Water limits dominate Greece’s food, energy and ecosystem trade-offs, model finds

A new modelling study of Greece argues that water, not energy or trade, is the binding constraint on the country’s water-energy-food-ecosystems (WEFE) nexus, and that policies aimed at a single sector in isolation can backfire across the whole system. The research, published in Discover Sustainability, uses a static, multi-sector computable general equilibrium (CGE) model calibrated to a 2015 Social Accounting Matrix and regionalised to separate key crop activities in the Karditsa region from the rest of Greece. In the model, water and energy enter production as intermediate inputs, domestic and imported goods are treated as imperfect substitutes, and household welfare is measured with a benchmark Cobb-Douglas utility index, allowing shocks to propagate through the entire economy rather than through one sector at a time.

The authors analysed seven scenarios: an increase in water tariffs, recycling of the resulting tariff revenue, a tariff combined with water scarcity, a fossil-energy import-price shock, a reduction in the activity tax on renewable energy, a combined energy-transition scenario, and a food-system import-price shock. The starkest results came from the water-scarcity case. When a water tariff is paired with a 10% constraint on water supply, water activity falls by 16.6%, Greek agricultural activity contracts by 9.8%, household utility declines by 13.1%, and the composite WEFE index, which summarises performance across the nexus, drops by 5.3%. These are model estimates of economy-wide responses, not observations of an actual drought, but they indicate how strongly water availability conditions the rest of the system in the calibrated data.

Energy shocks produced more moderate effects. A fossil-energy import-price shock generated cost-push pressures in water supply, food processing and the chemical industries, raising production costs in sectors that depend heavily on energy as an intermediate input. By contrast, supporting renewables through a reduction in their activity tax produced small positive effects across the system, and the combined energy-transition scenario also yielded modest gains. The asymmetry matters for policy design: in this model, price shocks on imported fossil energy transmit costs into water and food sectors, while renewable-energy support delivers small but broadly positive system-wide effects rather than concentrated benefits in one industry.

Trade protection showed mixed outcomes. Import substitution supported selected upstream activities, but it contracted food processing, livestock production and the overall nexus index. The pattern suggests that shielding domestic producers from import competition can shift activity between sectors without improving the integrated performance of the water-energy-food-ecosystems system, and can even reduce it once downstream processing and livestock are accounted for.

The regionalisation of the model to Karditsa, a major agricultural area in Thessaly, produced a notable caveat. In the calibrated regionalised Social Accounting Matrix, the selected Karditsa crop accounts appear less exposed to the tested shocks than national agriculture. The authors are explicit that this should not be read as evidence that Karditsa is hydrologically resilient to drought; it reflects the structure of the calibrated data rather than a hydrological finding, and the model does not capture local water-balance dynamics that a drought would impose.

Because the CGE framework links water and energy as intermediate inputs into every production activity, the results highlight trade-offs that single-sector analysis tends to miss. A water tariff raises revenue and can signal scarcity, but combined with an actual supply constraint it imposes measurable welfare losses on households and measurable contractions in agriculture. The authors argue that the findings support integrated water-efficiency, renewable-energy and food-system policies rather than single-sector interventions, with implications for the Sustainable Development Goals on water security (SDG 6), food security and sustainable agriculture (SDG 2), clean energy (SDG 7), climate action (SDG 13) and ecosystem protection (SDG 15).

For Mediterranean economies facing intensifying resource pressure and climate variability, the study offers a template for quantifying nexus trade-offs before policies are implemented. Its central message is that water constraints dominate the Greek nexus in the modelled scenarios, that renewable-energy support produces small positive system-wide effects, and that trade protection yields mixed results across the food system. By making these interactions explicit in a single economy-wide framework, the research demonstrates the relevance of a WEFE perspective for integrated sustainable-development policy, while the authors caution that the Karditsa results describe the calibrated data, not hydrological resilience on the ground.

Subject of Research: Computable general equilibrium modelling of the water-energy-food-ecosystems nexus in Greece

Article Title: A regionalised computable general equilibrium model assesses water energy food ecosystems nexus trade offs under policy and climate shocks in Greece

Article References: Fosah, G., Kleftodimos, G., Kyrgiakos, L. S., Vlontzos, G., Zander, P., Nejatiyanpour, E., Mosquera-Losada, M. R., & Hosseini-Yekani, S.-A. (2026). A regionalised computable general equilibrium model assesses water energy food ecosystems nexus trade offs under policy and climate shocks in Greece. Discover Sustainability, 7(1), Article 1508. https://doi.org/10.1007/s43621-026-04604-9

Image Credits: AI Generated

DOI: 10.1007/s43621-026-04604-9

Keywords: regionalised, computable, general, equilibrium, model, assesses, water, energy, food, ecosystems, nexus, trade