Conference Agenda

Terrestrial water storage (TWS) is the total amount of water stored in all continental storage compartments and is an essential resource for food and energy production, manufacturing and ecosystem health. Even though absolute TWS is unknown, satellite gravimetry-based methods enable global estimations of TWS changes, revealing significant alterations over the past two decades due to natural variability, direct human influence, and climate change. Yet, TWS changes are not considered in current estimates of the economic cost of climate change. To address this gap, we combine GRACE TWS anomaly measurements from 2004 to 2018 with data on economic growth from more than 1600 subnational regions worldwide. We then empirically assess the impact of changes in TWS on regional economic growth, employing a long-difference approach and fixed-effects panel regressions with either instrumental variables (IV) or a control variable for human water consumption. The IV approach isolates the meteorological drivers of TWS changes, utilising the Standardized Precipitation Evapotranspiration Index (SPEI) as an instrument. We find that negative TWS trends are associated with reductions in economic growth across all three models. Among the regions with the largest TWS-induced growth rate reductions are several in the Caspian Region and India, whereas others benefitted, pointing to pronounced regional heterogeneity even within countries. To further investigate this heterogeneity, we combine a leave-one-out sensitivity analysis with tree-based classification techniques and a feature importance analysis. The results imply i.a. that regions with a high share of agricultural area or low income per capita experience higher growth reductions for negative TWS trends. Our findings contribute to the discourse on sustainable water management and its implications for economic prosperity.