The relative roles of energy and water intensity in the economic growth of the United States, 1950–2015

Abstract

Water and energy are indispensable inputs to the modern economy and are of primary concern for the sustainability of the global economy. Continually growing use of water and energy cannot be sustained in the pursuit of greater wealth and prosperity, given planetary boundaries and other limitations on these resources. Water is a main input to the production of energy, and vice versa, and to some extent the two are substitutes. An economy’s energy intensity and water intensity measure the efficiency with which energy and water, respectively, are used in the generation of wealth. How far has an advanced economy like that of the US gone in decoupling energy and water use from economic growth? To answer this question, we decompose the growth of GDP per capita into improvement in energy and water intensity and the change in the per capita use of these two crucial inputs, using data for the US from 1950 to 2015. We find that water and energy use efficiency improvements are responsible for much more growth in per capita GDP than increases in water and energy inputs, and that water use can be decoupled more significantly from increasing wealth than the use of energy. The results have important implications for the future of energy and material consumption by the global economy.

Keywords

• economic growth
• energy intensity
• water intensity
• growth accounting