129
© Springer Nature Switzerland AG 2020
P. Saundry, B. L. Ruddell (eds.), The Food-Energy-Water Nexus, AESS
Interdisciplinary Environmental Studies and Sciences Series,
https://doi.org/10.1007/978-3-030-29914-9_5
Chapter 5
Economics
Bruce A. McCarl and Yingqian Yang
5.1 Introduction
As the previous chapters have illustrated, the FEW sectors are often strongly linked.
Actions that seek to optimize outcomes for food, energy or water separately often
lead to less than optimal outcomes for the other sectors. Bazilian et al. (2011) conclude that treating the three areas of the FEW Nexus holistically “would lead to a
more optimal allocation of resources, improved economic efficiency, lower environmental impacts, and better economic development conditions, in short, overall, optimization of welfare.” Indeed, much Nexus work arises from an underlying
assumption that by better managing the resources overall societal benefits arising
from those resources can be increased.
Economics is frequently defined as the study of how people allocate scarce
resources when needs and wants of those resources are unlimited. Economics can
provide metrics which can be utilized when evaluating the benefits and costs arising
from potential actions.
Economics also permits one to look at not only total regional welfare but also at
the welfare of participants in the Nexus identifying who gains and who loses under
alternative scenarios. This provides a way to understand the incentives needed to
attain full cooperation in strategy implementation.
B. A. McCarl (*)
Department of Agricultural Economics, College of Agriculture and Life Sciences,
Texas A&M University, College Station, TX, USA
e-mail: mccarl@tamu.edu
Y. Yang
Agricultural Economics, Texas A&M University, College Station, TX, USA
e-mail: yingqianyang@tamu.edu
© Springer Nature Switzerland AG 2020
P. Saundry, B. L. Ruddell (eds.), The Food-Energy-Water Nexus, AESS
Interdisciplinary Environmental Studies and Sciences Series,
https://doi.org/10.1007/978-3-030-29914-9_5
Chapter 5
Economics
Bruce A. McCarl and Yingqian Yang
5.1 Introduction
As the previous chapters have illustrated, the FEW sectors are often strongly linked.
Actions that seek to optimize outcomes for food, energy or water separately often
lead to less than optimal outcomes for the other sectors. Bazilian et al. (2011) conclude that treating the three areas of the FEW Nexus holistically “would lead to a
more optimal allocation of resources, improved economic efficiency, lower environmental impacts, and better economic development conditions, in short, overall, optimization of welfare.” Indeed, much Nexus work arises from an underlying
assumption that by better managing the resources overall societal benefits arising
from those resources can be increased.
Economics is frequently defined as the study of how people allocate scarce
resources when needs and wants of those resources are unlimited. Economics can
provide metrics which can be utilized when evaluating the benefits and costs arising
from potential actions.
Economics also permits one to look at not only total regional welfare but also at
the welfare of participants in the Nexus identifying who gains and who loses under
alternative scenarios. This provides a way to understand the incentives needed to
attain full cooperation in strategy implementation.
B. A. McCarl (*)
Department of Agricultural Economics, College of Agriculture and Life Sciences,
Texas A&M University, College Station, TX, USA
e-mail: mccarl@tamu.edu
Y. Yang
Agricultural Economics, Texas A&M University, College Station, TX, USA
e-mail: yingqianyang@tamu.edu