The increasing pressure from the world’s population on limited natural resources has reached an urgent level. The global demand for water, food, and energy is unsustainable, and poses a threat to human health, political stability, and environmental well-being. The poor in developing countries are most vulnerable to the negative effects of the exploitation of constrained resources, and the segregation of development programs by sector means that policy interventions do little to help. Currently, development policies are created in isolation from one another, within their own sectoral realms, and inter-sector coordination is rare. Policy interventions that affect more than one sector are key to holistic, sustainable development, but because they face an ownership issue, not falling under any one sector’s jurisdiction, they often go unaddressed. The alternative to the status quo is the use of a nexus perspective, which emphasizes the interconnectedness of sectors and seeks to implement policy interventions with the best net outcomes. Policy makers are encouraged to adopt “systems thinking”, to resist over-focused investments and interventions, and to seek regulatory cooperation.
The body of nexus literature is growing mainly with the establishment of theoretical frameworks and macroeconomic studies that model outcomes of nexus interventions. This thesis contributes to the pool of nexus literature with microeconomic studies that are evaluated from the perspective of the food-energy-water (FEW) nexus. Microeconomic analysis is valuable to the nexus perspective not only because it informs macroeconomic models, but also because it provides empirical evidence of nexus forces at work.