Competition for natural resources

Concept

As long-term economic growth accelerates, especially in emerging markets such as the BRIC countries (Brazil, Russia, India and China), and despite the current economic downturn, we are using natural resources and energy sources at increasing rates. This leads to increasing competition over needed resources such as oil, water, energy, grain and raw materials.

What is the best way to cope with the strong volatility of demand and related price fluctuations? How can economic growth and sustainable environmental demands co-exist in the longer term?

Trajectory

In the next two decades, by 2030, World demand for oil is projected to increase 21 percent over 2007 levels. Without significant new discoveries or radical innovations, supply is unlikely to keep up. There are similar surges in demand across a broad range of commodities. In China, for example, demands for copper, steel, aluminum, wood and coal have increased in the past decade.

The world’s resources are increasingly strained. Water shortages, in particular, will be the key constraint to growth in many countries. Fights for water (and more conflicts over valuable territory, then religion) will dominate. The world’s atmosphere will require dramatic shifts in human behavior to keep it from being depleted.

Recent climate change conferences and new legislation from the EC have reasserted environmental issues on the economic agenda. Reactions to the economic crisis also lean to alternative sources, amongst others, to reduce oil dependency. According to recent analysis from the Citi Group, the improvement in global vehicle efficiency and the substitution of natural gas for oil could be enough to put in a plateau for global oil demand by the end of this decade.

Chinese and other Asian investments in Australia, Latin America and Africa can be seen against the backdrop of competition for natural resources, as part of a strategy of securing direct access to these resources.

Prices for raw materials may have been relatively low recently, due to the economic downturn, but as the economy of the world recovers, prices in critical resources might rise rapidly.

The intensification of the usage of alternative energy schemes may alter the power balance between stakeholders on the planet. For example, the usage of lithium may go up exponentially with the advent of electric cars, making other countries rich and powerful: the new Middle East. The same rationale is true for solar and wind energy for countries with large sun-bathed areas or topologies favoring wind usage.

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