Pressure on dwindling resources 'threatens global chaos'
Demand for basic commodities set to soar over the next 20 years
Pressure on the world's resources is becoming so great the situation could trigger a proliferation of hunger and warfare hugely damaging to the global economy, according to an analysis published today.
With demand for basic commodities such as wheat and copper set to soar over the next 20 years, relatively small shocks to supply risk causing sudden price rises and triggering "overreactions or even militarised responses", says a report by the Chatham House think tank. Global trade is so interconnected that no importer of resources is insulated from the problems of key exporters – a fact of concern to the UK, which imports 40 per cent of its food and a high proportion of the fossil fuels and metals it consumes, the think tank warns.
"Shocks reverberate across supply chains when communities protest in Peru, rainfall levels drop in the American Midwest, or a flood hits Australia – often sending the global resource markets into a tailspin," according to the report, entitled Resources Futures. Chatham House is calling on the world's 30 biggest producers and consumers of resources – including the UK, China and the US – to form a G8-style "coalition of the committed" to tackle the increasing volatility in global commodity prices.
"As a major importer of resources and an important donor to the developing world the UK can play a very important role in this coalition," Bernice Lee, the report's lead author, said.
The price of the average commodity, including everything from corn and soya to nickel and iron ore, has soared by 147 per cent in real terms since 2000 as fast-growing countries such as China demand ever-more resources, while the global population rises and weather increasingly deviates from traditional patterns.
Compounding the problems, speculators have spotted an opportunity to profit from the resources boom, investing hundreds of billions of dollars in the past decade. This speculation has exacerbated price volatility, which was already on the rise as growing shortages of key materials prompted governments to impose export restrictions, according to Chatham House.
"Volatility of prices is the new normal, hitting both consumers and producers," it warns. "Fluctuating prices will create chaotic chain reactions unless governments and businesses get to grips with a new world order defined by resource politics." Commodity price volatility is likely to prove damaging for the global economy because it increases the risk of producing resources. This deters investment in resource production, further reducing supply and pushing up prices, the report says.
"Confronting volatile prices is effectively an insurance policy for the global economy. Investing in social and environmental improvements in new producer states in the developing world is not charity: it is crucial," the report says.
The "Resources 30" coalition's "first task should be to tackle price shocks", the report says. It should then devise guidelines on the use of export restrictions and push for greater transparency among state-owned resource companies. Food, metal and fuel prices have been nearly four times as volatile since 2005 than they were in the preceding 25 years, according to figures from the International Monetary Fund.
Furthermore, the report warns, the trend is set to accelerate, with global steel demand to soar by 90 per cent by 2030, copper to rise by 60 per cent and gas by 44 per cent.
In the past decade, resource trade has grown by nearly a half in weight terms, as the global use of coal, palm oil and iron ore has grown by between 5 and 10 per cent a year and consumption of oil, copper, wheat and rice has risen by 2 per cent.
The report is based on 12 million "data points" covering 1,200 types of resources in 200 countries.
- 1 Autistic teenager beaten up by bullies makes them watch 20-minute video about autism
- 2 Greece debt crisis explained: A history of just how the country landed itself in such a mess
- 3 People all over the world are getting semicolon tattoos to draw attention to mental health
- 4 Greek debt crisis: Yanis Varoufakis's funniest (and most memorable) quotes
- 5 Swedish minister gives strongest case yet on why EU should stop turning away asylum seekers
Autistic teenager beaten up by bullies makes them watch 20-minute video about autism
Greece debt crisis explained: A history of just how the country landed itself in such a mess
German conservatives are destroying Europe with austerity, says economist Thomas Piketty
Man dies instantly after shooting firework from top of his head
Isis schoolgirl Amira Abase who fled London to join terrorists in Syria mocks victims of Tunisia massacre
More Britons believe that multiculturalism makes the country worse - not better, says poll
Osborne to cap family benefits at £23,000 – announced ahead of his post-election Budget
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
Sickness and disability benefits could be reduced by £30 a week as part of £12bn welfare cuts
£16000 - £30000 per annum: Recruitment Genius: They are looking for individual...
£25000 - £40000 per annum: Recruitment Genius: A Project Coordinator is requir...
£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...
£20000 - £40000 per annum: Recruitment Genius: Trainee Vehicle Inspectors / Pu...