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Globalized economy is placing too much pressure on resources

A new study from the University of Cambridge has found that the globalized economy is putting too much pressure on water, energy, and land resources. According to the researchers, countries which are highly dependent on trade are potentially more at risk from resource insecurity, especially as climate change is causing extreme weather events to become more common. 

Because countries depend on both domestic production and international trade for their goods and services, they are draining natural resources beyond their own borders.

The Cambridge team used macroeconomic data to quantify the strain that the globalized economy is placing on the world’s resources. The analysis revealed that most countries are highly exposed to over-exploited and insecure water, energy, and land resources, whether they are impacted directly through domestic production or indirectly through imported goods. The greatest overall risk was tied to international trade, mainly from remote countries.

In recent decades, the worldwide economy has become highly interconnected through globalization. For example, it is not uncommon for each component of a product to originate from a different country. Globalization helps companies keep their costs down and allows them to make their products almost anywhere in the world. However, after estimating the resource use of 189 countries, the team found that many nations are imposing demands on resources that are already strained in other countries.

The experts report that severe weather can also increase resource insecurity in countries that rely the most on food imports. 

“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 Dr. Oliver Taherzadeh. “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.”

“This type of analysis hasn’t been carried out for a large number of countries before. 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.”

The study authors are calling for an urgent investigation into the scale and source of consumed goods and services, both in individual countries and globally, as economies seek to rebuild after the COVID-19 pandemic.

“Covid-19 has shown just how poorly-prepared governments and businesses are for a global crisis,” said Dr. Taherzadeh. “But 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. If the ‘green economic recovery’ is to respond to these challenges, we need to radically rethink the scale and source of consumption.”

The study is published in the journal Global Environmental Change.

By Chrissy Sexton, Staff Writer

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