Governments stimulate efficiency measures to save water resources, particularly in areas with high water stress and those that experience droughts. However, economic theory and some empirical studies tell us that the effects of efficiency improvements of a resource may not lead to a global reduction in the use of that resource. We assess the effects of improving water resources productivity in Spain on the global use of water using a dynamic water-economy computable general equilibrium model. We set an overall annual improvement of water efficiency of 50% and find that the economy-wide water rebound effect is 100.47%. This means that there are no savings of water after an efficiency improvement, and there is actually a slight global increase in water use.
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The adjustments were mainly made to reduce the dimension of the matrix because some sectors that were originally included were very small and could generate errors when running the models.
The Cobb–Douglas production function represents the technological relationship between the amounts of different inputs such as capital, labor, energy, and materials that produces the output of a specific industry.
We only test 50% water efficiency improvement as an example because we obtain the same rebound effect with different efficiency improvements.
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The author would like to thank the financial support from the Government of Catalonia, Agència de gestió d’Ajuts Universitaris i Recerca, through a Beatriu de Pinós Fellowship (2017 BP 00009).
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Freire-González, J. Does Water Efficiency Reduce Water Consumption? The Economy-Wide Water Rebound Effect. Water Resour Manage 33, 2191–2202 (2019). https://doi.org/10.1007/s11269-019-02249-0
- Water economics
- Rebound effect
- Computable general equilibrium