In this chapter, we discuss some important elements of the economics of energy efficiency. We start by illustrating the definition of energy efficiency from a microeconomic point of view and then describe the most important empirical methods to measure the energy efficiency of an economy, a region, a firm, or a household. Afterwards, we present how households can evaluate investments in energy efficiency. To this end, we introduce the concept of lifetime costs. A central discussion of this chapter is developed on the concept of energy efficiency gap, that is a situation in which economic agents don’t invest in the most energy-efficient solutions, although they may be the most beneficial. We then explain the barriers that give rise to the energy efficiency gap, paying special attention to behavioural anomalies, in particular bounded rationality and the role of energy-related financial literacy. At the end of the chapter, we also present the rebound effect and discuss issues in developing countries related to the topics discussed in the chapter.

The claim that there exists a complex ‘nexus’ linking water and other global challenges has become a commonplace of discourse on resource governance. But how should the relations between water and cognate areas be understood? This final main chapter of the book takes up this question by examining the four main relations underpinning water security and insecurity today: with trade, agricultural production, energy and capital. The chapter considers these four relations in turn, in each case providing an overall mapping of the 'transformations and circulations' that define them and an assessment of how they shape water-related (in)securities, especially in the book's five divided environments. The chapter argues that water is much more a dependent than an independent variable in nexus relations and that patterns of water (in)security are determined neither by natural availability nor market efficiencies, but instead by countries’ positionings within a structurally unequal and hierarchical capitalist world order. Against neo-liberal arguments, the chapter thus argues that contemporary capitalist nexus relations are a central part of the problem of water – and climate – security.

It is widely assumed that the extra purchase cost of a high–efficiency car or furnace or other device is more than compensated by the operating cost savings, making energy efficiency profitable. This view is common to physicists, engineers, and many environmentalists. But research, mostly by economists, shows that newer, more efficient technologies that require longer periods of successful operation to pay off the extra purchase cost also pose higher risks, which can negate their profitability. And, even when these technologies are successful, they may be used more because of their lower operating costs – what is known as the rebound effect. While advocates should not abandon their pursuit of energy efficiency, they need to also advocate for carbon pricing and regulations since these policies are essential to cause fuel switching, and in turn will improve the economics of energy efficiency.