Strategic Financing for Sustainability : Enhancing the Food-Energy-Water Nexus in Iran

This thesis investigates the role of financing in optimizing the Food-Energy-Water (FEW) nexus in Iran’s agriculture sector. The concept is critical for effective resource management in the face of climate change, population growth, urbanization, geopolitical challenges, and resource scarcity in the country. This study acknowledges the interlinked nature of food production, energy consumption, and water resource management in the context of the agriculture sector, and therefore aims to address the gap in understanding how financial mechanisms can enhance the effectiveness of the FEW nexus, particularly in Iran’s unique context of environmental stresses and socio-economic challenges.

The existing financing mechanisms and technological solutions have proven insufficient in optimizing the nexus, highlighting the need for innovative financing strategies to support the resource management practices. This research deploys a dual approach, combining qualitative landscape analysis of current resource management practices and financing structures with quantitative analysis through fixed effects estimator models, with an aim to explore the interactions within the nexus and identify key policy variables that can be targeted through financial interventions. The landscape analysis posits that current policies and financing mechanisms addressing the FEW nexus angles, have largely failed due to inadequate funding, bureaucratic hurdles, and inefficiencies, while neglecting the inherent interconnections between water, food, and energy. Meanwhile, the empirical analysis shows that the public sector’s massive investments in electrification and irrigation modernization have led to a rebound effect due to lack of governance, requiring a new perspective on how financing mechanisms are developed. In the end, this thesis develops four strategic financing schemes with an aim to address the FEW nexus dynamics in the agricultural sector of Iran more holistically and efficiently.