ABSTRACT
This chapter provides both an overview of the different factors affecting the relationship between income, economic growth, and both water use and water quality, and gives an up-to-date review of some of the empiric literature that has investigated these relationships. It begins by exploring the relationship at micro level, that is the level of the individual or household, looking at issues such as income elasticity of demand for water, and continues to look at the macro or system-wide level. A common method of evaluating the impact of changes in income on consumption is to calculate the income elasticity of demand for a good. This measures the percentage change in demand (consumption) relative to a percentage change in income. A minority of studies found negative relationships between income and water use, implying that in some cases, an increase in income led to a decrease in water consumption.
