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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]

Author

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  • François Bareille

    (UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • 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

    (UR - Université de Rennes)

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).

Suggested Citation

  • François Bareille & Raja Chakir & Charles Regnacq, 2024. "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]," Post-Print hal-04698458, HAL.
  • Handle: RePEc:hal:journl:hal-04698458
    DOI: 10.1016/j.jeem.2024.103047
    Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-04698458v1
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    1. Xiaojun Yu & Russell Smyth & Yao Yao & Quanda Zhang, 2024. "Water stress and industrial firm productivity: Evidence from China," Monash Economics Working Papers 2024-20, Monash University, Department of Economics.

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    More about this item

    Keywords

    Dams; Weather;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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