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  • Commodity pricing = water pricing
  • CIA
    http://www.americanprogress.org/issues/security/report/2013/02/28/54579/the-arab-spring-and-climate-change/
    “The Arab Spring and Climate Change” does not argue that climate change caused the revolutions that have shaken the Arab world over the past two years. But the essays collected in this slim volume make a compelling case that the consequences of climate change are stressors that can ignite a volatile mix of underlying causes that erupt into revolution.
    All of these authors are admirably cautious in acknowledging the complexity of the events they are analyzing and the difficulty of drawing precise causal arrows. But consider the following statements:
    “A once-in-a-century winter drought in China contributed to global wheat shortages and skyrocketing bread prices in Egypt, the world’s largest wheat importer.” (Sternberg, p. 7)
    “Of the world’s major wheat-importing companies per capita, “the top nine importers are all in the Middle East; seven had political protests resulting in civilian deaths in 2011.” (Sternberg, p. 12)
    “The world is entering a period of ‘agflation,’ or inflation driven by rising prices for agricultural commodities.” (Johnstone and Mazo, p. 21)
    “Drought and desertification across much of the Sahel—northern Nigeria, for example, is losing 1,350 square miles a year to desertification—have undermined agricultural and pastoral livelihoods,” contributing  to urbanization and massive flows of migrants. (Werz and Hoffman, p. 37)
    “As the region’s population continues to climb, water availability per capita is projected to plummet. … Rapid urban expansion across the Arab world increasingly risks overburdening existing infrastructure and outpacing local capacities to expand service.” (Michel and Yacoubian, p. 45)
    “We have reached the point where a regional climate event can have a global extent.” (Sternberg, p. 10)
  • Negative correlation between the price of water and the scarcity
    http://www.globalwaterintel.com/archive/9/9/analysis/world-water-prices-rise-by-67.html
  • Why do environmental costs matter?
    3Bn new middle class consumers by 2030 will create huge increase in demand for consumer products
    Demand in the past to 2001 has been easily met and indexed prices of raw materials (commodities) have actually declined by 1%
    However, in the past 10 year prices have increased exponentially and become more volatile
    Conclusion: rising demand and increasing resource constraints will present significant opportunities for those companies prepared to meet the resource productivity challenge and value at risk for those are less prepared.
  • Value - financial capital vs natural capital
    Water pricing
    Water risk - shortfall by 2030

Transcript

  • 1. The resource revolution Dr Richard Mattison Chief Executive, Trucost “The world is more at risk as persistent economic weakness saps our ability to tackle environmental challenges” World Economic Forum, January 2013 “We use it because it is valuable, we lose it because it is free” Pavan Sukhdev The Economics of Ecosystems and Biodiversity (TEEB) Study Leader, November 2012
  • 2. Drivers of the Resource Risk Mega-trend "In the next 40 years we need to produce as much food as we produced in the past 8,000." WWF •3bn more middle class consumers by 2030 •40% water shortfall by 2030 •>100% increase in real commodity prices since year 2000 •3X increase in volatility since year 2000
  • 3. WHY NOW? The World Economic Forum’s Global Risks 2013 report is developed from an annual survey of over 1,000 experts from industry, government, academia and civil society, who were asked to review a landscape of 50 global risks.
  • 4. WHY NOW? ..........5 of the top 8 global risks identified by the World Economic Forum in 2013 have been explored in this study
  • 5. WHY NOW? Was the Arab Spring triggered by a natural capital shock? Source: Centre for American Progress
  • 6. Fact: There is a negative correlation between the price of water and water scarcity* *GWI/OECD 2008 Global Water Tariff Survey
  • 7. 1
  • 8. NATURAL CAPITAL AT RISK TEEB for Business Coalition Report Natural Capital at Risk: The top 100 externalities “We use it because it is valuable, we lose it because it is free” Pavan Sukhdev The Economics of Ecosystems and Biodiversity (TEEB) Study Leader, November 2012
  • 9. METHODOLOGY: AIR POLLUTION
  • 10. RESULTS Top 100 externalities (‘Global 100’) total cost of US$4.7 trillion Total externalities measured by the study were US$7.3 trillion TOP 10 OF THE GLOBAL 100 INDIVIDUAL EKPI IMPACTS BY REGION-SECTOR
  • 11. RESULTS: COMBINED EKPI IMPACTS BY REGION-SECTOR (TOP 5) 3. Coal power generation, Northern America, US$317bn, 1.3x revenue 1. Coal power generation, Eastern Asia, US$453bn, 1.0x revenue 4. Wheat farming, Southern Asia, US$267bn, 8.4x revenue 2. Cattle ranching, Southern America, US$354bn, 19x revenue 5. Rice farming, Southern Asia, US$236bn, 3.6x revenue