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Water fueling businesses: How does the water availability affect production performance of the private sector and the general business environment?
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
2016 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

The aim of the this paper was to answer the question of how exactly and through which mechanisms water availability may or may not affect the performance of the private sector and the business environment in one economy. The study was set up in a way that it looks at seven distinct micro models, each trying to add to the bigger picture of answering the question at hand. By utilizing the strongly balanced panel data, this study took an approach of fixed-effects model and instrumental variable regression. We find that water does not significantly affect the value added production in neither of the industries we observed. On the other hand we find a statistically significant, positive causal effect of water on the business performance indices. The results lead us to speculate that water availability/scarcity would have a significant impact on value added production as well, but only on the low end for water supply. This suggests that private sector at this point in time is not facing water shortages that would affect their production. However, due to the overwhelming evidence that the water supply worldwide is in crisis, these findings may have a potentially strong policy implications suggesting that businesses have an abundant water access at the expense of households which are generally the first units to face water shortages.

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URN: urn:nbn:se:uu:diva-296419OAI: oai:DiVA.org:uu-296419DiVA: diva2:938138
Available from: 2016-06-16 Created: 2016-06-16 Last updated: 2016-06-16Bibliographically approved

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