Rainwater shocks and economic growth: The role of the water cycle partition

Chocs de l'eau de pluie et croissance économique: Le rôle de la partition du cycle de l'eau

Francois Bareille, Raja Chakir and Charles Regnacq ()
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Raja Chakir: UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Charles Regnacq: CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper improves our understanding of how rainwater impacts economic growth by investigating the effects of overlooked properties of the water cycle. First, we consider the natural separation of rainwater into flows of blue water (i.e., the water that runs off towards rivers) and green water (i.e., that remaining in the soil). Second, we account for the presence of surface and groundwater stocks. These considerations allow us to comprehensively address the whole partition of rainwater, which, upon reaching the ground, splits into distinct water resources that determine water availability inland. Our analyses on a global panel coupling sub-national economic and hydrological data show that rainwater does increase growth, but do so differently depending on its partition. Specifically, blue water leads to more economic growth than green water at the margin, but, because two thirds of terrestrial water is green, the latter contributes more to growth in total. By missing this crucial partition, we find that commonly used rainwater measurements overstate rainwater's contribution to growth (by about two). Our analyses further indicate that, although groundwater reserves always mitigate the impacts of rainwater reduction on growth, surface water reserves sometimes amplify regional dependence to rainwater (depending on sector, income and reserve types).

Keywords: Dams; Weather (search for similar items in EconPapers)
Date: 2024-09
New Economics Papers: this item is included in nep-env
Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-04698458v1
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Published in Journal of Environmental Economics and Management, 2024, 128, pp.103047. ⟨10.1016/j.jeem.2024.103047⟩

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Journal Article: Rainwater shocks and economic growth: The role of the water cycle partition (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04698458

DOI: 10.1016/j.jeem.2024.103047

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