Accounting for Externalities in the Water Energy Food Nexus

Abstract

The WEF nexus can be generally defined as the relationship between food, energy, and water in human-environmental systems. The linkages between each nexus component are often complex, varying across both spatial and temporal dimensions. However, understanding and quantifying those linkages are key to maximizing potential net benefits from the WEF nexus. While there are many ways to categorize the different type of linkages/relationships, we will use the following three distinctions: (i) direct dependencies, (ii) direct competition, (iii) externalities. Research on the third type of nexus relationship is somewhat less prevalent than research on the other two types of linkages, likely because externalities are often difficult to physically quantify, and even more difficult to monetize. Externalities within the WEF nexus are quite common and should not be ignored. In this chapter, we focus on negative externalities and present two case studies from Japan to illustrate how to account for externalities in the WEF nexus.