The water-energy nexus: how energy efficiency reduces your water footprint

Water and energy form an interdependent system that directly influences the environmental footprint of any organisation. Much of the energy we consume needs water to be produced and, conversely, abstracting, treating, and distributing water consumes energy. That is why energy efficiency is also a lever for reducing the water footprint.

In this article we explain what the water-energy nexus is, what it implies for companies, and which concrete measures make it possible to act on both resources at once.

What is the water-energy nexus?

The water-energy nexus describes the interdependence between water consumption and energy use in production systems. Almost every activity that consumes energy uses water directly or indirectly, and every use of water requires energy for abstraction, treatment, transport, and wastewater management. It is a link recognised by bodies such as the International Energy Agency (IEA), which analyses it regularly in its reports.

The link is operational and, to a large extent, quantifiable: reducing energy consumption tends to reduce the water footprint associated with that energy, although the magnitude depends on the energy mix in each case.

Why does energy efficiency reduce the water footprint?

Energy generation is one of the largest water users globally, mainly because of the cooling of thermal power plants and the extraction and processing of fuels. That is why each kWh saved avoids the water associated with:

• the extraction and processing of fuels,
• the cooling of thermal power plants,
• electricity generation itself,
• the distribution infrastructure.

In this way, energy efficiency directly reduces the organisation's indirect water footprint, in both its blue and grey components.

Which sectors are most exposed to the water-energy nexus?

The impact is not uniform. Some activities concentrate a high simultaneous dependence on water and energy, which increases their exposure to operational, regulatory, and cost risks.

Industry

Thermal processes, cleaning, cooling, and transformation create a dual dependence on water and energy, especially in sectors such as chemicals, paper, steel, and ceramics.

Agri-food

Irrigation, processing, and refrigeration make the agri-food sector one of the most exposed to water stress and energy stress.

Buildings and services

Heating and cooling, domestic hot water, and electricity are the main sources of cross-consumption in buildings and service centres.

Companies in these sectors tend to obtain better returns when they address both vectors in an integrated way rather than separately.

How is the water footprint associated with energy consumption measured?

Measuring the water footprint linked to energy brings to light impacts that go unnoticed in traditional analyses, by connecting energy data with water use across the value chain.

Direct water footprint

The direct water footprint measures the water consumed in a company's own processes: abstraction, cleaning, cooling, and discharges.

Indirect water footprint

The indirect water footprint measures the water associated with the energy and inputs consumed (electricity, fuels, raw materials). In many service and light-industry companies, the indirect footprint is the largest part of the total impact, so ignoring it distorts the diagnosis. You can go deeper into this distinction in our article on the difference between direct and indirect water footprint.

Which energy efficiency measures reduce the water footprint the most?

Not all measures have the same effect on water. Those that reduce both energy consumption and indirect water use at the same time are the ones that maximise the environmental and economic benefit.

Efficient electrification

Replacing obsolete thermal equipment with efficient electric solutions reduces the water consumption associated with fossil fuels.

Process optimisation

Improvements in motors, compressors, boilers, and thermal systems simultaneously reduce water and energy.

Renewable energy

Solar photovoltaic and wind energy have a far lower water footprint per kWh than conventional thermal generation, so changing the electricity mix also reduces the electric footprint and its associated water.

Digitalisation and monitoring

Real-time measurement makes it possible to detect hidden inefficiencies in water and energy and to prioritise the actions with the greatest return.

What is the relationship between the water-energy nexus and the CSRD?

The ESRS standards of the CSRD require companies to report water and energy consumption and the associated risks. Treating both impacts in isolation creates inconsistencies in reporting.

Companies that address the water-energy nexus improve the quality of their information, better identify physical risks (droughts) and transition risks (energy costs), and strengthen their resilience. For the water calculation, our guide on how to measure the water footprint in companies can help, and for energy cost, the article on the impact of energy costs on companies.

Common mistakes in water-energy management

Managing the nexus is often limited by partial approaches and a lack of integrated data. The most common mistakes are:

• measuring water and energy in silos, without cross-referencing the information,
• prioritising only immediate economic cost,
• ignoring the indirect water footprint,
• not normalising the indicators so they can be compared.

Integrated management eliminates these blind spots.

Integrated efficiency: the key to sustainable water and energy management

The water-energy nexus is consolidating as a critical axis of corporate sustainability and risk management. Integrating energy efficiency with data-driven water management makes it possible to reduce impacts, optimise costs, and strengthen resilience against climate change and regulatory pressure.

Frequently asked questions about the water-energy nexus

Do all companies have an indirect water footprint?

Yes. Any company that consumes energy or buys inputs has an indirect water footprint, even if it does not consume much water directly.

Is it more effective to save water or energy?

It depends on the case, but in many organisations saving energy generates a relevant indirect water reduction, on top of the direct water saving. The ideal is to act on both.

How should investments be prioritised?

With combined water and energy indicators, prioritising the measures that reduce both resources at once and have the best return.

Is it mandatory to report this nexus?

Increasingly so. The CSRD, through the ESRS, incorporates water and energy in a cross-cutting way in the sustainability reporting of companies in scope.

To connect your water and energy data and reduce your indirect water footprint, discover Manglai's water footprint module.