Water, food, oil, gas: many problems, or one?
Last week, the Transatlantic Academy gathered a plethora of academics and policy makers to discuss the global competition for natural resources. Among several pressing issues, the panel placed particular emphasis on the interaction between different resources and the political and economic outcomes emerging from that “nexus.”
Particularly in the raw materials industry, resources are used in abundance to extract others, or in some cases to create new ones. Water is used to extract oil and gas. These three resources are used to raise corn, which itself is used to produce ethanol. And all the aforementioned resources are used to extract minerals. The web is obviously larger, but even this small picture illustrates what scholars and policy makers have come to label a “nexus of resources.”
In a world where resources are scarce, this interconnectivity presents problems for the global economy and creates political complications. Spikes in oil or food prices have ripple effects, and for this reason it is no longer appropriate to analyze resource markets in isolation. A nexus-driven approach must now be the standard.
Nowhere is this more evident than in the market for food, particularly agricultural goods. As the situation stands today, food production rates must increase dramatically to keep pace with projected population growth and dietary changes related to the rise of the middle class. And yet, for years, as Julie Howard from USAID points out, large fluctuations in food prices failed to capture the attention of policy makers as important political events. Only with the onset of the 2008-09 price spikes did governments begin to truly appreciate the impact of food security on international and intra-state politics.
Numerous factors account for the recent spikes in food prices, but several reports emphasize the role of the biofuels industry in particular. Paul Faeth, a fellow at CNA Corporation, points out that the amount of corn available for consumption compared to that used for ethanol production has decreased by 15% in the last ten years. Increasing demand for corn in the U.S. ethanol industry has contributed to global food shortages, and a recent UN report tacitly implicates this practice in the price spikes many associate with uprisings in the Arab world. Leaving the efficacy of biofuels aside, Howard insists this reality nonetheless begs for the elevation of food security to a higher rung on governments’ list of international assistance priorities.
Food security is also closely related to water supplies. Especially in arid regions such as the Middle East and North Africa, heavy agricultural irrigation can create what Andrew Martin of the New York Times called a twisted “quandary, as [countries] are forced to choose between growing more crops to feed an expanding population or preserving their already scant supply of water.” As a result, MENA countries have become dependent on food imports, exposing citizens to cruel scenarios in the event of sudden global food price increases.
Another high usage area for water is in oil and gas extraction. With the recent developments in fracking technology used in the shale gas industry, water footprints are expanding. The issue here, as Robert Kleinberg of Schlumberger-Doll points out, isn’t waste necessarily, since 100% of the water taken out of the ground after fracking can be sanitized and reused, although Kleinberg does mention that only 1/3 of water put in the ground is actually recoverable.
But as far as water waste goes, the natural gas industry pales in comparison to agriculture. The real problems with fracking are the environmental hazards associated with the process of extraction. Trucks spewing emissions transport water to extraction sites, which themselves suffer surface erosion. And, fracking leaves highly saline and often radioactive water in the ground, which can cycle into farm irrigation systems and other water supplies. For these reasons, as both Faeth and Kleinberg seem to accept, the astronomical potential of natural gas as a profitable and clean(er) fossil fuel must be harnessed to a regulatory scheme that requires producers to meet environmental standards, or else pay for the negative externalities.
Though I missed the final session on the geopolitics of energy, I can imagine that Faeth and Kleinberg also recognize shale’s strategic potential given the large reserves in the U.S. They seem to agree that energy independence is less important that efficiency, but domestic natural gas production could address both these issues.
Strategic considerations also abound when it comes to food security and regime stability in the Arab world. For all the concern about ethnic and sectarian tensions in MENA—undoubtedly fundamental sources of conflict in the region—perhaps Mathew Burrows from the National Intelligence Council is correct to argue that resource scarcity could be the deciding factor, tipping these frictions in the wrong direction.
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