Study: Water use and the performance of the Canadian economy

Canadian businesses use water for a variety of purposes, ranging from the production of marketable outputs (hydroelectric power production, growing crops, beer, or canned food) to disposal of industrial effluents.

Self-supplied industries carry out the bulk of water intake at virtually no cost. These industries withdraw water directly from rivers, lakes and groundwater rather relying on municipal water utilities to supply them.

The study found that the majority of Canadian businesses and the majority of industries have improved their efficiency in the use of water, measured in terms of amount of output per unit of water used.

The usual concepts of productivity define output and input conventionally, ignoring any contribution of natural capital, such as water. Broader concepts of productivity that factor in impacts on the environment are increasingly in demand. This experimental study shows the value of integrated databases on the environment and the economy. More specifically, the study proposes an experimental framework that allows for water use to be incorporated into productivity estimates, illustrates how they can be measured and shows their impact on the productivity performance of the Canadian business sector from 1981 to 1996.

All the gains in labour usage, capital usage, intermediate inputs usage and water use are combined in this study to produce a multifactor productivity measure. From 1981 to 1996, the last year for which industrial water use data consistent with productivity data are available, productivity of the largest self-supplied industries (utility, agriculture, paper, primary metal, chemical, mining and refined petroleum) advanced on average 2.2% annually compared with 1.5% when water is ignored.

The business sector's water intake reached 40.9 billion cubic metres in 1996, up from 32.5 billion cubic metres in 1981. The distribution of water intake is quite uneven across the business sector. Over the 1981 to 1996 period, seven industries accounted for 96% on average of the overall water self-supplied, led by utility (65.9%), agriculture (10.1%), paper (7.1%), primary metal (4.7%), chemical (4.5%), mining (1.5%) and refined petroleum (1.2%). These seven largest water-using industries represent only 23.8% of gross output of the business sector.

The study also found that water recirculation (a form of recycling) is an important consideration of self-supplied businesses.

Out of the 40.9 billion cubic metres of self-supplied water used by the Canadian business sector in 1996, 51% was recycled. In 1981, the recirculation ratio was 43.5%. Over the 1981 to 1996 period, recirculation represented on average 40.2% of water intake of the business sector, slightly higher than the 37.4% reported by the seven largest water-using industries.

The research paper Water Use, Shadow Prices and the Canadian Business Sector Productivity Performance no. 26 (11F0027MIE2004026, free) is now available online. Additional information on related papers can be found in the publication Update on Economic Analysis (11-623-XIE, free). From the Our products and services page, under Browse our Internet publications, choose Free, then National accounts.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Tarek M. Harchaoui (613-951-9856; fax: 951-951-3292; harctar@statcan.gc.ca), Micro-economic Analysis Division.