Industrial Water Use Kuznets Curve: Evidence from Industrialized Countries and Implications for Developing Countries

Population growth and economic development are the two major driving forces of water demand. In developing countries, the rapid population growth together with an eagerness to develop the national economy, typically through industrialization, has generated a strong demand for additional water. This situation has been the basis underlying many projections of a substantial expansion of industrial water use. While the increase in industrial water use is a trend evident in many countries, it is also observed that industrial water use in some developed countries has experienced an increase, level-off and then decrease with the economic development and income rises. This inverted U-shaped trend resembles the well-known Environmental Kuznets Curve (EKC). Prior to this study, however, there has been no systematic investigation into changes in industrial water use associated with the process of industrialization. This paper investigates the existence of the Kuznets curve in industrial water use. It focuses on the following questions: does an inverted U-shaped relationship generally exist between industrial water use and the level of income? If so, where is the turning point of industrial water use? And, what are the preconditions for the decline? Based on the results from the analysis of the OECD countries, preliminary discussion is made for developing countries on the scale of potential increment in industrial water use before reaching the turning point. A standard EKC model is expressed as a quadratic function of the level of income (Eq. 1). We apply this model to statistically verify the Kuznets curve relationship between industrial water use and income observed in the OECD countries. tttot eYaYaaIW +++