Domestic and foreign decoupling of economic growth and water consumption and its driving factors in the Brazilian economy

Abstract

Water intensity may present contrasting levels for supplying the domestic and foreign markets, impacting the water-GDP decoupling degree of a country differently. The present study innovates by combining the water footprint and virtual water trade balance to investigate the decoupling of GDP and consumption water footprint (CWF), decomposing the total CWF into Brazilian domestic and foreign markets. Technical efficiency, economic activities, and sectoral population were used as driving factors to comprehend CWF. The results demonstrate an expansive negative decoupling in the Brazilian economy (CWF increased more than GDP). The opposite behavior observed between the domestic and foreign markets reveals that the export agenda (expansive negative decoupling) had a higher impact on water resources than the domestic one (strong decoupling). The primary-exporting sectors strongly influenced this result, mainly agriculture and livestock. The population effect stands out among the drivers of CWF, causing a reduction in domestic consumption and an increase in consumption for the foreign market. This can be explained by the demographic dynamics in regions expanding export activities. In conclusion, economic growth promoted by exports coupled more intensely than the domestic market to water, impacting the use of this natural resource differently.