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Managing earth: The land-water-energy nexus

Demographics, lifestyle, urbanisation, farming and transport: all are facts of life and, as we try to manage our economies and our environment, are the focus of millions of policy actions around the world. We must reduce pollution and congestion. 

But we need farms for our food and roads to get around, which put enormous pressure on land, water and energy resources, endangering the environment and our economic security at the same time. It is a hard balance to strike, as policies that focus on relieving one challenge might add to pressure to another. 

Surely the key is to develop policies that better reflect the linkages between these different resources­. A new modelling approach, focusing on the “land-water-energy nexus”, has been advanced to help do just that, and the readings are quite stark.

The model, which assesses the biophysical consequences and economic costs of the nexus in 2060, shows how shocks to one part of the system affect other parts of the system. It reminds us that everything is intrinsically interdependent.

It traces, measures and anticipates how use and regulation of one resource creates bottlenecks for others. Water management, for instance, leads to trade-offs between needs for energy production and irrigation for agriculture, particularly (but not only) in water-stressed regions. Urban sprawl eats away at the land available for growing food, but so do green policies promoting biofuels. Clearly we need to take into account the effects on the land-water-energy nexus for more holistic and effective policies that work for everyone concerned.

Linking a physical representation of bottlenecks with a global economic model

This nexus is perhaps best viewed through the prism of agriculture. Take water for instance. Unregulated groundwater pumping for irrigation, which occurs in many countries, can lead to a depletion of aquifers. This depletion is fastest in drier, water-stressed regions where farmers rely on groundwater, but rising demand for food and urbanisation have led to water pressures for farming even in rainier climates, with farm intensification hardly helping.  

There is likewise more demand to protect natural areas, but like urbanisation, this can also lead to increasing pressure on land markets. As green belts around major cities show: protected areas can either put existing agricultural land out of production, prevent its expansion or shift agricultural production to unprotected lands. In many countries, demand for land for food production has led to deforestation, destroying ecosystems and further driving climate change. Sprawl can also lead to lower crop yields when the most productive croplands disappear.

Increased biofuel production also affects our nexus. On the one hand, biofuels are an economic opportunity and have the potential to grow fast in countries like Brazil and Russia, with their abundant land and rain-fed agriculture. But in many cases biofuels reduce land availability for food crops. This “indirect land use change” can have several effects. It can push up global and regional food prices as supply is squeezed, with particular impacts in regions where food security is already vulnerable, such as India and northern Africa. More biofuels can also lead to higher energy prices, and cause new vulnerabilities among producers.

The whole is greater than the sum of its parts

By understanding the linkages between resources and economic choices, we can adapt agricultural practices more strategically, allowing them to adjust to shocks in a more integrated manner and to manage impacts and costs. This would help improve policymaking aimed at managing competing land uses, at local, regional and global levels. From California to the Caspian region, and through Africa and India, alarm bells, for water notably, are ringing loudly, calling for policies that address the land-water-energy nexus.

As climate change advances, the multiplication of extreme weather events and their growing unpredictability will directly impact agriculture, transform irrigation requirements and add pressure to groundwater resources. In the electricity sector, heat waves will require ever more balancing of supply and demand to cope with less water for power plant cooling and high energy demand for air conditioning and water pumping.

The effects of climate change can also be studied in a nexus scenario as an overarching bottleneck. Climate change exaggerates the nexus bottlenecks especially in regions where it is the most acute, such as India, North and Sub-Saharan Africa (see graph above). In these regions, the depletion of groundwater resources will increase people’s vulnerability where precipitation is low and boost global dependency on regions with rain-fed agriculture. Our global economic welfare depends on getting this balance right.  

Clearly, the costs and consequences are only a part of the nexus story. The nexus is about local hotspots, where different bottlenecks come together, but whose consequences can spread globally to affect all sectors in all regions. The land-water-energy nexus not only points the way to better policies for managing our environmental and economic interdependency, but could give rise to new, effective techniques, initiatives and innovations–technological, political and organisational–for managing resources and ensuring better lives for all.

References

OECD (2017), Land-water-energy nexus: Biophysical and Economic Consequences, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264279360-en

©OECD Observer No 312 Q4 December 2017