30 sept. 2016

The Road to Resilience // Managing the Risks of the Energy-Water-Food Nexus

This report focuses understanding how the energy sector can better manage impacts on land and water whilst still aiming to balance the Energy Trilemma. The initial findings lay out the initial understanding of the risks posed by the energy-water-food nexus in the energy industry. By understanding how to technically and financially address these risks, the report provides recommendations for the energy industry to work together with the financial community, investors and policymakers to share and promote measures that must be incorporated into energy infrastructure design and investment decisions.

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(C) flickr / Dana Smillie / World Bank Photo Collection

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Key Findings

Energy is the second-largest freshwater user after agriculture. It is used all along the energy value chain from primary energy production to power generation.
The risks posed by the energy-water-food nexus will expand because of growing demand. Some currently water-stressed regions could see significant economic development, population growth and changing consumption patterns, all increasing demand.
Alongside growing demand, increasing uncertainty about water availability and quality will further increase the significance of risks posed by the nexus.
From 2014 to 2069, reductions in usable water capacity could impact 60% of the 24,515 hydropower plants analysed and more than 80% of the 1,427 thermoelectric plants.
In many cases, location-specific knowledge on water issues and modelling tools to adequately reflect risks posed by the nexus in energy infrastructure investment decisions are lacking. These risks have large economic stakes. In 2015, Brazil’s hydropower facilities were hit by losses of more than US$4.3 billion due to energy and water rationing during drought.
The risks posed by the nexus are often made worse by the lack of sound water governance such as well-defined water rights for competing users, water pricing and trading arrangements.
Cross-border cooperation is key. 261 international trans-boundary basins cover 45% of the Earth’s land surface, serve 40% of the world’s population and provide 60% of the Earth’s entire freshwater. This affects the operation of planned and proposed energy infrastructures, and there is a need to ensure that adequate cross-border water management frameworks are in place.

By World Energy Council The series of reports is prepared with Swiss Re Corporate Solutions and Marsh & McLennan Companies with insights from the European Bank for Reconstruction and Development. The next report in the Resilience series, Cyber Risk, will investigate how the energy sector can better manage impacts from cyber risks.

Published

2016