Resources Futures

Chatham House have recently brought out a report “Resources Futures”. In it they look at the future of resources over the next few decades. This blog has covered some of the energy implications of this report here. The report is important enough to merit a blog post summarising the reports main findings on the other resources mentioned.

Background

For most of the last 150 years the global story has been about the rise and rise of the Western economies. They have had the worlds largest economies and dominated the worlds resources. This is particularly true since the second World War. However, after the collapse of communism this started to change, the G7 group of countries expanded to include Russia. More recently even this group of countries has been insufficient to “solve” the worlds problems and after the 2008 financial crash was expanded to be the G20. This includes the so called “BRIC countries” (Brazil, India and China). But even this grouping maybe out of date. A whole host of other countries are undergoing rapid economic growth such as Turkey, Botswana, Kenya, Turkey and Bolivia. As these countries develop they consume more energy, water, metals and food as their citizens become wealthier. Hence we have a problem. At the same time population is growing putting more pressure on resources, the estimate for the global population before it peaks is in the range of 8.1 to 9.7 billion in 2040, increasing from about 7 billion today.

Expectations of resource demand increases

The Chatham house authors warn that some of the data used to make projections are in short supply.

Food. By 2020 the projected demand for cereals is likely to increase by about 15%, for vegetable oil seeds, protein (used as feed) and meat by 20%. Meanwhile demand for sugar, vegetable oils and fresh dairy produce surges by roughly 25%. Cereal demand is expected to reach 2.7 billion tonnes by 2030 up from 1.9 billion tonnes in 2000. Much of this increase is due to biofuels. In 2010 fisheries produced 128 million tonnes of fish products this will need to increase by an additional 14 million tonnes by 2020 (27 million in 2030). Almost all of this increase in fish consumption comes from developing countries. Meat consumption increases at 1.7% a year (mainly poultry).

Metals. OECD data suggests a 250% increase on 2005 demand by 2030. Aluminium and steel lead. Due to space considerations we were not able to write more than a very brief amount on non-energy resources in our book, but one thing to note is the energy used to mine and extract metals is rising fast because the ore strengths are falling. Like oil and gas all the easy to extract stuff has been mined first. The report gives little indication of when metal supply crunches are going to occur but other people have made some guesses and for some metals its not good…

Fertilizers. Nitrogen fertilizers are fossil fuel dependent (due to the energy used in the Haber process) whereas potash and phosphate are mined (but still somewhat fossil fuel dependent). Chatham house state “Annual demand for nitrogen, phosphate and potash will grow by 1.7%, 1.9% and 3.1% respectively to 2015″. Other problems mentioned are lower yields due to climate change, soil degradation and water shortages. The authors describe the problem thus;

In sum, agriculture must be radically reformed if production is to keep pace with demand, remain resilient to climate change and stay within environmental limits relating to the use of land, water and fertilizers. There are, however, significant opportunities to improve farm practices and improve water management and fertilizer application.

Wood. Traditionally used as a biomass fuel (for cooking) in the developing world, demand is rising due its use in the developed world as biomass fuel (for electricity production). No figures are given on future projected demand.

The implications

As Chatham house put it “volatility as the new normal”. Price volatility is the highest its ever been overall for metals, food and fuel. Price volatility isn’t great for consumers or producers and political problems can occur in areas where reliance on low prices is highest, such as food and oil. We saw this with the Arab spring and other countries such as Mexico where food riots occurred. The question is how much can technology help? Can technical innovation cope to overcome demand constraints and environmental problems? The report is open minded. It depends on a number of factors, finance to fund innovation, policy drivers such as feed-in-tariffs and resource supplies.

Governments have tended to react to the threats of a resource crunch in the following ways. Resource nationalism (keeping more of their production of a particular resource at home), formation of cartels to maintain high prices, trying to increase production at home, increasing strategic stockpiles of materials and most controversially of all the purchase of land by sovereign wealth funds. All of these policy drivers have disadvantages, for example resource nationalism can lead to lack of foreign investment and therefore a drop in production.

Chatham house suggest a number of more positive policies to overcome the above. These include better efficiency and use of resources, more recycling particularly of metals, substitution of different materials and a move towards a circular economy (this last point is going to be the subject of a another blog post). The authors also suggest a new politics with better intervention to prevent food price increases. A number of mechanisms are considered including a global virtual reserve in which countries would intervene in global futures markets to forestall price rises and also buy foodstuffs from biofuel producers. (Would it not be easier to limit trading in food as a commodity as used to be the case?). The report also recommends increased environmental protection since we are dependent on the environment for so much of our resources. Finally we should  be investing in producing countries to give better government and environmental resilience as well as better transparency and data on resources.

This is a well written and researched report which is beginning to think beyond technofixs and business as per usual. Its a great pity not many Christians have even thought about these issues since we will have to face them over the next decade or so. As Rebekah Simon-Peter wrote in “Green Church”;

For example, have you ever tried to make lunch without drawing upon the bounty of the earth? It cannot be done. Even if you are having a plastic sandwich, neon chips and a diet pop from the corner store, your lunch still finds its source in the earth. There is no life for humanity without a healthy creation.

For more information see here.

Neil

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