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Governments are increasingly concerned that current levels of water use are unsustainable, particularly in the face of threats posed by climate change. This paper examines recent research on water-using innovation in three key water-using sectors (residential, manufacturing, and agriculture) for evidence to support the call for greater reliance on economic instruments as part of the suite of policy measures to promote water innovation, conservation, and efficiency. The findings illustrate the need to understand water’s role in production (industrial, agricultural, and household) and the way changes in unit costs of other inputs (particularly energy and capital) influence innovation. In addition, the available research indicates that policies based on economic instruments should be tailored to the specific features and contexts of the different water-using sectors. [ABSTRACT FROM AUTHOR]

Relatively little is known about the factors that influence firms' water recirculation decisions. This paper estimates an econometric model that jointly considers two facets of firms' recirculation behavior: first, the discrete decision of whether to recirculate and, second, the decision of how much to recirculate. The model is estimated by applying the Heckman two-stage estimation procedure to cross-sectional data from Environment Canada's 1996 Industrial Water Use Survey. In the first stage, long-run factors, such as relative water scarcity and production technologies, are found to influence the decision whether to recirculate water. In the second stage, the imputed prices of intake water and water recirculation as well as the scale of operations are found to influence the choice of the optimal quantity of water to recirculate. Les facteurs qui influencent les décisions des entreprises concernant le recyclage de l'eau sont assez peu connus. Dans le présent article, nous avons estimé un modèle économétrique qui tient compte de deux aspects du comportement des entreprises envers le recyclage de l'eau : le choix de recycler l'eau ou non et le choix de la quantité d'eau à recycler. Nous avons estimé le modèle à l'aide de la procédure en deux étapes de Heckman que nous avons appliquée à des données transversales tirées de l'Enquête sur l'utilisation industrielle de l'eau, réalisée par Environnement Canada en 1996. À la première étape, des facteurs à long terme tels que la rareté relative de l'eau et les technologies de production influent sur la décision de recycler l'eau ou non. À la deuxième étape, les prix imputés du captage et du recyclage de l'eau ainsi que l'envergure des opérations influent sur le choix de la quantité optimale d'eau à recycler. [ABSTRACT FROM AUTHOR]

The Government of Canada has endorsed a policy to promote water conservation in an attempt to reduce environmental impacts of water use. Nonetheless, total water intake, consumption, and gross water use in the business sector have increased in the period 1981–1996. Water intake intensities, measured in cubic meters of intake water per dollar of production, however, have fallen by 4%. To better understand these changes in intensities, we decompose them into separate composition and technique effects. We show that changes in the composition of business activity have lead to an expansion of water intensive industries. However, changes in techniques and production processes have more than offset this. Overall, water intake intensities have fallen by 7%, after accounting for changes in the relative growth of sectors. These reductions are even stronger when we include recirculated water where technological and process changes have reduced gross water intensities by 18%. At the same time, though, firms have increased their consumption of water so that, on average, consumption intensities rose 17%. Hence, firm level changes in techniques and processes may have increased the impact of economic activity on the environment rather than having reduced it. [ABSTRACT FROM AUTHOR]