The Water-Energy-Food Nexus in East Asia: A tele-connected value chain analysis using inter-regional input-output analysis

Population and economic growth pose unique challenges in securing sufficient water, energy, and food to meet demand at the sub-national (regional), national, and supra-national level. An increasing share of this demand is met through trade and imports. The unprecedented rapid growth, extent, and complexity of global value chains (GVCs) since the 1980s have reshaped global trade. The GVCs – and new economic patterns of regionalization – affect the demands on water, energy, and food within countries and across global supply chains. East Asia is of particular interest due to the region’s rapid economic growth, substantial population size, high interdependence of the region’s economies, and varying degree of resource availability. While greater interdependence across the region has increased the efficiency of production and trade, these activities require the input of water-energy-food and generate disturbances in the environment. The transnational inter-regional input-output approach is utilized in a tele-connected Water-Energy-Food Nexus (WEFN) analysis of the East Asia GVC to assess competing demands for these resources and environmental outcomes. This analysis demonstrates the hidden virtual flows of water, energy, and food embodied in intra-regional and transnational inter-regional trade. China’s current national export oriented economic growth strategy in East Asia is not sustainable from the WEFN perspective. China is a net virtual exporter of nexus resources to Japan and South Korea. China’s prioritization of economic growth and trade in low value added and pollution intensive sectors consumes a great amount of nexus resources within its territory to satisfy consumers’ demands in Japan and South Korea. Japan’s Kanto and Kinki regions and South Korea’s Sudokwon region were the major beneficiaries while China bore the environmental burden associated with the production of exports. For example, net virtual exports from China’s East region included over 1.2 billion m3 of scarce water and 61.3 million metric (CO2 equivalent) tons of greenhouse gases (i.e. CO2, NH4, and N2O) and 2 million metric tons of SOx emissions. Trade is an important mechanism for overcoming resource bottlenecks, but, taking into account environmental linkages, regional specialization is not necessarily mutually beneficial. This analysis demonstrates a mismatch between regional water-energy-food availability and final resource consumption and the lack of attention for environmental impacts in national economic growth strategies. Resource scarce countries like China must, therefore, incorporate trade-off decisions between pursuing national economic growth, incurring environmental degradation, and food security into strategic regional development policies.