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Lucie Pluschke, Energy-water-food nexus officer, FAO Land and Water Division

Why is the nexus approach important for investment?

The way I see it, the nexus approach draws in different groups of people, people who might not normally interact with each other. And these interactions can bring to light possible unintended consequences, and get people thinking about how to deal with these consequences. That can be very useful when you want to ensure that investments are responsible and sustainable. Let me explain this using two recent examples.

In western and southern India, water is scarce and electricity subsidies are high. These subsidies provided people with virtually free energy, making groundwater irrigation very attractive. They are now almost a political necessity regardless of the heavy financial burden they present. If you took them away from one day to the next, this could have significant political repercussions. So in the state of Karnataka, the Government came up with the idea of using solar power, which is free, to pump groundwater. Before, they used electric pumps. Solar irrigation is good because greenhouse gas emissions are lower, and, apart from the initial investment costs, maintenance and operational costs are low. Renewable energy is being used and you can pump water in areas where people don't have access to the grid.

But with free energy for pumping, there is the great risk that groundwater resources are being overexploited and water is becoming scarcer. The Government in Karnataka had to rethink how it could regulate the use of solar pumps, while also ensuring that farmers use the water they pump efficiently. They came up with a new policy to promote solar irrigation, and at the same time, provide an incentive for farmers to conserve water and energy. The idea is simple. Farmers can sell surplus energy to the grid. Instead of using the energy to pump water, they can get cash for it. The devil, of course, is in the detail.  

Another example is in Central Asia, where planning during the Soviet times was centralized, and infrastructure looked at the river system as a whole. After the collapse of the Soviet Union, different countries identified their national priorities and developed strategies for managing natural resources, and also developing new, water and energy infrastructure. Any sort of regional trading system that had taken place before − countries rich in oil and gas, for example, giving relatively cheap energy to upstream countries so they wouldn't have to produce hydropower − has since broken down. Investing in a hydropower dam could resolve the issue of energy access in one country, but cause problems in others. The World Bank and other partners are looking at how to establish regional approaches to transfer water resources and energy, as well as to develop alternative energy sources.

What are the opportunities for investment?

There are two dimensions where we really see scope for the nexus approach. We can focus on optimizing resource use, understanding, for example, how an investment in a multi-purpose water supply system can benefit the different water, food and energy needs of local communities. And we can focus on policy dialogue, making sure investments avoid conflict and support a common vision for shared resource use and management.

It makes sense to "nexus-proof" some investments, similar to how we have socio-economic and environmental impact assessments.

Work is being done by FAO to assess the potential for poverty reduction through investments in agricultural water management, mapping out areas in countries where investments make sense and answering questions on who will benefit and what type of investment is appropriate based on the climatic conditions and available natural resources.

We recently spoke with the Asian Development Bank about investments at the World Water Forum. Large-scale investments are their bread and butter, but there's a lot of potential for smaller-scale investments too, particularly those that benefit an entire community, like integrated food and energy systems. One example of that is on-farm livestock waste management, where you use manure for biogas production, reducing the risks of water and soil pollution. And you can work on upscaling these smaller investments.

What would you like to see happen in the future?

It's important that investments are supported through dialogue with the right stakeholders, not just with immediate, obvious stakeholders. That means including people involved in, say, WASH (Water, Sanitation and Hygiene) or health and nutrition, to identify trade-offs and synergies. If we want to consult with farmers, we need to be clear about the diversity of farms in terms of size, degree of commercialization, type of employment and so on. All this is important to understand what interests and stakes are at the table. Different people have different perspectives. If you have people from fisheries with you while planning the modernization of an irrigation system, or developing multi-purpose water supply systems, they might have some great ideas on how to accommodate fisheries in a canal system or in rice production. The nexus is all about seeking synergies with different partners who might not normally be at the table. But it is also about providing a space to negotiate losses and trade-offs.