The Land-Water-Energy Nexus

Biophysical and Economic Consequences

image of The Land-Water-Energy Nexus

This report contributes to the discussion of interconnections between scarce resources by highlighting the nexus between land, water and energy (the LWE nexus). It focuses on a dynamic, integrated, and disaggregated analysis of how land, water and energy interact in the biophysical and economic systems. The report provides projections for the biophysical and economic consequences of nexus bottlenecks until 2060, highlighting that while the LWE nexus is essentially local, there can be significant large-scale repercussions in vulnerable regions, notably on forest cover and in terms of food and water security.


The analysis is based on coupling a gridded biophysical systems model with a multi-regional, multi-sectoral dynamic general equilibrium modelling assessment. Numerical insights are provided by investigating a carefully selected set of scenarios that are designed to illustrate the key bottlenecks: one scenario for each resource bottleneck, plus two scenarios that combine all bottlenecks, with and without an overlay of climate change.


Key linkages between water and energy

As any analysis, the quantitative assessment used in this report has limitations. In particular, it is not fit to study some of the important linkages between water and energy outlined in Chapter 1. First, the modelling tools can only capture systemic effects that are noticeable in the top-down frameworks, and ignore important local bottlenecks with severe local consequences that may occur over short time spans. Secondly, there are significant data gaps (see e.g. OECD, 2010) that prevent a full representation of all the bottlenecks in the baseline and counterfactual projections of the modelling tools. Therefore, this Annex attempts to provide further insights on the consequences of this particular linkage. Given the large data gaps, some of the key consequences of the nexus bottlenecks can only be discussed in an anecdotal way. Nonetheless, the inclusion of these consequences in the evaluation of the bottlenecks is fundamental in providing an overview of the full costs of inaction on the nexus, and therefore in the assessment of the benefits of policy action.


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