The Water-Economy Nexus: a Composite Index Approach to Evaluate Urban Water Vulnerability

Resource scarcity is a driving force behind water conservation and reuse as urban areas seek strategies to adapt to population growth and environmental challenges. Although there are numerous indicators that examine urban water resource and demand characteristics, these approaches do not tie together how aspects like economic health, environmental conditions, and population growth correlate with local water conservation to demonstrate a city’s ability to cope with water resource vulnerability. This research develops a conceptual framework for the Water-Economy Index (WEI) which characterizes social, economic, and environmental dynamics of water reuse and conservation. The application specifically utilizes a principal component analysis (PCA) to evaluate how hydro-economic indicators (including water demand intensity, demand for recycled water, economic productivity of water, unemployment, and allocations of water resources) are correlated and can impact sustainability goals. The PCA method aggregates indicators into three groups: socio-economic, water allocation, and socio-environmental indicators. The most influential indicators within each group are economic productivity of water, wastewater reuse, and consumptive water demand, respectively. The WEI ranks of 49 cities are compared to identify shared traits across individual indicators and to demonstrate the application of the WEI for benchmarking. The results provide insight into the complex relationship between the characteristics of an urban area’s water demand and socio-economic performance.