Several influential studies suggest that population and income growth lead to
increasing demands for freshwater and freshwater scarcity. Unfortunately,
there is little rigorous empirical testing of this hypothesis. This article relies
on a cross-country multiple regression framework pioneered by Kuznets,
Chenery, and Chenery and Syrquin to analyze the structural transformation
in water use as socioeconomic development occurs. Cross-country regressions
are cross-checked by time-series (and cross-state) regressions for the United
States. Results suggest that water use exhibits an inverted-U relationship with
income per capita. The findings also suggest that this relationship is affected
by the efficiency of water use in agriculture, by whether a country was in the
former Soviet Union, and by a country's trade policy. Taken together, these
findings suggest a need for a rethinking regarding freshwater use and freshwater scarcity as socioeconomic development proceeds.
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