A large amount of energy is used to pump, treat and transport water. A substantial amount of water is used to extract, generate and transport energy, and to cool some types of power plants. This paper examines the resource conservation aspects of the energy-water nexus that can be improved through better state policy design. Many of the ideas in this paper were discussed at an experts roundtable hosted by the National Governors Association Center for Best Practices in February 2016, which brought together a diverse set of stakeholders—including state and federal officials, electric and water utilities, environmental organizations and academics—to review a draft set of policy recommendations. An earlier paper, State Practices to Protect Drinking Water Resources While Developing Shale Energy, examined how states can address the interdependency of energy developed with hydraulic fracturing and water quality and quantity.