Implementing the Water-Energy-Food Nexus: Incentive structures and policy instruments

The project investigated incentive structures, governance mechanisms and policy instruments which consider inter-sectoral interdependencies in the use of natural resources and contribute to increased water, energy and food securities.

Project Lead:
Ines Dombrowsky
Waltina Scheumann

Project Team:
Babette Never
Carmen Richerzhagen
Rodriguez de Francisco, Jean Carlo
Katharina Stepping

Financing:
Federal Ministry for Economic Cooperation and Development (BMZ)

Time Frame:
2015 - 2016 / completed

Project description

The project investigated incentive structures, governance mechanisms and policy instruments which consider inter-sectoral interdependencies in the use of natural resources and contribute to increased water, energy and food securities.
Central questions of the project were: How can inter-sectoral, negative externalities and trade-offs be minimized and how can win-win situations are created? Which governance mechanisms and policy instruments are being applied to Nexus-relevant situations and how successful are they? What are the conditions of a successful application of respective mechanisms and instruments, especially in developing countries?
The project investigated a selection of governance mechanisms and policy instruments at different levels of governance which are applicable to different Nexus-situations:

  • Nexus 1 and 2: Instruments and incentives for treatment, reuse and energy saving in urban wastewater systems
  • Nexus 3: Reduction of water pollution through cooperation agreements between farmers and water suppliers
  • Nexus 4: Payments for Ecosystem Services from a Nexus perspective
  • Nexus 5: Mechanisms of inter-ministerial coordination for the planning of water-intensive agricultural investments
  • Nexus 6: Resource efficiency standards and benchmarking for both water- and energy-intensive industries
  • Nexus 7: The Nexus in international river basins: What role for river basin and regional energy organizations?


Detailed descriptions of the subprojects Nexus 1 to Nexus 7 are given as following:

Nexus 1 and 2: Instruments and incentives for treatment, reuse and energy saving in urban wastewater systems
Katharina Stepping and Babette Never

The sufficient treatment of wastewater in sewage treatment plants diminishes environmental pollution and reduces the costs of drinking water treatment or risks which are accompanied by insufficiently treated drinking water. The reuse of treated wastewater lowers the quantity of required fresh water and therefore can contribute to a relaxation of water stress. Biogas production from sewage sludge and certain methods of wastewater treatment offer energy saving potentials for wastewater treatment plants and can occasionally produce energy for other consumers. These various opportunities are hardly exploited neither in developing countries nor in emerging economies. For example, in Brazil only 38% of the wastewater receives secondary treatment.
The case study in Brazil analyzes which economic, political, social, institutional and cultural factors promote or impede the treatment or reuse of wastewater. Moreover, it will be investigated which instruments and incentives are the most suitable to overcome potential barriers  and under which conditions these tools may be applied.
The case study in India analyzes which factors influence the diffusion of energy efficient technologies in the wastewater sector and what instruments and incentives promote investments in energy efficient and sustainable solutions in different parts of local wastewater systems.

Nexus 3: Reduction of water pollution through cooperation agreements between farmers and water suppliers
Carmen Richerzhagen und Waltina Scheumann

Intensive farming contributes to a major degree to pollution and eutrophication of water bodies and hence triggers costs for other water users like drinking water companies. A reduction of these costs can be achieved with various approaches, of which cooperation agreements between famers and water suppliers are considered more promising than, for example, emission rights, trading, taxes or fees. Nexus 3 investigates the prevalence of such cooperation agreements, analyzes a case study in the Rhein-Sieg-Kreis with a focus on the incentives for the actors involved and asks for the transferability to developing countries.

Nexus 4: Payments for Ecosystem Services from a Nexus perspective
Jean Carlo Rodriguez de Francisco

Payments for Ecosystem Services (PES) are used as a tool for internalization of external effects. As an example in the context of the Nexus “Water-Energy-Food”, PES has been implemented in situations where hydropower plants, water suppliers and irrigation farmers downstream make payments to farmers upstream. That shall compensate for losses caused by changes and restrictions of land-use. However, PES projects do not take into account all utilizations and effects along a watercourse. For example, user within the downstream area might be excluded from PES. Nexus 4 therefore analyzes potentials, weaknesses and challenges of PES, among others, in a case study of Colombia.

Nexus 5: Mechanisms of inter-ministerial coordination for the planning of water-intensive agricultural investments
Waltina Scheumann

Many countries of Sub Saharan-Africa plan an intensification of agricultural production, which shall be achieved, inter alia, through an expansion of irrigated agriculture. The realization of such investments challenges water planners in different ways: It needs to be clarified if the local availability of water allows the use of water-intensive agricultural investments. Furthermore the question is how the use competition with other sectors and among different agricultural user groups (agricultural enterprises or small farmers) is governed, in particular when modern and traditional land and water rights coexist and whn new water governance institutions are being established. Nexus 5 analyzes the inter-ministerial coordination mechanisms in Zambia between the agricultural and the water sectors and other relevant bodies like the Zambian Development Agency who promote water-intensive agricultural investments.

Nexus 6: Resource efficiency standards and benchmarking for both water- and energy-intensive industries
Babette Never

Resource intensive industries like the food industry consume a high share of water and energy. The introduction of combined water and energy efficiency standards as well as benchmarking systems of the one hand increase transparency and encourage sustainable consumption. Of the other hand, the market gets clear signals of innovation and change. That provides companies opportunities for saving costs through resource efficiency or to benefit from competitive certificates like the ISO 140001. In developing countries, the introduction and implementation of these standards is not yet wide-spread. Nexus 6 therefore analyzes how and why existing initiatives in standards and benchmarking systems incorporate the Nexus concept and how a gradual introduction and implementation of standards in water and energy intensive industries can be improved.

Nexus 7: The Nexus in international river basins: What role for international river basin and regional energy organizations?
Ines Dombrowsky und Waltina Scheumann

In the use of resources in international river basins, there are various inter-sectoral interdependencies which affect the Nexus “Water-Energy-Food” (WEF). For example, hydropower upstream can negatively influence energy generation downstream and affects ecosystem and other users. On the other hand, land-use change upstream can be detrimental to hydropower generation. The multi-sectoral coordination between national energy, water or environment ministries and authorities relies on voluntary negotiations. It is presumed that international river basin organizations and regional energy organizations can have a coordinating function in this regard. This assumption will be analyzed in selected case studies: Coruh (Turkey and Georgia), Mekong (Cambodia, Laos, Thailand, Vietnam), Kagera (Burundi, Rwanda and Tanzania) and Ruzizi (Burundi, DR Congo and Rwanda). It will be explicit discussed how ecologic interests (preservation of ecosystem services and the resource base) are taken into account.

Publications

Events

Current Publications

Harnessing the SDGs for Africa’s Climate Policy

Mbeva, Kennedy / Joanes Atela
The Current Column of 25 March 2019

Tax expenditure and the treatment of tax incentives for investment

Redonda, Agustin / Santiago Diaz de Sarralde / Mark Hallerberg / Lise Johnson / Ariel Melamud / Ricardo Rozemberg / Jakob Schwab / Christian von Haldenwang
Externe Publikationen of 21 March 2019

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