How Does Urbanization Affect Water Withdrawals? Insights from an Econometric-Based Landscape Simulation

Abstract

Effects on water resources are an understudied aspect of the environmental consequences of urbanization. We study how urban land development affects water withdrawals on a regional scale to account for market adjustments, human behavioral responses, and government institutions. Fine-scale econometric and simulation methods are used to represent the spatial heterogeneity associated with determinants of water withdrawals. Our analysis reveals a complicated relationship between future water withdrawals and changes in socioeconomic drivers. Despite population growth of approximately 85% and a doubling of income, water withdrawals in two urban areas increase by at most 12% and in another area, decrease slightly. (JEL Q24, Q25)