The land water energy nexus biophysical and economic consequences
Almost all economic activities are supported by the use of scarce water, land or energy, either directly or indirectly. We need water to grow food and for energy production, we need energy to grow food and to pump and treat water, and we need land to produce bioenergy. Unsustainable use of these resources raises serious concerns about their looming scarcity. There may be constraints or bottlenecks regarding the quantity and quality of supply of each of these resources, including pollution and degradation, and regarding increased demand for them in a growing global economy.
There are strong linkages between land, water and energy in biophysical and in economic terms. Nexus is a useful label to describe the way that these resources are bound together and that the bottlenecks in one area are tightly linked to the other resources. Policies neglecting these interlinkages may be sub-optimal and can actually create or exacerbate problems instead of solving them; i.e. they might resolve a specific problem with one of these resources but at the same time impact the others and create additional (and unforeseen) problems. Therefore some activities can impact indirectly other activities
by increasing the scarcity or changing the quality of the resource they use in common. In terms of policy analysis, it implies that efficient management of the nexus resources needs to take into account the direct and indirect effects of changes in the demand and supply of the various resources on the whole biophysical and economic systems, as this is the only means to avoid negative side effects and to create synergies. or example, implementation of hydropower for electricity production can conflict with irrigation requirements where hydropower release schedules do not match the timing of irrigation needs. Under more favourable conditions and adequate operational management, a dam and reservoir can provide a win-win situation with both hydropower and agricultural benefits (Hellegers et al., 2008). This shows that a careful, simultaneous consideration of the land-water-energy resources is needed when designing policies, as ignoring their interactions can present negative side-effects. Therefore an integrated approach is needed to assess whether policies adequately resolves bottlenecks in the whole nexus, or effectively shift stress from one resource to another.
As part of the CIRCLE project, the scope of this report is to provide a broad assessment of the global and regional implications of some of the main bottlenecks in the land-waterenergy (LWE) nexus, and project how the consequences of these “nexus bottlenecks” affect the biophysical and economic systems by 2060. More precisely, it aims to shed light on the main trade-offs and synergies between the different bottlenecks in the LWE nexus, and their interactions with the global biophysical and economic systems. The report also examines the sensitivity of these indicators to the changes in biophysical conditions
stemming from alternative assumptions on the evolution of the underlying assumptions regarding climate change. In other words, it addresses the following question: What would be the global and regional biophysical and economic consequences by 2060 of policy inaction to account for the limited availability of land, water and energy, given all the complex relations between these resources?
A full quantitative assessment of the global and regional consequences for the LWE nexus would require detailed modelling tools that can represent the key linkages in resource use and economic activity at the local level. Many of the nexus bottlenecks will occur within specific water basins (see Box 1.1 on recent OECD analysis of water risk hotspots), and have widely varying effects in different geographical locations, depending on the availability of all three key resources, and distances to economic markets.
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