Abstract
Water productivity is broadly used as an indicator to measure the success of policies aiming at efficient water management. Focusing on the agricultural sector, this paper provides the first critical analysis of the appropriateness of water productivity for this type of assessment. We apply Logarithmic Mean Divisia Index (LMDI) decomposition analysis together with descriptive statistical analysis to test our main hypothesis that is natural resources do not generate value added, and therefore changes in water productivity are related to well-known drivers of economic growth rather than to improvements in water efficiency. We use three different models with different levels of decomposition detail to identify the drivers of water productivity changes. Results show that indeed there is a weak relationship between changes in water productivity and water efficiency. In contrast, changes in water productivity are driven by changes in labor productivity and capital intensity. Thus, we discourage policy makers from using the indicator to monitor the progress on efficient water management or on decoupling between economic growth and water consumption. Rather, indicators independent from economic development such as biomass per volume of water should be used and the absolute volumes of water appropriated by society monitored.
Highlights
Freshwater is a fundamental resource for human activities and in dustrial operations
To enable the comparability among the three Logarithmic Mean Divisia Index (LMDI) models, in the paragraphs we show the contribution of each factor to water produc tivity changes in absolute values
The sign attached to each factor will reflect its contribution to the total change in water productivity
Summary
Freshwater is a fundamental resource for human activities and in dustrial operations. While industrial water consumption (e.g. for energy production, mining, or the pulp and paper industry) is increasing, globally agriculture is still the largest consumer of water. The demand for this key resource increases steadily – the annual increase of global water use (for instance, EEA, 2015) has been around 1% since 1980 (WWAP, 2019). The divergences in freshwater availability and accessibility are dis cussed in the context of the “climate crisis”, as climate change makes water availabilities less predictable and increases the competition for this scarce resource. Decoupling economic activity and human well being from water use – i.e. improving water efficiency – has gained importance as a concept and indicator for water management over time. It shall guarantee access to water for all dependent economic sectors, especially agriculture or electricity generation
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