Water stress, agricultural efficiency, energy use, and CO₂ emissions: evidence from GCC countries

Abstract This study examines the relationship between water stress, agricultural efficiency, energy use, and CO₂ emissions in GCC countries, a region characterized by extreme water scarcity and energy-intensive development patterns. The coexistence of severe freshwater constraints and carbon-intensive energy systems creates a setting in which resource management and environmental pressure are tightly interconnected within the water–energy–agriculture–environment nexus. Understanding these interdependencies is essential for designing effective sustainability strategies in arid, fossil fuel–dependent economies. Using panel data for six GCC countries over 1992–2023, the study applies a second-generation panel econometric framework that accounts for cross-sectional dependence and heterogeneity, including Westerlund cointegration tests, the Common Correlated Effects Mean Group (CCE-MG) estimator, and an error-correction model (ECM). The results confirm a stable long-run relationship among the variables. Energy use emerges as the dominant driver of CO₂ emissions in both the short and long run, while water stress affects emissions primarily through long-run structural adjustments. In contrast, agricultural efficiency does not exert a statistically significant impact at the aggregate level. These findings underscore the central role of energy systems in shaping environmental outcomes in GCC economies. From a policy perspective, reducing emissions requires prioritizing the decarbonization of energy systems, particularly in water supply processes such as desalination and groundwater extraction. Expanding renewable energy use in water production and improving energy efficiency are therefore critical. While enhancing agricultural efficiency supports better resource use, its contribution to emission reduction remains limited without broader structural reforms. Overall, the results highlight the need for integrated policy frameworks that align water, energy, and agricultural strategies to achieve long-term environmental sustainability.