Water-Energy Nexus: Business Risks and Rewards

The report examines the 'water-energy nexus,' where water scarcity threatens energy production and energy costs impact water provision. It analyzes three case studies: the Middle East and North Africa's reliance on energy-intensive desalination, China's coal-fired power plants facing high water stress, and the United States' water-intensive hydraulic fracturing for shale gas. The document argues that companies can mitigate these risks by shifting from expanding supply to reducing demand, scaling alternative water sources like reclaimed wastewater and brackish water, and adopting clean energy resources such as solar and wind.

• In the Middle East and North Africa (MENA), extreme water scarcity is driving a heavy reliance on desalination, with some countries diverting significant energy resources to meet water needs. For example, Saudi Arabia uses 25 percent of its oil and gas production for desalination electricity, and Kuwait's energy use for desalination cogeneration is projected to equal its current fuel oil production by 2035.
• Desalination in MENA is highly carbon-intensive and costly. Under a business-as-usual scenario, plants needed to produce 90 billion cubic meters of water by 2050 are estimated to emit 270–360 megatons of CO2 annually. Financially, desalination is significantly more expensive than water conservation, costing approximately $1.30 per cubic meter compared to $0.02 for improving agricultural practices.
• China's electric power sector faces substantial water risks, as nearly 60 percent of its coal-fired power generation is located in regions with high or extremely high water stress. Projections indicate that climate change will intensify water stress in drier provinces by 40–70 percent over current levels by 2040.
• To reduce water reliance, China is implementing policies to phase out inefficient small coal plants and promote dry-cooling technologies, which use 70-80 percent less water than closed-loop cooling. Additionally, the country is increasing the use of reclaimed municipal wastewater, with a goal to reuse 20 percent of it by 2020.
• In the United States, 60 percent of shale gas plays are projected to be in regions with arid conditions or high/extremely high water stress by 2020. While hydraulic fracturing accounts for only one one-thousandth of total U.S. water withdrawals, these are highly localized and can represent up to one third of total freshwater use in some counties.
• U.S. unconventional oil and gas developers face economic and regulatory risks from water stress, including high withdrawal costs—such as Colorado municipalities charging $1,000–$2,000 per acre-foot during a 2012 drought—and liabilities from produced water disposal, such as seismic activity risks associated with deep-well injection.
• Alternative water sources for the energy sector include brackish water and recycled wastewater. In the Permian Basin of Texas, brackish water accounted for 80 percent of total water used for fracturing in 2011. In the Marcellus Shale, repurposed water meets 10 to 30 percent of fracturing requirements.
• The report suggests that companies can mitigate long-term risks by adopting internal financial tools such as pricing carbon and valuing water. Over 1,000 companies already report pricing carbon internally to prepare for regulatory changes or market shifts.

APA

Metzger, E., Owens, B., Reig, P., Wen, W. H., & Young, R. (2016). Water-Energy Nexus: Business Risks and Rewards. World Resources Institute. https://wriorg.s3.amazonaws.com/s3fs-public/Water-Energy_Nexus_Business_Risks_and_Rewards.pdf

Chicago

Metzger, Eliot, Brandon Owens, Paul Reig, William Hua Wen, and Robert Young. Water-Energy Nexus: Business Risks and Rewards. World Resources Institute, 2016. https://wriorg.s3.amazonaws.com/s3fs-public/Water-Energy_Nexus_Business_Risks_and_Rewards.pdf.

Wikipedia

{{cite report |last1=Metzger |first1=Eliot |last2=Owens |first2=Brandon |last3=Reig |first3=Paul |last4=Wen |first4=William Hua |last5=Young |first5=Robert |title=Water-Energy Nexus: Business Risks and Rewards |publisher=World Resources Institute |date=2016 |url=https://wriorg.s3.amazonaws.com/s3fs-public/Water-Energy_Nexus_Business_Risks_and_Rewards.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{metzger2016waterenergy, author = {Metzger, Eliot and Owens, Brandon and Reig, Paul and Wen, William Hua and Young, Robert}, title = {{Water-Energy Nexus: Business Risks and Rewards}}, institution = {World Resources Institute}, year = {2016}, url = {https://wriorg.s3.amazonaws.com/s3fs-public/Water-Energy_Nexus_Business_Risks_and_Rewards.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }