Explaining the relationship between income and water consumption using ‎the smooth transition regression ‎

Document Type : Original Article


1 Department of Economic, Faculty of Management, Payam Noor University, Khozestan, Iran

2 Department of Economic, Humanity and Social Science Faculty, Ilam University, Ilam, Iran


Water plays an important role in the level and growth of economic activities, ‎social welfare, and environmental sustainability. The main purpose of this article ‎is to study the non-linear effects of per capita income on water withdrawal in the ‎domestic sector (drinking and urban) of the world. For this purpose, “The ‎Environmental Kuznets Curve (EKC) hypothesis based on the natural resources” ‎has been tested using cross-sectional data, Ordinary Regression, and Smooth ‎Transition Regression (STR) from 163 countries. The result is to accept the ‎hypothesis in Water Economics. Furthermore, the "transition point" of the ‎relationship between income and water consumption in the gross domestic product ‎‎(GDP) is $ 41,982. The effect of national income on water consumption in the ‎domestic sector is non-linear, which can be caused by the scale, technology, or ‎composition effects. As a result, stricter environmental regulations can reduce ‎per capita water withdrawals and the rate of aquifer erosions. Indeed, increasing ‎per capita income and changing societal structures will reduce per capita water ‎use.‎


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