Global Policy Forum

Managing Scarcity: The Institutional Dimensions

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By Alex Evans

August 25 2009

So now that we're all sufficiently depressed about scarcity issues, let's turn to what the UN and the wider multilateral system need to be doing about them.

Let's start first with what I think is the fundamental point: why we need to see energy, food, climate and water security as different facets of the same underlying issue of resource scarcity, rather than as separate issues that happen to share a few attributes.

First, because they share common drivers. Whether you're looking at energy, food, water, land or 'atmospheric space' for our emissions, demand is skyrocketing - both because of the growing size and affluence of a 'global middle class', and because of a rapidly growing world population. As we've heard, global demand for energy is set to rise 45% by 2030; for food, 50% by 2030 (before biofuels are taken into account); for water, 25% by 2025.  And at the same time, as we've been discussing, there are serious reasons for doubting that the supply of any of these resources can rise indefinitely.

Second, because of the ways scarcity issues are linked to each other through feedback loops - which creates a major risk of unintended consequences when we try to tackle one scarcity issue, without taking the others into account. Like when the US invests in biofuels to improve energy security - and in the process accidentally helps create a food security crisis.  Or when Gulf states use desalinization technology to improve their water security - but at a fearful cost in terms of energy use and greenhouse gas emissions.  Or when South Asia achieves incredible crop yield growth by increasing irrigation during the Green Revolution - but 40 years later, faces a crisis of depleted water tables and aquifers.

Third and most fundamentally, we need to see scarcity issues as a set because they share common impacts - of three kinds.

First, they impact disproportionately on poor people and fragile states.  Poor people spend a huge proportion of household income on energy and food (in the case of food, between 50 and 80 per cent).  They are far more exposed to price spikes like the ones we saw last year.  And environmental stresses like water scarcity or extreme weather events are one of the main causes of the kind of shocks that force poor people into catastrophic short term coping strategies like selling off productive assets or taking kids out of school - strategies which are often a key reason why poor people become poor in the first place.

And fragile states are also particularly exposed to scarcity. Their political and institutional deficits mean they're badly placed to resolve disputes over access to resources - look at how access to land was a flashpoint in the post-election violence in Kenya last year, or how water scarcity threatens to make already bad situations in Darfur or Nepal even worse.  And remember that climate change will exacerbate all this: International Alert suggests that climate change is likely to result in 46 countries, home to 2.7 billion people, being at increased risk of violent conflict.

On top of this, there's the fact that fragile states' lack of social protection systems means that governments faced with civil unrest in the face of food or fuel price spikes will often turn instead to panic measures like price controls or economy-wide subsidies - measures which are less targeted, more expensive, and have perverse outcomes like removing incentives for farmers to increase food output.

This leads us to the second set of common impacts that come from scarcity issues: economic stresses.  Price inflation is the obvious example here: food and fuel, for example, were identified by the IMF as the two most important global drivers of price inflation last year, which ran into double digits in many developing countries.  But it's not the only example.  Think of the panic measures we saw in the trade context at the height of the food crisis, when more than 30 producer countries had export restrictions in place - measures which made a bad problem very much more serious.

And then there's a third set of common impacts: the potential for strategic resource competition between countries whose own natural resource endowments are insufficient for their demands.

We've seen the scramble for rights to produce or purchase energy from Africa, the Arctic, the South China Sea, the Caspian and elsewhere, for example - and we can all see the potential for this to lead to friction in future, or even to violent conflict.

More recently, we've started to see the same happen with food too, as import-dependent countries like China, South Korea, Japan and a range of Gulf states have sought to forge security of supply deals with producer countries - so-called "land-grab" deals that the CEO of Nestle recently observed may be as much about access to the water beneath the land, as the land itself.

 

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So, scarcity issues are all interconnected: and that's something that the multilateral system needs to bear in mind, as it finds itself asked to facilitate collective action to mitigate scarcity trends - and to pick up the pieces when things go wrong.  So what does this demand from us in practice?

Well, let me start at ground level with the challenge of building resilience to scarcity among poor people and fragile states, where I think seven key agendas stand out.

  • First, we need to improve surveillance and early warning. We have reasonable global surveillance systems on climate, energy markets, agricultural output and food markets, but when you get down to ground level, coverage is a lot more patchy. We're not sure how climate change will impact specific places. We don't really have a real time sense of where the most water scarce places are. Where we do have scientific data like this, it's not well integrated with data about conflict risk, or human vulnerability, or political economy dynamics. The new Global Impact and Vulnerability Alert system that the G20 commissioned from the SG in April could prove to be an extremely important first step here - but only a first step.
  • Second, we need to focus more on mitigating unsustainable population growth. At the global level, population growth has slowed a lot since its peak in the early 1960s: far from being the exponential growth of popular imagination, DESA estimates suggest that global population is actually on course to stabilise at about 10 billion people in 2200 - and that with a serious push, we could level off at 8 billion people as early as 2035. That's the good news. The bad news: pretty much all of the remaining population growth is heavily concentrated in the world's most fragile states - like Pakistan, where population is set to double between now and 2050. This can be avoided, if we get much more serious right now about girls' education, and access to reproductive health services: two MDGs that will be especially crucial in shaping our collective future. But we need to get on with it.
  • Third, we are going to have to focus more on agriculture - especially smallholder agriculture. This is not about some romantic attachment to peasant agriculture: it's about recognising that this really is one of the front lines of scarcity issues, and that we forgot about agriculture for the last two decades (during which the proportion of aid spent on agriculture fell from 17% in 1980 to 3% in 2006). This is where we will win or lose the battle against water scarcity; it's where the greatest increases in crop yield are to be found, if we can find ways of getting technology, know-how, credit and risk management out to the sticks; and it's also where most of the world's poor people are. Three quarter's of the world's poor are still rural, 2. 5 billion of them rely on small farms for their livelihoods, and if solutions aren't working for them, then they're not working at all.
  • Fourth, we need to start seeing social protection systems and safety nets as one of the most powerful weapons in our arsenal for tackling vulnerability and replacing it with resilience. Last summer, more than three dozen countries saw civil unrest because of high food and energy prices. As I already mentioned, many governments responded to this with panic measures like economy-wide subsidies, price controls or export restrictions - all of which just made the problem worse. Social protection systems can offer a much more sophisticated approach, in both urban and rural areas. But we're starting from a low base. Only 20% of the world's people currently have access to them. They need high-capacity institutions to run them. Governments worry about the long term fiscal commitment. Middle class voters worry that they'll increase dependency. But they remain a better bet than the alternatives - and aid donors need to focus on them a lot more.
  • Fifth, international actors need to scale up their capacity for working on natural resource governance in areas like land, water or forestry, which will have dramatically increased potential to be political flashpoints. What we're really talking about here is a much more politically sophisticated approach to development - and a need for aid donors, in particular, to get beyond the rather safe, technical agendas like public financial management or institutional capacity building that aid donors often mean when they talk about 'governance'. Instead, they need to get more involved in the political economy issues inevitably involved in sharing out scarce resources - which in turn involves really understanding the drivers of change in different countries, and working intelligently with those drivers of change to help bring about progressive change.
  • Sixth, there is of course a huge amount much to do on the conflict prevention front, where I think the task starts with sharing experience across the international system of how natural resource issues come up in mediation, in peacekeeping and elsewhere, with the intention of building up a body of knowledge that SRSGs, force commanders, Resident Co-ordinators, mediators and others can draw on as they encounter scarcity issues in new contexts. As a first step towards this, perhaps the UN could identify a number of pilot countries in which to experiment with integrated approaches to scarcity, development and conflict prevention - perhaps building on the 'One UN' pilots that emerged from the 2006 High Level Panel on System Coherence.
  • And finally, we're going to need to upgrade our emergency response capacity to deal with scarcity. If the informal rule of thumb in the humanitarian system is that emergency relief agencies can reach up to 100 million people at any one time, then it's notable how close to that level we came during the food price spike. Project scarcity trends (and especially climate change) forward into the future, and it's not at all unreasonable to suppose that we might need to be able to help 200 million people at once within a decade or so. And as well as larger caseloads, we're also likely to see different caseloads. Traditionally, most humanitarian emergencies have been primarily in rural areas, and have come after wars or natural disasters. Look to the future, though, and we can expect to see more situations where (as Josette Sheeran noted of many urban areas last year), the problem is that there's food on the shelves, but poor people are priced out of the market.

Now, the seven areas I've just outlined all share the feature that they cheerfully ignore the neat little silos into which we've spent the last few decades organising the international system.  Whether each  of us comes from the world of peacekeeping, or aid and development, or humanitarian assistance, or climate adaptation, or conflict mediation, the extent to which we do or don't make progress on the seven agendas I've just outlined is going to be an absolutely central shaping factor in determining whether the challenges awaiting us are tough but manageable - or, on the other hand, a gradually losing battle in which we constantly find ourselves running to stand still.

And we are going to need to work together across these disciplines far more than we currently do, in order to deliver on the challenges I've just mentioned.  This goes far beyond the rather limited agenda covered in the 2006 High Level Panel on System Coherence - which failed more or less completely to cover scarcity issues, relegating them instead to a review of environmental governance that never took place and that in any case overlooks the point that the issues we're talking about fit extremely awkwardly into the "environmental" category.

This brings me to where I want to finish off, which is with the larger crisis prevention agenda.  In this presentation, I've concentrated primarily on what we have to do on the ground in developing countries and fragile states to tackle vulnerability and build resilience, as this is where scarcity issues will hit hardest.  But without comprehensive solutions at the trans-boundary level to scarcity issues, all this will be no more than palliative care - and with diminishing returns at that.

While scarcity issues aren't new, what is new is the combination of scarcity with global interdependence that we see today.

There is the potential here for a zero-sum dynamic to emerge, with intensifying competition between countries, citizens or other actors for scarce resources: a situation in which commitment to multilateralism slowly unravels, and poor countries and fragile states find themselves ignored, exploited or fought over.  What happened in Madagascar a few months ago ought to be a wake-up call for all of us: as you'll recall, the news that a South Korean company had leased one half of the country's arable land, for 100 years, for no payment, contributed to simmering public discontent - and from there to the coup d'etat that took place in March this year.  The new President's first act was to cancel the deal.

The alternative to this kind of zero sum dynamic is a rules-based approach, founded on mutually accepted international norms.  But in order to get there, states, citizens and international organizations are going to have to work through tough questions about what are the rights and responsibilities that they have in a world of scarcer resources.  Questions like:

-      How do you share out a global emissions budget between the world's countries and people, given the massive per capita disparities between current emissions?

-      What if any obligations are owed by food producers not to interrupt food exports suddenly - whether through quota restrictions, or through diverting crops through domestic biofuel regulations?

-      What responsibilities do the world's affluent consumers owe to poor people if their resource-intensive diets are helping to raise the cost of food beyond the reach of the bottom billion?

The bottom line here is that states, citizens and other policy actors have choices about whether to deal with scarcity issues together, or compete with one another as demand exceeds supply. Whether that choice is made consciously, through building systems for collective action, or unconsciously, through a slide away from interdependence and towards intensifying competition, remains to be seen.

Now, international organizations can't force member states to get serious about this agenda.  But they can start to prepare the way, by helping build shared awareness between policymakers and by investing now in developing the ideas that we need to have sitting on the shelf when political windows of opportunity open - usually suddenly, and briefly.  So what can we do?

First, building coherence among ourselves on scarcity issues.  We need to be having far more regular meetings between agency heads and senior staff working on different facets of scarcity issues.  Part of what made the High Level Task Force on the Global Food Crisis such a success last year was the fact that the IFIs and the UN were playing nicely together - which in turn stemmed largely from the excellent relationship between Josette Sheeran and Bob Zoellick.  So let's try a little harder to systematize that.  The Policy Committee was an important step in improving coherence within the UN. Now, we need to do that between the UN and other parts of the multilateral system - not just through CEB, but at the more political level.

Second, as a way of driving collaborative working and integrated analysis across the international organizations most relevant to scarcity issues - including IEA, FAO, IPCC, World Bank, IMF, UNEP, WFP and OCHA - it would be great if member states mandated them to produce a regular World Resources Outlook, bringing together global and regional level scientific surveillance across energy, food, water and other scarcity trends, and integrating this with economic analysis and field-level vulnerability.  As the IPCC has amply demonstrated, analytical processes can become platforms for action - and we need a lot more action on scarcity issues.

Third, we should take advantage of the upcoming 20th anniversary of the Rio summit to institute a High Level Panel on Climate, Scarcity and Security that would really look at the architectural issues here.  Both the 2004 and the 2006 Panels identified climate, energy and water security as key issues - and both panels deferred the question of what to do about them until a later date.  Now, we need to come back to these questions, and how they relate to wider international issues like trade or financial reform.

All of this is really about global leadership - leadership that so far has been conspicuously absent on scarcity issues. It's not just a question of political will, fundamental though that is, but also of vision. Political leaders/policymakers have yet to find the narrative needed to explain the transition ahead - and international organizations have a big role to play in nudging them into that space.




 

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