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Economy-Wide Policy Modeling of the Food-Energy-Water Nexus

Identifying Synergies and Tradeoffs on Food, Energy, and Water Security in Malawi

von Franziska Schünemann (Autor:in)
©2018 Dissertation 224 Seiten


Food, energy, and water are intrinsically connected through economic and ecological linkages and dependent on limited resources that are particularly threatened in developing countries by climate change, economic and population growth. A nexus perspective that simultaneously encompasses food, energy, and water has thus become crucial to avoid inefficient resource use. This volume contributes to the research on the food-energy-water nexus by first developing three integrated modeling frameworks for ex-ante policy simulation and then analyzing four policies in Malawi – biofuels production, irrigation expansion, improved cookstoves and agroforestry. The analyses show that the design of policies matters and that the inclusion of smallholders generally maximizes synergies between food, energy and water security. Integrated modeling frameworks are vital for analyses of policies that simultaneously affect the economic, social, and environmental spheres to quantify relevant tradeoffs.


  • Cover
  • Title
  • Copyright
  • About the author(s)/editor(s)
  • About the book
  • This eBook can be cited
  • Contents
  • Acknowledgments
  • Abstract
  • List of abbreviations
  • List of tables
  • List of figures
  • 1 Introduction
  • 1.1 Background: global challenges and the food-energy-water nexus
  • 1.2 The FEW nexus in the broader debate on sustainable development
  • 1.3 The role of linkages in the FEW nexus in detail: economic and ecological linkages
  • 1.4 Objectives and research questions
  • 1.5 Policy measures analyzed and specific research questions
  • 1.6 Structure of the study
  • References
  • 2 Developing the appropriate modeling framework for quantitative policy analysis of the food-energy-water nexus
  • 2.1 The importance of economic linkages
  • 2.2 Economic policy simulation models and their applicability to analyze the nexus
  • 2.2.1 Farm household models
  • 2.2.2 Partial equilibrium models
  • 2.2.3 Computable general equilibrium models
  • 2.2.4 CGE models’ suitability for analyzing the FEW nexus in Malawi and the specific challenges
  • Food
  • Energy
  • Water
  • Conclusion
  • 2.3 Modeling the nexus: integrating the environment and non-market interactions
  • 2.3.1 Integrated global models
  • 2.3.2 An integrated modeling framework for nexus analysis in Malawi
  • Malawi CGE model
  • Modeling framework for analyzing biofuel production
  • Modeling framework for analyzing irrigation expansion
  • Modeling framework for analyzing the biomass energy sector
  • 2.4 Conclusion
  • References
  • 3 Leveling the field for biofuels: comparing the economic and environmental impacts of biofuel and other export crops in Malawi
  • 3.1 Introduction
  • 3.2 Biofuels in Malawi
  • 3.2.1 Food, energy, and water systems
  • 3.2.2 Sugarcane-ethanol
  • 3.2.3 Ethanol production technologies
  • 3.3 Measuring economic and environmental impacts
  • 3.3.1 Measuring economy-wide impacts
  • 3.3.2 Simulating biofuels production
  • 3.3.3 Estimating crop water use
  • 3.3.4 Measuring greenhouse gas emissions
  • 3.4 Results
  • 3.4.1 Baseline scenario
  • 3.4.2 Producing biofuels on estate farms
  • 3.4.3 Using outgrower schemes
  • 3.4.4 Relying on rain-fed production
  • 3.4.5 Environmental impacts and trade-offs
  • 3.4.6 Imposing stricter land constraints
  • 3.4.7 Biofuels versus other export crops
  • 3.5 Conclusion
  • References
  • Appendix
  • 4 Evaluating irrigation investments in Malawi: economy-wide impacts under uncertainty and labor constraints
  • 4.1 Introduction
  • 4.2 Agriculture and irrigation in Malawi
  • 4.2.1 Irrigation master plan
  • 4.3 Modeling approach
  • 4.3.1 Crop models
  • 4.3.2 Economy-wide model
  • 4.3.3 Simulating irrigation expansion
  • 4.3.4 Simulations
  • 4.4 Simulation results
  • 4.4.1 Irrigating summer crops
  • 4.4.2 Introducing a winter season
  • 4.4.3 Increasing irrigation with unemployment
  • 4.4.4 Accounting for climate uncertainty
  • 4.4.5 Irrigation fertilizer interaction
  • 4.5 Conclusion
  • References
  • Appendix
  • 5 Policies for a sustainable biomass energy sector in Malawi: enhancing energy and food security simultaneously
  • 5.1 Introduction
  • 5.2 Background: energy sector development in Malawi
  • 5.2.1 Population growth, income growth and urbanization
  • 5.3 Estimating biomass energy demand
  • 5.3.1 Estimating household demand
  • 5.3.2 Household demand projections
  • 5.3.3 Non household demand
  • 5.3.4 Results and discussion
  • 5.4 Estimating biomass supply
  • 5.4.1 Results and discussion
  • 5.5 Demand side policy: improved cookstoves
  • 5.5.1 Results and discussion
  • 5.6 Supply side policy: agroforestry
  • 5.6.1 Methodology
  • 5.6.2 Results and discussion
  • 5.7 Conclusion and policy implications
  • References
  • Annex
  • 6 Discussion and conclusions
  • 6.1 Major results and achievements
  • 6.1.1 Methodological contributions
  • 6.1.2 Empirical findings
  • Simultaneous impacts on food, energy, and water security
  • Role of drivers
  • Impact on the livelihoods of the poorest
  • 6.2 Policy implications
  • 6.2.1 Smallholder integration
  • 6.2.2 Funding of policies
  • 6.2.3 The food-energy-water nexus as a paradigm for the Sustainable Development Goals
  • 6.2.4 Traditional fuels for sustainable development
  • 6.3 Directions for further research
  • References
  • General bibliography
  • Series index

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This study emerged during my work in the project “Policies and Institutions for Achieving the Virtuous Food-Energy-Water Nexus in Sub-Saharan Africa” of the International Food Policy Research Institute (IFPRI) and the University of Hohenheim. First of all, I would to like thank Professor Manfred Zeller for giving me the chance to become a part of such an exciting project and to advance in my research skills. From the beginning, he was confident that I would be able to work into a completely new area of research, and guided and supported my research ideas from Germany and Uganda. I am deeply indebted to James Thurlow and Siwa Msangi of IFPRI who have been my mentors on economy-wide and natural resource modeling. They have been supporting me throughout my PhD to be innovative and put my ideas into mathematical code. I spent a considerable amount of time doing research at IFPRI in Washington DC where I became part of the Environment and Production Technology Division. I would like to express my gratitude to Ephraim Nkonya and his wife Leticia for their warm welcome into their family. I would like to thank Karl Pauw and Tingju Zhu for sharing with me their knowledge in social accounting matrices and water modeling. I would like to thank my coauthors Joao Rodrigues and Stefan Meyer for providing me with the latest information from Malawi. I am extremely grateful to all Malawian stakeholders that took part in several project workshops in Lilongwe and provided my with invaluable insights on food, energy, and water security in Malawi.

My time in Hohenheim was made very special and memorable by a group of great colleagues, who have become real friends. I will miss you all dearly and am very thankful for the research discussions and leisure you shared with me.

This work is dedicated to my beloved parents. Their continuous support and love have given me the strength to aspire to my dreams and to follow in their footsteps. I would also like to thank my siblings and their families as well as my cousin for being always there for me. I would like to thank my American parents for giving me a real home in the United States. To my fellow sisters, thanks for always helping with words and deeds. Last but not least, I would like to thank my partner for his unconditional love and belief in me.

Finally, I would like to gratefully acknowledge funding by the German Federal Ministry for Economic Cooperation and Development (BMZ) for the CGIAR research project entitled “Policies and Institutions for Achieving the Virtuous Food-Energy-Water Nexus in Sub-Saharan Africa”.

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Food, energy, and water are essential goods for human survival and are intrinsically connected through economic linkages and ecological processes. All three are dependent on limited resources which are threatened by global drivers in the form of economic growth, population growth, and climate change that are particularly affecting developing countries. In the light of these challenges, researchers and policy makers gathered in Bonn, Germany, in 2011 and agreed that development policy cannot continue on its current “silo” path, but must undergo a transformation towards a nexus perspective of integrated food, energy, and water security policies. This study contributes twofold to the research on the food-energy-water (FEW) nexus: methodologically, through developing integrated modeling frameworks for ex-ante policy assessments that capture the linkages between food, energy, and water, and empirically through identifying those policy measures that maximize the synergies for food, energy, and water (FEW) security and minimize the tradeoffs. To this end, three studies analyze four policies in Malawi – biofuels production, irrigation expansion, improved cookstoves and agroforestry – that directly affect FEW security and provide a large scope for realizing synergies.

Previous studies on FEW security are sector-specific and are unable to simultaneously measure policy effects on all three sectors, which is pivotal to find the most beneficial interventions for the whole FEW nexus. Due to the complexity of the nexus, there is to date no existing economy-wide modeling framework that adequately captures all various interconnections. To close these research gaps three innovative modeling approaches for ex-ante policy simulation are developed that encompass all relevant linkages of the FEW nexus at country level. A computable general equilibrium (CGE) model of Malawi is at the heart of each modeling framework. The economy-wide model includes all economic linkages and the social dimension of the FEW nexus. The CGE model encompasses both the availability dimension of FEW security by measuring output changes and the access dimension through income and prices. Population and economic growth are incorporated within the CGE model to determine the role of these drivers. As the CGE model includes neither nexus linkages outside of market interactions nor ecological processes, the model is linked with biophysical and tailor-made farm household models as suitable for each policy analyzed. Each of these modeling frameworks does not aim to cover all linkages between food, energy, and water, rather the frameworks concentrate on the nexus linkages affected by the ← 13 | 14 → policy measures analyzed to better understand the effectiveness of those policies in evoking synergies and tradeoffs. The modeling frameworks therefore close an important methodological gap in the literature by allowing detailed ex-ante policy analysis of the FEW nexus at country level, especially since all developed models can easily be transferred to other developing countries. By simulating the abovementioned four policy measures within these modeling frameworks, their empirical impacts on the FEW nexus in Malawi are determined.

Biofuels are promoted to increase energy security, but often raise the specter of food insecurity, water resource depletion, and greenhouse gas (GHG) emissions from land clearing. These concerns underpin the “sustainability criteria” governing access to European biofuel markets, although it is unclear if producing biofuels in low-income countries like Malawi exacerbates food insecurity or conversely increases income of smallholders. The results of the policy simulations demonstrate that biofuel production reduces poverty and food insecurity in Malawi by raising household incomes. An expansion of biofuel production in Malawi leads to economic growth and higher energy security by increasing the availability of fuel. This synergy between food and energy security is dependent on irrigation of feedstock, which entails tradeoffs for water security and climate change. The high GHG emissions of irrigated feedstock production and biofuel processing do not meet the EU sustainability criteria. Biofuels therefore involve tradeoffs for the environment that need to be valued carefully. In contrast, the findings also reveal that biofuel crops are not worse but even better for the environment and food security than other export crops, making the sustainability criteria overly biased against biofuels.

As irrigation determines the effectiveness of biofuel production, the second study examines impacts of irrigation expansion on the FEW nexus in Malawi. Irrigation is crucial to increase food security and mitigate effects from climate change, but the low profitability has led to little irrigation investments in Sub-Saharan Africa so far. Since benefits from irrigation arise not only from yield increases, but also from multiplier effects and lower climate risks, the developed modeling framework simultaneously assesses the various returns. Water availability is explicitly included in the simulations to minimize tradeoffs for water security. As irrigation is conducted with smallholder technologies such as treadle pumps and watering cans, energy needs are minimal. The policy simulations confirm the low profitability of irrigation in Malawi due to relatively low yields and high labor requirements. Despite that, the study reveals large benefits of irrigation in Malawi through higher food security, lower poverty, and reduced vulnerability to weather variability, making investments in irrigation worthwhile ← 14 | 15 → to improve the livelihoods of the poorest. If implemented correctly, irrigation expansion in Malawi is a policy that exhibits only synergies for FEW security.

Biomass energy in the form of firewood and charcoal dominates the energy sector in Sub-Saharan Africa, in particular as the main source of cooking fuel. The strong linkages to food security and the environment make biomass energy crucial for sustainable development. As population and economic growth are exacerbating already existing supply-demand imbalances, the third study analyzes the impact of improved cookstoves and agroforestry on the FEW nexus with a focus on establishing a sustainable biomass energy sector in Malawi. Water security is only indirectly, but positively affected by these policies as lower demand for, and higher supply of trees increases the ability of the soil to hold water. The model results suggest that improved cookstoves and agroforestry have the potential to increase energy security in Malawi in a way that is sustainable for the biomass energy sector. Especially agroforestry increases both availability of and access to energy. As food security is dependent on the secure provision of cooking energy, an increase in energy security simultaneously increases the access to and the utilization of food. The strong link between energy and food security is therefore strengthened by both interventions, leading to a win-win situation for all nexus sectors. Biomass energy can be inherently sustainable and should be an integral part of energy sector strategies in developing countries and the Sustainable Development Goals.


ISBN (Hardcover)
2018 (Oktober)
Food Security Biofuels Irrigation Biomass energy Agroforestry CGE model
Berlin, Bern, Bruxelles, New York, Oxford, Warszawa, Wien, 2018. 224 pp., 4 fig. col., 4 fig. b/w, 27 tables

Biographische Angaben

Franziska Schünemann (Autor:in)

Franziska Schünemann is a postdoctoral researcher at the Kiel Institute for the World Economy. After studying economics in Mannheim, Göttingen, and Groningen, she received her PhD in Agricultural Economics at the University of Hohenheim in 2017. She was also a collaborator at the International Food Policy Research Institute (IFPRI) in Washington DC.


Titel: Economy-Wide Policy Modeling of the Food-Energy-Water Nexus
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226 Seiten