Water extended input-output analysis of the Croatian economy

Abstract

The main objective of this paper is to identify the most important direct and indirect sources of water use in the Croatian economy and, based on that, to identify the key drivers of water use in the process of Croatian national production. For this purpose, water extended input-output model was constructed and empirically applied in the paper, based on which the indicators of direct, indirect, and cumulative water intensities of production sectors in the Croatian economy have been quantified and analysed, including their cumulative and indirect water use multipliers. Using the aforementioned model, the paper also assesses and analyses domestic, net imported, and total water footprints of production sectors in the Croatian economy, as well as the relative strength of pull-and-push effects of their water use. For the purpose of model construction, the last published input-output table of the Croatian economy for 2010 and the reference data of the Croatian official water statistics were used. The results of the model indicate that direct and indirect water use flows in the Croatian economy are mostly determined by intermediate processes of generating and using the output of the power, chemical, and oil-processing sector. Through the application of the model, it has also been found that these sectors dominate in the structure of the total water footprint of the Croatian economy, whereby the Republic of Croatia, overall, achieves a surplus in the international exchange of virtual waters. Given the new findings on indirect and cumulative water use flows in the Croatian economy, the author’s recommendation is that the multiplicative effects of inter-sectoral dependencies in the processes of national production on the total water use must be taken into account when conducting future activities of planning, management, and protection of Croatian water resources.