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.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Sales Executive - OTE £30,000+

£16000 - £30000 per annum: Recruitment Genius: They are looking for individual...

Recruitment Genius: IT Project Coordinator / Manager

£25000 - £40000 per annum: Recruitment Genius: A Project Coordinator is requir...

Recruitment Genius: Mortgage Advisor - OTE £95,000

£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Trainee Vehicle Inspectors / Purchasers

£20000 - £40000 per annum: Recruitment Genius: Trainee Vehicle Inspectors / Pu...

Day In a Page

Greece debt crisis: EU 'family' needs to forgive rather than punish an impoverished state

EU 'family' needs to forgive rather than punish an impoverished state

An outbreak of malaria in Greece four years ago helps us understand the crisis, says Robert Fisk
Gaza, a year on from Operation Protective Edge: The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas

Gaza, a year on from Operation Protective Edge

The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas
How to survive electrical storms: What are the chances of being hit by lightning?

Heavy weather

What are the chances of being hit by lightning?
World Bodypainting Festival 2015: Bizarre and brilliant photos celebrate 'the body as art'

World Bodypainting Festival 2015

Bizarre and brilliant photos celebrate 'the body as art'
alt-j: A private jet, a Mercury Prize and Latitude headliners

Don't call us nerds

Craig Mclean meets alt-j - the math-folk act who are flying high
How to find gold: The Californian badlands, digging out crevasses and sifting sludge

How to find gold

Steve Boggan finds himself in the Californian badlands, digging out crevasses and sifting sludge
Singing accents: From Herman's Hermits and David Bowie to Alesha Dixon

Not born in the USA

Lay off Alesha Dixon: songs sound better in US accents, even our national anthem
10 best balsamic vinegars

10 best balsamic vinegars

Drizzle it over salad, enjoy it with ciabatta, marinate vegetables, or use it to add depth to a sauce - this versatile staple is a cook's best friend
Wimbledon 2015: Brief glimpses of the old Venus but Williams sisters' epic wars belong to history

Brief glimpses of the old Venus but Williams sisters' epic wars belong to history

Serena dispatched her elder sister 6-4, 6-3 in eight minutes more than an hour
Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy