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Physical water use and water sector activity in environmental input-output analysis

Oluwafisayo Alabi (oluwafisayo.alabi@strath.ac.uk), Max Mundy (mundaymc@cardiff.ac.uk), Kim Swales (j.k.swales@strath.ac.uk) and Karen Turner
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Oluwafisayo Alabi: Department of Economics, University of Strathclyde
Max Mundy: Welsh Economy Research Unit (WERU), Cardiff University
Kim Swales: Department of Economics, University of Strathclyde

No 1612, Working Papers from University of Strathclyde Business School, Department of Economics

Abstract: This paper uses input-output accounting methods to identify the direct, indirect and induced physical demand for water. Previously the seminal work by Leontief (1970) has been employed to motivate a fuller account of issues related to sectors that generate and sectors that clean/treat polluting outputs (Allan et al 2007). The present paper extends this approach to deal with sectors that use a natural resource and the sector(s) that supply it. We focus on the case of water use and supply and a case study for the Welsh regional economy. The analysis shows how the proposed method, using both the quantity input-output model and the associated price dual, can be used to consider economy wide implications of the deviation between actual expenditure on the output of the water sector and actual physical water use. The price paid per physical amount of water appears to vary greatly amongst different uses. This may occur for various reasons. We argue that such analysis and information is essential for policy makers and regulators in understanding the demands on and supply of UK regional water resources, their role in supporting economic expansion, and can ultimately inform water sustainability objectives and strategies.

Keywords: Water resources; Full Leontief environmental model; input-output; Multipliers; Wales (search for similar items in EconPapers)
JEL-codes: C67 Q25 Q51 R11 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2016-09
New Economics Papers: this item is included in nep-agr, nep-env and nep-hme
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Persistent link: https://EconPapers.repec.org/RePEc:str:wpaper:1612

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