Water, Economic Growth, and Conflict: Three Studies.

Abstract

This dissertation is composed of three separate studies, each of which addresses issues in water policy and economics. While the focus of these studies is water, the methods and results are relevant to environmental and natural resource policy in general.

The first study investigates how patterns of water withdrawals and water use correlate with economic growth at the national and state levels. Using both standard parametric and non-parametric statistical techniques, the study evaluates the robustness of environmental Kuznets curves (EKCs) for water withdrawals.

The second study analyzes the correlation between economic growth and national water footprints (the sum of water consumed directly plus the net import of “virtual water”, a term coined to denote the amount of water necessary to produce goods). The first and second studies are complementary in that they examine the production and consumption sides of water use, respectively. Results from both studies showed some evidence of EKCs, but varied depending on choice of dataset, the economic sector examined, and whether cross-sectional or panel data were used. The variation among results indicates that economic growth is unlikely to serve as a reliable indicator of future water use patterns. Results also indicate that some of the reduction in water consumption among industrialized nations may be a result of increased consumption of water intensive goods from developing nations.

The third study presents evidence that warnings and threats of violent conflict over increasingly scarce water resources appear to be more common than past experience would suggest likely. It explains this phenomenon by highlighting numerous incentives facing various stakeholders to stress and even intentionally exaggerate the risks of conflict over water. Understanding these incentives will allow policymakers to better evaluate the veracity of claims regarding risk of environmental and resource based conflict.