Determining the impact of economic indicators on water, energy and food nexus for sustainable resource security

The trio of water, energy, and food resources stands as indispensable resources that determine the economic trajectory of any nation. The interrelationship, synergies, and trade-offs among these resources have given rise to the integrated concept known as the water, energy, and food nexus, as elucidated by various scholars (Hoff 2011; Qi et al. 2021; Sun et al. 2021; David et al. 2022). Rakitskaya’s (2021) research delves into the interconnectedness of the WEF nexus and its pivotal role in fostering sustainable economic development within a nation. Failure to manage these interlinkages could potentially result in the insecurity of water, energy, and food resources, casting a shadow on their long-term sustainability. A failure to manage the nexus sustainably could disrupt the availability and stability of these resources, both of which are indispensable inputs for all economic processes. Conway et al. (2015), in their exploration of the inter-regional economic implications of WEF resources, shed light on the potential for countries in Southern Africa to contribute to WEF stability in regions grappling with resource shortages due to climate change anomalies. This underscores the significant influence of macroeconomic indicators on an economy, particularly concerning aspects such as resource importation, exportation, prices of WEF goods/products, inflation rates, and the dimensions of international trade. Additionally, Conway et al. (2015) research brings to limelight the role of microeconomics in shaping the dynamics of supply and demand for water, energy, and food resources and highlights how these dynamics directly affect household consumption patterns.

Moreover, Markantonis et al. (2019) explained the relationship between the WEF nexus and economic indicators stating that through the perspective of the nexus, economic growth is possible, as the nexus can ensure fair distribution of WEF resources, reduced transactional costs among the nexus sectors, enhance pricing mechanism within environmental, cultural, and social values, increased investment on technological Research and Development (R & D) in the nexus thereby creating employment opportunities and strengthening institutional arrangement, which leads to sustainable resource security. Blandford (1990) expressed the view that agriculture plays a pivotal role in propelling a nation's economic growth. It achieves this through several means, including supplying essential food for human sustenance, furnishing vital raw materials for various industrial sectors, contributing significantly to the Gross Domestic Product (GDP), and generating employment opportunities. According to the authors, the nexus between Agri-Food resources and economic growth serves as a vital input of environmental performance in areas such as air quality, biodiversity, forestry, and land use. The United Nations (2013) and Mpundu and Bopape (2022) opined that Agriculture is an essential economic activity ensuring the security of food production, income provision, and livelihood sustenance. The Agri-Food resource of the WEF nexus is the foundation of economic activities as the source of all raw materials in producing varieties of products. This economic activity also drives the WEF nexus in determining the production level and consumption rate of different resources and, through various micro- and macro-economic tools, balances the supply and demand of Agri-Food resources. In their review of forty-six (46) articles, the research of Bhuiyan et al. (2022) noted that energy resources, either renewable or non-renewable resources, contribute to and drive economic growth. Also, energy has always been a source of economic growth, as opined by the research of Asghar (2008), which showed an instrumental relationship between economic growth and energy resources via GDP. Energy resources are the fulcrum of economic activity. It is a major economic lubricant that aids in the conversion of other resources and raw materials into finished products of other sectors of the economy. Also, the variations, market forces, and international trades affect the resources' prices, demand, stability, and supply. Also, due to the energy mix and power generation mix, economic activities differ from one country to another. Moreover, the research of Berry (2008) compared the wealth of a nation to the availability of water, which thus stimulates economic activities due to the indispensability of usage to all forms of life. Mukherjee (2016) corroborated in UNESCO (2019), in assessing the relationship between economic development and water resources, opined that the challenges of water scarcity, water pollution, level of water utilization, and increase in water demand have an impact that is opposed to economic growth. Water resources are a resource stabilizer that is indispensable in producing other resources, thereby exercising both intrinsic and physical value on economic activities.

However, there is a paucity of research on the association between the indicators of an economy and the nexus of the three resources of water, energy, and food. Previous studies, exemplified by the works of Rakitskaya (2021), Al-Riffai et al. (2017), Conway et al. (2015), and Markantonis et al. (2019), predominantly regarded the WEF nexus as a contributing factor, a stabilizing force, and an environmental influencer on the economy. However, this study unveils a critical research lacuna pertaining to the influence of economic indicators on the water, energy, and food nexus, with a particular emphasis on sustainable resource security. Prior research primarily concentrated on elucidating how these resources contribute to the economy while largely overlooking the role played by economic indicators. This observation forms the foundation for the following research questions:

To address these research inquiries, the study employed two distinct statistical methodologies. The first research question was resolved through mean score ranking, while the second question was answered through more intricate inferential statistics employing structural equation modeling (SEM). Consequently, tackling these research questions has the capacity to trigger economic solutions dedicated to establishing and preserving sustainable resource security. This involves protecting these three vital resources, not only for the current generation but also for future generations, to ensure their stability, affordability, and availability. It is worth noting that the instability of these resources has been recognized as a global risk by the United Nations (Walker 2020). Moreover, achieving sustainable resource security for water, energy, and food resources plays a significant role in addressing a wide range of urgent global challenges. These challenges include but are not limited to, eliminating hunger, mitigating water scarcity, preventing energy depletion, enhancing public health, and promoting a sustainable economy (Shannak et al. 2018).

Moreover, comprehending the impact of various economic indicators on the nexus between these three resources aids in effectively managing the escalating demand for them. For instance, considering the accelerating global population growth, the impacts of climate change on resources, and the expanding consumption habits of the middle class, the United States National Intelligence Council (USNIC 2012) issued a forecast in December 2012 concerning global trends in 2030. According to this projection, by 2030, global water demand is anticipated to rise by 40%, energy demand by 50%, and food demand by 35%. Also, the United Nations anticipates a 60% surge in food production to accommodate an estimated global population of 9.8 billion people by 2050 (Da Silva 2012). This is as energy consumption on a global scale is expected to increase by nearly 30% by 2040 (IEA 2017). Additionally, the Food and Agricultural Organization (FAO 2015) projects that between 2000 and 2050, food demand in Africa will triple due to improved dietary habits and population growth in the region. Furthermore, energy demand in Africa is expected to double from 500 million tons of oil equivalent (mtoe) in 2000 to 1000 mtoe by 2030. Given the projected population increase in Africa, which is set to rise by nearly 50% of its current population by 2030, water demand in the region is expected to nearly quadruple, surpassing the growth rates observed in other parts of the world (Jacobsen et al. 2013). In essence, addressing these demands and challenges constitutes a response to sustainability questions for future generations, encompassing the security and well-being of the three vital resources, as we are seven (7) years into 2030, seventeen (17) years into 2040 and twenty-seven (27) years into 2050. Thus, this study seeks to contribute to managing the three resources with cognizance to their nexus, thus achieving the various resource security definitions put forth by IEA (2014) for energy, UN-WATER (2013) for water, and FAO (2014) for food.

Moreover, understanding the influence of economic indicators, as well as the nature of these indicators, on the three critical resources, plays a pivotal role in ensuring the sustainability of food, energy, and water resources. Vagsholm et al. (2020) and Helland and Sörbö (2014) assert that sustainable food security encompasses various facets, including ensuring an adequate supply of food, its availability, accessibility, affordability, nutritional adequacy, and stability—all while safeguarding environmental integrity. Prasad et al. (2019) contend that sustainability in the realm of energy is contingent upon increasing energy generation from renewable sources, which do not adversely impact the environment through carbon emissions, thus catering to the needs of both current and future generations. Similarly, Mejia et al. (2012) and the American Society of Civil Engineers (ASCE 1999) posit that water sustainability revolves around the capacity of water resources and services to meet current and future water demands without degrading the overall system. These diverse perspectives on the sustainability of water, energy, and food resources collectively underscore the significance of economic indicators. That is, the better the economic indicators, the higher the sustainable resource security of the three resources. This is because only a booming economy can assure WEF sustainability and security. In other words, when a country's economy is performing well and its economic indicators are positive, it is more likely to achieve higher levels of security and sustainability for its water, energy, and food resources.

The cardinal objective of this paper is to determine the impact of economic indicators on the water, energy, and food nexus for sustainable resource security and to determine the type of economic indicators that affect the WEF nexus for sustainable resource security. Achieving these objectives led to the following contribution from the study:

As a result, the paper is organized into six distinct sections. In the second section, we provide an overview of the water, energy, and food nexus concept, emphasizing its role in ensuring sustainable resource security. Moving on to the third section, we delve into economic indicators and their measurement methods. The fourth section outlines our research methodology, encompassing the quantitative study’s nature, sample size, and data analysis approach. Section five is dedicated to presenting our study’s findings, where we thoroughly discuss both descriptive analysis and inferential statistics. In the sixth section, we embark on a detailed exploration of the findings' implications, including an examination of respondents' demographic characteristics and the impact of economic indicators on the WEF nexus for sustainable resource security. Concluding our paper, the seventh section encapsulates the study's findings and policy recommendations.

The WEF nexus are adequately described in Fig. 1, by Endo et al. (2015), whereby an individual resource is an input for another resource. According to the authors, the nexus relationship is seen in utilizing one resource for the production and efficiency of the other resources. Also, Bhaduri et al. (2015) stated that these interactions are now driven by joint demand, price development, resource constraints, and technology. This further shows that the consumption of one resource stimulates the consumption of other resources. Moreover, from the viewpoint of economics, it means that the resources are both competing and complementary resources affected by the law of demand and supply. Moreover, Hoff (2011) at the Bonn conference opined that the interlinkages and interdependencies between these developmental resources bring about nexus thinking. Also, Weitz et al. (2014) opined that nexus interactions are “about how we use and manage resource systems, describing interdependencies (depending on each other), constraints (imposing conditions or a trade-off), and synergies (reinforcing or having a shared benefit).” In projects involving any of the resources, nexus has brought about the need not to consider the resources as separate entities but as being complex, and inextricably entwined (European Commission 2018).

The World Economic forum (2011) opined that nexus presents a better approach to understanding the relationship between resource security, economic disparity, and environmental pressures, highlighting the economic and social dimensions of development. Bazilian et al. (2011) stated that the nexus would contribute to developmental goals in deforestation, energy access, biofuels, irrigation, hydropower, food security, and provision of water through desalination. The WEF nexus entails understanding the tradeoffs, interrelation, and resource struggle associated with WEF for Sustainable Development (Cansino-Loeza and Ponce-Ortega 2021; Abulibdeh and Zaiden 2020). Pueppke (2021) pronounced that the WEF nexus is about the expansion of the benefits of the synergies among the three resources while avoiding the drawbacks of WEF trade-offs by transferring attention from the resource competition to their shared benefits. Ogbolumani and Nwulu (2021) also stated that the WEF nexus ensures resource allocation doesn’t have catastrophic consequences on the resources and the consumers. David and Adepoju (2021) posit further that the nexus is a global action for uniting the mechanisms of achieving the security of the resources. Also, Zarei et al. (2021) stated that the nexus encompasses economic, social, environmental, and political factors that must address infrastructural planning as WEF activities have ecological impacts such as declining groundwater levels, degradation of rivers, water pollution, carbon emission, deforestation, air pollution, raising the water temperature, killing aquatic animals, and GHG emission. The ADC (2015) also explained that the nexus entails the development of stakeholders' capacity at all levels, including specific technical assistance, training, and efforts to strengthen analytical and system thinking in WEF project complexity. The United Nations avers that the WEF nexus is a policy tool for managing the joint demand for the three resources and the attendant challenges of allocation (FAO 2014).

The WEF nexus has shown that it is a resource security mechanism that can be sustainable, which implies that the major outcome of the nexus approach is the sustainability of the resources. This entails the equitable availability of resources inter-generationally and intra-generationally with the promotion of socio-economic activities and ensuring environmental integrity (Stoddart 2011). This sustainability dynamics can be measured using the three dimensions of sustainability: economic, social, and environmental sustainability (Khan 1995; Mensah 2019). According to the authors, economic sustainability deals with achieving economic prowess without altering or causing ecological disturbances, whereas social sustainability entails the effect of decisions on the people and their cohesiveness, whereby environmental sustainability focuses on the preservation of the ecosystem.

So, within the context of sustainable resource security related to the water, energy, and food nexus, as deduced from the studies by Rakitskaya (2021), Al-Riffai et al. (2017), Conway et al. (2015), and Markantonis et al. (2019), the dimensions of sustainability were aligned with the WEF nexus, marking this as the first paper on the subject matter. Therefore, the economic sustainability measures entail conversion and recycling of WEF resources to waste, environmentally friendly production, eco-friendly supply chain, utilization of cleaner production mechanism, sustainable production mechanism, accounting value of WEF resources, a friendly import–export ratio, potentiality of increasing employment opportunities and production of more innovative products. WEF nexus in social sustainability entails training employees on nexus thinking, eco-friendly location of the production factory, enhancement of competent leadership, a stable political environment, promotion of stakeholder consultation, promotion of good working conditions, promotion of health and safety codes, optimization of labor laws, re-organization of societal norms, and digitalized procurement mechanism. Environmental sustainability measures from the WEF nexus include adequate environmental impact assessment, recycling, and reusability of food waste, reduction of greenhouse gas emission, enhancement of waste management, enhancement of energy efficiency, water sustainability, promotion of climate change management strategies, reduction of biodiversity loss, promotion of afforestation, and promotion of green investment.

The Bonn Conference of 2011, where Hoff (2011) first proposed the WEF Nexus, was a conference about improving the standards of living of people of the world from a green economy perspective, highlighting the symbolic effect of economic growth of a nation and the sustainable security of water, energy and food resources. The WEF resources, considering their critical roles as economic boosters, economic stabilizers, and economic stimulants, necessitate understanding the extent of the role of economic indicators, which can be determined via the level of economic growth of a nation beyond its gross domestic product.

Generally, economic growth has been perceived and conceptualized as the increased rate of producing economic goods and services over time. According to the research of Haller (2012), economic growth is a long-run phenomenon that is complex in measurement, the performance of an economy, and subjected to constraints such as population, resource constraint, inadequate infrastructure, difficulties from the institutional framework, and government. According to the author, economic growth is determined by the efficiency in the utilization of resources and the increase in the production capacity of a country, facilitating the redistribution of wealth between the society and the population. According to the Department for International Development (2007), economic growth aids in moving people out of poverty, increases employment opportunities, optimizes human development endeavors, improves education and health, and transforms society.

In research, various methodologies have been employed to evaluate economic growth, with gross domestic product (GDP) often taking precedence as a fundamental measure. However, Skare and Rabar (2017) introduced a set of distinctive economic indicators used to assess the underpinnings of economic growth within Organization for Economic Cooperation and Development (OECD) countries. These economic indicators encompass multiple facets of the economy pertinent to the WEF nexus. According to the authors, these indicators can be broadly categorized into two main groups. The first category is constituted by macro-economic indicators, encompassing parameters such as real per capita GDP, inflation rates, unemployment rates, and the exports/imports cover ratio. The second category encompasses social, institutional, and environmental indicators, such as public health expenditures, scientific research publications, CO2 emissions, and the representation of women in national parliaments. However, for the purposes of this study, the aforementioned Skare and Rabar (2017) eight (8) economic indicators were adapted and contextualized based on the works of Hoff (2011), Haller (2012), and the Department of International Development (2007). This led to the indicators used for measuring and analyzing the relationship between economic factors and resource security in the WEF nexus. They are Citizens' standards of living, Government subsidies, Availability of labor (skilled and unskilled), Investment in WEF infrastructure, Importation of WEF resources, Exportation of WEF resources, Price mechanism of WEF resources, Employment rate in WEF sectors, Economic incentives, Gross domestic product index, Inflation rate affecting WEF interactions, Carbon emission tax, Taxes on WEF resources production, private company’s activities, Taxes on WEF resources distribution, tax relief initiatives and taxes on WEF resources consumption rate.

This paper employed a quantitative research approach to examine the influence of economic activities on the water, energy, and food nexus. Data for this study were collected through the distribution of a questionnaire to management personnel in South Africa's water, energy, and food departments. The questionnaire employed a five-point Likert scale, in line with recommendations from Sekaran (2003) and Aaker et al. (2009). The Likert scale consisted of two categories: the first category (1—To no extent, 2—Small extent, 3—Moderate extent, 4—Large extent, and 5—Very large extent) assessed the degree of impact of economic activities on the water, energy, and food nexus. The second category (1—Strongly disagree, 2—Disagree, 3—Neither, 4—Agree, and 5—Strongly Agree) gauged respondents' agreement levels regarding how the nexus can contribute to sustainable resource security in terms of economic, social, and environmental sustainability.

The study population consisted of management personnel within South Africa's water, energy, and food resource sectors, as outlined in Table 1, sourced from the annual reports for 2018/2019, 2019/2020, and 2020/2021. The sample size, determined using Yamane's (1967) formula and Bowley's Proportional Allocation Formula (1962), was calculated to be two hundred and eighty-two (282), with allocation details presented in Table 1.

The research analysis encompasses both descriptive and inferential statistics, employing techniques such as percentages, frequencies, Mean ranking EFA, CFA, and SEM. The first objective was achieved using EFA, CFA and SEM, while the second objective was analyzed using Mean ranking. These analytical tools were chosen to construct a comprehensive model for a detailed examination of the relationship between economic indicators and sustainable security measures within the WEF nexus. This selection is grounded in recommendations derived from Aigbavboa (2014), Bentler (2006), and Kline (1998). To conduct the analysis, two statistical software packages were utilized: Statistical Package for the Social Science (SPSS) version 27 and Equations (EQS) version 6.4. It is noteworthy that before engaging in SEM, an EFA is routinely performed, aligning with the methodology outlined by Aigbavboa (2014) and Ogunbayo (2021). EFA serves as a preliminary step in SEM, as further affirmed by Rehbinder (2011), who emphasized its role in identifying underlying factors that explain correlation patterns among observed variables, thereby streamlining data.

Following the EFA, confirmatory factor analysis (CFA) is carried out for the remaining variables. Notably, during the CFA, the variables are subjected to Satorra-Bentler statistics (S-Bχ²), accessible within EQS, as it offers greater accuracy compared to conventional Chi-Square test statistics, as highlighted by Byrne (2006) and Bentler (2006). Furthermore, the EQS software employed in this research offers a robust maximum likelihood (RML) estimation method, as mentioned by Kline (2005) and Musonda (2012), to ensure the robustness of fit indexes, as displayed in Table 5, prior to establishing a model between the variables.

In conclusion, the findings and discussions from this study have underscored that in the pursuit of sustainable resource security, economic indicators are predominantly characterized as macroeconomic rather than microeconomic. They tend to be more driven by infrastructure investment rather than consumption, reliant on the economic power of individuals rather than government largess and influenced by globalization rather than local content. This highlights the importance of prioritizing comparative advantage-driven investments in the three key resources, both at the regional level (regardless of cultural homogeneity) and on the international stage (regardless of heterogeneity). Specifically, for the Republic of South Africa, it is recommended that comparative advantage-driven investments in the WEF nexus should focus on addressing economic water scarcity, optimizing food resource imports, and promoting clean energy initiatives. Furthermore, to fully harness the potential of WEF resource production, it is advisable to implement an optimal decision support system. This can be achieved through the utilization of advanced tools such as artificial intelligence, techno-economic analysis, and benefit–cost analysis. These methodologies can aid in optimizing the production of WEF resources, thereby enabling a more effective and comprehensive management of the WEF nexus for sustainability.

Nevertheless, it is essential to acknowledge certain limitations within the scope of this study, primarily concerning the chosen methodology and the reliance on EQS for analysis. In the pursuit of more comprehensive insights, future research endeavors may explore alternative software tools and analytical approaches, particularly when assessing the statistical significance and the precise quantitative impact of each EFA component as it relates to EQS analysis. The utilization of various analytical tools and software packages can offer a more diversified perspective on the relationships between economic indicators and sustainability within the context of the WEF nexus. By exploring a broader array of analytical methods, researchers can deepen their understanding of the multifaceted dynamics at play and potentially uncover nuances that might remain obscured when using a single analytical framework. This approach would not only enhance the robustness of research findings but also contribute to the refinement of methodologies in the field of WEF nexus studies.

Moreover, this study has significantly and statistically established that economic indicators play a pivotal role in shaping and determining the level of sustainable resource security, impacting both the current generation and those to come in future. However, these findings underscore a critical limitation associated with economic indicators—an omission of essential policy implications. Specifically, if the present generation increases resource security through their economic power and prevailing macroeconomic realities, how will it transform into resource sustainability without considering the economic power and macro-economic realities of future generations. To address this crucial issue, this paper puts forward three policy recommendations: