Trivariate Causality between Water Resources Consumption, Economic Growth and Urbanization in Zhejiang Provinces of China

This paper investigates the causal relationship between water resources consumption, economic growth and urbanization in the case of Zhejiang in China, while utilizing the data over the period of 1982-2013. I applied unit root tests to examine the stationarity properties of the series, finding the data series are stationary. Then, I employed the ARDL bounds test to investigate long run relationships. The Granger causality test was subsequently used to examine the direction of causality between water resources consumption, economic growth and urbanization. My results indicate the existence of long run relationships. I further find there is a bidirectional causality between water consumption and economic growth. Feedback hypothesis is observed between water consumption and urbanization, and between economic growth and urbanization. Consequently, the relevant authorities should boost clear water resources as one of the means of achieving sustainable urbanization in the long run.