Abstract
This paper uses input-output accounting methods to identify the direct, indirect, and induced physical demand for water. The seminal work by Leontief (1970) has previously motivated a more extensive account of issues related to those sectors that generate and those that clean/treat polluting outputs. The present paper extends this approach to deal with sectors that use a natural resource and those that supply it. We take, as a case study, public water use and supply in Wales. The analysis shows how the proposed method, using both the quantity input-output model and the associated price dual, can be used to investigate the economy-wide implications of the deviation between expenditures on the output of the water sector and actual physical water supplied. The results indicate that the price paid for water varies greatly amongst different uses; in particular, household consumption is charged at a higher price than intermediate industrial demand. We argue that decision makers (in this case, policy makers and industry regulators) require such analysis and information in order to understand the demands on and supply of water resources and their role in supporting economic expansion, whilst simultaneously adopting appropriate strategies for achieving water sustainability objectives.
Highlights
Water policy and regulation in the United Kingdom and its devolved administrations increasingly prioritize efficient use of the resource and recognize competing uses for scarce water resources within an ecosystems services framework (see for example, DEFRA (2016))
This paper demonstrates the way in which environmental input-output methods can be used to improve our understanding of the economy-wide implications of using water resources to meet economic needs (Leontief, 1970; Allan et al, 2007b)
This paper explores alternative input-output approaches to generating physical multiplier values that may be used to understand water resource use and supply in Wales
Summary
Water policy and regulation in the United Kingdom and its devolved administrations increasingly prioritize efficient use of the resource and recognize competing uses for scarce water resources within an ecosystems services framework (see for example, DEFRA (2016)). ALABI ET AL: PHYSICAL WATER ACTIVITY AND WATER USE regulation are having to respond to issues such as increases and changes in the spatial distribution of water demands They need to consider the more implicit environmental costs associated with water abstraction and use within individual water catchments. Current water regulations across the UK require the water companies to incorporate a specific Water Resources Management Plan (WRMP) that takes into account the planning processes, strategies, and action for enabling a more resilient water sector (Welsh Government, 2016) This type of planning recognizes that industrial and household demands might lead to unsustainable water abstraction levels and associated water stress.
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