NCPA - National Center for Policy Analysis

How Important Is Water to the U.S. Economy?

October 22, 2014

America is highly reliant on water, from supporting agriculture to thermoelectric power to regular household use. In fact, American household water use is quite high compared to other nations -- domestic water use in the United States is 98 gallons per person per day, while it is just 37 gallons per day in the U.K. and 32 gallons per day in Germany.

Brookings Institute researchers Melissa S. Kearney, Benjamin H. Harris, Brad Hershbein, Elisa Jácome and Gregory Nantz have compiled a report that looks at the importance of water within the U.S. economy. According to the study:

  • Eighty percent of all water that is withdrawn in the United States goes towards power generation and irrigation, with power generation responsible for 49 percent and irrigation 31 percent. Notably, however, not all withdrawn water is fully consumed.
  • Agriculture-heavy states have understandably high rates of water use. In California, 80 percent of water withdrawals are used for agriculture. The production of alfalfa alone uses one-eighth of the state's water.
  • The agriculture sector in California is important for the entire nation; the state is the largest agricultural exporter, responsible for exporting 13 percent of all American agricultural exports and three-fifths of all fruit, nut and vegetable exports.
  • The percentage of water used for agriculture in California has actually fallen since 1980.

The authors note that drought (though not unusual when looking at drought historically in the United States) is a significant problem in much of the country, with 57 percent of the United States facing abnormally dry conditions this year. Significantly, America's driest states are also its fastest-growing:

  • Of the 10 fastest-growing states in the first decade of the 200s, half received an average of less than 20 inches of precipitation annually. The national average for the twentieth century was 30 inches. Nevada and Arizona have less than 15 inches of precipitation annually, while simultaneously growing at 35 and 25 percent rates, respectively.
  • America's driest region (including Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming) is projected to grow by 45 percent over the next 30 years.
  • The driest states also have the highest domestic water usage per capita, due to outdoor watering needs. While Maine residents use just 54 gallons of water per day, Nevada residents use 190 gallons per day.

Source: Melissa S. Kearney et al., "In Times of Drought: Nine Economic Facts about Water in the United States," Brookings Institute, October 20, 2014. 


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