Economic growth and the evolution of water consumption in Spain: A structural decomposition analysis

The aim of this paper is to examine how technology, processes of input substitution, and changes in final demand, all of which underlie economic growth, influence water consumption. This analysis is undertaken for Spain during a significant socio-economic period, from 1980, the beginning of the democratic era, to 2007, the onset of the current economic crisis. s end, we construct water consumption series linked to a time series of input–output tables generated for the Spanish economy, and we develop a structural decomposition analysis to study mainly changes in water consumption embodied in final demand. d that the growth in Spanish demand (all other things being constant) would have implied an increase in water consumption almost three times the growth actually observed. However, this demand effect is largely offset by technology and intensity effects, mainly due to changes in agricultural crops. Given the importance of the demand growth, the final demand effect is also analyzed in detail, broken down by categories as well as level and composition. Household demand and the increase of exports appear as key explicative factors.