A more globalised world has come with many benefits, including higher standards of living around the world, access to new markets, and lower-cost products. However, globalisation is also decreasing the security of global supply chains, according to a recent study published in October in Global Environmental Change (1).
The team of researchers from the University of Cambridge used macroeconomic data from 189 countries to perform the first large-scale study of the risks countries face from dependence on water, energy and land resources both within and beyond their borders.
“There has been plenty of research comparing countries in terms of their water, energy and land footprints, but what hasn’t been studied is the scale and source of their risks”, said lead author Dr Oliver Taherzadeh of the University of Cambridge. “We found that the role of trade has been massively underplayed as a source of resource insecurity — it’s actually a bigger source of risk than domestic production”.
More specifically, they examined water, energy and land insecurity to quantify the pressures countries are placing on natural resources in order to meet their needs for goods and services through both domestic production and international trade and found that countries highly dependent on trade are potentially more at risk from resource insecurity.
“By quantifying the pressures that our consumption places on water, energy and land resources in far-off corners of the world, we can also determine how much risk is built into our interconnected world”, Taherzadeh added.
The study adds crucial insights into resource pressures and their sources. Most previous studies have been region-specific, making it difficult to create an overall picture. However, by linking indices designed to capture insecure water, energy, and land resource use to a global trade model, the authors were able to obtain an overview of the scale and sources of national resource insecurity from both domestic production and imports.
Interestingly, large economies like the US and China were found to be more at risk from water shortages outside their borders due to the high volume of international trade in these countries; Whereas, many countries in sub-Saharan Africa, such as Kenya, that are less heavily embedded in the global economy are less exposed and are relatively self-sufficient in food production. Climate change exacerbates the risks, the authors say.
The global economy has become highly interconnected and the Covid-19 crisis has exposed huge vulnerabilities in both local and global supply chains. The findings raise pressing concerns about whether globalisation is compatible with achieving sustainable and resilient supply chains.
Taherzadeh says that to ensure a ‘green economic recovery’ from the pandemic, we will have to ‘radically rethink the scale and source of consumption’.
“However bad the direct and indirect consequences of Covid-19 have been, climate breakdown, biodiversity collapse and resource insecurity are far less predictable problems to manage — and the potential consequences are far more severe”.
(1) Oliver Taherzadeh et al. Water, energy and land insecurity in global supply chains. Global Environmental Change, 2020 DOI: 10.1016/j.gloenvcha.2020.102158