THE WATER-ENERGY

NEXUS AND ITS

IMPLICATIONS IN THE

GULF COUNTRIES

ABSTRACT The following research paper aims at

explaining the water-energy nexus

present in all economies around the

world and outlining its specificities in

the Gulf Countries. The research

scope is rather broad in order to

touch on the numerous important

issues contributing to the dilemma. I

also chose the broad rather than in

depth approach keeping the limited

word count in mind. In this way I

managed to outline the basic

underlying structures of the dilemma

while especially targeting the

necessary governance policies that

have to be implemented in order to

equalize growing demand, limited

availability of resources and the

running clock on the world’s climate

and sustainability issues.

Rebecca Blum Global Risks, Regional Vulnerabilities, Local Solutions Academic Year 2014/2014, Christine Alfsen

CONTENT

1. Explaining the Water-Energy Nexus

2. What Sector consumes how much?

2.1 Agriculture

2.2 Energy

2.3 Trade

3. The Water-Energy Nexus in the Middle East

4. Impacts of different factors on water

availability and energy demand

4.1 Population Growth

4.2 Climate Change

5. Social Impacts

6. Water-Energy Nexus in the Middle East Not

merely a management problem: policy solutions

7. Conclusion

8. Sources

9. Annex

1. Explaining the Water-Energy Nexus

The term “water-energy nexus” essentially describes how much water is needed in order to

generate energy and vice versa how much energy is needed in order to collect, clean, move,

store and dispose of water. Water-intensive processes in the energy generation include the

processing of raw materials, the constructing and maintaining of power plants, the

generation of the energy itself and especially cooling processes. Renewable power sources

require less water in the energy production as such, but are very water-demanding in the

processing of raw materials.

To quantify the relationship: in the US, about 8 litres of water are evaporated in the creation

of 1 kilowatt hour of energy. On hydroelectric plants, the figures amount to 68 litres per

kilowatt hour. That is two nights of light, three brews of coffee or two meals cooked. Thermal

power plants for example demand huge amounts of water for cooling. Whereas only 3

percent of the cooling water is actually consumed by evaporation, the returned water is

returned at a higher temperature, thus posing problems to habitats and ecosystems. Put in

abstract quantitative terms, the energy sector withdraws water at the same rate that water

flows down the Ganges River.

Water supply and sewage systems on the other hand need energy. Drinking water must be

pumped to the treatment plant and the pre-treatment processes themselves consume

energy. The water then has to be pumped to consumers. The energy footprint for these

processes in especially high in water-scarce areas where water pumps have to overcome long

distances.

Intuitively, both water and energy are closely interrelated and an excessive demand of either

resource can lead to depletion, pollution and price rocketing. Challenges for keeping a lid on

the water and energy demand are of course presented from growing populations, climate

change, pressures from regulators, shareholders, surety providers, non-governmental

organizations and the public. Population growth will decrease the fresh water per capita

availability and climate change will at the same time increase water variability due to

droughts and floods.

Energy production faces constraints from water availability, as large amounts of water are

needed for cooling, steam generation and fuel gas treatment. Predictable and affordable, as

well as clean water supplies are pivotal to the energy generation business. At the same time,

the businesses have to ensure they create enough energy to ensure consistent water supplies

to the water works’ customers. Limited water availability results in growing competition

among users or regulations that further limit the access to water.

The economics of energy use have undergone a rapid change and a restructuring of water

infrastructure is needed to improve energy efficiency and reduce dangerous GHG emissions

that in turn have an impact on the water availability and connected energy demand. Risk

management for water-related risks can be done with existing technologies, but this will

expose us to trade-offs in cost, energy output and project siting.

2. What Sector consumes how much?

Currently, about 70 percent of all of the world’s freshwater withdrawals are dedicated to

agriculture. 16% go to energy and industry and a mere 14% are used for domestic purposes.

With the increasing demand for both energy and water, we could face a supply gap of up to

40% by 2030, an outlook that is more than worrying. This increasing demand is not simply

and issue of growing populations but rather a consequence of more wealthy societies

demanding more water. The Middle East and first and foremost the Gulf region are a

quintessential example for this development.

2.1 Agriculture

Famers will need to increase global agricultural production by 70-100% over the next 20 years

in order to meet the forecasted demand growth. Rather than due to population growth alone,

this increasing demand will be due to diet changes in wealthier societies that can afford to

eat better. This development will account for more than a quarter of the demand increase.

As the demand shifts from grain to more protein intensive diets, more water will be required

to meet the production needs to feed the future population. Whereas a kilogram of grain

consumes 1,200 litres of water for its production, the same amount of meat consumes almost

ten times that amount: 20,000 litres per kilogram.

Here lies the water challenge. Clearly, the business-as-usual approach is not an option for

managing the future agricultural water usage if we already use more than 70% of freshwater

for agricultural purposes and will by 2030 face a significant population growth that brings

increasing demand for water-intensive meat and dairy production with it.

2.2 Energy

The increasing demand of energy until 2030 is not as stark as the demand increase for

agricultural goods, yet amounts to at least 40%. As outlined above, the energy value chain

consumes so much water, that about 50% of freshwater withdrawals are dedicated to oil, gas

and electricity generation in rich countries1. If such a country, for example the US, continues

these practices, the forecasted 40% energy demand increase by 2030 will translate to a 165%

increase in freshwater access needs.

Large amounts of water are also required to produce natural gas and liquid fuels from raw

materials; processes that not only the US but especially the Gulf countries heavily depend

on2. Unfortunately, unconventional energy resources that become increasingly available,

technically viable and politically attractive while at the same time decreasing carbon

footprints, demand even more water for their production than conventional resources. Water

use could increase dramatically.

We are facing an estimated 76% increase in water demand only for energy and industry across

Asia by 2030. Bearing in mind that this development takes place at the same time as these

countries also need to almost double their food production, the water-energy nexus

definitely creates a myriad of challenges.

2.3 Trade

The aforementioned growing needs of agricultural supply will force more countries to rely on

trade. This is especially true for the water-scarce countries of the Gulf and the wider Middle

East. Jordan, to give an example, allocates about 80% of its freshwater to agriculture. This is

not at all economically viable, regarding the fact that agricultural production accounts for

barely 10% of the country’s GDP. Jordan will have to change traditional agricultural patterns,

leading to more dependence on food imports.

In general, nations all around the world, but first and foremost water-scarce countries such

as the Gulf countries, will have to undergo structural changes: they have to steer their

economies away from lower-margin rural activities and towards high-value manufacturing,

empowering especially the private sector. This will result in a reallocation of water resources

from agriculture to the energy and industry sector, an in turn in an increasing dependence on

food or virtual water imports.

1 See Annex 1 2 See Annex 2 and 3

Many countries are already in the middle of this reallocation process. Agricultural exports

worldwide already decreased from 46% to 9%. It is likely that the traditional “breadbasket”

nations will have to increase their agricultural production to feed the worldwide population

in order to help the economic rebalancing in agricultural trade flows.

3. The Water-Energy Nexus and its implications in the Gulf

and the wider Middle East

The Gulf Countries are among the most water-scarce countries in the entire MENA region.

They do have the economic capacity to overcome this scarcity with the help of desalination,

leading to little awareness about the problem and consumption patterns that are

unparalleled in the world. A majority of the GCC nations is looking to shift their energy mix

towards renewable energy sources in order to meet the growing demand for water and

energy alike.

However, there is limited understanding of the linkages between water management and

energy generation. This has stymied the coordination between water and energy policy

makers. Desalination is by far a considerable sustainable solution for meeting water demands

in the region, but the energy required for groundwater pumping increases with the depths of

wells necessary to reach underground watercourses. This has a cascading effect on increasing

production costs and reduced revenues for farmers.

To top this dilemma off, civil unrest and political crises have affected the delivery of basic

supplies of energy, while energy shortages in turn inhibit the ability to supply water. This

connection between water losses and energy losses further increases the costs of supply

provision.

Abu Dhabi’s water demand for example has more than doubled over the last 10 years, with

an annual population growth rate of 9.5%. The entire water supply of the emirate is

generated by nine desalination plants. Only two years from now, the demand is expected to

grow by another 45%!3 Essentially all desalination activities are powered by natural gas-fired

cogeneration plants. Abu Dhabi thus imports the exact same amount of gas as it uses for

3 See Annex 4

water desalination. This currently amounts to an incredible 12 million dollars’ worth of gas a

day.

To put the emirate’s energy consumption into relation to its naturally available water supply:

Abu Dhabi consumes 26 times as much water as it get through rainfall. In face of the rapidly

rising costs of natural-gas powered desalination and the simultaneous skyrocketing water

demand, Abu Dhabi is relying on its quite impressive solar resources and other renewables to

provide the water of the future. Keeping in mind that the generation of renewables itself is a

more water-intensive process than the generation of conventional energy, the water that is

generated on one end will flow into its own production on the other end. A vicious circle…

Abu Dhabi’s next door neighbours are not at all better off. Qatar for instance has the world’s

third-largest gas reserves and is the single largest exporter of liquefied natural gas. It imports

90 percent of its food and 100% of the country’s water is desalinated. The country looks to

solar energy to solve the water and food security issues in the future and is very proud of its

policies in the sector, but again, the water generated through renewables will have to be

dedicated to its own production in big proportions.

Saudi Arabia, too, relies entirely on desalination. More than 1 million barrels of crude oil are

burnt a day just to desalinate water in the kingdom. As a point of reference, at the current

market price, that is 115 million dollars lost in revenue just to make fresh water – daily!

A massive 550 litres of water a day are used per capita in Abu Dhabi alone for all uses. This

includes groundwater sources. Clearly, desalination alone cannot solve the Gulf’s problem,

especially if it relies so heavily on expensive energy. To tackle the problem, subsidies to

irrigate forests are being eliminated and green areas are gradually replaced by concrete.

Parks and gardens that remain are aiming to severely cut their water consumption and water

saving devices are required in all buildings. Hydroponic food production is also being

discovered to replace open soil watering that results in a lot of evaporation.

It seems as though all possible solutions to the Gulf’s water scarcity issues lead to new

problems on other ends. Is there really no way out that doesn’t require cuts or harms

elsewhere?

4. Impacts of different factors on the demand and

availability of water and energy

Before showing possible solutions to the problem: just as we need 70% more food in the

world, if current trends continue, increasing water scarcity could cause an annual grain loss

of 30%. The two challenges the world faces are population growth and climate change.

4.1 Population Growth

Population growth will decrease the per capita availability of fresh water. A growing

population will obviously cause a growing demand for energy and thus more need of water

that’s dedicated to the energy sector. With an estimated 9 billion people populating the world

by 2050 this will pose severe challenges. The decreasing water availability and increasing

demand for energy are likely to result in local energy water tensions and trade-offs. This

development can be witnessed in all economic sectors and throughout all geographical

regions of the world.

4.2 Climate Change

The main impact of climate change on the water-energy dilemma is the increased water

variability due to droughts and floods. Further, it influences the predictability of flows.

Increased temperatures increase evaporation rates, increased droughts and floods increase

water variability and rising sea levels increase salinity and decrease fresh water quality.

Droughts and increasing temperatures could also have major consequence on power plants

as permitted discharged temperatures could easily be exceeded.

5. Social Impacts

The water-energy dilemma might be easier to solve if its implications were limited to the

above mentioned environmental and technical issues. However, societies feel a great deal of

impacts arising from the dilemma.

Water resources are considered as a public good by some, and rightly so, even though the

economic definition of a public good does not necessarily apply to fresh water. Access to safe

water and sanitation is recognized a human right. However, neither concept usually applies

to energy. This economic, commercial and social disparity is mirrored by the greater

attention energy attracts from the political arena than water.

Yet, water consumption especially in the Gulf does indeed urgently require attitudinal

changes and a reconsideration of the fulminant subsidies allocated to citizens in these

countries. Emirati citizens receive their water at zero cost and treat it accordingly; from

washing down their cars on a daily basis to hosing outside spaces and maintaining lush

gardens.

Building up on all above outlined future developments it is safe to say that this sheer abuse

of water cannot be maintained in the long run. Subsidies will eventually have to be lifted, but

this has to be done carefully. After all, there is a significant share of the population that are

poor labourers and they cannot be overburdened. This tight rope is pivotal to prevent another

edition of Arab-Spring style uprisings in the Gulf.

Little steps are being taken in Gulf countries in order to raise awareness. Electricity bills for

example detail the amount people consume along with the subsidized share of the

government.

6. Not merely a management problem: Policy solutions

There is in fact a window of opportunity to incorporate water into energy policy discussions

and vice versa. An effective policy framework will include several elements: climate change

and energy technology deployment trajectories that can educate on potential constraints

and infrastructure vulnerabilities at national and regional scales should be incorporated in

future policy scenarios. The energy system’s resilience under water constraints, water

resource variability and extreme events also has to be outlined, especially to inform the

private sector investment and operations. A more systematic understanding of the water-

energy nexus is pivotal.

Federal agencies, the state, as well as regional, tribal and local authorities have to work hand

in hand with the private sector and non-governmental organizations. Together they have to

identify potential synergies between renewable power generation and hydroelectric, while

supporting capital investment in advanced cooling technologies that can help save water on

this end, as well as technology and operational approaches to sustainable oil and gas

production.

We will need deeper and more integrated understanding of where intersections prevail and

how to manage them. However, this is not sufficient. We also need new economic analyses

to optimise profits. Both, financiers and environmentalists are looking for higher and more

stable returns on their available resource portfolios. Simultaneously they want to reduce

volatility and shocks resulting from connections between the different components or their

portfolios. Optimally, we will steer towards more economic output per unit of land, water or

energy. Profits will also be optimized by effectively mitigating correlations between sectors.

In short, a cascade as for example a drought leading to water shortages, leading to fears of

grain supply shocks, which in turn creates export barriers, thus increasing food prices and

thereby creating further anxiety in commodity markets has to be broken.

A couple of key advices for practical action can be derived from the above summarized, but

in fact way more complex research on the water-energy nexus:

First of all, an improved data collection is needed. The access to even the most basic of

information has to improve, advancing the accuracy, consistency and transparency of the

information. Information further has to be synthesized from diverse sources such as key

global agencies, national or state level governments and private sector stakeholders (they

have access to the most relevant information).

Second of all, models for the economic interdependencies need to be created. Economic

exercises should be analysed in order to establish in which way resource-efficient

improvements have to and can take place within the separate sectors of energy, agriculture,

trade, etc. Also, the fundamental points of intersection between the sectors and their

correlations have to be analysed in order to make information on necessary integrated action

available. This quantitative analysis has to be used to underpin policy models.

Thirdly, models of collaborative multi-governmental action need to be developed. Fact bases

and understanding of the above mentioned links between sectors could ideally result in this

multi-governmental action, as well as involving non-experts with the help of the well targeted

information. All relevant trade-offs that should be made to secure an efficient yet sustainable

growth-path need to be made known to stakeholders such as international agencies,

international and domestic private sector actors, major investors, NGOs, academics, etc.

Finally, we might want to consider re-structuring our institutions. Recent changes in Qatar

and Jordan for example, where cross-cutting national councils on water were initiated.

Institutional innovation in this space will ideally go along with dialogues on the international

and inter-regional level.

Inherently, the decision on water resources originate from broad policy circles primarily

concerned with economic profit and development, public health, investment and financing,

food and energy security. All of these multiple aspect should be embraced in tandem while

placing water at the heart of all decision making.

7. Conclusion

No doubt, the water-energy nexus is an undeniable fact with consequences on the water

supply and the energy generation business. As demand for both energy and water

increases, a supply gap of up to 40% by 2030 could be the result of a continued business

as usual. Agriculture, trade and energy all need to be reformed in order to make water

consumption and energy generation more sustainable. This process is hindered by global

warming and world-wide population growth. Unfortunately, countering global warming

with renewables will result negatively on the water-energy nexus, as they demand even

more water than conventional resources. Countries all around the world have to steer

their economies away from lower-margin rural activities and towards high-value

manufacturing, empowering especially the private sector. A more systematic

understanding of the water-energy nexus is pivotal. We will need deeper and more

integrated understanding of where intersections prevail and how to manage them and

we also need new economic analyses to optimise profits. In short: a cascade has to be

broken. Improved data collection, models for the economic interdependencies, models

of collaborative multi-governmental action and a re-structuring our institutions are the

steps along the way to transforming the water-energy dilemma into a water-energy

interdependency.

SOURCES “The need for fresh water economics – an informal discussion paper for the

Bonn2011 Nexus Conference on the Water, Food and Energy Security Nexus”,

World Economic Forum Publications, 2011

“Policy and Institutional dimensions of the water-energy nexus”, in Energy Policy,

2011

“The water-energy nexus in the Middle East and North Africa”, in Energy Policy,

2011

United Nations World Water Development Report, Volume 1, 2014

“The water-energy nexus: challenges and opportunities”, US Department of

Energy Report, 2014

http://en.wikipedia.org/wiki/Water-energy_nexus#External_links

http://water.jhu.edu/magazine/the-water-nexus-finding-solutions-in-the-

balance/

http://www.worldenergyoutlook.org/resources/water-energynexus/

http://energy.gov/articles/ensuring-resiliency-our-future-water-and-energy-

systems

http://www.thethirdpole.net/un-warns-of-energy-and-water-dilemma/

http://www.smartplanet.com/blog/the-take/ground-zero-in-the-energy-water-

nexus/

ANNEX Annex 1

Global water use for energy production in the New Policies Scenario by fuel

and power generation type.

Source: WEO-2012

Annex 2

Water withdrawal and consumption by resource

Source: World Energy Organization, 2012

Annex 3 Water withdrawal and consumption by energy generation method and resource

Source: World Energy Organization, 2012

Annex 4

Abu Dhabi water demand forecast.

Source: ADWEC