Toward Sustainability: Water Use Efficiency, Renewable Energy, and the Load Capacity Curve Hypothesis—A Sectoral Analysis of OECD Countries

This study examines the relationship between economic growth and the Load Capacity Factor (LCF) in 37 OECD countries from 2005 to 2023 within the Load Capacity Curve (LCC) framework, focusing on the threshold role of water use efficiency (WUE) and the role of renewable energy consumption (REC). Controlling for urban population growth, government effectiveness, REC, and freshwater withdrawal, the models are estimated with the Generalised Panel Smooth Transition Regression (GPSTR) method at the aggregate level and for the agriculture, industry, and services sectors. At the aggregate level, the growth–LCF relationship does not follow an LCC pattern: WUE only mitigates the negative effect of growth on the LCF. At the sectoral level, the results are consistent with an efficiency-conditioned LCC pattern, in which growth reduces the LCF below the WUE threshold and increases it above, in agriculture; they provide indicative support for this pattern in services and show no such pattern in industry. REC is positively and significantly associated with the LCF in all models. The findings suggest that growth–environment policies should account for sectoral differences, support the renewable energy transition, and extend water governance beyond technical efficiency targets. The study contributes by modelling WUE as a threshold variable and providing a comparative sectoral analysis.