Global trade linked to resource insecurity

The global economy and international trade are aggravating water, land and energy insecurity and this is taking a disproportionate toll on supply chains and remote nations, according to the first comprehensive analysis of its kind.

“Whilst most mainstream economists argue for increased trade on the basis of competitive advantage, this analysis shows empirically that trade amplifies resource insecurity,” says Oliver Taherzadeh, who led the research while at the University of Cambridge, UK.

“These findings call for critical reflection on whether globalisation is compatible with managing the risks countries face.”

The researchers combined data from the world’s largest macroeconomic database of resource use and risk from the United Nations, national governments and think tanks to provide an integrated picture of resource dependencies of the world’s economies spanning 189 countries and 14,838 sectors.

The results – which are published in a paper in the journal Global Environmental Change – suggest that improved domestic self-sufficiency and sustainable terms of trade are vital for a green economic recovery, Taherzadeh suggests, adding to warnings against returning to business as usual post-COVID.

They also highlight the urgency of addressing overconsumption and investing in improved resource efficiency.

Human population growth has produced an exponentially increased demand for resources, vastly surpassing its sustainability, the researchers write.

Water has been extracted from major basins at up to 50 times its replenishment rate, leaving around four billion people with critical water shortages. More than three quarters of land has been degraded, resulting in food insecurity and ecosystem collapse. Fossil fuel exploitation to meet global energy demand has placed the planet on a precarious tipping point.

While the environmental footprint of different countries has attracted growing attention, this is the first study to show that international trade has a larger impact on resource security than domestic production.

The database created shows resource-related risks faced by countries and sectors through their consumption, production and trade pathways. It also reveals that most countries depend heavily on non-domestic water, energy and land resources, exposing them to shaky supply chains from countries where stores are being overexploited.

Large economies with heavy international trade such as the US, China and Japan have high exposure to water shortages outside their borders. In contrast, more self-sufficient countries in sub-Saharan Africa face less risk.

The UK imports 50% of its food, making its supply vulnerable to severe weather events such as floods and droughts.

And while The Netherlands has high domestic food production, it exports the food it grows and imports the food it sells locally, producing a 98% international land footprint that covers more than 100 million hectares – more than double its own land area and nearly five times its own farmland.

Other nations with greater than 90% footprint outside their borders include Ireland, Japan, Saudi Arabia, Switzerland, Israel, Kuwait and Greenland.

The study also highlights variable resource insecurities that need to be managed differently. In India, for instance, 95% of the water footprint is at risk but less than 2% is due to international trade. Qatar, on the other hand, has 56% high risk water footprint but more than 90% results from trade.

On environmental efficiencies, it found that every thousand dollars spent in Switzerland imposes a global demand of 28.4 cubic metres of water. Compare this water volume to 113 in China, 203 in Russia and 723 in Paraguay – more than double the global average.

Footprint comparisons per capita reveal vast differences. US consumers demand 41 times more land, 24 times more water and 17 times more energy than Sri Lanka, for instance, while the UK gobbles up 94, 124 and 350 times more of those resources, respectively, than Belarus.

A look at nearly 15,000 different sectors showed that those with the highest water and land use risk included dog and cat food manufacturing in the US.

The impacts of lockdown during the global pandemic pale in comparison to these issues.

“[H]owever bad the direct and indirect consequences of COVID-19 have been,” says Taherzadeh, “climate breakdown, biodiversity collapse and resource insecurity are far less predictable problems to manage – and the potential consequences are far more severe.

“If the green economic recovery is to respond to these challenges, we need to radically rethink the scale and source of consumption.”