Abstract
Water technologies have become new solutions to water scarcity and could play an increasingly crucial role in the future. However, theoretic and empirical studies on the economic effect of water technologies which incorporate water resources into a sustainable economic growth model remain scarce in northwest China. This article attempts to build a water technology endogenous model based on “learning by doing” theory to identify the mechanisms of water technologies affect economic growth due to changing water consumption. Considering the case of Northwest China in this empirical research, we apply the stochastic production frontier model by using panel data from 1996 to 2017. The results shows that progress in water technologies has indeed increased GDP growth and the current level of water technologies is not a key factor in eliminating the constraints of water resources. In addition, water scarcity still constrains economic growth in Northwest China and progress in water science and technology is the main power of all water technologies. Finally, the speed of water science and technology slows as the amount of water consumption increase and the impact of water technical efficiency on economic growth depends on water institutions of different areas. This study may enhance the policy relevance of water technological governance and economic growth transformation, which were beneficial for informing policies towards sustainable water resource utilization in northwest China.
Highlights
Water is an important factor of production contributing both directly and indirectly to economic activity across all sectors and regions of the global economy
The speed of water science and technology slows as the amount of water consumption increases
The impact of water technical efficiency on economic growth depends on water institutions of different areas and is not as significant as that of water science and technology
Summary
Water is an important factor of production contributing both directly and indirectly to economic activity across all sectors and regions of the global economy. Distefano & Kelly [9] developed a multi-regional input-output model and founded that the most important driver of future water scarcity is economic growth, which overwhelms any realistic savings that can be made from increased technological progress and improvements to efficiency. Based on empirical evidence from Northwest China, this paper provides an effective way for the improvement of water technologies in technologically backward areas, which can increase the growth rate while reducing the utilization of water resources. Both our research design and research findings are significant for an understanding of the potential of the implementation of water technologies to solve the problem of water scarcity and to achieving sustainability
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