Some 40% of the fresh water taken up in the United States is used to cool power plants, and this fact brightly underlines the intertwined relationship between water and energy resources. Thus, the threat of drought – such as the large-scale one the U.S. suffered last year – poses a huge risk to both food production and energy supplies. One good example: An Illinois power plant had to be taken off line temporarily in summer 2012 when “its water supply became too warm to effectively cool the plant,” according to the IEEE Spectrum, an Institute of Electrical and Electronics Engineers publication.

Citing a study by the Union of Concerned Scientists (UCS), the IEEE further noted that even gas-fired power plants account for a large amount of water use – not for cooling — but often during the hydrofracking process used to break up underground rock and release the gas in the first place.

The good news about these competing demands is that technologies exist to increase energy efficiency, which, along with the use of right kinds of renewable energy, could significantly cut conventional energy demand and thus water demand, too. It’s been done before. Highly effective energy efficiency policies have helped keep electricity use levels in U.S. homes flat between 1978 and 2005 (although bigger houses and more plug-in devices completely offset the large energy savings achieved over the period).

This idea of competing natural resources will come increasingly into focus over the next several years as the tension between demand and supply tightens. What this might mean for business and the environment was the subject of a recent special report from Knowledge at Wharton and the Wharton Initiative for Global Environmental Leadership (IGEL), entitled, “The Nexus of Food, Energy and Water.” The report expands the on the basic idea of the interdependence of water and energy to include food, creating an even more complex matrix of challenges. Meantime, innovative thinking and technologies are beginning to work through the issues.

As the report notes, more than one billion people lack access to clean drinking water, sufficient food and electricity. Meanwhile, the global population is growing by some 80 million people every year. By 2030, the nine billion people living on earth will need 30% more water, 40% more energy and 50% more food to survive.

Given the complex relationships among food, energy and water, meeting these demands will require thinking in terms of systems, not silos, according to the report. It will take collaborative approaches that embrace rather than battle natural processes. And it will mean new technologies and approaches to everything from bio-fuels to desalination.

The report also notes that businesses increasingly realize that constraints on food, energy and water threaten their own sustainability, and that there is an opportunity in increasing efficiency and reducing waste. It also looks at the great strides underway in desalination, where creating freshwater from saltwater can now use a fraction of the energy required by older technologies in some cases. In addition, the report analyzes some of the new policies backed by innovative technologies that offer some solutions to the rapidly rising demand for food, and potential solutions to the “food vs. fuel” challenge.

The special report includes the following articles:

‘New Water’ Offers and Ocean of Hope

Growing Food, Growing Problems

The Transportation Nexus: Ethanol Is a ‘Food vs. Fuel’ Issue

You can also download the entire report here.