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

Abstract

This paper investigates the existence of the Kuznets curve in industrial water use. The result shows that industrial water use in most countries in the Organization for Economic Cooperation and Development (OECD) has experienced an increase, followed by a leveling off and then a decrease to some extent as income rises. The relationship between changes in industrial water use and income appears to comply with the environmental Kuznets curve, i.e., an inverted U-shaped curve seen in the relationship between income changes and environmental quality. It is found that the income threshold corresponding to the turning point of industrial water use varies across the OECD countries with a majority falling in the range of 10,000 United States dollars (USD)/capita–25,000USD/capita (1995 constant prices). Further examination suggests that decrease in the share of the secondary industry in the national economy is a precondition for the stabilization and decline in industrial water use. In the OECD countries, the share of the secondary industry in total GDP was around 40% at the turning point of industrial water use. The verification of the existence of the Kuznets curve relationship in industrial water use and the identification of the share of the secondary industry in total GDP corresponding to the turning point help in projecting the scale of future increase in industrial water use in developing countries.