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Climate change, rapid urbanization, and the emerging carbon economy, among other factors, have elevated the energy-water nexus from an operational tool to a new joint-resource management and policy paradigm. Nowhere in North America, and in few regions globally, is this need greater than in the Southwest United States and Northwest Mexico. In the states of Arizona and Sonora, investment is inadequate to meet energy and water infrastructure needs. On par with critical infrastructure in economic development terms, agriculture is likewise energy-intensive and currently consumes the largest share of water resources in both states. The important gains to be made through coupled energy- and water-based conservation, including the potential of certain types of renewable energy development to reduce water requirements for electricity generation, raise questions over conventional plans to rapidly increase investments in infrastructure. The purpose of this paper is to assess the region's energy-water nexus through analysis of data on water supply, electrical power generation, and energy consumption. Four cases are examined to illustrate the coupled nature of policies for energy and water: (1) rapidly growing urban centers; (2) water consumed in power generation and the "virtual water" implications of regional interstate power trade; (3) the irrigation-electrical power nexus in agriculture; and (4) coastal desalination and proposed trans-boundary transfer schemes. The paper concludes that conventional water management for cities has a large and rising energy footprint. Conversely, power generation that is often considered "non-consumptive" in this arid region is a major consumer of water. Similarly, there is a major opportunity for energy and water conservation in groundwater irrigation. Finally, desalination may hold promise, particularly for coastal communities, but current costs and institutional barriers suggest that transboundary transfer of desalinated water for general purposes, including environmental conservation and agriculture, has low ftasibility. [ABSTRACT FROM AUTHOR]