DP10573 Decomposing U.S. Water Use Since 1950. Is the U.S. Experience Replicable?

Author(s): Peter Debaere, Amanda Kurzendoerfer
Publication Date: May 2015
Keyword(s): international economics, natural resources, water
JEL(s): F18, Q25
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=10573

Water use in the U.S. has followed a remarkable pattern since 1950, not mimicking the almost uninterrupted 110 percent increase in the size of the U.S. population, the relatively steady 570 percent growth in real GDP, and the 220 percent improvement in per capita GDP. After doubling between 1950 and 1980, the total volume of water withdrawn has stabilized and even decreased in recent years. Our decomposition shows that between 35 and 50 percent of the productivity gains that allowed the U.S. to produce each dollar of its GDP with increasingly less water stems from long-term structural changes of the U.S. economy since 1950 (growing service economy, declining manufacturing and agricultural sectors). The remaining 50 to 65 percent is due to improved production techniques, and in particular due to water productivity improvements in the electricity-generating sector, especially since the mid to late 1970s. We argue that while globalization has helped reduce U.S. water use particularly since 1980, the U.S. ability to import more water-intensive goods is not the main reason U.S. water use plateaued.