LWE Nexus challenges gain from integrated policy approaches
The analysis, which combines PBL’s IMAGE and OECD’s ENV-Linkages models, contains a set of scenarios on the potential bottlenecks in the supply of water, land and energy. To alleviate negative side effects and create synergies through policy, efficient management of the nexus resources should take into account any direct and indirect effects of resource bottlenecks within the linked biophysical and economic systems.
The “Cost of Inaction and Resource scarcity: Consequences for Long-term Economic growth” (CIRCLE) project, focusses on a dynamic, integrated, and disaggregated analysis of how land, water and energy (LWE) interact in the biophysical and economic systems.
The project received additional funding from the Dutch Ministries of Infrastructure and Environment, Foreign Affairs and Economic Affairs.
Repercussions at the global and regional level
- At the global level, the biophysical and economic impacts of bottlenecks in the LWE nexus are moderate, though regional impacts can be substantial. International trade can help spread the risks and limit the worst regional impacts.
- Negative economic consequences of the nexus bottlenecks tend to concentrate in hotspots: countries with strong bottlenecks in economic activities that cannot be substituted or imported, as well as regions with strong decreases in crop yield leading to higher food production costs. North Africa, the Middle East and parts of Asia, not least India, are projected to suffer the most from bottlenecks in the LWE nexus.
- The LWE bottlenecks potentially put food security at risk in all regions, and water security especially in already water-stressed regions.
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