Towards Sustainability in Resource Scarcity

Dadhichi Tripathi, MBA IB, IIFT Delhi, 2014 With evolution of man one thing which remained constant is ever increasing resource exploitation. For centuries we kept on destroying natural habitats, resources and even species. But by the end of 20th century, we have seen protests for saving our ecosystem, which is in danger of being over utilized beyond limits of sustainability. Our current and projected future demand of nonrenewable resource is immense. Even Optimistic estimates for Coal and Oil peak are for 2025, then the rate of production is expected to enter terminal decline. In such scenario of Limited supply, inequitable resource distribution and ever rising demand, scarcities shall lead to Global turmoil. It is not lone threat; it works in nexus with food, water and climate insecurity. For example US is top Corn producer country but this year is suffering large scale crop deterioration, 70% plus crop is hit due to higher temperature, its stark reality of changing climate, which can lead to food crisis. Changing dynamics of political control, once polarized world by superpowers after global economic crisis now look at BRICS Nations, to sustain growth. The World Population will touch 9 billion by 2040 and energy and food demand shall rise by 50%.We are not prepared for this challenge, we have been looking for Disruptive energy solutions which may be there but it cant be the only way as success rate is very less and results can take decades to come. UN tried ambitious, Millennium Development Goals (MDG-2015) adopted by world leaders in 2000.Being without incentives, lukewarm responses are far from achieving those goals and it will push things for another decade at least. Even Though its gloomy, we have innovative technologies, social support and global awareness. Also education and much better networking with internet gives us ray of hope and optimism.

FOOD AND WATER SECURITY

FAO define food security as: Food security exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life Vulnerability of poor to get this security has forced the World to think again, on the very fundamentals of resource sharing to avail The fundamental right of food and water. What we call equality of rights today, is at center stage of political gambit. Imbalances in supply and demand are basis to any socio-economic problem .To address this on one hand supply can be addressed by investing via technology to improve availability of food, water, energy etc. and adding buffer stock for emergency. But on other hand projections show Demand is going to overshoot present curve of supply very soon. Catch-22 lies in the fact that, we produce more food than possible consumption today, still a Billion plus are facing

problems of food scarcity. Similarly changing lifestyle and farming ways are possessing threat to sustainable clean water supply. Also water is prime to power generation and Industries thus we are in competition for resource, If we see chart

attached Water and Food crisis are grave threat to Society as per WEF.

Demand Drivers: Key drivers which cause this crisis are land scarcity and Storage, climate change, energy shortage and Credit crunch. Currently 1.5 Billion Hectare (12% of total land) is used for agriculture out of which only 20%, which accounts for 40% output, is with irrigation facility. Also as per Oxfam reports the amount of arable land per capita halved from 1960 to 2007, from 0.39 to 0.21 hectares. A lot can be done here to increase production with prudent use of technology for optimum irrigation. Climate change threatens to pattern of rainfall, temperature, sea level etc. this will lead to uncertainty and hence trade dynamics will change. In this scenario some country will be benefitted and some will lose resource thus added adaptation cost will occur. Energy is key driver of any electrical and most mechanical devices, but most of it is used by developed nations this causes inequitable distribution also its demand has been rising exponentially hence shooting up oil prices leading to high transportation, farm equipment cost which in turn shoots up food prices. Similar is case with water and other resources, agriculture uses 70 % of world fresh water and its directly linked to food security but we need water to run our Power plants too as source of coolant. That results in trade off and poor country pay for this by losing their resource to dominant .For example China and Oil Rich nation indulged in buying large patches of land (Land Grab) in Africa, some analysts consider it backup to water supply or beginning of new era of colonization. Also UNDP reports lamentably, 1.1 billion living 1 km away from nearest clean water source and per capita annual renewable water in MENA region will fall to 500 Cubic meters by 2025 which is currently 750 cubic meters. Here we are facing physical scarcity but lack of Infrastructure and investment can also lead to economic water scarcity such was case seen in Sri Lanka.

Role of International trade: Potential benefit from Trade is based on the law of comparative advantage. It reduces risk by diversifying buyers and seller in an open market thus injecting more liquidity into system. Allows food-surplus countries to complement the countries in food-deficit thus bring forward global integration and Efficiency to the table. It ensures availability of non-native items and price reduction of food and other items over the years through greater competition, and enhanced consumer purchasing power. Its kind of Hedge against global conflict (below diagram).

Here SolowSwan growth model seem applicable as it will go in long term collaboration and success, countries can go for virtual water trade. International investment brings with them latest technology and best practices. With global FDI expected reaching $1.8 trillion in 2013 and $1.9 trillion in 2014, barring any macroeconomic shocks, we will see good investment and trade in coming years.

ENERGY AND NATURAL RESOURCES SUPPLY

7 billion and counting, World Population and their changing living habits are bound to put huge pressure on energy demand. With Coal, Oil and Gas to as major supply Component to our energy needs a look at vision 2040 shows what we shall be trying.

Currently Coal provides 40% of the worlds electricity needs. It is the second source of primary energy in the world after oil, and the first source of electricity generation. But it comes with cost of carbon pollution, which can be contained using Carbon capture and storage technology (CCS), but its not cost effective yet. Nuclear looked promising but Aftermath of the Fukushima there is hesitation also its not cheap. The Golden rules for golden age of gas from IEA is document showing shale gas will supply 50% of natural gas supply in US by 2020,Tight gas and methane at coal beds should also be seen as viable options. In this scenario higher energy productivity is most cost effective way out .Wind, Solar and geothermal energy can be seen as clean source with high potential as candidates.

India recently saw back to back blackouts due to grid failure; Official figures show shortages of about 10% during peak hours. This case can be handled by operation optimization using Smart grids. Also saving fuel using hybrid and efficient engines should be done, any organization must understand energy requirements and have holistic approach as power generation is to become costlier with coal showing downward slope but question is will people pay extra for carbon less Emissions and clean energy can.

Current Crisis in Food and Agriculture Crisis of 2008 came with multiple repercussions, one of them was rise in food prices, with future in uncertainty, exporting countries began restricting grain exports to keep their domestic food prices down .Then there was sudden rush form oil producing rich country to accumulate food gains. It led to sharp increase in prices and causing Food riots in poor nations like Algeria and Yemen. Welcome in the era of new geopolitics on food. This problem is not standalone its linked to Agrarian productivity. After Green revolution genetically modified crop and DNA mapping came with some hope, but nothing much has happened .Much of land is still dependent on rainwater and old practices. Also protectionism has allowed only 10% trade of crops internationally whereas goods are traded 50%.Changing Climatic condition and increased used of inorganic fertilizers has caused depletion of soil and drop in Water table. Also biofuel concept caused a lot of water depletion. We have hit phase of stagnation and waiting for something new and disruptive to happen.

Solution and Approach forward

Any problem of this dimension cant be one shot solution, thus Multi-stakeholder collaboration approach which is directed toward saving last mile loss containing wastage from farm to fork using supply management practices. Along with working on Sustainable diet plan. Funding and innovating in that direction to maintain availability, accessibility, acceptability, adequacy and stability of source .To curb this evil in society, Oxfam talks about Fair share via supporting distribution channel and using egalitarian approach. Also efficient usage and design for data improvement and system integration to Identify and divide in multilayer. Other than saving we can see following:

Five points B-RITE Approach looking forward to integrated solution taken from various industries to challenge this mega issue are: Big data Analysis, IT industry has been struggling with unstructured data coming at fast rate in diverse form in large quantity. But solution to such lies at implementing distribution of data base approach its safe and with new algorithms and analytics can do wonders with targeted feeding of

resource which could be implemented in our resource problem. It gives Macro trends unknown hitherto, it does not limit you from feeding only data in terms of alphanumeric it can be any video, photo, graphs etc. hence a viable solution to data collection. Second is Risk Diversification, here we have seen how international trade and open market can help and improve existing systems. Also you get immunity from natural calamity and region specific draughts. Third is Incentivized Funding, direct funding to generate resource or aid may not work as its one time solution. Consider example of extra funds allotment if they come up with Master plans of growth and data showing how they have implemented till now. Fourth is The Ownership Feeling, is to make it a personal issue this can start with a teaser campaign as in generally is approach in marketing, a sense of loss and a humanistic desire to work forward should come. Feeling that I am the Owner of Every resource and its responsibility is mine along with every person on Earth is related me. Fifth point is Social Engineering, here food distribution should be based on need, Also depending on law of land ,this incentive should be attached with education and hence developing local model of social engineering ,where community within decides need and resource sharing based on services each can provide. Our strength lies in Unity and we have shown before, together we stand on issues of Humanity and this time too we will.

(Author: Dadhichi Tripathi, 1st Year MBA Student at Indian Institute of foreign TradeNew Delhi, Contact: dadhichi1@gmail.com)

References:
1. The World Bank Website: Here Global finance and Development Indicators Data http://databank.worldbank.org/Data/Views/Reports/TableView.aspx 2. FAO website: An article on Diets must become sustainable: http://www.fao.org/news/story/en/item/153694/icode/ 3. World Economic Forum: Report on Global risk Barometer http://reports.weforum.org/global-risks-2011/#data-explorer-barometers 4. UNCTAD: Statistic data on international trade for BRICS countries. http://unctadstat.unctad.org/TableViewer/tableView.aspx 5. BBC: Navin Singh Khadka on South Asia's energy crisis demands collective action. http://www.bbc.co.uk/news/business-19107372 6. Energy Realities: A visual Guide to global energy needs http://www.energyrealities.org/meeting-our-needs/population-density-1990-2015

Video: 1. Video link to TED: Josette Sheeran Talking on Ending hunger now
http://www.ted.com/talks/josette_sheeran_ending_hunger_now.html

2. Link to YouTube: IEAEnergy upload on A Clean Energy Future: Do We Have What

It Takes? http://www.youtube.com/watch?v=Y8omwilkdx0

Books:
1. Colin Chartres and Samyuktha Varma, FT Press (2010),Out of Water: From Abundance to Scarcity and How to Solve the World's Water Problems ISBN-10: 0-13-136726-9.