Application of Regression Models on Panel Data in the Regional Analysis of Water Consumption

Abstract

Water is a core component of the nature environment. The problem of good quality water supply to the humans has been aggravating because the available resources of fresh water in some regions of the planet proved to be insufficient for satisfying all the consumer needs. Lack of fresh water has been a structural factor affecting the global economic development, with drinking water acquiring the characteristics of a strategic commodity. These circumstances raise the importance of solutions on saving fresh water resources and ways of their rational use from the local level to the global one. The article contains a description of the current situation with water supply and water consumption in Ukraine. As regards water supply, Ukraine, according to the hydrological classification, is undergoing water stress, in parallel with extra water consumption and high water intensity in the domestic production sector. The subject of the study is water intensity of the gross domestic product, its main factors and ways of reduction. The object of the study is seven Ukrainian regions across which the river Dnieper flows, and the city of Kyiv. A significant variation of water intensity is observed in administrative and territorial units located in the Dnieper basin, which is caused by the varying industrial capacities, varying systems of technical water supply at industrial enterprises, and varying scopes of fresh water use in water supply for agricultural and utility needs, lack of advanced systems for water supply in some of the regions, which causes large losses of water and high water intensity in some production facilities. The impact from the above mentioned factors on the regional water intensity is assessed by the regression model on panel data. The specific conditions of the business operation in some regions of the Dnieper basin are represented in the model by dummy variables. By the model of water intensity of GDP, the largest one is the impact from industrial specialization of a region (especially Dnipropetrovsk, Zaporizhzhia, Kyiv and Kherson regions), the existence of water recycling systems at industrial enterprises, scopes of water drainage and capacities of sewage treatment plants. Effective use, rehabilitation and protection of water resources, improvement of water quality, and reduction of water intensity in the production facilities through taking technological and economic measures in water consumption are considered as important factors of the national security.

Keywords

• regression model, panel data, water availability, water consumption, water intensity