Signatures of water resources consumption on sustainable economic growth in Sub-Saharan African countries

Abstract

We adapt the transcendental logarithmic (translog) production model to examine the role of water resources consumption on economic growth in 38 Sub-Saharan African (SSA) countries. Labor, capital and energy are incorporated into the model to provide for omitted variable bias. Several findings have been documented from the investigation. First, the results suggest that economic growth in SSA is driven mainly by water and labor. Capital and energy were found not to significantly drive economic growth. Second, technical change in SSA is scale-biased and factor augmenting; suggesting that efficiency of water withdrawals and labor use would lead to technological progress in SSA. Third, substitution possibilities between water and labor exist indicating that restrictions on water withdrawals would lead to labor intensiveness and vice versa. Finally, a more general insight from the study is that efficient use of water resources promotes technological innovation and hence, critical for sustainable development.