Fluctuating resources prices will set in motion a chaotic chain of events unless governments and businesses ‘get to grips’ with a new world order defined by resource politics, according to a new report released by Chatham House.

 

The Resources Futures report found that mutually destructive trade policies and an ever more unpredictable are adding to a heady cocktail of resource-related fears.

 

The report found that in an increasingly interconnected world, volatile prices pose greater threats than the prospect of scarcity, and that the grasping of the politics of resources is a pre-condition for tackling major global challenges, including climate change.

 

The report is based on 12 million data points from over 200 countries and 1,2000 types of natural resources. It concludes that:

  • Volatility of resource prices is the new normal, hitting both consumers and producers. 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 a critical part of this insurance policy.
  • Trade is becoming a frontline for conflicts over resources, at a time when the world is more dependent than ever on resources trade, which grew by 50% in the last ten years.
  • Environmental change and degradation, especially water scarcity and climate change, is making business-as-usual practices obsolete and threatening the global production system.

 

To avoid a protracted period of resource-related strife, the report proposes:

  • The formation of a 'coalition of the committed', or a new grouping of the world’s key resource producers and consumers – a ‘Resources 30’, or 'R30'. The coalition’s first task should be to tackle price shocks.
  • Initiatives to improve transparency, manage interdependencies, and strengthen climate adaptation should be prioritized by donors in the coming wave of new producer countries. Their fast expanding resource sectors are potential flashpoints for social and political tensions.
  • Expanding or linking the International Energy Agency’s emergency sharing mechanism to those in the emerging economies, especially China and India.
  • Allowing companies crucial to fuel supply to access a percentage of national reserves without prior government approval, and tackle local disruptions before they hit international markets.
  • Major biofuel-producing countries to collectively purchase options on grain and oilseed feedstocks from their biofuel industries. These would be triggered during food price spikes, acting as a virtual global food reserve.

 

The full report can be found here