Game theory at the nexus of food, water and energy

Jaejin Jang, associate professor of Industrial engineering, used to work on scheduling: the allocation of resources and tasks in an industrial production process to maximize its efficiency.

But environmental concerns have shifted his research interest toward the food, water and energy nexus: the complex web of actions we take to grow food, provide drinking water and supply sufficient energy for both. These three resources are inextricably linked; for example, energy is needed to deliver drinking water, but water is also needed to run power plants.

Competition for resources naturally results in competing interests of individuals and private companies. For Jang, the government’s role is to help reconcile these interests with a greater societal good, such as environmental protection.

“Helping to develop government policies that satisfy not only individual interests, but also a shared societal goal is both an intellectual challenge and a globally important topic,” he says.

To illustrate the nature of the problems he studies, Jang uses the example of biofuel, whose goal is to reduce carbon emissions from fossil fuel-powered cars and trucks.

Biofuel can be derived from a variety of plant material. If we use corn to produce ethanol, its price will likely increase due to an increased market demand. It can now be sold as both a food crop, to animal farms and grocery stores, and as an energy crop, to corn-based refineries that convert it to biofuel. Growing more corn also requires more water and other energy-intensive resources, such as pesticides and fertilizers, which reduces the climate benefit of switching to biofuel.

Therefore, the government may decide to promote other energy crops, such as switchgrass, by providing subsidies: financial incentives for farmers to grow, and for refineries to process, switchgrass instead of corn.

To determine whether the net monetary benefit to society (the output) is greater than the taxpayer-funded government subsidies for switchgrass (the input), Jang uses techniques from game theory, a subfield of mathematics for studying competition and cooperation between different players or agents. In this case, the players include farmers, refinery owners, other biofuel-based companies and all end consumers.

Once he has built a mathematical model that connects these players and their actions, Jang uses computer simulations to evaluate the many individual decisions they can make. These

decisions also depend on financial resources and existing technology, which may determine how much water is needed to generate a certain amount of energy or vice versa.

“Since private entities have the authority to make their own decisions in order to maximize their own profits, we cannot control their behavior, which makes government policies an important tool for achieving a larger shared goal like reduced carbon emissions,” Jang explains. “By sharing the results of my models with decision-makers, I hope to inform the design of these policies and help people allocate the resources at their disposal as effectively as possible.”

by Silke Schmidt