Globalization and Scarcity : Multilateralism for a world with limits

8/8/2019 Globalization and Scarcity : Multilateralism for a world with limits

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NEW YORK UNIVERSITY

Globalization and Scarcity

Multilateralism or a world with limits

Alex Evans

November 2010

CENTER ON INTERNATIONAL COOPERATION


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CENTER ON INTERNATIONALCOOPERATION

NEW YORK UNIVERSITY

The world aces old and new security challenges that are more

complex than our multilateral and national institutions are

currently capable o managing. International cooperation is ever

more necessary in meeting these challenges. The NYU Center on

International Cooperation (CIC) works to enhance international

responses to confict, insecurity, and scarcity through applied

research and direct engagement with multilateral institutions and

the wider policy community.

CICs programs and research activities span the spectrum o

confict insecurity, and scarcity issues. This allows us to see critical

inter-connections and highlight the coherence oten necessary

or eective response. We have a particular concentration on the

UN and multilateral responses to confict.


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Table o Contents

Acknowledgements

List o abbreviations

Executive Summary

Part 1: Into a World o Scarcity 10

Scarcity Issues: An Overview

Why See Scarcity Issues as a Set?

Part 2: Scarcity and Multilateralism 22

Development and Fragile States 22

Finance and Investment

International Trade

Strategic Resource Competition 4

Conclusion 47

Endnotes

Bibliography

Globalization and Scarcity |Multilateralism or a world with limits


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Globalization and Scarcity | Multilateralism or a world with limits

Acknowledgements

This project would not have been possible without the generous fnancial assistance o the Government o Denmark, whose

support is grateully acknowledged.

Alex would like to oer his sincere thanks to the Steering Group or the Center on International Cooperations program

on Resource Scarcity, Climate Change and Multilateralism: the governments o Brazil, Denmark, Mexico and Norway; andWilliam Antholis, David Bloom, Mathew J. Burrows, Helen Clark, Sarah Clie, Elizabeth Cousens, Meera de Mel, Geo Dabelko

David Nabarro, Robert Orr, Bryce Rudyk, Heather Simpson and Josette Sheeran.

Grateul thanks also go to Rahul Chandran, Jane Frewer, Richard Gowan, Andrew Hart, Michael Harvey, Bruce Jones, Matt

Kent, Georgios Kostakos, Florian Lux, Michael Mainelli, Nealin Parker, Janos Pasztor, Vera Quina, Elsina Wainwright and

Constance Wilhelm or their advice and assistance during this project; and especially to Emma Williams.

Special thanks are due to David Steven, with whom numerous o the ideas in this paper were developed. The paper draw

on a number o publications co-authored with David, including Hitting Reboot: Where next or climate change ate

Copenhagen? (Brookings Institution, 2009), An Institutional Architecture or Climate Change (CIC, 2009), and The WorldAter Copenhagen: What can we learn rom the geopolitical dynamics o climate negotiations? (CIC, 2010).The paper also

draws extensively on the analysis set out in Conronting the Long Crisis o Globalization: Risk, Resilience and Internationa

Order (Brookings Institution, 2010, co-authored with David and with Bruce Jones), and on papers commissioned by the

oce o the UN Secretary-General and by the World Bank or the 2011 World Development Report.

About the author

Alex Evans directs CICs program on Resource Scarcity, Climate Change and Multilateralism. He also works on climate and

scarcity issues with organizations including the United Nations, World Bank and Oxam, and co-edits GlobalDashboard.org

the global risk and oreign policy blog, with David Steven.

From 2003 to 2006, Alex was Special Adviser to Hilary Benn MP, then UK Secretary o State or International Development

where he worked across DFIDs policy agenda, ocusing in particular on climate change, resource scarcity and multilatera

reorm.

Alexs previous publications can be downloaded rom Global Dashboard.
http://www.globaldashboard.org/articles-and-publications/http://www.globaldashboard.org/articles-and-publications/


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BRIC Brazil, Russia, India and China

CAP EU Common Agricultural Policy

CDM Clean Development Mechanism

CEO Chie Executive Ocer

CGIAR Consultative Group on International Agricultural Research

CNOOC China National Oshore Oil Corporation

CO2 Carbon dioxide

CO2e Carbon dioxide equivalent

CSD UN Commission on Sustainable Development

DESA UN Department o Economic and Social Aairs

DFID UK Department or International Development

DPA UN Department o Political Aairs

DPI UN Department o Public Inormation

DPKO UN Department o Peacekeeping Operations

DRC Democratic Republic o the Congo

EIA US Energy Inormation Administration

EITI Extractive Industries Transparency Initiative

EU European Union

FAC Food Aid Convention

FAO Food and Agriculture Organization

GDP Gross Domestic Product

GIEWS FAO Global Inormation and Early Warning System

GPAFS Global Partnership or Agriculture and Food Security

IEA International Energy Agency

IEF International Energy Forum

IEP International Energy Program

IFAD International Fund or Agricultural Development

IFPRI International Food Policy Research Institute

IMF International Monetary Fund

IPCC Intergovernmental Panel on Climate Change

mb/d Million barrels o oil per day

MDG Millennium Development Goal

MIT Massachusetts Institute o Technology

mtoe Million tonnes o oil equivalentNAFTA North American Free Trade Agreement

NGO Non-governmental organization

OECD Organisation or Economic Co-operation and Development

OCHA UN Oce or the Co-ordination o Humanitarian Assistance

ODA Ocial Development Assistance

OPEC Organization o the Petroleum Exporting Countries

List o abbreviations


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ppm Parts per million (concentration level o CO2 or greenhouse gases)

R&D Research and development

REDD Reducing Emissions rom Deorestation and Forest Degradation

SADC Southern Arican Development Community

SSM Special Saeguard Mechanism

UNDP UN Development Programme

UNEP UN Environment Programme

UNFCCC UN Framework Convention on Climate Change

UNICEF UN Childrens Fund

UNSG UN Secretary-General

US United States (o America)

WFP World Food Programme

WMO World Meteorological Organization

WTO World Trade Organization


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EXECUTIVE SUMMARY

Globalization has improved the living standards o

hundreds o millions o people but growing resource

scarcity means it risks becoming a victim o its own

success. Let unaddressed, scarcity o ood, energy,

water, land and other key natural assets has the potentialto trigger intensiying zero sum competition between

states in the process, increasing poverty, state ragility,

economic instability, ination, and strategic resource

competition between major powers.

On ood, projections suggest that production will need

to increase by 50% by 2030 (and 100% more by 2050), to

meet orecast demand. Yet there are already signs that the

productivity gains o the Green Revolution are running out

o steam, even as signifcant amounts o crops are beingdiverted to biouels. The 2008 ood price spike provided

a taste o what may be to come, with the number o

undernourished people rising by over 150 million, unrest

in 61 countries and over 30 countries introducing export

bans or restrictions.

On land, competition between dierent land uses

is increasing ast both globally (between land uses

including ood, eed, uel, orest conservation, carbon

sequestration and growing cities), and in hotspots

where land degradation, desertifcation, ast growing

populations and weak systems o land tenure create the

risk o political discord or violent conict.

On water, demand will rise by around 25% by 2025, but

even existing consumption levels are already beyond

sustainable levels. Water scarcity will intensiy over the

next decade as groundwater depletion continues in many

regions. Declining water availability is also projected to be

probably the most signifcant impact o climate change

over the next decade, with particular impacts on regions

dependent on glacial meltwater and trans-boundary

reshwater resources.

On energy, the International Energy Agency estimates

that investment o $26 trillion is needed between now

and 2030 to meet projected demand a fgure that rises

to $36.5 trillion once the need to reduce greenhouse gas

emissions is actored in too. However, current investment

totals are nowhere near this level, with investment in

energy having allen particularly ast during the global

downturn leading the IEA to warn o the risk o a renewed

oil supply crunch as the global economy recovers.

Climate change, fnally, will intensiy all o the above

challenges, reducing ood and water availability, driving

massive shits across energy and agricultural systems and

causing a range o other shocks and stresses. A particular

challenge acing policymakers is the act that climate

change impacts are likely to be highly unpredictable, non-

linear, and hallmarked by sudden shits as key thresholds

are passed.

These scarcity challenges need to be understoodas an integrated whole, not as separate issues. They

share common drivers, including both rising demand

driven by a global population projected to reach an

estimated 9.2 billion by mid century, and the increasing

auence o a growing global middle class and urther

signs that the supply o key resources will struggle to

keep pace. All o them present the greatest risk to poor

people and countries, who have the least capacity to cope

with shocks or adapt to new realities. And all o them are

linked together by complex and oten poorly understood

eedback loops, creating the risk o unexpected change,

unintended consequences rom policy, and multiplier

eects that complicate attempts to manage risk.

Scarcity issues could emerge as an important catalyst

or collective international action to tackle global

challenges in the process helping to ensure that a

globalization that is already efcientalso becomes

more sustainable, equitable and resilient. Few observers

o the multilateral system would dispute that it is up to

the task o managing scarcity, confgured as it is today.

But this paper argues that it is already possible to begin

assessing the key implications o scarcity issues or a range

o international agendas; to identiy the specifc cases in

which international collective action o reorm o existing

multilateral institutions is needed; and to start mapping

out the key actions that need to be taken over the short,


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may become more common i climate change leads to an

increase in migration.

Multilateral cooperation is needed not only to contain

worst case scenarios, such as the risk o inter-state conicts

over resources, but also the risk o a generalized shit away

rom international cooperation, and towards zero sumcompetition. Given the highly distributed nature o scarcity

issues, governments and international organizations will

also need to work collectively to build shared awareness

o scarcity issues among non-state actors, and shared

platorms that can help to construct political coalitions to

push or the international action needed.

The papers key recommendations in each o these areas

are summarized in the table below.

Policy area Implications o climatechange and scarcity

Why multilateralism isneeded

Key multilateral actions

Development and ragilestates

Climate change and scarcity

combine with existing sources

o vulnerability to impact poor

people and countries hardest

Risk o increased poverty, hunger;

economic impacts includingreduced growth, higher ination,

worsening fscal fnances,

higher interest rates, currency

depreciation

New winners and losers; wider

implications or political economy

o developing countries

Risk o violent conict (though

with scarcity usually as a threat

multiplier rather than a stand-

alone cause)

Multilateral institutions already

massively involved in issues o

development and state ragility

Poor people and countries will be

disproportionately impacted by

climate change and scarcity Multilateral system will hence

increasingly have to take account

o scarcity issues across the board

in its work in poor countries

Short term

Increase international

humanitarian assistance capacity

and unding

Scale up social protection

systems, saety nets, etc. Build international donor capacity

or analysis o natural resource

governance, political economy

and conict risk dimensions o

scarcity

Scale up work on girls education,

access to reproductive health

services, womens empowerment

and other sectors that can help

reduce unsustainable population

growth.

SUMMARY OF RECOMMENDATIONS


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Development and ragilestates

Medium term

Work towards an integrated

approach to building resilience

as part o core development

strategies

Build scarcity issues into conict

response strategies

Key questions and issues

Need or more concrete examples

o low-carbon, climate-resilient

growth

Need or integrated assessment

o fnance or development needs

(see Finance and Investment

below)

What happens i scarcity develops

to the point where social

protection systems are insucientor protecting poor people?

Finance and investment Energy inrastructure investmentrequirements o $36.5 trillion

between now and 2030

Need or a 21st century Green

Revolution, especially in low

income countries with high

potential productivity gains

potentially $420 billion between

now and 2030

Mainstreaming o climate

adaptation through development

strategies potentially around

$50-100 billion per year rom

2015 onwards

Role o collective action in

tackling market ailures (e.g.

environmental costs that are

externalized rom current price

signals)

Governments need to provide

clear signals rom the uture to

improve long-term predictability

or private sector investment

Protecting poor people and

poor countries rom the eects

o climate change and resource

scarcity

Short term

Pursue key climate adaptation and

mitigation actions that can move

orward without a comprehensive

global deal

Accelerate investment in a 21st

century Green Revolution

Scale up R&D spending on both

energy and agriculture

Medium term

Move to longer term commitment

periods and a more robust

compliance regime in global

climate policy

Agree a global climate stabilization

target

Equitable and binding targets or

developing countries within a

global emissions budget


Need to reassess fnance or

development requirements in light

o scarcity


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International trade Risk o acute trade shocks in ood/ uel contexts

Risk o countries losing

confdence in open international

trade to ensure their security o

supply

Potential unilateral use o carbon

taris, risking slide into tit-or-tat

protectionism

Emission controls or oil scarcity

could drive reductions in

international trade volumes

Role o international institutions

in creating enough trust to

support the global public good

o open trade (and avoiding tip

into zero sum competition and

protectionism)

Current international institutions

poorly confgured to cope with

scarcity trends (e.g. emerging

economies not ull IEA members,

WTO lacks rules on export

restrictions)

Protecting poor people and

poor countries rom the eects

o climate change and resource

scarcity

Short term

Bring emerging economies into

ull IEA membership

Scaling up ood stocks (either

real or virtual, at multilateral or

regional level)

Implement mechanisms to use

intergovernmental peer pressure

to reduce the risk o export bans or

restrictions

Medium term

Move orward with liberalization o

developed country arm support

regimes

Agree terms o use or carbon

taris to reduce the risk o climate

protectionism

Key questions and issues What will energy scarcity mean or

international trade?

Will more countries come to

regard increased sel-suciency

as more resilient than reliance on

open markets?

Strategic resourcecompetition

Risk o increased competition

or trans-boundary resh water

resources

Risk o inter-state competition or

energy resources

Risk o inter-state competition or

land, ood, biouels, etc.

Impacts o climate change on

resource competition, especially

rising sea levels

Potential disputes between

states over the ate o climate

reugees

Risk o overall increase in zero

sum competition between states

in international relations

Conict risk arising rom scarcity

directly relevant to UN Charters

primary objective o maintaining

international peace and security

Intensiying zero sum

competition risks eroding

existing international

cooperation

Governments and international

organizations need to work

collectively to build shared

awareness o scarcity issues

among non-state actors, and

shared platorms to build

coalitions or action

Short term

Undertake stress testing o existing

multilateral architecture

Build up oresight and surprise

anticipation capacities

Invest in resilience, e.g. trade

measures as discussed earlier,

development policies

Start developing options or

shared global operating systems to

manage scarcity

Commission relevant international

agencies to produce a joint World

Resources Outlook

Medium term

Start building up international

system bandwidth and inter-

agency interoperability

Develop political narratives

centered on air shares, especially

on ood, energy and climate


Will policymakers be ready to take

advantage o political windows o

opportunity or urther-reaching

action as and when they open up?


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0

Part 1: Into a World o Scarcity

The world is entering an age o scarcity, with climate

change, ood security, competition or land and water, and

energy security all moving steadily closer to the center o

the international agenda. As they do so, they are creating

new challenges and new concerns in oreign policy. As theFinancial Timess Martin Wol observed at the height o the

ood price spike

the biggest point about debates on climate

change and energy supply is that they bring back

the question o limits. This is why climate change and

energy security are such geopolitically signifcant

issues. For i there are limits to emissions, there may

also be limits to growth. But i there are indeed limits

to growth, the political underpinnings o our worldall apart. Intense distributional conicts must then

re-emerge indeed, they are already emerging

within and among countries. 1

This paper is about what scarcity issues mean or

international relations and what they require in terms o

collective action and multilateral reorm.

It begins by looking briey at the key scarcity issues: ood,

land, water, energy and climate change. Climate changeis regarded as a scarcity issue not only because it is the

key driver o change on the other three, but also because

airspace or human-caused greenhouse gas emissions

is itsel an increasingly scarce resource with just as

much potential to create zero sum disputes as any o the

others. (Other natural resource issues, such as orestry and

fsheries, are omitted rom the papers analysis or reasons

o space but many o the arguments made in this paper

would also apply to them.)

The paper then sets out why these scarcity trends need to

be regarded as an interconnected whole, noting that they

share both common drivers a rising global population,

growing auence, increasing limits to supply growth

and a web o complex eedback loops o knock-on eects

rom one scarcity issue to another.

Finally, the paper looks at what these issues mean o

international relations more broadly, in particular the

areas o development and ragile states; internationa

trade; fnancing and investment; and inter-state strategic

resource competition.

Across all o these areas, the paper argues that eectivemultilateral cooperation is essential not only to build

resilience to the likely eects o scarcity, but also to co

ordinate the collective action needed to stabilize the roo

causes o resource scarcity and shit the world to a more

sustainable trajectory.

Scarcity Issues: An Overview

Food

The ood price spike that peaked in 2008 pushed the globa

total o undernourished people over a billion or the frst

time, rom a total o 854 million beore the spike.2 With oi

prices spiking at the same time, 61 countries experienced

political unrest, in many cases violent; more than thirty

imposed ood export bans or restrictions.3

More recently, the summer o 2010 saw unpleasan

reminders o the events o two years earlier. Wheat price

saw their biggest one month jump in over three decades

ollowing a severe drought in Russia, and rose still urthe

ollowing Russias decision to ban exports o the crop; in

Mozambique, a 30% rise in bread prices triggered riots

that let seven dead and 288 wounded.4

Concerns about a repeat o 2008 appear overdone the

International Grains Council points out that the world

is in act on course or the third highest wheat crop on

record in 2010 but the volatile summer had the eect

o reocusing political and media attention on the issue o

ood prices, and on the long term challenge o eeding a

world o nine billion.5 So what drove the ood price spike

and should policymakers expect a repeat?

As many commentators and analysts have observed since

the ood price spike, the period o 2006 to 2008 was in

many ways a perect storm.6


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As Figure 1 below shows, the Food and Agriculture

Organizations benchmark Food Price Index rose by 9%

during 2006, by 24% during 2007 and by 51% during the

twelve months to July 2008.7

Among the key drivers o the ood price spike were

historically low stock levels(ood reserves declined romover 110 days worth just beore 2000, to just over 60

days worth by 2004); poor weather in important producer

countries; and high oil prices (which pushed up costs or

transportation and or inputs like ertilizer).8

As prices approached their peak, a range o positive

eedback loops driven by the perceptions o consumers,

investors and governments had the eect o ampliying

the crisis. As already noted, over 30 governments

implemented ood export bans or restrictions in attemptsto calm domestic political pressures over ood prices

pushing ood prices higher at the same time as reducing

incentives or producers to increase output. At the same

time, many import dependent countries tried to rebuild

their stock levels, pushing prices higher still. 9

But a range o underlying structural drivers was also

involved, and it is here that the reasons or ears about

longer term global ood security become apparent.

Demand or crops is rising sharply, not only because o an

expanding global population, but also as a result o the

changing diet patterns o a growing middle class and a

large increase in biouels production in the US and the EU,

driven by government subsidies and regulatory mandates.

Looking to the uture, the World Bank suggests that

demand or ood could grow by 50% by 2030, even beore

biouels are taken into account.11

Yet the yield increases driven by the 20th century Green

Revolution appear to be running out o steam, with average

productivity growth rates alling rom 2.0% between 1970

and 1990 to 1.1% between 1990 and 2007, and urther

alls projected in the uture.12 The US Department o

Agricultures Economic Research Service observed in 2008

global demand or grain outstripped supply or seven o the

eight years between 2000 and 2008.13 In uture, the supply

side also appears likely to be increasingly constrained by

the other scarcity issues discussed in this section, namely:

Lower water availabilitylikely to be the most

important scarcity issue aecting ood production in the

short term;

Competitionforlandgiven that the amount o arable

land available globally has allen rom 0.39 hectares per

capita in 1960 to 0.21 hectares in 2007; 14

Rising oil priceswhich will make inputs and

transportation more expensive while increasing the

attractiveness o biouels; and

Climate changewhich is projected to have a nega-

tive impact on crop yields in most developing countries

more or less immediately (and in all countries over the

longer term), will expose tens o millions more people to

the risk o hunger, and which will greatly complicate the

challenge on each o the three scarcity issues previously

mentioned.15

Land

Beore the 20th century, additional demand or ood was

met almost entirely through increasing acreage the

amount o land under cultivation rather than through

enhancing the crop yield rom each hectare in production.

Figure 1: FAO Food Price Index, 1990-2010 (source:

Food and Agriculture Organization)10


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2

During the 20th century, this dynamic reversed, with

increasing crop yields the key driver that allowed ood

production to keep pace with a rising global population.

In the 21st century, however, many analysts suggest that

meeting ood needs will once more require more land to

be brought into ood production.16

The problem, however, is that growing global demand or

ood is by no means the only source o increasing demand

or land. Land is also needed or:

eed or the worlds livestock industry, which is

converted into meat (demand or which is projected to

grow by 85% by 2030, according to the World Bank) and

dairy products, both o which are proportionally much

more resource-intensive than direct consumption o

crops;

17

crops to use as biouels, which accounted or almost

hal the increase in the consumption o major ood crops

in 2006-07, according to the International Monetary Fund

(primarily as a result o corn-based ethanol production in

the United States);18

orestry to produce fber, such as paper (demand

or which is projected to grow by 2.1% a year to 2020)

and timber (demand or which is projected to rise by 1%

a year); 19

cities (FAO has estimated the global urban expansion

rate to be 20,000km2 per year, with 80% o this taking place

on agricultural land (cities account or a small proportion

o total global land use, but tend to grow on some o the

best agricultural land); 20

aorestation projects used to sequester CO2 rom

the atmosphere;21 and fnally

protection o existing orests, either or biodiversity

objectives or to avoid greenhouse gas emissions

(potentially a particularly important source o demand

or land, given that overall expansions in grassland,

agricultural crops and urban areas have come at the

expense o equivalent overall reductions in orest area). 22

At the same time, the amount o arable land available pe

person has allen steadily over recent decades, even taking

into account the amount o land converted rom ores

cover. As noted above, the amount o arable land available

globally ell rom 0.39 hectares per person in 1960 to 0.21

hectares per capita in 2007 despite the extent to which

large-scale deorestation had brought more cropland intoproduction over the same period. 23

In addition to competition or land between sectors a

the global level, there is also the possibility o intensiying

land scarcity in particular regional hotspots where rapidly

growing population levels combine with land degradation

and weak land tenure regimes to create resource stress

and potentially the risk o violent conict. These risks are

discussed urther in the next chapter o the paper, as are

growing concerns about the impact o international dealsor leasing arable land.

Admittedly, reductions in the amount o land available o

arable crops can be oset by improved yields on the land

that is available which is what has happened over the

last fty years. Even as arable land per capita almost halved

rom 1960 to 2007, global ood production was able to

keep pace with the worlds growing population, thanks to

the Green Revolution o new seed varieties, increased use

o ertilizer, and expanded irrigation. 24

As already noted, however, the productivity growth driven

by these techniques has allen signifcantly since 1970

and scarcity trends (particularly o water, discussed below

will necessitate a ar more resource-ecient approach in

uture.

Water

In water, too, the long term outlook is one o rapidly

increasing demand coupled with hard questions abou

whether supply will be able to keep pace. As population

and average per capita water use have grown, so the

amount o resh water withdrawn globally each year ha

grown too rom 579 cubic kilometers in 1900 to 3,973

km3 in 2000. Demand is projected to rise urther to 5,235

km3 in 2025.25


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Much o the increase in demand over this period came

rom agriculture, which today accounts or 70% o human

water use, with the majority used by irrigation one o the

central planks o the success o the 20th century Green

Revolution in raising crop yields.26 From 1961 to 1999,

the amount o land under irrigation worldwide grew at

an astonishing rate, most o all in West Asia (where theincrease was 256%); at present, 40% o the worlds ood

supply comes rom land that is irrigated.

However, most irrigation is highly inecient. While

surace water irrigation eciency is between 50-60% in

Israel, Japan and Taiwan, or example, it is only 25-40%

in India, Mexico, Pakistan, the Philippines and Thailand.

Technologies exist that could dramatically improve

eciency levels, but uptake levels remain low, oten due

to a lack o water pricing: less than 1% o the irrigated areain both China and India uses drip irrigation, or example

(compared to 90% in Cyprus).28 Subsidized electricity

compounds the problem, encouraging proigate

pumping o groundwater.29 Meanwhile, demand is

growing rapidly rom sources other than agriculture,

above all industrialization and the worlds growing cities.

Consequently, unsustainable rates o water extraction

rom both rivers and groundwater are already a major

problem all over the world. 1.2 billion people live in

basins where human use has exceeded sustainable limits;

by 2025, this fgure will rise to 1.8 billion, with up to two

thirds o the worlds population living in water-stressed

conditions, mostly in non-OECD countries.30 Others will

suer rom the problem o too much water rather than

too little, oten because o poor drainage or ooding, with

the result that land becomes waterlogged, salts build up

in the soil, and ertility decreases a problem that aects

10-15% o irrigated land.31

Climate change will make matters worse.32 A range o

areas are likely to see signifcantly reduced overall water

runo over the 21st century, including particularly the

Mediterranean, Middle East, Southern Arica and the

western USA / northern Mexico.33 Many more areas will

experience large seasonal changes, particularly in regions

where summer river ows depend on snowmelt and

/ or glacial melting.34 More than a sixth o the worlds

population lives in river basins ed by glaciers or snowmelt

including the Indus, Ganges, Mekong, Yangtze and

Yellow, all o which rely on the Himalayas.35

Climate change will also aect water security through

rising sea levels which will reduce reshwater availabilityin coastal regions as estuaries and groundwater become

salinized and through changes in the variability and

intensity o precipitation, which will increase the risk o

both droughts and oods. 36

While water scarcity issues are oten local rather than

international, two important exceptions exist. One is the

case o trans-boundary watercourses. At present, 263 rivers

either cross or delineate national borders (the number

changes when, or example, new states are created). As thenext chapter discusses, however, 158 o these lack any kind

o cooperative management ramework, and even where

such rameworks do exist, they are increasingly coming

under stress (as or example in the cases o the Nile and

Indus).

The second, less obvious way in which water security

becomes an international issue is through virtual or

embedded water the water used to grow a crop that is

then exported, thus in eect exporting the water too. One

kilogram o wheat eectively contains 1,300 liters o virtual

water, or example, while 15,500 liters o water are needed

to product 1kg o bee, and the 500g o cotton needed

to produce a medium size T-shirt requires 4,100 liters o

water. As water resources become more scarce, it has

been suggested that governments seeking land purchases

in third countries (discussed later) are actually primarily

interested in the water resources that come with that land.

The CEO o the ood company Nestle, or example, has

argued that:

with the land comes the right to withdraw the

water linked to it, in most countries essentially a

reebie that increasingly could be the most valuable

part o the deal. Estimated on the basis o one crop

per year, land purchased represents 55 to 65 cubic

kilometers o embedded reshwater, an amount


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4

equal to roughly 1 times the water held by the

Hoover Dam. And, because this water has no price,

the investors can take it over virtually ree.40

Energy security

Energy is another area in which demand is increasing

rapidly. The International Energy Agency orecasts that

world primary energy demand will increase by 1.5% a year

between 2007 and 2030, an overall increase o 40%.41 The

IEA identifes developing Asian economies as the main

drivers o this demand growth, with by ar the biggest

increase in demand accounted or by coal, ollowed by

natural gas. 42

However, with coal projected to remain readily available

or years to come and natural gas markets experiencing

a supply glut due to booming production in North

America as a result o new drilling techniques, it is oil that

is the main ocus o energy security concerns. By 2030,

oil remains the single largest uel in the primary energy

mix on IEA projections; demand or oil rises by 1% a year

over this period, rom 85 million barrels a day in 2007 to

105 mb/d with 97% o the increase accounted or by the

transport sector.43

As with ood, however, oil aces hard questions about

whether supply growth will be able to keep pace with

increasing demand. Throughout the last decade, as

demand or oil was exploding, supply was struggling to

keep pace, remaining stubbornly at around 85 million

barrels a day.44 As a result, oil prices ollowed a simila

trajectory to ood over the decade just ended, rising

rom around $20 per barrel in 1990 to $147 per barrel in

July 2008, beore alling sharply as the global economy

slowed.45

One reason why oil prices rose so much during this

period was the long time-lag involved in developing new

supplies; another was low stock levels beore the price

spike.46 From 2007, price volatility was urther increased

by the weakening o the US dollar, which set o a ight to

commodities as investors turned to oil and other resource

as a store o value.47 Supply side tightness also made the

oil market especially vulnerable to local shocks, such as

supply disruptions in Nigeria and Venezuela.48

Figure 2: Water Poverty Index, 2005 (source: Oxord Centre or Water Research)

No Data Severe (WPI 35-47.9) High (WPI 48-55.9) Medium (WPI 56-61.9) Medium Low (WPI 62-67.9) Low (WPI 68-78


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Figure 3: World spot prices or oil, 1989-2010

(source: US Energy Inormation Administration)49

In the background, however, was the story o the decline

o easy oil a trend which is likely to prove ever more

signifcant in years to come. As Michael Klare has written,each new barrel added to global reserves will prove

harder and more costly to extract than the one beore; it

will be buried deeper underground, arther oshore, in

more hazardous environments, or in more conict-prone,

hostile regions o the planet.50

While crude oil prices collapsed rom July 2008 onwards,

reaching a low o around $35 in January 2009, they had

by June 2009 already rallied to around $70 per barrel as

tentative signs o economic recovery started to appear in

some parts o the world leading some analysts to wonder

why oil prices arent $20 per barrel, as they were only

eight years ago, during the last recession.51 At the time o

writing, in all 2010, oil prices stand at just over $80.52

Looking to the uture, concerns or security o oil supplies

center on two key issues. The frst is the risk that the

crash in oil prices in the second hal o 2008, coupled

with ongoing tight fnancial sector lending, has led to

an ongoing shortall in investment in oil exploration and

production. The International Energy Agency has warned

on several occasions during the global downturn that

these shortalls risk setting the stage or a new oil supply

crunch as soon as the global economy recovers, and noted

in the 2009 World Energy Outlook that global upstream oil

and gas investment budgets had been cut by 19% rom

2008 to 2009. 53

The second security o supply concern on oil centers on

whether the world is approaching the peak o global

oil production when the rate o world oil production

reaches its highest level, and starts to decline.54 While

such arguments were, until recently, viewed as somewhat

ringe by mainstream energy analysts, they have become

signifcantly more mainstream over the last two years.The chie executive o Total, Europes third largest energy

group, has argued that the world will never be able to

produce more than 89 million barrels o oil per day, or

example.

While arguments about how much oil remains in the

ground continue to be divisive and contested, there is

broader agreement that the supply side or oil looks set to

become tighter in uture. In reality, the peak o global oil

production could result not because o geological actors,but rather because o above ground actors, such as a

marked deterioration in regional security in the Middle

East or an OECD ban on deepwater drilling. As the UK

governments ormer Chie Scientifc Adviser, Proessor Sir

David King, has argued:

While there is certainly vast amounts o ossil uel

resources let in the ground, the volume o oil that

can be commercially exploited at prices the global

economy has become accustomed to is limited and

will soon decline. The result is that oil may soon shit

rom a demand-led market to a supply constrained

market.55

Climate change

This leads, fnally, into the broader challenges posed by

climate change.

Since pre-industrial times, global average temperatures

have increased by 0.7 Celsius. Emissions already in the

atmosphere mean that the world is committed to a urther

increase o 0.6 Celsius.56 Even i the 2009 Copenhagen

climate summit had agreed stringent action, this might

have proved insucient to avoid global average warming

o 2 Celsius or more; as it is, the summits weak outcome

leaves the world on track or average warming o around

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Climate change will have ar-reaching implications and

knock-on eects or all o the scarcity issues already

discussed in this chapter.

While todays energy systems are driving climate

change, the need to tackle climate change must drive

tomorrows energy systems. The scale o change requiredis breathtaking. As noted above, global emissions cuts o

50-85% are needed by 2050.58 The IEA is unable to model

a scenario in which such demanding cuts are achieved

without replacement o existing capital stock beore the

end o its usual lietime. In the energy context, adaptation

to climate change will be as much about adapting to the

solutions that are needed as adapting to direct climate

impacts.59

Table 1: Climate change policy requirements

versus current situation

Where we need to be Where we are

According to the

Intergovernmental Panel on

Climate Change (IPCC)60 , limiting

average temperature increase to

2 Celsius would involve:

Stabilizing greenhouse gas

levels in the air at between

350 and 400 parts per

million o carbon dioxide(or 445-490 ppm o carbon

dioxide equivalent, with

other greenhouse gases

included).

Global emissions peaking

by 2015 at the latest.

Global emissions then

declining by 50-85% below

2000 levels by 2050.

Current atmospheric levels o

CO2 already just over 389ppm,

and rising by around 2ppm per

year.61

Weak outcome at

Copenhagen appears

to leave global average

warming on track or 3

Celsius.62

2009 WEO Reerence

Scenario projects

continuing growth in

emissions rom 28.8

Gigatonnes (Gt) o CO2 a

year in 2007 to 40.2 Gt o

CO2 by 2030, an increase o

40%.63

A recent MIT study gave

a median projectiono atmospheric CO2

concentrations reaching

866ppm by 2095 on the

basis o current emissions,

with median surace

warming o 5.1 Celsius.64

On ood, while the 2007 IPCC Assessment Report projected

that on the whole global ood production would increase

with warming between 1-3 Celsius, it also argued that i

would decrease beyond this. In low and tropical latitudes

where most developing countries are it ound that even

moderate temperature increases (1-2 Celsius) are likely to

have negative yield impacts or major cereals.65

These estimates also took no account o the eect on ood

production o extreme weather events, such as hurricanes

and oods. The 2010 oods in Pakistan and drought in

Russia (each o which was attributed by the government

to climate change) provided two vivid examples o the

eects that such events can have on agriculture. Overall

the IPCC estimates that climate change will expose tens to

hundreds o millions more people to the risk o hunger.66

At the same time, agricultures own contribution to

climate change will need to be reduced drastically

Agriculture accounts or up to 32% o global greenhouse

gas emissions, i deorestation is included.67 Over time, i

will have to become a net sink or emissions rather than

a net source o them a shit that agriculture has barely

begun to anticipate, but which will massively intensiy the

challenge aced by armers as they attempt to meet rising

demand.

On water, as just noted, climate change will cause majo

problems through changes in precipitation, glacia

melting, droughts and other shits.

Finally, climate change will introduce a range o othe

risks in addition outside o those in the water, ood and

energy sectors. Among the most important will be the

danger aced by densely populated coastal megadeltas

in Asia and Arica, such as the Nile, GangesBrahmaputra

and Mekong, where tens o millions o people will be at

increased risk o acute ood and storm damage, chronic

coastal ooding and loss o coastal wetlands.68 Othe

impacts will include extensive implications or health and

inectious disease.

For policymakers, it can be hard to make sense o what

is happening. New science fndings continue to emerge


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rapidly. The IPCCs 2007 Fourth Assessment Report is

already out o date in some key respects.69 While climate

models are improving all the time, their fndings remain

subject to considerable uncertainty, especially at more

specifc levels o geographical ocus. And while estimates

o uture climate impacts may seem to imply steady,

gradual changes that can be adapted to over time, pastchanges in the earths climate have been the opposite:

unpredictable, highly non-linear, and hallmarked by

sudden shits as thresholds are passed. Policymakers must

hence also consider the risk o abrupt climate change

resulting rom positive eedback eects, such as:

rapid die-back o tropical orests or melting o Arctic

tundra (both o which would release large amounts o

methane into the atmosphere); 70

rapid melting o polar ice sheets or glaciers (which

would result in higher sea levels);71 or

reduction in the capacity o atmospheric sinks such as

the worlds oceans to absorb carbon dioxide (which

would magniy the impact o current emissions).72

While these kinds o risk are largely omitted rom IPCC

assessments because o the high degree o uncertainty

associated with them, they remain a real consideration

or policymakers wanting to take a risk management

approach based on easible worst case scenarios.73

Current best-guess estimates suggest that global average

warming o around 2 Celsius may be a key threshold or

some o these eects but such assessments are tentative

guesses at best, and may prove to be over-optimistic.74 In

eect, then, policymakers responding to scarcity issues

must make a bet on the basis o incomplete inormation

and their own attitudes to risk.

Why See Scarcity Issues as a Set?

So why think o energy, ood and water security as an

integrated whole under the collective scarcity heading

rather than regarding them simply as separate issues?

Common drivers

First and most obviously, because o the extent to which

scarcity issues all share common drivers. On one side o

the equation, demand or ood, land, water, energy and

atmospheric space or anthropogenic emissions is rising

or two reasons. First, the global middle class is growing insize and auence. Especially important or scarcity issues

are

energyuse (larger homes, increased mobility, energy

used to manuacture and move consumer goods and

hence greater demand or both oil and, increasingly,

biouels); and

diet (higher consumption o meat, dairy products and

processed ood than the global average, which are inturn ar more resource intensive in terms o energy,

grain, water use and greenhouse gas emissions).

People in developed countries have consumed a

disproportionate share o these resources or decades. But

what has changed in the last 10 years is the sheer pace

o growth in China and other emerging economies. By

mid-2007, the our BRIC economies Brazil, Russia, India

and China together accounted or 15% o the world

economy.75 This trend is set to accelerate: even beore

the global downturn, in which emerging economies

have oten ared better than OECD economies, Goldman

Sachs suggested that the our BRICs could outweigh the

combined GDP o the G7 economies by 2035.76

This dizzying growth has, in turn, brought the issue o

global resource consumption to a head. Perhaps the most

vivid illustration o the implications o current growth rates

or natural resources is seen by simply ollowing the logic

o exponential growth rates to its logical conclusion. With

annual GDP growth o 9%, Chinas economy doubles in

size roughly every 7-8 years with all o the resource use

implications that this entails.

The second reason or rising global demand is a growing

world population. Contrary to many popular perceptions,

the rate o global population growth has actually slowed


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substantially in recent decades, having peaked in

1963.77 While many discussions o resource scarcity still

ocus anxiously on the idea o a Malthusian population

explosion, in act global population levels are on course

to stabilize, at around 10 billion people.78 With strong

commitment to the policies such as girls education,

womens empowerment and access to reproductivehealth services, stabilization could happen much sooner,

and at much lower levels.79

2007 2050

Country Population(m)

Country Population(m)

China 1,329 India 1,658

India 1,169 China 1,409

USA 306 USA 402

Indonesia 232 Indonesia 297

Brazil 192 Pakistan 292

Pakistan 164 Nigeria 289

Bangladesh 159 Bangladesh 254

Nigeria 148 Brazil 254

Russia 142 DRC 187

Japan 128 Ethiopia 183

Mexico 107 Philippines 140

Philippines 88 Mexico 132

Vietnam 87 Egypt 121

Ethiopia 83 Venezuela 120

Germany 83 Russia 108

Egypt 75 Japan 103

Turkey 75 Iran 100

Iran 71 Turkey 99

Thailand 64 Uganda 92

DRC 63 Kenya 85

However, most uture population growth will be heavily

concentrated in the worlds lowest income regions, where

population is projected to rise rom 5.4 billion now to

7.9 billion in 2050 under the UNs median scenario, and

especially in cities.80

As the table above illustrates, the list o countries in which

population growth is likely to be astest includes numerou

states that are as ragile as they are regionally signifcant

including Pakistan, Nigeria, Bangladesh, the Democratic

Republic o the Congo, Ethiopia, Iran and Kenya.

On the other hand, there is the challenge o limitations tosupply growth o energy, ood and water, as discussed in

the last section. Admittedly, innovation and technology

can make a huge contribution towards both increasing

supply and reducing demand. But important obstacles

stand in the way. One is the extent to which public R&D

budgets have declined in recent decades: the budget

or the Consultative Group on International Agricultura

Research (CGIAR) has allen by 50% over the last 15 years

or instance, while the IEA estimates that public R&D on

energy is hal its level o 25 years ago.

82

Many other technologies ace barriers in attaining

commercial roll-out, or example because o the oten

long timescales on which capital investment costs are

recouped. Another key barrier to the uptake o clean o

high-eciency technologies is that environmental cost

are requently externalized, i.e. not properly reected

through price mechanisms. This is particularly true o

water, which is oten not priced at all, but it also applies to

energy prices (which tend not to reect the environmenta

costs o ossil uel combustion), ood production (where

ood prices rarely include costs that are borne elsewhere

such as pollution rom ertilizer use) and environmenta

services (such as the vital role played by the worlds orest

in regulating the climate or which the owners o orest

land rarely receive recompense).

Common linkages

The second reason or seeing energy, ood and water

scarcity as a single set o issues is the dense, and

increasingly complex, mesh o eedback loops between

them.

These eedback loops are oten most apparent at country

level. In Haiti, or example, complex eedback loops o

cause and eect link deorestation, soil loss and erosion

Table 2: Worlds 20 Most Populous Countries,

2007 and 2050 (source: UN DESA)81


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degradation o agricultural land, changed precipitation

patterns and increased risk o ooding with human

variables such as increased hunger and ood insecurity,

the risk o instability and violent conict, and state ragility

(see Figure 4 below).

At regional and global level, the complexity o these

linkages and eedback loops increases still urther, thus

raising the risk o unexpected outcomes, disruptive

change and unintended consequences.

The linkage between energy and ood provides a

particularly good example o why such eedback loops

matter or policy. Over the last century (and particularly

over the last decade), energy and ood, have in eect been

converging into a single ood-energy economy. Today,

energy can be converted into ood, ood into energy, and

prices or both are becoming linked in a process termed by

Goldman Sachs as bushel-to-barrel convergence.83

While modern agriculture has achieved massive increases

in crop yields, it has done so partly by becoming more

energy intensive. Mechanization began to replace human

labor in agriculture early in the 20th century. Since then,

dependence on ossil uels has urther increased, whether

in nitrogenous ertilizers (made in energy-intensive

processes in which ossil uels are also the raw material),

on-arm energy use (including heating livestock sheds and

greenhouses, as well as tractors and combine harvesters),

and the energy used to pump groundwater or irrigation.

Todays longer supply chains are also energy-intensive in

their dependence on ossil uels and rerigeration systems.

Agricultures energy dependence is hence one o the

major reasons why higher oil prices tend to mean higher

ood prices.84

The other hal o the ood-energy link has to do with

the growing importance o biouels in the international

energy economy. Although less than 2% o global demand

or liquid uels is met by biouels, they accounted or 75%

o the increase in non-OPEC oil supplies in 2008.85 And

while biouels contribution to total liquid uel needs may

be small, they have nonetheless caused major ripples in

the ood context. As the IMF noted in its WorldEconomic

Outlook2008

Although biouels still account or 1.5% o the global

liquid uels supply, they accounted or almost hal

the increase in the consumption o major ood crops

in 2006-07, mostly because o corn-based ethanol

produced in the United States.86

As biouels show, the linkages between dierent scarcity

issues introduces the risk o unintended consequences

rom policy measures taken to tackle one scarcity issue,

without taking other dimensions o scarcity into account. A

measure taken to improve US energy security can have the

side-eect o creating substantial ood security problems

in multiple other locations around the world.

The convergence o the worlds energy and ood

economies provides just one example o how scarcity

issues are increasingly overlapping with one another. There

are many others. Water security is oten energy-intensive,

or example, whether in the energy used to power

groundwater pumps or in the high energy use rates oten

associated with desalination technologies; equally, many

countries rely on water to produce electricity, through

hydroelectric power generation. Water and ood are

connected through the act that agriculture accounts or

70% o human water use; land is connected to water since

land rights usually come with rights to extract the water

Figure 4: Satellite image o border o Haiti and

Dominican Republic, showing deorestation(2002)

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Cause...eect Energy Food / land use Water Climate change

Energy Agriculture is a majorconsumer o energy,

both directly (cultivation,

harvest, processing,

rerigeration, distribution)

and indirectly (ertilizer,

pesticides, other inputs)

Water is a highly energy

intensive industry (energy

= 40% o cost o water in

developing countries)

Groundwater depletion

leads to higher energy use

or extracting / desalinizing

water

Climate change demands

retreat rom ossil uels,

investment in new energy

systems

Extreme weather can

severely impact oil

production (e.g. hurricanes

in Gul o Mexico)

Food / land use Higher energy prices leadto higher ood prices as

input and transport costs

increase

Biouels create arbitrage

relationship between ood

and uel, pulling ood costsupwards in line with energy

Biouel cultivation leads

to increase in demand or

cultivable land

Deorestation or frewood

Lower water availability

has negative eect on crop

yields, can make some

crops unsuitable or areas

Changes in water

management (dams,

irrigation, etc.) can aectviability and productivity o

land downstream

Short term yield variance

due to rising temperatures

Reduced yields through

extreme weather events

Reduced yields through

changes in precipitationand water availability

Desertifcation, land and

soil degradation will

increase with climate

change

Water Higher energy costs leadto higher water costs

because o energy used

in extracting / pumping /

processing it

Water essential or

hydroelectric power

generation (c. 16%

o global total power

generation)

Increased water use or

irrigation can aect water

resources (e.g. shrinking o

Aral Sea)

Land use change aects

water management (e.g.

wetland drainage reduces

ood resilience)

Climate-driven changes

in precipitation; increased

droughts

Changes in water

availability e.g. through

glacial melting

Climate change Emissions drive climatechange

Some air pollution

dampens climate changeby reducing radiative

orcing

Energy security concerns

may lead to more coal use

CO2 emissions rom

agriculture energy use

(cultivation, processing,

rerigeration, distribution)

Methane emissions rom

livestock, rice cultivation;

deorestation leads to

methane emissions as trees

decompose

See energy intensity points

above

Table 3: Selected linkages between scarcity issues


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beneath it; and so on. (Table 3 provides a uller overview

o some o the most important linkages between dierent

aspects o scarcity.)

Nor are the direct eedback loops between scarcity issues

the only ways in which they are linked. As the section on

development and ragile states discusses, all aspects oscarcity have in common the extent to which poor people

and ragile or low income states are especially vulnerable

to them. All have the potential to drive increased violent

conict, albeit almost always as threat multipliers rather

than as stand-alone causes. And because o the numerous

international dimensions o scarcity issues, together with

the resource dependence o the global economy, all pose

proound questions or globalization itsel.

continuedfrompage19


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Part 2: Scarcity and Multilateralism

Development and Fragile States

What do climate change and scarcity mean or

development and ragile states?

In the real world, the impacts o resource scarcity or climate

change will almost always blur with those o other risk

drivers which makes it hard to attribute any particular

shock, stress or other impact solely to climate change or

resource scarcity.

Take or example recent fgures on the global total o

undernourished people. In 2007, according to the UN

High-level Task Force on the Global Food Crisis, 854

million people were undernourished.87

By late 2009, theFood and Agriculture Organization put the fgure at 1.05

billion.88 While one part o the reason or the rise was the

fnal year o the ood and uel price spike, another part was

due to the subsequent eects o the global downturn,

which urther eroded the purchasing power o many

poor people.89 (The fgure has subsequently allen to an

estimated 925 million undernourished people.)90 Likewise,

the peacebuilding agency International Alert stresses that

the most signifcant impacts o climate change may be

consequences o consequences indirect eects elt inthe broader social, political or economic arena.90

The problem o attribution o eects to scarcity is

compounded by the act that vulnerability whether

o individuals, communities, ecosystems, states, or

economies is as important a hazard in determining the

impact that shocks and stresses driven by scarcity have on

the ground.

Poor people are especially vulnerable to scarcity, as to

other risks, in particular when these risks are experienced

as sudden-onset events that can lead to poverty traps.

Droughts, or instance, oten orce poor amilies to sell

livestock or other assets. Other kinds o shock can orce

amilies to take children out o school. When such shocks

come in cycles, they are oten what cause people to

become poor or stay poor. Environmental risks are an

especially common cause o such shocks; climate change

will worsen the problem.92 Poor people are also most at

risk rom ood or uel price spikes because they spend a

high proportion o income on these commodities: in the

case o ood, oten between 50-80%.

The same applies at the country level or importdependent low income countries. An International Energy

Agency study published in late 2007 ound that in 13 non

oil producing Arican countries including South Arica

Ghana, Ethiopia and Senegal increases in the cost o oi

over the previous three years came to more than the sum

o aid and debt relie they received over the same period.9

The ood spike aected poor countries hardest too: during

2008, low-income ood-defcit countries saw their impor

bills rise by as much as 40%.94

State ragility is another source o vulnerability or many

countries. A 2007 report rom International Alert ound

that 46 countries would experience a high risk o violen

conict as climate change interacted with economic

social and political problems, while in a urther 56

countries the institutions o government will have grea

diculty taking the strain o climate change on top o al

their other current challenges.95

So climate change and resource scarcity are bette

understood as threat multipliers than as stand-alone

sources o risk to poor people and ragile states.96 With

this caveat stated, however, a range o potential impact

can be identifed.

First, climate change and scarcity risk leading to a rise

in poverty. As noted, the number o undernourished

people rose sharply during the ood and uel price spike

In rural areas, where three quarters o poor people live

rising energy costs also saw small armers hit by steep

increases in costs or ertilizer and pumping water.97 In the

uture, the number o people at risk o hunger because o

climate change is expected to increase by 10-20% more

than would be expected without climate change, with

the number o malnourished children rising 21% over the

same period.98


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Second, scarcity issues will have ar-reaching implications

or the political economy o developing nations. As a

recent World Bank study observed, renewable natural

resources defne systems o power and access in a range

o ways, including ownership, consumption, distribution

and governance.99 In countries with patronage-based

political systems, the eect o such resources becomingscarcer may change the political economy balance by

reducing the size o the patronage cake, or creating new

winners and losers potentially contributing to unrest

or violent conict in the process (see below). Land and

water governance regimes are especially important in this

context.

Conversely, growing resource scarcity may also create new

orms o the resource curse the problem in which point-

sourced commodities such oil, diamonds, precious metals,minerals and certain plantation crops such as coee and

cocoa have the eect o warping the political economy

o a country by encouraging rent-seeking competition,

acilitating corruption and catalyzing conict over control

o revenues.100 In the Niger Delta, or example, perceived

inequalities in beneft-sharing rom oil production have

contributed to an insurgency that has, at times, shut

down one fth o the countrys oil production.101 I oil

prices are set or long-term ination, then the risk o such

insurgencies and their capacity to leverage impact may

increase.

It is also possible that new kinds o commodity may

become subject to the resource curse in uture as a result

o resource scarcity or example as a result o unequally

shared benefts rom third country land or ood access

deals (so-called land grabs which as noted earlier, can

also be water grabs).

One potential indicator o this risk was the 2009 controversy

in Madagascar over a deal which saw the South Korean

company Daewoo lease one hal o the countrys arable

land or 100 years or which the government would

receive no payment.102 When news o the deal broke in

the FinancialTimes, discontent simmered over, and was

widely perceived to have contributed to the coup dtat

that took place in March 2009. The new Presidents frst

act was to cancel the deal.103 More recently, a major World

Bank report on such deals argued that a priority was or

governments to improve land governance to ensure

that the pressures rom higher land values do not lead to

dispossession o existing rights. 104

Another risk is that scarcity shocks can lead to violentunrest. During the ood and uel price spike that peaked

in 2008, or example, 61 countries experienced unrest as

a result o price ination. In 38 countries, these protests

turned violent, with ragile states proving particularly

susceptible to this problem.105 More recently, as noted

earlier in the paper, Mozambique experienced serious

unrest in summer 2010 when it tried to reduce subsidies on

bread, leaving seven people dead and over 200 injured.106

At worst, scarcity may contribute to the outbreak orsustenance o violent conict. Some quantitative studies

have ound strong causal relationships between rainall

variation or temperature increase and violent conict,

although the methodological approach taken by these

studies has been challenged, and such quantitative

approaches also rest on an implicit assumption that the

past will be a guide to the uture which may be incorrect,

given the potential or abrupt, non-linear changes in the

uture, as discussed in the section on climate change earlier

in the paper.107 Alternatively, cases can be identifed in

which scarcity has played a role, or instance competition

or land in the run-up to the 1994 Rwandan genocide or

the disputed elections in Kenya in 2008, or the role o both

water and land as conict threat multipliers in Ethiopia and

Darur.108

In many cases, the risk o violent conict that arises rom

resource scarcity has less to do with disputes over the

control o natural resources themselves, than with the

livelihoods that they enable. One widely discussed example

o this is the example o piracy o the coast o Somalia,

where it has been argued that depletion o fsheries due

to over-exploitation by eets rom other countries has led

to fshing communities taking up piracy as an alternative

livelihoods strategy.109


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Why is multilateral cooperation needed?

The multilateral systems involvement in issues o

development, state ragility and emergency response is

already vast. In the development context, or example,

OECD DAC countries spent just under a quarter o their

total development aid through multilateral institutionsbetween 2004 and 2006.110 In the conict context, nearly

80,000 peacekeepers are deployed to conict-aected

states through the UN, costing $8 billion a year.111 The UN

humanitarian system will spend the same amount again

this year through the Consolidated Appeals Process.112

At the same time, as just noted, poor people and poor

countries will be disproportionately impacted by scarcity

a theme that comes up again in each o the other three

policy areas discussed in this part o the paper. Climatechange will hit hardest on low latitudes, where most

developing countries are located. Poor people and poor

countries have the greatest vulnerability to environmental

shocks and stresses, just as or kinds o shocks and stresses.

They spend more o their resources on ood and uel, and

are more exposed to commodity price ination. They have

less capacity to organize to secure air shares, whether in

local, national or international settings.

So given that the multilateral system is already heavily

involved in supporting poor people and poor countries,

and that these actors have such a direct stake in eective

management o climate change and scarcity, it ollows

that the multilateral system will increasingly need to

take account o scarcity in all its work in poor countries

whether humanitarian relie, conict prevention and

response, long term development, or indeed provision o

global public goods. What does this involve in practice?

What are the key tasks or multilateral cooperation?

Once again, it bears repeating that scarcity issues will

rarely, i ever, be experienced in isolation rom other

risk drivers. This means that policy responses must be

equally integrated. The list o actions below is not just an

agenda or action on scarcity, thereore, but in some ways

an agenda or developmentitselfin a world increasingly

characterized by risk o which scarcity is just one aspect.

Short term tasks

To start with, the multilateral system will need to scale up

humanitarian assistance capacity to cope with scarcity

Today, a rough rule o thumb sometimes used by UN

humanitarian practitioners is that global emergency relie

systems can reach up to 100 million people to at one time

The ood / uel spike saw these capacities severely testedEven beore the spike, the World Food Programme was

helping 73 million people in 78 countries; the ood crisis

then increased the number o undernourished people by

well over 100 million, to over a billion in total.113

As scarcity increases, then, humanitarian relie may need

to assist many more than 100 million. Exact estimates are

Key Multilateral Tasks or Managing Scarcity: Protecting

Poor People and Fragile States

Short term (e.g. actions that could be agreed at summit

meetings in 2011 or 2012)

Increase international humanitarian assistance capacity

and unding

Scale up social protection systems, saety nets, etc.

Build international donor capacity or analysis o natural

resource governance, political economy and conict risk

dimensions o scarcity

Scale up work on girls education, access to reproductive

health services, womens empowerment and other

sectors that can help reduce unsustainable population

growth

Medium term (actions requiring greater political heavy

liting, likely to take 3-5 years) Move towards a more integrated approach to building

across development programs

Build scarcity issues into conict response strategies


Need or more concrete examples o low carbon,

climate-resilient growth

Need or integrated assessment o fnance or

development needs (see next section)

What happens i scarcity develops to the point at which

social protection systems are insucient or protecting

poor people?


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impossible, but a potential doubling o capacities over the

next 10-15 years is probably a reasonable starting point.

At the same time, the humanitarian system will need to

be ready to deal with dierent kinds o challenge. In the

past, emergency relie has generally come ater violent

conict or a natural disaster. Scarcity issues will change

this context signifcantly. The ood price spike provided ataste o the uture: as World Food Programme executive

director Josette Sheeran observed at the time, there

is ood on the shelves but people are priced out o the

market there is vulnerability in urban areas that we

have not seen beore.114

To cope with these changing circumstances, emergency

relie is likely to need:

Additional nancial resources. WFP nearly ran out ounds during the peak o the ood price spike, when

it had to raise $755 million o additional unding just

to continue eeding people already dependent on it.

In 2009, the agency needed approximately $6 billion

a 20 % increase on 2008 (itsel a record year). The

importance o unds being available in advance is also

likely to increase.

Improved co-ordination. Humanitarian agencies will

have to work with a wider range o governments

and international agencies as scarcity evolves.

Humanitarian co-ordination structures must also cope

with spikes in their own running costs, and potentially

also with wider economic volatility (or example in

exchange rates, costs or insurance and the potential

eects o export bans).

Re-conceptualizing. As humanitarian agencies fnd

themselves helping victims o scarcity-driven slow

onset stresses, the line between humanitarian

relie and social protection (see below) will become

increasingly blurred driving new complexities

in unding and co-ordination, but potentially also

creating new opportunities or improved delivery.

The UN humanitarian system should start planning now

or the how caseloads may grow and evolve. The UN Oce

or Co-ordination o Humanitarian Assistance (OCHA) is

best placed to undertake this analytical work, and should

be mandated by the UN Secretary-General to carry out a

ull review o how needs will change in the light o scarcity

issues.

Second, there is a need to scale up social protectionsystems and saety nets as a way o building resilience.

Social protection is usually defned as public actions carried

out by the state or privately that can enable people to deal

more eectively with risk, vulnerability to crises or change,

and that help to tackle chronic or extreme poverty.115 The

proportion o people who currently enjoy access to social

protection is very low around 20% o people globally.116

Social protection policies are oten classifed into two

categories: social insurance, where social security isfnanced by contributions and based on the insurance

principle o pooling risk; and social assistance, where

public actions transer resources to needy people.117 In

practice, it can take a huge range o orms, including cash

and in-kind transers, employment guarantee schemes,

mother and child health & nutrition or school eeding

programs, weather-indexed crop insurance, micro-fnance

or social pensions.118

Such policies have a valuable role to play in managing

scarcity. Food and energy security is not just about the

total amount o ood or oil that is producedglobally, but

crucially also who is able to access these goods. (As the

economist Amartya Sen once observed, Starvation is the

characteristic o some people not having enough to eat.

It is not the characteristic o there not being enough to

eat.)119

The ood / uel price spike sharply reduced the access o

poor people to ood and uel, and led to unrest in many

countries at least 46 o which imposed either price

controls (which distorted markets and removed incentives

or increased supply) or economy-wide subsidies (leading

to inationary impacts and serious budget shortalls). As

the UN ood task orce argued at the time, social protection

systems targeted at the poorest and most vulnerable

people could have oered a ar more aordable and


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targeted way, with ewer unintended side eects.120 At the

same time, as Nicholas Stern has argued, social protection

systems are also increasingly seen as potentially orming a

core element o climate adaptation strategies.121

Scaling up social protection will require fnancial resources

and harmonization across aid donors, but it will also requirethem to take a politically sophisticated approach. The key

barriers to social protection systems are oten political, not

technical: elites may oppose them out o ears that they

will encourage dependency, or example (the evidence

actually suggests the opposite).122

A third task is building international donor capacity

or analysis o natural resource governance, political

economy and confict risk dimensions o scarcity.

As already noted, the impact o scarcity issues in ragilestates needs to be seen in a broad political, economic

and social context. Getting involved in such politicized

areas presents challenges or aid donors. Many fnd it

easier to concentrate on sae areas or example seeing

development assistance as primarily about disbursing

money rather than exercising inuence, or concentrating

on relatively technical areas o governance such as public

fnancial management systems.

But as scarcity increases, donors will fnd themselves orced

to engage with tough debates about resource rights, given

that in many countries the deault outcome will be or the

poor to end up the losers, because o their lack o political

clout. The frst step towards this engagement is or donors

to have as ull an understanding as possible o the country

context, together with a clear-sighted recognition o the

act that donors themselves are always political actors,

never neutral bystanders.

The capacity or this kind o analysis is becoming

an increasingly central plank o progressive donors

engagement in poor countries the UK Department or

International Development (DFID), or example, now

uses drivers o change analysis as a basis or developing

Country Assistance Programs in all countries where it

operates. The next step is or donors to bring scarcity

issues to the heart o these analyses, mapping the

outlook on resource scarcity against indicators o human

vulnerability, economic impact, conict risk and so on

with particular attention to the governance regimes tha

countries apply to resources such as land and water. (The

Center on International Cooperation is in the process o

producing pilot studies or what such integrated country

assessments would look like in practice.)

Finally, there is a pressing need or donor agencies to do

more to address unsustainable population growth in

key low income countries. Population is one o the mos

sensitive issues in development, involving as it does highly

personal questions about sexual behavior and womens

empowerment. Discussion o population growth can

also raise acute ears, whether because o the draconian

approach that some countries have taken to the issue (o

example, Chinas one child policy), or because o accountso environmental degradation that lay the blame with

poor people or reproducing too much rather than with

OECD countries or the worlds middle class or consuming

too much.

Yet as discussed earlier in the paper, the act remains that

some o the worlds poorest and most ragile states ace

some o the least sustainable rates o population growth

I unaddressed, these rates o growth will greatly intensiy

the problem o managing scarcity; slower population

growth, on the other hand, can buy more time to adapt

particularly in the ace o the coming impacts o climate

change.123

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Globalization and Scarcity : Multilateralism for a world with limits

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