Optimizing dynamics of water-energy-food nexus in a desert climate

Abstract

This study explores the potential effects of electricity pricing on crop cultivation in Saudi Arabia. The country recently started implementing a domestic energy price reform strategy to make energy consumption more sustainable and increase government revenues as highlighted in the Fiscal Balance Program one of the key realization programs of Vision 2030. Two modeling schemes were developed to complete this analysis. First, a model that applies physical equations to estimate water and energy requirements for 21 crops across 13 provinces. Second, an optimization model that runs iteratively to determine short-run electricity costs, import costs and export revenues. The main finding from the model simulations is that increasing electricity prices will shrink the domestic cultivation and exports of the crops while increasing their imports. For example, as an extreme case, if the agriculture electricity price is raised from $0.048 per kWh to the US industrial electricity price level of $0.692 per kWh, the model optimizes that this will reduce electricity consumption from 33.65 gWh to 7.84 gWh, domestic crop cultivation from 15.1 million tons to 6.3 million tons, and crops' export from 0.062 million tons to 0.057 million tons while will increase crops’ import from 9.5 million tons to 18.3 million tons.