Defining Sustainability in an Input-Output Model: An Application to Spanish Water Use

The continuous increase in freshwater consumption threatens water availability worldwide, especially in dry and arid regions. In this paper, we evaluate the sustainability of water use in Spain, a Mediterranean country that suffers from a permanent imbalance between water availability and water use. Our method, based on the input-output (IO) model, calculates the total water requirements of the Spanish production system. According to input-output assumptions, however, factors (i.e., labor and capital) and resources (such as natural goods or human capital) are not fully employed (not completely used), and therefore any expansion in demand is thought to always be automatically covered by production activities. This assumption seems unrealistic in water-scarce regions since it implies the following: (i) water resources are not quantitatively limited, and (ii) demand inflows can be fully produced and completely covered by the corresponding water requirements (i.e., the IO model assumes that water is always underused). To address this weakness in input-output water applications, we present a method that combines input-output analysis and sustainability criteria by incorporating physical environmental measurements that take into account thresholds in water usage. In particular, the Water Exploitation Index (WEI) evaluates whether water availability is sufficient to satisfy changes in demand in a sustainable or unsustainable way. Application of this index to Spanish water usage shows that services and manufacturing are linked to an unsustainable use of water.