Water Consumption in Brazilian Economic Sectors – An Application from a General Equilibrium Model

Abstract

The manufacture of all products requires water, either directly or indirectly. Due to its peculiar nature, water is a unique input. Global economic growth and international trade put pressure on the demand for water in industrial and primary sectors. This paper seeks to analyze the total water consumption in Brazil by economic sector in scenarios of greater external demand for domestic products, considering especially the shift in the current national export profile. A typical computable general equilibrium model (CGE) based on the 2015 Brazilian Input-Output Table and the 2013-2015 System of Environmental-Economic Accounts for Water in Brazil are used for this analysis. The changes in total water consumption in the proposed scenarios are elastic in relation to the variations in demand for the other primary factors of the model (capital and land) and activity level. The extractive industry was the one with the highest increase in water consumption. The agricultural sector, which represents a large share of Brazilian exports and is the largest water consumer in the world, surprisingly had a variation in water consumption when compared to other sectors.

Keywords

• water consumption
• cge models
• brazilian economy
• international trade
• basic inputs