‘Resource Futures’: good new report on how to confront resource scarcity and conflict

January 15, 2013

     By Duncan Green     

resourcesfutures_coverLooks like this is going to be crystal ball week on the blog – must be the time of year. Just read Resource Futures from Chatham House (inventors of the ubiquitous Chatham House Rule). The analysis is pretty good, but it really raises the bar on communication, with great interactive infographics and killer facts. Advocacy wonks everywhere, take note.

The paper summarizes the key trends and flashpoints in global resource use, including:

  • Resource trade has grown nearly 50% from a decade ago in weight terms owing to expanding trade in oil, iron and steel, coal, oilseeds and cereals
  • Large-scale resource extraction remains concentrated in a handful of countries (China, the United States, Australia, the European Union, Brazil, Russia, India and Indonesia)

And then boils it all down into 5 ‘key findings’:

Volatility is the new normal

Volatility (see graph), driven by shrinking ‘buffers’ (eg reserve stockpiles) is spurring resource nationalism and needs to beresource futures 2dampened down by government and international action. The report has some clever ideas on how to design price smoothing mechanisms for oil, food and metals.

Environmental change and degradation are challenging traditional approaches

Environmental boundaries are starting to bite, notably climate change and water scarcity. Not much new in the way of ideas here (remove fossil fuel subsidies, improve water-sharing agreements etc), more ‘just do it’.

Trade as a frontline for resource conflicts

‘Trade is becoming a frontline for conflicts over resources’. Interesting – trade wars on the way back, eg over unilateral export bans by food producers, but in a different guise from the old WTO style struggle over import liberalization

Resource politics matter

‘Resource politics, not environmental preservation or sound economics, are set to dominate the global agenda and are already playing themselves out through trade disputes, climate negotiations, market manipulation strategies, aggressive industrial policies and the scramble to control frontier areas.’

Likely flashpoints that will need international action include resource production in highly eco-sensitive areas like the Arctic and ‘extreme engineering’ such as weather modification. The report picks up Alex Evans’ suggestion for a high profile annual ‘State of the World’s Resources’ report.

Collaborative governance is the only option

The report’s main big idea, in terms of policy proposals, is to set up a ‘new club of the world’s principal resource-producing and -consuming countries to fill existing governance gaps on resource and scarcities governance. This ‘Resources 30’ or R30 grouping, conceived as a ‘coalition of the committed’, would comprise leaders and officials from thirty countries of systemic significance as resource producers, consumers, importers or exporters.’

And here’s report co-author Bernice Lee introducing the findings