Intensified Competition for Scarce Resources

Summary

Driver description
Interactions with the Economy Domain
Interactions within the Social Domain
Interactions with the Environment Domain
Interactions with the Technology Domain
Impacts on Mobility and Transport

Driver description

  • “China, India, and the United States will emerge as the world’s three largest economies in 2050, with a total real U.S. dollar GDP of 70 percent more than the GDP of all the other G20 countries combined. In China and India alone, GDP is predicted to increase by nearly $60 trillion, the current size of the world economy. However, the wide disparity in per capita GDP will remain.” (Ref: CO_2025)
  • “The glob Traditional Western powers will remain the wealthiest nations in terms of per capita income, but will be overtaken as the predominant world economies by much poorer countries. Given the sheer magnitude of the challenge of lower-wage competition, protectionist pressures in advanced economies may escalate.” (Ref: CO_1035)
  • “Economic transformation will shift international relations in unpredictable ways. To retain their historic influence, European nations will be pressed to conduct foreign policy jointly, an objective implied by their recently ratified constitution, and will need to reach out to emerging powers. Japan and Russia will seek new frameworks of alliances. The largest emerging nations may come to see each other as rivals.” (Ref: CO_2025)
  • “Russia, historically a great power, may become a political outlier under this scenario. Geographically the largest country and enormously rich in natural resources, its population in 2050 will be down to 109 million from 140 million today. With China, India, and the United States—not only the world’s three largest economies in 2050 but also the world’s three most populous—to its south and east, pressure may mount for Russia to increase its economic and security ties with Europe and to promote a balance of power among its large neighbours. Turkey’s prospects for joining the EU may be a beneficiary of European concerns to maintain influence in a world of giants. Furthermore, one could imagine Russia becoming a full EU member by midcentury; with Turkey projected to have a smaller population than that of Russia in 2050, it may be easier for Turkey—a Muslim country with a population that will be larger that of any current EU member—to accede.” (Ref: CO_2025)
  • “In an era of terrorism and continued heavy dependence on Middle East oil and ultimately gas, concerns over energy security will clearly influence the direction of future world energy trade and production. Concern over security will likely increase as energy supplies become more costly and continued economic growth in such countries as China, India, and Brazil eat into available supplies. China, for example, attempting to diversify its oil supply sources for security reasons, now imports oil from more than 20 countries around the globe. The country may build a blue-water navy in part to safeguard its oil import shipments. To shift emphasis toward domestically produced energy, China recently announced the most ambitious nuclear development plans anywhere in the world, the construction of 24–32 new nuclear reactors by 2020.” (Ref: CO_6014)
  • “Pursuits for new energy supplies has also led to geopolitical competition over resources, for example Japanese and Chinese efforts to convince Russia to move East Siberia oil to either Daqing, China or Vladivostok, Russian Far East, where it could be exported to Japan. Japan’s interest in the Siberia field for its own energy security is so pronounced that the country has offered billions of dollars towards ‘social projects’ in Russia as enticement for the Putin government to choose the Pacific coast route.” (Ref: CO_6014)
  • “International organizations such as the IMF will be compelled to reform their governance structures to become more representative of the new economic landscape. Those that fail to do so will become marginalized.” (Ref: CO_1035)
  • “Water security, food security and energy security are chronic impediments to economic growth and social stability. Figure below shows their interrelatedness: food production requires water and energy; water extraction and distribution requires energy; and energy production requires water. Food prices are also highly sensitive to the cost of energy inputs through fertilizers, irrigation, transport and processing. Economic growth and population growth are common drivers for all three risks, especially as improving living conditions in emerging economies results in more resource-intensive consumption patterns. Environmental pressures also drive resource insecurity – from climate shifts to extreme weather events that alter rainfall and affect crop production.” (Ref: CO_0024)
  • “Governance failures in terms of managing shared resources – such as trans-boundary water and energy sources and food trade agreements – create tensions that can lead to conflict, as seen recently in Yemen. Economic disparity also often exacerbates this nexus of risks as governments and consumers seek short-term, unsustainable solutions to economic hardship such as growing high-value, water-intensive export crops in water-deprived regions.” (Ref:CO_0024)
Figure 1‑54 System diagram for risks associated with the water-food-energy nexus

Source: Global Risks 2011 (Ref: CO_0024)

  • “Agriculture is the dominant water user, consuming more than 70% of total global water demand. Industrially produced meat is especially water intensive, requiring up to 20,000 litres of water to produce a kilogram, compared to approximately 1,200 litres to produce a kilogram of grain. Both population growth and increasing meat consumption in emerging economies will therefore have a tremendous impact on resource needs. [..] Over the next 10 years, the world population is expected to rise from the current 6.83 billion to approximately 7.7 billion, with most of the growth in emerging economies. The United Nations Food and Agriculture Organization (FAO) projects a 50% increase in demand for food by 2030, and the International Food Policy Research Institute (IFRI) expects a 30% increase in demand for water, with other estimates rising to over 40%. The International Energy Agency (IEA) forecasts that the world economy will demand at least 40% more energy by 2030; producing this energy will draw heavily on freshwater resources. For such increased demand for water, food and energy to be realized, significant and perhaps radical changes in water use will be required as well as new sources for food and energy production exploited.” (Ref: CO_0024)
  • “For food production, supply-related challenges may limit the ability of farmers to meet growth in demand. Already, major grain-producing areas – in China, India and the United States, for example – depend on unsustainable mining of groundwater.” (Ref: CO_0024)
Figure 1‑55 Impacts of risks related to the water-food-energy nexus (non-exhaustive)

 

Source: Global Risks 2011 (Ref: CO_0024)

Interactions within the Economy Domain

GDP trends

  • “(...), increased resource prices will inevitably impact economic growth, as higher prices are passed on to consumers. Experts suggest that despite such challenges, efforts to create properly costed systems are critical to the future sustainability of global prosperity, as the cost of severe shortages because of irreparable damage to water and food sources would far exceed the costs incurred through proactive resource management. In regions such as the Middle East and North Africa, market prices may also attract private investment in infrastructure that can better preserve the scarce resources currently being depleted.” (Ref: CO_0024)

Regional differences in economics

  • “At the international level,(...) a world of bilateral government deals between energy producers and energy consumers, with national governments competing with each other for favourable terms of supply or for access by their energy companies. There is a strong element of rivalry between consumer governments, but they align with each other where their interests coincide.” (Ref: CO_1010)

Foreign trade, globalisation

  • “Globalisation exacerbates the tensions within and between nations, and distracts policymakers from the need to take action and build international coalitions to face the energy and climate change challenges.” (Ref: CO_1010)
  • “The looming competition for access to raw materials will – in the ideal case – lead to more competition among importers of raw materials for the markets of the exporting countries (so that they are able to pay for those raw materials) and to a race to improve resource efficiency, but it could also turn into conflicts for territorial and economic control of natural resources.” (Ref: CO_0235)

Energy availability and prices

  • “Although business cycle variations continue, energy prices are generally strong. This is not only because of the intrinsic pressures on supply but also because OPEC has learned from the price increases since 2004 that the world can absorb higher energy prices relatively easily. In the economic interests of its members, therefore, OPEC manages oil supply to minimise any incipient price weakness. With strong prices and lagging supply, “favourable terms” for importing nations increasingly means just some assurance of uninterrupted supply.” (Ref: CO_1010)
  • “Prices are kept artificially low by government subsidies or other regulation in many countries, thereby increasing demand. However, even if they were allowed to rise through market mechanisms, prices would not account for many of the negative externalities created by water, food and energy consumption.” (Ref: CO_0024)
  • “Both the cost of local impacts (such as the long-run social and environmental costs of resource exploitation) and global impacts (such as contribution to climate change through carbon emissions) should ideally be included in resource pricing. Without accurate pricing to reflect the full cost of resource use, it is likely that unsustainable decisions regarding resource use will continue.” (Ref: CO_0024)

Interactions with the Social Domain

Planning

  • “The challenges associated with managing tradeoffs of food, energy and water resources rest with governments. Experts argue that meeting those challenges is undermined by the existence of separate administrative structures and policies for agriculture, water, energy and urban planning. The development of high-level commissions that cut across government departments, stakeholders and country representatives could improve public-sector-led governance, planning and information flows.” (Ref: CO_0024)
  • “Multistakeholder coordination on regional infrastructure investment could significantly enhance resilience with regard to food, water and energy security. Pricing has a large role to play in managing demand for food, water and energy.” (Ref: CO_0024)
  • “(...) market mechanisms must be managed progressively so as not to endanger social stability by disadvantaging poor consumers; the human cost of higher resource prices should be recognized by stakeholders and solved with careful planning.” (Ref: CO_0024)

Interactions with the Environment Domain

Climate change impacts

  • “In some regions, such as North Africa and Australia, climate-related changes of precipitation have already critically reduced the levels of freshwater supply. In northeast China, one of the country’s main grain-producing regions, climate change could increase drought losses by over 50% by 2030.” (Ref: CO_0024)
  • “Climate change is likely to be exacerbated by meeting the growing demand for energy. Over 75% of the global increase in energy use from 2007-2030 is expected to be met through fossil fuels, especially coal, and an estimated 77% of the power stations required to meet demand are yet to be built.” (Ref: CO_0024)

Interactions with the Technology Domain

Technology development in general and innovation diffusion

  • “Further research and investment in transformative technologies and risk management tools that address the nexus as a whole are needed. Ensuring that such tools are locally appropriate and broadly adopted is key to their success. Many efficiency improvements require new operational management models and access to information. Innovations such as synthetic protein manufacturing, drip irrigation, and hybridization of crops to make them salt resistant could potentially maintain food security while simultaneously achieving water and energy efficiency, but require investment for both development and implementation.” (Ref: CO_0024)

Traffic management systems

  • “The increasing traffic at airports coupled with the constraints on constructing new airports or runways calls for more efficient use of existing ground infrastructure. The advanced surface movement guidance and control system (A-SMGCS) concept has been developed to enable integrated management of airport ground movements.” (Ref: CO_0289)

Impacts on Mobility and Transport

Fossil fuel access

  • “Another example is shale gas extraction, which promises access to new reserves of fossil fuels, but is highly water-intensive and may pose a risk to water quality. Few governments are developing energy policy with a goal of not only enabling economic growth and reducing carbon emissions, but also ensuring water efficiency; the nature of this nexus, however, means pursuing multiple goals will become a necessity.” (Ref: CO_0024)

Biofuel

  • “(...) because of policy incentives designed to reduce vehicle emissions, by 2030 the IEA predicts that at least 5% of global road transport will be powered by biofuel – over 3.2 million barrels per day. However, producing those fuels could consume between 20-100% of the total quantity of water now used worldwide for agriculture. This is clearly an unsustainable trade-off.” (Ref: CO_0024)
  • “In Scramble, a typical three-step pattern begins to emerge: first, nations deal with signs of tightening supply by a flight into coal and heavier hydrocarbons and biofuels; then, when the growth in coal, oil and gas can no longer be maintained, an overall supply crisis occurs; and finally, governments react with draconian measures — such as steep and sudden domestic price rises or severe restrictions on personal mobility with accompanying disruptions in value chains and significant economic dislocations. By 2020, the repetition of this volatile three-step pattern in many areas of the energy economy results in a temporary global economic slowdown.” (Ref:CO_1010)
  • “Large agricultural lobbies are already powerful in developed nations, and a huge push for biofuels develops early in this scenario. This helps meet the rapid growth in demand for liquid transport fuels, but also leads to unintended consequences. First-generation biofuels compete with food production, driving up world market prices, especially in those countries that use maize as a staple. And regions with insufficient production potential, such as the EU, import the shortfall and so indirectly encourage poorer nations to destroy large sections of rainforests and habitats in order to grow palm oil and sugar cane. The result of these land use changes is that significant quantities of CO2 stored in the soils are also released. The reaction to these unintended consequences plays its part in helping to establish second-generation biofuels by 2020 – those that use the woody parts of plants, including waste products such as stalks and leaves from plants grown for food production. Certification systems also emerge to promote sustainability of both first- and second-generation biofuels. A key advantage of second generation biofuels is that energy yields are a lot higher, particularly outside the tropical regions. Most OECD countries, being in temperate regions, encourage and eagerly embrace economic routes to second-generation biofuels.” (Ref: CO_1010)

Air transport

  • “As air transport recovers from the global economic crisis, it faces major challenges: it needs to reduce emissions substantially and it needs to make much more efficient use of scarce resources, which include not only oil but also air space and airport capacity.” (Ref: CO_0284)

Increasing congestion

  • “A key element of demand management in urban transport is the allocation of road space. As this space is a finite resource, absence of regulation can lead to overuse, which appears in the form of congestion.” (Ref: CO_0289)