Abstract
In economic growth models, less attention is paid to natural resources and their importance on economic growth. The decline of the world's water resources, especially in countries with inherently limited water resources, such as Iran, has caused a water supply and demand crisis. This chapter deals with the effect of water utilization rate on economic growth. The hypothesis of this research is based on Barrow and Sala's Martin model developed by Barber. According to this model, the effect of the water utilization rate on economic growth can be nonlinear. The tool for measuring the amount of water in this study is the water utilization rate. Other explanatory variables used in the model include the share of water exports, the share of water activities, and the share of gross capital. This chapter uses a self-regression model with distributive interruption with the shore test approach for 1990-2020 for Iran. The estimation results indicate that the relationship between water utilization rate and economic growth for Iran is inversely U-shaped.
TopIntroduction
Everyone in the community is aware of the importance of having water. Water is a common treasure trove of human beings, a treasure that has become one of the greatest challenges of the present century. In recent decades, the water supply and demand gap has been in crisis due to declining world water resources. Meanwhile, countries with inherent limitations in their water resources are more seriously involved in this crisis. Iran is no exception to this rule and is one of the countries facing a physical shortage of water due to the number of resources and per capita water withdrawal. According to Falcon Mark, Iran will face a physical shortage of water by 2025. Proper use and utilization of the country’s water resources can be the first step to deal with this crisis.
Water is an element on which human life depends, so how can it not impact its economy. At first glance, it may be said that a country that has more water resources and, by its nature, more exploitation of its water resources also has higher economic growth; in other words, there is a positive relationship between economic growth and water efficiency rates. Because Iran has a hot and dry climate, population growth and declining per capita renewable water have been further reduced so that the annual per capita amount of renewable water in the country has been reduced from 13,000 cubic meters in 1300 to about 1400 cubic meters in 2013. Therefore, to deal with the current water crisis and its consequences on the country’s economic growth, we need to examine the relationship between water utilization rate and economic growth as closely as possible. For this purpose, the present article has been organized into five specific sections. In the second part of the theoretical framework, the third part provides an overview of the studies performed, data analysis and estimation methods in the fourth part, and conclusions and suggestions in the fifth part.
Key Terms in this Chapter
Low-Carbon Economy: A low-carbon economy (LCE) or decarbonized economy is based on low-carbon power sources with minimal greenhouse gas (GHG) emissions into the atmosphere, specifically carbon dioxide. GHG emissions due to anthropogenic (human) activity are the dominant cause of observed climate change since the mid-20th century. Continued emission of greenhouse gases may cause long-lasting changes worldwide, increasing the likelihood of severe, pervasive, and irreversible effects for people and ecosystems.
Green Economy: A green economy is an economy that aims at reducing environmental risks and ecological scarcities and that aims for sustainable development without degrading the environment. It is closely related to ecological economics but has a more politically applied focus. The 2011 UNEP Green Economy Report argues “that to be green, and an economy must be not only efficient but also fair. Fairness implies recognizing global and country-level equity dimensions, particularly in assuring a Just Transition to an economy that is low-carbon, resource-efficient, and socially inclusive.”
Sustainable Development: Sustainable development is an organizing principle for meeting human development goals while simultaneously sustaining the ability of natural systems to provide the natural resources and ecosystem services on which the economy and society depend. The desired result is a state of society where living conditions and resources are used to continue to meet human needs without undermining the integrity and stability of the natural system. Sustainable development can be defined as development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Sustainability goals, such as the current UN-level Sustainable Development Goals, address the global challenges, including poverty, inequality, climate change, environmental degradation, peace, and justice.
Environmental Enterprise: An environmental enterprise is an environmentally friendly/compatible business. Specifically, an environmental enterprise is a business that produces value in the same manner which an ecosystem does, neither producing waste nor consuming unsustainable resources. In addition, an environmental enterprise rather finds alternative ways to produce one’s products instead of taking advantage of animals for the sake of human profits. To be closer to being an environmentally friendly company, some environmental enterprises invest their money to develop or improve their technologies which are also environmentally friendly. In addition, environmental enterprises usually try to reduce global warming, so some companies use environmentally friendly materials to build their stores. They also set in environmentally friendly place regulations. All these efforts of the environmental enterprises can bring positive effects both for nature and people. The concept is rooted in the well-enumerated theories of natural capital, the eco-economy, and cradle-to-cradle design. Examples of environmental enterprises would be Seventh Generation, Inc., and Whole Foods.
Natural Resource Economics: Natural resource economics deals with the supply, demand, and allocation of the Earth’s natural resources. One main objective of natural resource economics is to understand better the role of natural resources in the economy to develop more sustainable methods of managing those resources to ensure their future generations. Resource economists study interactions between economic and natural systems intending to develop a sustainable and efficient economy.
Emissions Trading: Emissions trading (also known as cap and trade, emissions trading scheme, or ETS) is a market-based approach to controlling pollution by providing economic incentives for reducing the emissions of pollutants.
Eco Commerce: Eco commerce is a business, investment, and technology-development model that employs market-based solutions to balancing the world’s energy needs and environmental integrity. Through green trading and green finance, eco-commerce promotes the further development of “clean technologies” such as wind power, solar power, biomass, and hydropower.
Green Politics: Green politics, or ecopolitics, is a political ideology that aims to foster an ecologically sustainable society often, but not always, rooted in environmentalism, nonviolence, social justice, and grassroots democracy. It began taking shape in the western world in the 1970s; since then, Green parties have developed and established themselves in many countries around the globe and have achieved some electoral success.
Eco-Tariffs: An Eco-tariff, also known as an environmental tariff, is a trade barrier erected to reduce pollution and improve the environment. These trade barriers may take the form of import or export taxes on products with a large carbon footprint or imported from countries with lax environmental regulations.
Circularity: A circular economy (also referred to as “circularity”) is an economic system that tackles global challenges like climate change, biodiversity loss, waste, and pollution. Most linear economy businesses take a natural resource and turn it into a product that is ultimately destined to become waste because it has been designed and made. This process is often summarised by “take, make, waste.” By contrast, a circular economy uses reuse, sharing, repair, refurbishment, remanufacturing, and recycling to create a closed-loop system, minimize resource inputs, and create waste, pollution, and carbon emissions. The circular economy aims to keep products, materials, equipment, and infrastructure in use for longer, thus improving the productivity of these resources. Waste materials and energy should become input for other processes through waste valorization: either as a component or recovered resource for another industrial process or as regenerative resources for nature (e.g., compost). This regenerative approach contrasts with the traditional linear economy, which has a “take, make, dispose of” production model.