Water, Energy and Food
By Daan Elffers CEO, EMG Group
CSR Editor of Middle East Business News and Magazine.
The future of business is brimming with opportunity, although a first look may suggest otherwise. With pressing issues of climate change, natural resource degradation and social inequality facing every country, the need for an integrated and joined-up approach has never been more urgent. Business, with its increasingly international dimension, is being called upon to address many of these challenges – why? Together, businesses have extensive resources that position them well in alleviating the assortment of concerns, from knowledge and expertise to finance and influence. However, despite a rise in well-intended acts of corporate stewardship, many challenges tend to be addressed in silos, with water or energy consumption addressed through isolated strategies, often restricted to their own operational boundaries. This approach misses the crucial interdependencies between resources and in particular, water, energy and food. The past decade or two has seen a rise in integrated management solutions and more recently, the application of ‘water-energy-food nexus’ thinking.
The water-energy-food nexus
The nexus addresses complex interactions between human and natural systems. The interactions describe how we use and manage natural resource systems, such as water and fossil fuels, and explain the trade-offs or shared benefits of using and conserving them. There are multiple forces driving these interactions such as demographic change, urbanisation, industrial development, agricultural modernisation, markets and trade, technological advancement etc., as well as specific drivers such as governance structures and cultural and societal behaviours.
The nexus in reality
Water is emerging as the number one global risk in terms of development impact, largely due to having no substitute or alternative.
The global population is growing fast and estimates show that continuing with our current behaviour, the world will face a 40% shortfall between demand and supply as early as 2030. By 2025, 1.8 billion – approximately 25% of the global population – will be living in regions of absolute water scarcity. In these areas, there will not be enough water locally to satisfy needs, least of all wants. While many of the drivers listed above have contributed to the impending water challenge, introducing a fair water price can prevent much of the waste and overuse that occurs in many middle- and high-income countries and intensive industries. When we consider water use in relation to food, it is perhaps interesting to learn that many of the world’s largest food exporters are already labelled as water scarce. This presents an opportunity to not only rethink the way we value and use water, but also patterns of trade towards more efficient and effective paths.
Food is a vital part of the nexus, requiring vast quantities of water and energy in its production. With a growing and increasingly prosperous population, meeting demand for food is estimated to require farmers to increase production by 70- 100% and reduce post-harvest losses. This is on top of the estimated 30% decrease in grain yield anticipated to result from wider water scarcity. With improving standards of living, demand for meat is expected to increase by 50% by 2025. This will require an increase in grain for animal feed by 42%. The effects of growing food demand are anticipated to impact directly on the global agricultural industry, which currently employs almost 65% of the global workforce and contributes almost 30% of GDP.
With increasing food and water demand, the International Energy Agency forecasts that global demand for energy will increase by more than 40% by 2030. At the moment, society is largely dependent on non-renewable, fossil fuels for energy. As such, it is crucial that governments and industries look towards cleaner and renewable sources to meet future energy needs. But even here, it is vital that an integrated approach is taken; while moving away from fossil fuels is expected to reduce the impacts of climate change due to a decrease in greenhouse gas emissions, some renewable energy sources when applied in silo, also pose negative environmental impacts. Take hydropower for example; it is anticipated to be the dominant renewable by 2030 but current methods can result in huge water loss through evaporation. Similarly, solar thermal energy is a very water-intensive fuel, with one plant in California requesting water use equivalent to 20% of that in a local valley.
The role of business
Applying an integrated approach to water, energy and food management provides a potential solution to the challenges that businesses are facing all around the world. So, as part of global society, what can businesses do? Firstly, understanding the interdependencies of the nexus in relation to business is crucial for success. The nexus presents risk but also great opportunity if managed responsibly, driving competitive advantage, enhancing business models and growth strategies and improving environmental performance. Such opportunities can be realized through a number of mechanisms, including corporate social responsibility (CSR). More broadly, organisations need to come together to envisage shared, future landscape scenarios. This involves engaging with stakeholders from all industries to understand how a business’ impact can complement the needs and wants of local communities and environments. Application of this demonstrates a move towards a green economy, which is currently being adopted by more than 60 countries. The green economy is an alternative to our existing model and is one that results in improved human well-being and social equity while significantly reducing environmental risks and ecological scarcities.
The nexus is a complex challenge that demands change but, by instigating change, everyone will benefit.