pa p e r s e r i e s

ResouRce cuRse Redux

Linking Food and WateR stRess With gLobaL ResouRce suppLy VuLneRabiLities
Raimund Bleischwitz Michael G. Dozler Corey Johnson

 2012 Transatlantic Academy. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing from the Transatlantic Academy. Please direct inquiries to: Transatlantic Academy 1744 R Street, NW Washington, DC 20009 T 1 202 745 3886 F 1 202 265 1662 E Info@transatlanticacademy.org This publication can be downloaded for free at www.transatlanticacademy.org.

Transatlantic Academy Paper Series The Transatlantic Academy Paper Series presents research on a variety of transatlantic topics by staff, fellows, and partners of the Transatlantic Academy. The views expressed here are those of the author and do not necessarily represent the views of the Transatlantic Academy. Comments from readers are welcome; reply to the mailing address above or by e-mail to TA@gmfus.org. About the Transatlantic Academy The Transatlantic Academy was created in 2007 as a partnership between the German Marshall Fund of the United States (GMF) and the ZEIT-Stiftung Ebelin und Gerd Bucerius. The Robert Bosch Stiftung and the Lynde and Harry Bradley Foundation joined as full partners beginning in 2008, and the Fritz Thyssen Foundation joined as a full partner in 2011. The Compagnia di San Paolo joined in providing additional support in May 2009, as did the Joachim Herz Stiftung and the Volkswagen Stifung in 2011. In addition, the Academy received startup funding from the Transatlantic Program of the Government of the Federal Republic of Germany through funds of the European Recovery Program (ERP) of the Federal Ministry of Economics and Technology.

On the cover: One of the worlds longest and heaviest trains carries a load of Pilbara iron ore (red gold) to port through a rugged desert landscape in outback Western Australia. BeyondImages

Resource Curse Redux

Linking Food and Water Stress with Global Resource Supply Vulnerabilities
Transatlantic Academy Paper Series May 2012

Raimund Bleischwitz, Michael G. Dozler, Corey Johnson1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Global Resource Supply Vulnerabilities Map . . . . . . . . . . . . . . . . . . . . . . . 3 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Discussion of the Results and Policy Relevance. . . . . . . . . . . . . . . . . . . . . . . . 11 Resources and Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Raimund Bleischwitz is a Transatlantic Academy Fellow and is co-director at the Wuppertal Institute, Germany. Michael G. Dozler was a research assistant at the Transatlantic Academy in early 2012 when this paper was written; he is currently a contractor with the U.S. Department of State. Corey Johnson is a Transatlantic Academy Fellow and is an assistant professor of geography at the University of North Carolina at Greensboro. The authors are pleased to acknowledge the discussions with our colleagues Geoffrey Kemp, Brahma Chellaney, Jim Cust, Tim Boersma, Philip Andrews-Speed, Stacy VanDeveer, as well as with Paul Collier, Ephraim Nkonya, Jonathan White, and feedback from Steve Szabo.

Introduction

Badlands you gotta live it everyday Well keep pushin till its understood Bruce Springsteen

he Transatlantic Academys report on The Global Resource Nexus: The Struggles for Land, Energy, Food, Water, and Minerals (Andrews-Speed et al., 2012) gives evidence that the interconnections between different resources lead to new and additional governance challenges, and possibly also to conflicts and security threats. It further argues that a number of countries are likely to suffer from what can be called a redux of the resource curse: a downward spiral of development where the impacts of a food and/or water crisis put fragile states and regions at risk of socio-political breakdowns, which may lead to interruptions of supply chains for materials that are essential for many key technologies. This thesis is close to earlier discussions about a resource curse, the institutional inability of many resource-rich developing countries to transform natural endowments into prosperity for the poor. However, it contrasts with more recent estimates about a potentially bright future for these states that has been put forward by Paul Collier (2012), the World Bank (World Bank, 2012), and others. They believe that a) lessons on better governance have been learned and b) sweeping civil society actions in Africa and elsewhere puts healthy pressure on governments to act on behalf of their citizens rather than in favor of corrupt elites. This paper explains the basis for the more skeptical outlook of the Transatlantic Academys report on the resource nexus (Andrews-Speed et al., 2012). Primarily, it adds the environmental change dimension to the resource curse debate

and argues that the governance challenges of the global resource nexus are enormous. In addition, this report provides a preliminary map of the global resource supply vulnerabilities from atrisk countries. Based on the available data, the paper identifies 15 countries that are most at risk for resource supply disruptions. Furthermore, it identifies 30 additional countries that, given more extreme circumstances, may also be at risk and have an impact on global resource supplies. Whether resource-rich countries that exploit their endowments will effectively manage or suffer from the resource nexus is of crucial importance not only for those countries but also for the transatlantic community. The outlook is not great, however. If our estimates are correct, not only are risks of resource conflicts and scarcities more likely to prevail but also the need to take action becomes more pressing. Thus, it is crucial to get better evidence on the mechanisms that shape resource development outcomes in developing countries, and on how resource conflicts within states spill over to become issues of international concern. The following mapping exercise and our analysis do not predict which countries will have resource supply disruptions; rather, the map displays those countries that, given current conditions and trends, are likely to be at risk in the near future. Because conditions are rapidly changing, the map only presents a snapshot of vulnerabilities as they stand now and represents a methodology that will need to be improved over time.

Resource Curse Redux

1
M

The Global Resource Supply Vulnerabilities Map

and relevant risk. This map originated as part of a report of the Transatlantic Academy (AndrewsSpeed et al., 2012) on the global resource nexus and Map 1

ap 1 displays the countries at risk of not being able to supply essential resources to global markets in the near future. States are divided into two categories: high risk

Source: own compilation1

1

Not all countries were considered for inclusion on the map for reasons of obvious political stability, known lack of resource reserves, or minimal threat of environmental stress.

Resource Curse Redux

the intersection of markets, international politics, and human security. The highest risk countries (see Table 1) include Afghanistan, Algeria, Democratic Republic of the

Congo (DRC), Guinea, Indonesia, Iran, Iraq, Libya, Nigeria, Sierra Leone, Somalia, Sudan/South Sudan, Yemen, Zambia, and Zimbabwe. These countries share a high degree of political instability and

Table 1: Countries at High Risk and their Relevance Country Afghanistan Algeria Democratic Republic of the Congo (DRC) Guinea Indonesia Relevance Major resource endowments (e.g., lithium) estimated to be near US$1 trillion; long-lasting war and civil war; large drug producer Major producer of natural gas Major endowments of copper, diamonds, and critical minerals; long-lasting civil war in eastern portions of the state Major endowments of bauxite (aluminum) and iron ore Major producer of forest products and agricultural goods (e.g. bio-fuels) as well as fuels (natural gas), nickel, copper, and aluminum ores; vulnerable to sea level rise and climate change; secessionist conflicts; strategic position at the Strait of Malacca Major producer of natural gas and oil; regional de-stabilizer Major producer of natural gas and oil; long-lasting war and civil war Major producer of natural gas and oil; recent civil war Major producer of oil, off-shore oil reserves; recent political changes towards democracy Major reserves of bauxite (aluminum) Holds strategic position near the Strait of Hormuz

Iran Iraq Libya Nigeria Sierra Leone Somalia*

Sudan, South Sudan** Major producer of oil; currently in armed conflict over disputed areas, including oil fields; plans to erect dams for agricultural use along parts of the Nile River may put downstream countries at risk of water shortages Yemen Zambia Zimbabwe Severe water shortages; homebase for terrorists; strategic position at the Strait of Hormuz Major producer of copper; major endowments in coal and cobalt Major reserves of coal and lithium; relevant producer of platinum

* Note on Somalia and Somaliland: In this paper, Somaliland is considered to be a legal part of Somalia, since Somaliland does not have internationally recognized independence. The data for political stability, agricultural stressors, and resource reserves also does not consider the two entities separately. Therefore, on the map, the designation between Somalia and Somaliland is shown with a dotted line, but the data and evaluation does not distinguish between the two. ** Note on Sudan and South Sudan: The data for this paper comes from before South Sudans separation from Sudan proper in July 2011. Therefore, for the purposes of this paper, assessments of Sudan and South Sudans political stability, agricultural stressors, and resource reserves were considered as a unified Sudan. When new data for the two separate countries becomes available, new risk assessments should be made in which case both countries may not necessarily be at high risk. Source: own compilation

Transatlantic Academy

environmental stress, and they also hold enormous fuel and/or mineral reserves. Thirty additional countries are identified as relevant risks, meaning they risk causing disruptions to global resource supplies but, if they do, not to the same degree as the high-risk states. These states are much more geographically diverse and their conditions vary widely. Consider the examples of Chile and Angola. Chile has a stable democratic government with large amounts of natural resources, especially copper. However, its long coast and diverse terrain as well as water shortages in the mining areas make it susceptible to the type of environmental stress that could restrict supplying the resources to global markets. On

the other hand, Angola faces less environmental stress, but the political instability there threatens to disrupt resource supply. Overall, the risk from these countries is relevant to interested stakeholders, but not of the highest degree. One should also consider that such risk factors could occur at a regional scale within large countries such as Brazil, Mexico, India, Russia, China, and others. To highlight the importance of the countries at highest risk, they are included on Map 1 in red along with markers of the severity of environmental stress and political instability and the level of resource reserves. The countries at relevant risk are shown in yellow, and their data information is included in Map 1.

Resource Curse Redux

2
T

Methodology

he resource nexus originates in the interconnections between different resources, in other words, the requirement that one (or more) resource is used as an input to produce another resource (PBL, 2011). For example, water and electricity (for pumping water) are necessary resources for producing food. In addition to the recent debates about the obvious nexus between water, food, and energy (Hoff, 2011), there is also concern over the nexus with minerals such as phosphorus being non-substitutable for world food production, and critical minerals such as rare earth, gallium, and lithium being essential to the clean technologies that are needed to combat climate change (Moss et al., 2011; U.S. Department of Energy, 2011). The whole resource nexus has become more pressing in recent years (McKinsey, 2011). The impacts of climate change and the high volatility of commodity prices especially can hardly be managed from single governments and this could translate into what we call a redux of the resource curse (Figure 1): triggered by the emergence of a food and/or water crisis whatever the causes may be local governance mechanisms may not be able to cope with such a shock. Any existing institutional resilience is likely to be diminished if people start rioting for access to water and food. This will put fragile states and regions at risk of further instability, where mechanisms of malnutrition and existing socio-political tensions might escalate. Any such escalation may lead to interruptions of supply chains for essential materials. Recent evidence on the dangerous conjunction of high prices for food and water and social tensions could be witnessed during the Arab uprisings in 2011. However, the relationship between high food prices and water scarcity and political unrest is a complicated one. It, nevertheless, can be seen as

an indicator for two new governance challenges. First, global drivers can overshoot local drivers in the management of common pool resources such as river basins and agriculture. Second, increasing connectivity allows local turbulences to spread rapidly, with unintended side-effects on other resources and regions. Thus, fragile countries and regions are especially vulnerable. Many countries and regions can be considered fragile. In particular, new resource suppliers that started mining on a large scale during the boom of the past ten years have to struggle with basic governance challenges, including: Negotiating a fair agreement with mining companies; Managing the switch from employmentintensive construction period of a mine to the more capital-intensive extraction period, which usually comes with huge lay-offs; Establishing a transportation infrastructure that meets the needs of broader development purposes and environmental standards; Balancing the needs of the affected local communities with other regions and the general public (quite often the population in the capital); Establishing a robust fiscal regime with permission grants, royalties, and rents; and Dealing with environmental issues that partly arise through mining processes but usually may have other causes. In general, such fragile states can hardly be assumed to comply with international standards, e.g. for labor safety, and to carry out effective environmental policies. Their institutions are yet too weak. According to Paul Collier (2007), a domestic institutional capacity comparable

Recent evidence on the dangerous conjunction of high prices for food and water and social tensions could be witnessed during the Arab uprisings in 2011.

Resource Curse Redux

to Portugal in the 1980s is necessary to embark on a path for inclusive and sustainable growth. Stress multipliers such as climate change, volatile commodity prices, and pressure from population growth factors that are not easily managed by weak states further limit institutional capacitybuilding in fragile states, increasing the risk of violent conflicts (see, e.g., Humphreys, 2005; Collier and Hoeffler, 2004; Melvin and De Koning, 2011; Dinar, 2011; Guesnet et al., 2009; Mildner, 2011; Samset, 2009). Some or even many of these countries may actually fail. Figure 1 depicts the possible mechanisms of a new resource curse, which could emerge from a regional food and water crisis caused by a number of factors. As observed during the Arab Spring and elsewhere, malnutrition in combination with a demographic youth bulge can kick-start a rising escalation of political riots driven by migration, fundamentalism, secessionism (estimated to be the biggest source of violent conflicts according to the conflict barometer done by HIIK, 2010), terrorism, and organized crime, all of which can trigger civil wars. A good illustration of this mechanism is the secession of South Sudan from Sudan in 2011 and the subsequent armed conflicts in early 2012. The two countries still have not reached a final agreement about access to some of the oil fields along their shared border. To transport the oil along its pipelines, Sudan charges fees ten times higher than average costs elsewhere. Meanwhile, South Sudan lies in the upper reaches of the Nile, which provides water crucial to Egypts existence, yet South Sudan does not participate in the river basin institutions. In fact, South Sudans unilateral plans to develop a large agricultural sector may put the water supply of downstream states, as well as many of the traditional land tenure systems, at risk. Yemen is yet another extreme case where a political crisis coincides with water stress.

To map the countries worldwide where the resource nexus could affect governance and resource supplies, the following three exercises were carried out: Mapping possible future agricultural and water stress to determine where there is a likelihood of a food and water crisis break-out; Mapping todays fragile states and regional political instabilities; and Mapping the estimated reserves of fuels and minerals, particularly those of critical importance for future supply. The resulting Global Resource Supply Vulnerabilities map is therefore actually a composite of three underlying maps. Step I: Mapping Agricultural and Water Stress The first layer uses information from the Food and Agriculture Organization of the United Nations (FAO)1 to identify the agricultural systems at risk from future environmental impacts such as extreme weather events and climate change, natural conditions and disasters. These risks include floods/sea-level rises, water scarcity, pollution, loss of biodiversity, deforestation, desertification/ droughts, loss of/low soil fertility, erosion, and land scarcity. States facing environmental risk may not be able to achieve sustainable levels of food and water resources. Such risks as water and land scarcity may also compromise the extraction and production of minerals and energy resources. Step II: Mapping Political Instability The second layer measures each states political instability. Using information from the Fund for

http://www.fao.org/fileadmin/templates/solaw/images_graphs/ SYSTEMS_AT_RISK_MAP.pdf

Transatlantic Academy

Figure 1: Wheels of Fire

Peaces Failed States Index,2 states are grouped into five categories: failing, fragile, troubled, moderate, and stable. The Fund for Peace ranks states based on: mounting demographic pressures, massive movement of refugees or internally displaced persons, vengeance-seeking group grievances, chronic and sustained human flight, uneven economic development, poverty or sharp/severe economic decline, legitimacy of the state, progressive deterioration of public services, violations of human rights and rule of law, security apparatus, rise of factionalized elites, and intervention of external actors. For the purposes of this map, political instability infers a states ability
2

to effectively manage the extraction, production, consumption, and export of its food, water, energy, and mineral resources. Step III: Mapping Reserves of Resources for Future Supply Naturally, a map displaying nexus points of resource supply risks must also consider where the worlds natural resources are located. This layer provides information about each states reserves of key natural resources. These include fossil fuels (oil, coal, natural gas), base metals (iron ore, bauxite and alumina, copper), and critical elements (rare earth elements, cobalt, lithium, manganese, nickel, indium, gallium, tellurium). The fuels and minerals considered are critical to many aspects

http://www.fundforpeace.org/global/?q=fsi-grid2011

Resource Curse Redux

of developed and developing economies. For example, oil is essential to transportation; base metals to construction. The critical elements considered match with recent statements from U.S. Department of Energy and the EU and are seen as crucial for future technologies, including green technologies. Reserve estimates were obtained from the United States Geological Survey (USGS).3 Once the information for each layer was compiled, they were overlapped to see where all three factors meet. That means, for example, that even though Canada and Australia have significant resource reserves, they are neither politically unstable nor at
3

significant risk for environmental stress to warrant inclusion of at-risk states. After identifying the approximately 45 countries that showed resource supply vulnerabilities, the last step was to identify the most at-risk states. For each state, we scored the severity of political instability, the severity of environmental stressors, and the amount of commodity reserves on a scale of 0-3 (3 being the highest). The scores for the three categories were added, for a total score between 0 and 9. Zambia, for example, received a score of 8, while Mexico received a 5. Those states with the highest scores were grouped into the high risk states and the remaining countries were grouped as those at relevant risk. The rankings appear on the map next to each state or in the table below it.

http://minerals.usgs.gov/minerals/pubs/mcs/2012/mcs2012. pdf

10

Transatlantic Academy

3
T

Discussion of the Results and Policy Relevance

recent data and thus do not extrapolate into any near-term future. In an attempt to at least have a comparative view about fragility, however, we decided to use the available data. Resource reserve estimations usually carry a number of uncertainties as well. In the most basic terms, exploration is a risky and cyclical business, with asymmetric information between some consultants and companies on one hand and the public on the other. Africa, especially, is a continent where, due to political turbulences, not much exploration has been done until very recently; the African Mining Vision (AMV), which African leaders adopted in 2009, recognizes the crucial need to strengthen efforts towards exploration. Thus, an optimistic perspective would assume more reserves will be discovered. On the other hand, material and geological science tends to be cautious and not to assume large discoveries in the near future. Off-shore reserves are another source of uncertainties. Recent oil discoveries tend to speak in favor of optimists, but costs of production (including environmental and safety costs), regulatory uncertainties, and risks of interstate conflicts over access and production-sharing agreements should also not be underestimated. Pros and Cons about the Resource Curse and Whats New The debate about a potential resource curse, with related discussions on a paradox of plenty and Dutch Disease, has been alive since the early 1990s, with its seminal papers written by Paul Auty (1993), Sachs and Warner (1995) and others. The fact that particular oil-exporting countries had poor economic performances compared to some
0,,contentMDK:22230573~pagePK:64171531~menuPK:44489 82~piPK:64171507~theSitePK:511778,00.html. Foreign Policy also maintains its own rankings here: http://www.foreignpolicy. com/articles/2010/06/21/2010_failed_states_index_interactive_ map_and_rankings

he results of our mapping exercise are striking. In total, the likelihoods of interruptions of international supply chains are quite significant. On top of that, we observed: Ungovernable spaces could also occur within large states that may not be regarded as fragile (e.g. Indonesia, Northern Caucasus/Russia, Northern Mexico, Brazil, and India); and Risks of regional international resource-related conflicts in areas such as the Chinese Seas (see Andrews-Speed et al., 2012) should also be figured in. At a lower risk level, stress caused by the resource nexus also leads to irrational supply strategies and international distortions. Hence, the risks for international markets could become quite severe. Data Uncertainties Without question, the future remains uncertain. This report acknowledges the many scientific and behavioral uncertainties inherent in its findings. Possible future food and water stress data were taken from FAO based on recent estimations of the IPCC, whose assessments will be updated in the future, and other sources. Besides scientific uncertainties there is also the uncertainty about future demands for water and food as well as future diets. Much here will depend on how Asia will manage its irrigation-based agriculture, whether China might change into becoming a large-scale food importer, and what diet patterns the emerging middle class across the globe will develop. Fragility of states has been assessed by various sources other than the one used here, though with similar methodologies.4 These estimates use most

The socioeconomic interconnections between environmental change and the resource curse should receive wider attention in research and politics.

The World Bank, for example, defines fragile states using a Country Policy and Institutional Assessment (CPIA). More information can be found here: http://web.worldbank.org/ WBSITE/EXTERNAL/PROJECTS/STRATEGIES/EXTLICUS/

Resource Curse Redux

11

of the top-performing emerging economies such as South Korea led to two main explanations: Macro-economic deficits of overvaluing a currency in foreign exchange rates based on the booming mining sector while neglecting other sectors as well as failures to establish a robust fiscal system and to diversify the economy beyond mining; and Political-institutional deficits of negotiating contracts, corruption, and organizing resource rents for purposes of social development and infrastructures. It is certainly worthwhile to acknowledge that more recent price hikes in combination with better policies have benefited some countries such as Botswana, Chile, and Kazakhstan. The lessons learned have been widely discussed (Collier and Venables, 2011; Collier and Goderis, 2007; Lederman and Maloney, 2007; Jones Luong and Weinthal, 2010), and the more recent discussion seems to adopt a slightly more optimistic view (Collier, 2012; World Bank, 2012). Based on the lessons learned, online tools for better policies are now available. The Natural Resource Charter,5 with its 12 principles on how to turn the natural endowments into extraction
5

and development, is an excellent tool available for resource-rich developing countries. In addition, a model mining development agreement6 has been formulated by the Mining Law Committee of the International Bart Association. The African Mining Countries have developed a vision and an action plan.7 Though all of this needs to be applied and adapted to local contexts, structural deficits will be hard to remove, and external shocks can never be excluded, these tools offer ingredients from which countries can assemble their own solutions. In our view, however, the challenges of the resource nexus are not yet built into these policy tools. Climate change and other environmental impacts will have to be fully incorporated into regional planning processes, and are game changers for socio-economic perspectives. A more critical view of these tools also suggests two weaknesses. Firstly, the international economic order, with volatile commodity prices and existing distortions, has been left out. Secondly, the destructive tendencies of secessionism, fundamentalism, and terrorism may have been underestimated. This leads to the conclusion that the socio-economic interconnections between environmental change and the resource curse should receive wider attention in research and politics.
6

www.mmdaproject.org www.africaminingvision.org

www.naturalresourcecharter.org

12

Transatlantic Academy

4
I

Resources and Conflicts

t is now common knowledge that scarcity of natural resources is a clear underlying factor in some conflicts, while at the same time resource abundance can also foster conflict. Common pool resources (CPRs), while under some circumstances foster cooperation, can often lead to conflict. Governance of CPRs in local areas typically involves attempts to mitigate the tragedy of the commons by managing property rights and limiting free access, and there is much debate over whether this is an effective governance response. The legal and regulatory contexts around property rights vary widely across space just as the ability to adapt to scarcity also varies widely. Conflict and security literature has focused on what drives people to become involved in armed conflicts. Neo-Malthusian approaches links demographic changes, especially population growth, with resource scarcity, environmental problems, and increased propensity for violent conflict (e.g. Homer-Dixon). A second school of thought, represented by the work of Paul Collier, has been influential because it challenged prior held assumptions that resource scarcity was the primary driver of conflict; in fact, abundance is strongly related to the presence of violent conflict. It creates incentives and opportunities for looting of resources. Large-n studies of conflict have identified a correlation between the proximity to mines, for example, and the level of violence. These first two types of research usually intermingle in terms of causation, and are topped with a third strand of research focused on grievances over ethnic, class, or racial identity as a cause of conflict (see Humphreys, 2005; Le Billon, 2001; Korf, 2011). In sum, in all likelihood, it is a combination of factors such as dependence on natural resources, geographic distribution of resources, ethnic tensions, demographic makeup and geographic distribution of the population, terrain, and political institutional structure that lead to civil war

(OLoughlin and Witmer, 2005). More research will however be needed to explore the dynamics of the new resource curse and possible conflicts. Governance Matters At the heart of our skepticism for a potentially bright future of resource-rich states are the governance challenges associated with the resource nexus. Typically, governance is centered along one specific resource (think about ministries for agriculture), and establishing cross-divisional capacities never has been easy. In addition, longterm planning is usually discounted against shortterm benefits both in politics and in businesses. The challenges ahead not only require a long-term perspective but also resilient institutions, i.e. institutions that are able to cope with price shocks and extreme weather events. Recalling disasters such as the nuclear accident in Fukushima, Japan (2011), the Deep Water Horizon oil spill, Gulf of Mexico (2010), Hurricane Katrina, Louisiana (2005), and the heat wave in central Europe (2003), it is probably fair to assume that the institutional ingredients to such resilience are poorly explored. Coping with food and water crises in developing countries along with other stress factors therefore will need additional research before any tools for better governance can be created. Despite all these uncertainties and research topics, however, the results of this tentative mapping should be seen as step forward and relevant. While existing risk analysis on the future supply of resources focuses on access and concentration along a supply chain, our analysis should motivate more in-depth ex ante assessments on the resource nexus at a level of regions and countries with a perspective of cross-country comparisons for risk portfolio analysis. A second motivation for more research should be seen from a green economy perspective as

At the heart of our skepticism for a potentially bright future of resourcerich states are the governance challenges associated with the resource nexus.

Resource Curse Redux

13

promoted by the United Nations Environment Program (Fischer-Kowalski et al., 2011), the Organization for Economic Cooperation and Development (Hammer et al., 2011), the World Bank (2012) and the EU (EIO, 2011). Firstly, the risk to green technologies is looming because most producers of these technologies are small- and medium-sized companies that have yet to build up the capacities to monitor their supply chains and accept accountability. Secondly, the optimism stemming from potential business advantages on an international scale (McKinsey, 2011) might fall short of acknowledging these stress factors and their consequences. While market analysis on ecoinnovation suggests potential additional advantages through disseminating green technologies world-

wide,8 our perspective suggests that the impacts of the new resource curse are likely to change agendas and hamper progress. Countries struggling with the new resource curse will need short-term support and may not have the capacities to absorb ecoinnovations with long-term benefits. A policy that intends to foster eco-innovation and green growth therefore should also entail a mechanism that makes countries more resilient against the impacts of a food and water crisis and its potential socioeconomic escalations.

See the discussion on the so-called Porter-Hypothesis and e.g. www.eco-innovation.eu.

14

Transatlantic Academy

5
T

Conclusions

he global resource nexus will likely put all countries and producers under stress. This paper underlines a risk that is just emerging: a resource curse redux that may emerge through regional food and water crises and escalates into socio-economic breakdowns with subsequent interruptions of supply chains. The mapping process has revealed that some 15 countries can be considered at high risk, while additional 30 countries will also face serious challenges. Thus, this is a major challenge for these countries and for international relations. Future analysis should address the many uncertainties that have been underlined, including data needs. This map is a preliminary exercise and we hope that this work will inspire more thorough research into the intersection of agricultural and water stress, political stability, and resource management. These uncertainties, nevertheless, should not be used to postpone action.

Stemming from the resource nexus and governance implications, our paper adds a country-based approach as a new element for risk analysis and supply chain management. It should also be considered for future development cooperation and attempts to come closer to green economies worldwide. It should be noted that the preferred governance scope suggests a strengthening of regional cooperation and international relations at the level of material flows. Clearly, the transatlantic community can and should take more action here. The report of the Transatlantic Academy (AndrewsSpeed et al. 2012) suggests, inter alia, package deals at the interface of mining, environmental technology cooperation and capacity building, which should counter the risks of a new resource curse.

Resource Curse Redux

15

Bibliography

Andrews-Speed, P., Bleischwitz, R., Boersma, T., Johnson, C., Kemp, G., Vandeveer, S.D., 2012. The Global Resource Nexus: The Struggles For Land, Energy, Food, Water, And Minerals, Transatlantic Academy, Washington, DC. Auty, R.M., 1993. Sustaining Development In Mineral Economies: The Resource Curse Thesis, Routledge, London; New York. Collier, P., 2007. Laws and Codes for the Resource Curse, Oxford University Press, Oxford. Collier, P., 2012. IMF Delivers Harsh Truth From Planet Earth. Financial Times, January 15. London. Collier, P., Goderis, B., 2007. Commodity Prices, Growth, And The Natural Resource Curse: Reconciling A Conundrum. The Centre For The Study Of African Economies Working Paper Series, 2007-15. Collier, P., Hoeffler, A., 2004. Greed And Grievance In Civil War. Oxford Economic Papers, 56(4):563-595. Collier, P., Venables, A.J., 2011. Illusory Revenues: Import Tariffs In Resource-Rich And Aid-Rich Economies. Journal Of Development Economics, 94(2):202-206. Dinar, S., 2011. Beyond Resource Wars: Scarcity, Environmental Degradation, And International Cooperation, MIT Press, Cambridge, Mass. EIO, 2011. The Eco-Innovation Challenge; Pathways To A Resource Efficient Europe, DG Environment, European Commission, Brussels.

Fischer-Kowalski, M., Swilling, M., Von Weizsaecker, E.U., Ren, Y., Moriguchi, Y., Crane, W., Krausmann, F., Eisenmenger, N., Giljum, S., Hennicke, P., Romero Lankao, P., Siriban Manalang, A., 2011. Decoupling Natural Resource Use And Environmental Impacts From Economic Growth, A Report Of The Working Group On Decoupling To The International Resource Panel, UNEP, Nairobi. Guesnet, L., Mller, M., Schure, J., 2009. Natural Resources In Cte dIvoire: Fostering Crisis Or Peace? The Cocoa, Diamond, Gold And Oil Sectors, Bonn International Centre For Conversion, Bonn, Germany. Hammer, S., Kamal-Chaoui, L., Robert, A., Plouin, M., 2011. Cities And Green Growth: A Conceptual Framework, OECD, Paris. HIIK, 2010. Conflict Barometer 2010, Heidelberg Institute For International Conflict Research, Heidelberg. Hoff, H., 2011. Understanding The Nexus (Background Paper For Bonn 2011 Conference: The Water, Energy And Food Security Nexus), Stockholm Environment Institute. Humphreys, M., 2005. Natural Resources, Conflict, And Conflict Resolution. Journal Of Conflict Resolution, 49(4):508-537. Jones Luong, P., Weinthal, E., 2010. Oil Is Not A Curse: Ownership Structure And Institutions In Soviet Successor States, Cambridge University Press, New York. Korf, B., 2011. Resources, Violence And The Telluric Geographies Of Small Wars. Progress In Human Geography, 35(6):733-756.

Resource Curse Redux

17

Le Billon, P., 2001. The Political Ecology Of War: Natural Resources And Armed Conflicts. Political Geography, 20(5):561-584. Lederman, D., Maloney, W.F., 2007. Natural Resources, Neither Curse Nor Destiny, Stanford Economics And Finance & World Bank, Palo Alto, CA & Washington, DC. McKinsey, 2011. Resource Revolution: Meeting The Worlds Energy, Materials, Food, And Water Needs, McKinsey Global Institute. Melvin, N., De Koning, R., 2011. Resources And Armed Conflict. SIPRI Yearbook 2011. Stockholm International Peace Research Institute, Stockholm. Mildner, S.-A., 2011. Konfliktrisiko Rohstoffe? (Potential Conflicts From Resources?) (SWPStudy S05), SWP & DGAP, Berlin. Moss, R.L., Tzimas, E., Kara, H., Willis, P., Kooroshy, J., 2011. Critical Metals In Strategic Energy Technologies: Assessing Rare Metals As Supply-Chain Bottlenecks In Low-Carbon Energy Technologies, European Commission Joint Research Centre (JRC), Institute For Energy And Transport, Petten NL.

OLoughlin, J., Witmer, F., 2005. Taking Geography Seriously: Disaggregating The Study Of Civil Wars. Disaggregating The Study Of Civil War And Transnational Violence. University Of California Institute Of Global Conflict And Cooperation, La Jolla, CA. PBL, 2011. Scarcity In A Sea Of Plenty? (500167001), PBL-Netherlands Environmental Assessment Agency, The Hague. Sachs, J.D., Warner, A.M., 1995. Natural Resource Abundance And Economic Growth (NBER Working Paper No. 5398), National Bureau Of Economic Research, Cambridge, MA. Samset, I., 2009. Natural Resource Wealth, Conflict, And Peacebuilding. Report For The Program On States And Security, Graduate Center, Ralph Bunche Institute For International Studies At CUNY, New York. U.S. Department Of Energy, 2011. Critical Materials Strategy, DoE, Washington DC. World Bank, 2012. Inclusive Green Growth: The Pathway To Sustainable Development, World Bank, Washington, DC.

18

Transatlantic Academy

1744 R StReet NW WaShiNgtoN, DC 20009 t: 1 202 745 3886 F: 1 202 265 1662 e: iNFo@tRaNSatlaNtiCaCaDemy.oRg WWW.tRaNSatlaNtiCaCaDemy.oRg