Historically, energy and water systems have been developed, managed, and regulated independently at both national and international levels. Water scarcity, variability, and uncertainty are becoming more prominent, potentially leading to vulnerabilities of several domestic energy systems. Aware of the importance of addressing this undeniable relationship, a high-level panel on this issue was held on the fringes of the ECPA Second Ministerial meeting held in Mexico last month.

The concept of “energy for water” or “water for energy” gains meaning when you learn that water use for energy is estimated at 15% of global water withdrawals, placing energy second only to agriculture in water use. In Panama for instance, the agency that supplies potable water is perhaps the greatest consumer of electricity in the country. Conversely, approximately 13% of energy consumption in the U.S. is water-related. With these figures in mind, a panel of ministers came together on May 25 at a luncheon to discuss the energy-water nexus, highlighting crucial interdependencies between energy and water.

Growing population and economic trends, pose a greater demand for both water and energy, along with severe drought conditions resulting from climate change. Predictions forecast that by 2030, two thirds of the world’s population will live in regions of water shortage. This represents an enormous challenge, especially for the energy sector. Hydropower capacity is also at risk, especially with droughts being experienced in some Western Hemisphere countries. For example in the U.S., the California drought is cited as the worst on record in 1200 years, and the state’s hydropower capacity has fallen more than 50% in the last 4 years. Panama’s electricity sector on the other hand, is more than 60% reliant on hydropower. In addition, the Panama Canal operates with fresh water.

Since water is required for many sectors, there is tension between agriculture, energy, and other sectors as to water use. Said tension between countries will remain, especially as water becomes more of a constrained resource. A shared challenge is that several countries in the Americas used to having abundant water resources, and this has resulted in a lack of sensitivity with regards to water conservation and efficiency. Opportunities for water conservation include deployment of renewable energy technologies with low water consumption and withdrawal rates (such as wind and solar PV), energy and water efficiency, and use of nontraditional water sources (such as treated wastewater). Furthermore, the electricity sector has undergone a transformation as far as new investments and technologies, but perhaps there’s room for progress in the water sector, starting with best practices and improved policies.

Some countries have come up with tools and solutions for efficient water usage and conservation. The U.S. for example, has created a water–energy Sankey diagram, published in the 2014 which helps visualize the interdependencies of energy and water at the national level. The panel agreed that this useful tool could be replicated for each Member state as a productive exercise. The country is also starting to see reuse of water in shale gas production. These lessons learned should be shared with other Western Hemisphere countries. Panama for his part has created a system for gathering data by taking measurements in water basins and the Canal. There’s potential for fine-tuning this system so it becomes a regulation. Furthermore, Panama is working on the technical development of a design model that allows for water use optimization. This minimizes need for major water storage facilities.

This gathering ended with an exchange of potential multilateral energy-water initiatives, given the advancements in specific energy-water solutions being implemented by the private sector. Said advancements represent an opportunity for all countries to start working together and share information to mutual benefit. An example provided was in the area of unconventional oil and gas production, where many countries have substantial resources but water is a major concern. There is potential to develop how water is managed, treated, and reused to beneficial purpose, and this is a tremendous opportunity for multilateral collaboration.

In terms of international agreements, the U.S. is having early discussions with the International Energy Agency (IEA) about the possibility of an IEA Implementing Agreement on the water–energy nexus. This would represent an opportunity to build a multilateral platform for the water–energy nexus, and could include IEA member countries, non-members countries, civil society and academia. Moreover, a potential derived topic to consider is integrated water–energy planning. Panama for instance looks forward to multilateral efforts that address the future impact of climate change, while Mexico recognizes that different sectors (e.g. energy, water, food) are competing for resources, and energy security is at stake.

The ECPA Clearinghouse and the OAS Department of Sustainable Development are planning a regional water–energy nexus dialogue to be held in Panama City during the last quarter of 2015.