An Empirical Analysis of Water-Energy-Environment Nexus: The Case of Developing Economies

Abstract

Water, energy, and environment play a significant role in the economic growth and sustainable development of an economy. Energy and water resources rely on each other as energy is derived from water and water can be extracted with the use of energy, and environmental quality is affected by the use of energy and water. Current research examines this nexus using panel data of developing economies. Ecological Footprint (EF) has been used to measure environmental quality, environmental degradation and its sustainability in developing economies. Empirical results based on two-step difference generalized method of moments indicate that water, energy and environment are closely related to each other. Water productivity influences energy consumption and both energy use and water productivity have strong effects on climate change in case of developing economies. Integrated policy actions are required for water, energy and environmental management to avoid water scarcity and environmental degradation in developing economies.