In energy, efficiency can be on the supply side or demand side. Supply side relates to power plants and the relationship between energy and water. The demand side relates to the different sectors of the economy: industry, residential, commercial, transport and agriculture. The water-energy nexus in both sides demand and supply is important to be considered.

From the demand side, with industries being major water and energy consumers, a green economy will be contingent to the greening of the industrial sector and resource efficient, cleaner production.

From the supply side, a particular emphasis has to be placed on increasing the water use efficiency in energy production – essentially producing more kWh per drop of water. This would require a policy environment in which economic and social incentives are offered to promote water use efficiency and protect freshwater ecosystems.

Many efficiency improvements in utilities, such as the repair of leaks, require regular attention to ensure a steady supply of new water and energy savings.

Challenges involved include the water implications of the evolving global energy mix, the need to address climate change mitigation and adaptation in a coordinated manner, and the fundamentally different market structures for water and energy.

The 2013 Global Risks Report, prepared by the World Economic Forum, ranks the ‘water supply crisis’ as the fourth most important in the world in its likelihood and second in its impact. For example, uncertain water supply is becoming a major business risk for some energy sector managers. Securing access to modern energy services represents a major challenge in pursuing sustainable development.

W&E also have crucial impacts on poverty alleviation – directly, because a number of the Millennium Development Goals depend on major improvements in access to water, sanitation, power and energy sources; and indirectly, as lack of access to W&E can be a limiting constraint to sustainable economic growth, which is the ultimate hope for widespread poverty reduction.

In terms of sustainability, renewable energy technologies are very important because they are based on renewable sources instead of finite sources such as fossil fuels.

Sustaining ecosystem services is fundamental to sustainable economic growth and human wellbeing. Recognizing that ecosystems provide a variety of services to the water–energy nexus can help the management of trade-offs and ensure that short-term gains do not undermine services that are critical for resilience and long-term environmental sustainability.

The outcome document of the United Nations Conference on Sustainable Development, held in Rio de Janeiro from 20 to 22 June 2012, entitled “The future we want”, acknowledges the need to further mainstream sustainable development at all levels, integrating economic, social and environmental aspects and recognizing their interconnectivity, so as to achieve sustainable development in all its dimensions.