Water-Energy-Food Nexus: Agrifood Business Cases
There are plenty relationships and trade-offs within the triangle of the resources water, energy and food - known as the water-energy-food nexus. Both water and energy are needed to produce food; while water is required for almost all forms of power generation. Further, energy is needed to treat and transport water.
The agrifood sector is one of the most prominent subsectors within the nexus. It accounts for about 80% of total freshwater use, 30% of total energy demand, and 12-30% of man-made greenhouse gas emissions worldwide. As global food production is
expected to increase 70% by 2050, the agrifood sector faces resource pressures at a progressive rate (see also article "Energy within Food and Agricultural Value Chains").
For sustainable agricultural production it is essential to understand the interlinkages between water, energy and food and address them in a holistical manner. However, most agrifood enterprises lack that understanding of the significant of the nexus. Only few companies have initiated nexus-driven solutions for crop management, processing, distribution and retailing, and are thereby strengthening their competitive advantages.
The study "Making the Case: How Agrifood Firms are Building New Business Cases in the Water-Energy-Food Nexus" by REEEP (Renewable Energy & Energy Efficiency Partnership) and the FAO analyzes several business cases specifically addressing the nexus. As a result, the report identifies model pathways for nexus-related business cases and outlines important lessons both for enterprise as well as for governments.
Find the study here.
The study focuses on nine REEEP projects using clean energy in food production and water management. Examples of analyzed business cases include large companies such as SABMiller, but also approaches by small and medium enterprises (SMEs). The cases range from solar-powered irrigation and decentralized power distribution to post-harvest processing and use of agriculture waste for energy generation in Asia, Africa, and Latin America.
In short, the study's key findings for enterprises are (p.6):
- "The nexus adds value: Firms in the agrifood sector can mitigate risk, reduce costs and raise productivity through nexus thinking.
- Discovering nexus value: Firms must be able to assess risks, quantify returns and monitor progress. This requires
upfront investment and long-term thinking, often leaving small and medium-sized enterprises on the sidelines.
- Trust and partnerships are key: Large enterprises can generate nexus value across supply chains and
SMEs can reduce up-front risks and costs through mutually beneficial business partnerships and trusted,
verified technologies and services."
For governments, key lessons are (p.7):
- "Private enterprise cannot be expected to finance public benefits alone – governments must take steps to promote
and “monetize” nexus returns.
- Firms, especially SMEs, must have access to finance in order to make long-term investments in sustainability.
- The nexus is little-known among SMEs – governments must do more to promote awareness among small and
- Better policy making on food-water-energy issues demands cohesion among government agencies and inclusion
of SMEs in consultation processes."
- The Renewable Energy & Energy Efficiency Partnership (REEEP) & the Food and Agriculture Organization of the United Nations (FAO), 2014. Making the Case: How Agrifood Firms are Building New Business Cases in the Water-Energy-Food Nexus. Available at http://www.reeep.org/sites/default/files/REEEP_Making_The_Case.pdf