Transnational resource generativity: Efficiency analysis and target setting of water, energy, land, and food nexus for OECD countries

Ibrahim, Mustapha D.; Ferreira, Diogo Cunha; Daneshvar, Sahand; Marques, Rui Cunha

Transnational resource generativity: Efficiency analysis and target setting of water, energy, land, and food nexus for OECD countries

2019

Ibrahim, Mustapha D. | Ferreira, Diogo Cunha | Daneshvar, Sahand | Marques, Rui Cunha

Depletion of natural resources needs quantification and efficiency analysis of the use of resources to improve sustainability. This paper evaluates the efficiency of Organization for Economic Co-Operation and Development (OECD) countries in terms of Water-Energy-Land-Food (WELF-Nexus) to ensure sustainability and environmental viability for both present and future generations. An input-output index system is built at a transnational level. Composite and intrinsic indicators are introduced to incorporate the interconnections and tradeoffs between sectors of the nexus and outcomes of the nexus. The nonparametric benchmarking order-α model, resulting from Data Envelopment Analysis (DEA) is used to estimate WELF-Nexus efficiency of each country, and to alleviate the intricacies of using composite and intrinsic indicators. To ensure resource generativity, an output target setting model that accommodates predefined input is proposed. Results show variation in performance among OECD members, with an annual average efficiency score of 68%, 69% and 78% in 2007, 2012, and 2016. Sensitivity analysis was performed to measure the effect of drought on WELF efficiency, a decrease of about 13% on average WELF efficiency was observed. Outputs improvement was recommended for each country: Lithuania (14%), Mexico (10%) and 11% for Hungary, Latvia, and Turkey due to their high inefficiency. The study provides a robust framework for policy making and shows that a win-win strategy for the nexus must be implemented to achieve WELF-Nexus efficiency, given the trade-offs within its sectors. Furthermore, it highlights that innovative-driven policies will enhance WELF-Nexus efficiency and sustainability.

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