Global freshwater demand will likely continue its expansion under current expectations of economic and population growth. Withdrawals in regions which are already water-scarce will impose further pressure on the renewable water resource base threatening the long-term availability of freshwater across the many economic activities dependent on this resource for various functions. This paper assesses the economy-wide implications of demand-driven water scarcity under a ‘middle-of-the-road’ socio-economic development pathway by considering the trade-offs between the macroeconomic and food security impacts. The study employs a global CGE model comprising an advanced level of detail regarding water uses across economic activities and which allows for a sector-specific endogenous adaptation to water scarcity. A sustainable withdrawal threshold is imposed in regions with extended river-basin overexploitation (India, South Asia, the Middle East, and Northern Africa) whilst different water management options are considered through four alternative allocation methods across users. The scale of macroeconomic effects is dependent on the relative size of sectors with low-water productivity, the amount of water uses in these sectors, and the flexibility of important water users to substitute away from water inputs in conditions of scarcity. The largest negative GDP deviations are obtained in scenarios with limited mobility to re-allocate water across users. A significant alleviation is obtained when demand patterns are shifted based on differences in water productivity, however, with a significant imposition on food security prospects.

The paper analyses how the Water-Energy-Food Nexus is treated in Computable General Equilibrium (CGE) models, discussing their design, importance and possible ways of improvement. The analysis of their structure is critical for evaluating their potential efficiency in understanding the Nexus, which will be particularly effective for gauging the importance of the topic, the reciprocal dependency of its elements and the expected macroeconomic, demographic and climatic pressures that will act on its components. General equilibrium models can be useful devices to this end, as they are specifically built to track interdependencies and transmission effects across sectors and countries. Nevertheless, the review showed that most CGEs in the literature struggle to represent the competing water uses across sectors and, in particular, those concerning the energy sector. Therefore, it highlights the need to resolve this issue as a necessary step toward improving future research.

This study summarizes the concept of the food-energy-water security nexus (FEW nexus). The aim is to create awareness about the importance of the nexus and to enable stakeholders to consider interconnections between the sectors in their work. The FEW nexus is discussed in the context of Africa south of the Sahara (SSA)—using Malawi and Mozambique as case studies. Even though analyzing food, energy, and water security issues simultaneously is critical given the interconnections, summarizing interventions with the FEW nexus approach in Malawi and Mozambique, we found that there are only a limited number of interventions in place. Additionally, this study reviews macro- and microeconomic models that are able to analyze the FEW nexus. On the macrolevel, especially general equilibrium models are discussed, because they show trade-offs and synergies of nexus interventions at all economic levels. These models can help guide policymakers’ understanding of nexus effects ex ante and convince them to think beyond their respective political departments. On the microlevel, the impact of nexus interventions can be assessed with qualitative and quantitative approaches. There are specific challenges for nexus interventions when it comes to aggregation and planning of the targeting. A secondary data analysis of nexus interventions shows that existing data is not sufficient to conduct research specifically related to the FEW nexus. The results of this study will help research programs to reflect the key questions required to enhance adoption of FEW technologies and inform policymakers as they formulate policies that will exploit the strong synergies of food security, energy, and water investments. | Non-PR | IFPRI1; A.2 Sustainable Natural Resource Policies; A Ensuring Sustainable food production; CRP2; Land Resource Management for Poverty Reduction | EPTD; PIM | CGIAR Research Program on Policies, Institutions, and Markets (PIM)

This study summarizes the concept of the food-energy-water security nexus (FEW nexus). The aim is to create awareness about the importance of the nexus and to enable stakeholders to consider interconnections between the sectors in their work. The FEW nexus is discussed in the context of Africa south of the Sahara (SSA)—using Malawi and Mozambique as case studies. Even though analyzing food, energy, and water security issues simultaneously is critical given the interconnections, summarizing interventions with the FEW nexus approach in Malawi and Mozambique, we found that there are only a limited number of interventions in place. Additionally, this study reviews macro- and microeconomic models that are able to analyze the FEW nexus. On the macrolevel, especially general equilibrium models are discussed, because they show trade-offs and synergies of nexus interventions at all economic levels. These models can help guide policymakers’ understanding of nexus effects ex ante and convince them to think beyond their respective political departments. On the microlevel, the impact of nexus interventions can be assessed with qualitative and quantitative approaches. There are specific challenges for nexus interventions when it comes to aggregation and planning of the targeting. A secondary data analysis of nexus interventions shows that existing data is not sufficient to conduct research specifically related to the FEW nexus. The results of this study will help research programs to reflect the key questions required to enhance adoption of FEW technologies and inform policymakers as they formulate policies that will exploit the strong synergies of food security, energy, and water investments.