Macroeconomic, Food and Energy Security Implications of Water Dependency under a Changing Climate: A Computable General Equilibrium Assessment

Water, food and energy are three interconnected fundamental needs. Climate change potentially hinders the security of all of them, acting as a threat multiplier. Accordingly, this paper addresses the consequences of two climate scenarios in the 2030 horizon: specifically, it addresses the highest and lowest representative concentration pathway (RCP), 8.5 and 2.6; the relative changes in freshwater availability; and their sectorial and macroeconomic impacts. Furthermore, it addresses the importance of developing the simulations through a dynamic computable general equilibrium (CGE), which, uncommonly, explicitly considers the water endowment as a factor for both the irrigated agriculture and the energy sector. The results highlight that both the activation of the water–energy link and climate-induced freshwater availability changes have significant impacts on the simulation outcomes, even in the short-term horizon of 2030. Moreover, it reveals that water scarcity issues are expected to arise in the Middle East, leading to significant food security issues, as well as to significant consequences for the behaviour of the energy sector. Indeed, while we would expect that dependency on a scarce resource would lead to security issues, the Middle East energy sector appears to not straightforwardly behave as a resource attractor, likely due to its economic relevance both within the region and internationally.