Wednesday, May 16, 2012

Resources: Rising Resource Demand A Big Challenge

demand for resources
By J.C. Suresh
Courtesy IDN-InDepth NewsReport

TORONTO (IDN) – "Unless the transatlantic community takes the lead in addressing the challenges arising from the unprecedented global demand for land, energy, food, water, and minerals, severe market disruptions are likely to occur, as are increased chances of violent conflict at interstate and local levels in many 'hot spots,' especially in Asia, Africa, and Latin America," warns a new study.

Titled the The Global Resource Nexus – The Struggles for Land, Energy, Food, Water, and Minerals,Nexus, the report states: "Over the next 10-20 years, the world is likely to see accelerating demand for most natural resource commodities, as well as increasingly volatile markets. Scarcities are likely to be more common."

Resource or material scarcities, as experienced by states, firms, or populations, arise primarily from failures of governance rather than from a physical shortage of resources or materials. Yet natural resource governance faces increasing complexity, especially when the linkages and inter-dependencies between different resources are considered, says the report released on May 15, 2012 in Washington DC.

A collaborative effort by American and European fellows of the Transatlantic Academy, it is the first international study that analyses the nexus of challenges that arise from interconnections between five different key and interrelated resources – energy, fresh water, food, minerals, and land.

More than any other factors, these five resources comprise the most valuable ones in terms of international trade, are essential for human security, and will be the most likely to set off international conflict. By looking at the interrelationship of these key resources, the study provides an integrated view and avoids the stove piping of only looking at one resource in isolation from the others and demonstrates how changes in one resource effects the others.

The study also emphasizes three additional factors that magnify the basic resource problem: climate change and its impact on weather patterns and rising sea levels; the growth of a new middle class in Asia and Latin America that aspires to the same levels of affluence enjoyed by the West; and the parallel growth of a new global underclass with billions of people lacking the bare necessities for survival.

The report identifies three realms of the resource nexus:

Markets: Markets for resources operate at local, regional, and global levels along commodity chains. These markets transmit effects between resources and between regions in an unprecedented way – for example, between energy and minerals in the case of lithium, and between food and energy in the case of biofuels.

The study avers that poor transparency prevents the effective management of resources through their life cycle in a sustainable manner. Risks of illicit trade exacerbate common future risks of high and volatile prices and abrupt interruptions of supply chains. Examples include phosphorus, biofuels, coltan, unconventional energy resources, water management, and poor incentives for recycling, reuse, and increased material efficiency.

State interests and inter-state relations: Many resources straddle national boundaries. Powerful state actors may choose to exploit these resources unilaterally rather than engaging in transnational governance institutions to manage the resource more equitably, says the study. It adds: "Such actions raise the risk of violent conflict. Water is a major focus of such tensions. Several maritime disputes remain unresolved and involve hydrocarbon resources and fisheries, notably in the East and South China Seas, the Eastern Mediterranean, and the South Atlantic. Dam building by upstream states on major rivers threatens the livelihoods of populations in downstream states in South and Southeast Asia and along the Nile, for example."

Finally, climate change threatens to destabilize weak and highly vulnerable states and societies.

Local human security: Many urban and rural communities struggle to manage the resource nexus at a local level. Access to water, food, land, and energy are central challenges in people's everyday lives in the resource nexus on the ground. Resource depletion and environmental degradation can therefore lead to local competition for resources, migration, violence, terrorism, and the emergence of ungovernable spaces, with the potential for international repercussions. Water provision for growing mega-cities, for example, competes with agricultural and mining uses, while climate change threatens rural livelihoods.

This report proposes four areas for further analysis, debate, and action:

1. "Getting our own house in order" focuses on responses within and among the EU, the United States, and Canada. These include doubling resource efficiency in less than 20 years; working together to transition toward sustainable energy systems; coordinating efforts to properly price resources by reducing unsustainable subsidies and pricing carbon and resources; rethinking our ideas of “the good life” and economic growth based on ever-increasing resource consumption; working together to resolve disputes in the transatlantic neighbourhood; and reinvesting in global leadership by ratifying treaties and reforming transatlantic and global institutions.

2. Engaging "the wider Atlantic" seeks to expand the common notion of transatlanticism where resource issues are concerned, and draws inspiration from the observation that the Atlantic Basin – North and South – is endowed with substantial reserves of energy fuels and minerals, and opportunities to increase sustainable agricultural production and food security.

Early-stage projects might include establishing knowledge centres for coordinating mapping of resources reserves and extraction rates and agricultural production, fisheries management, and water trends. Other initiatives may include improved coordination of development and technological initiatives, such as new biofuels. Finally, a host of inter-state disputes and transnational security challenges need sustained, high level attention.

3. "Working with new players" offers ideas about how to better integrate transatlantic interests and concerns with those in rapidly growing developing countries and the many critical resource exporting states. Transatlantic leaders must redouble their efforts to engage China and India across the spectrum of resource nexus challenges.

Secondly, public and private actors in the transatlantic region have a host of shared interests in better integrating emerging market states and firms into effective institutions for supply chain management and a host of schemes for increased transparency, certification, and standards harmonization. Finally, engaging the new players offers opportunities to enhance cooperation on related security challenges.

4. "Strengthening global cooperation" argues that transatlantic actors must reinvest and reinvigorate some aspects of global institution building to address resource-related challenges. Such efforts should be directed at knowledge creation and globally-networked, participatory governance.

The report pleads for priorities to include an international data hub to provide harmonized data on different aspects of the resource nexus; a global food and water facility of helping to increase capital investments to expand food production, clean water, and sanitation; a network of training centres directed at resource management; guidelines on land-use governance; networks for global policy learning for the improved governance of cities; and the establishment of global, multi-stakeholder forums in collaboration with regional forums to raise the profile of the challenges associated with resource nexus governance. [IDN-InDepthNews – May 15, 2012]

2012 IDN-InDepthNews | Analysis That Matters

Image: From cover of the report | Credit: Transatlantic Academy