Resource insecurity is ‘back with a vengeance’
The world is undergoing a period of intensified resource stress, with supply disruptions, volatile prices and accelerated environmental degradation likely.
This stark outlook was presented in a report released today by the UK thinktank Chatham House which suggests that the scale and speed of resource demand growth from emerging economies and badly designed, short-sighted policies are responsible for the insecurity.
The report claims that “the sceptre of resource insecurity has come back with a vengeance.” One way of tackling this, it suggests, would be the formation of a global body conceived as a “coalition of the committed”, comprised of delegates from the 30 most resource driven countries around the world.
Resource volatility could give rise to increasing political tensions warns the report, and could trigger a chain of overreactions or even militarised responses that exacerbate these tensions.
The discovery of shale gas and maturation of non-conventional gas and oil has prompted some analysts to speculate that resource-related tensions will ease.
However, the report warns that these projections are hopeful, indicating that many of the fundamental conditions that gave rise to the tight markets in the past ten years remain.
The main recommendation the report sets out is the formation of a club of the world’s principal resource-producing and consuming countries, to fill existing governance gaps on resource and scarcities governance.
The proposed group, to be known as the ‘Resources 30’, would comprise of leaders and officials from 30 of the most resource orientated countries.
It would provide an informal but dedicated forum where governments and stakeholders could address specific resource-related issues such as price volatility and encourage transparency of state-owned companies.
In addition, the report suggests that mechanisms to reduce the impacts of short-term commodity price shocks should be explored.
For example, major grain-based and oil-seed based biofuel-producing countries could collectively purchase call options form their biofuel industries, acting as a virtual global food reserve.
Global data and transparency on metals production, trade and stock levels should also be enhanced. These suggestions come just weeks after it was revealed that 20% of the world’s natural resources that are extracted for use end up as waste.