Chapter one and Chapter two highlighted newly emerging and rapidly accelerating risks over the current, two- and 10-year time frame to provide analysis on risks currently unfolding or those that may become the next global shock. However, these present and future risks can also interact with each other to form a “polycrisis” – a cluster of related global risks with compounding effects, such the overall impact exceeds the sum of each part.1
Scenario thinking can be a useful tool to enable better anticipation of polycrises, as key drivers can interact in unanticipated ways and lead to unexpected consequences. Bearing this in mind, this chapter explores how connections between the emerging risks outlined in previous sections may evolve by 2030. This year, we explore Resource Rivalries - a potential cluster of interrelated environmental, geopolitical and socioeconomic risks relating to the supply of and demand for natural resources. The intent is not to exhaustively outline all scenarios but to provide a structured approach to identifying potential futures for the polycrisis that may be triggered, providing a framework for better preparedness and risk mitigation efforts today.
Supply-chain crises of recent years have highlighted the need for resilience in traditional strategic sectors. Reliable and cheap access to the most basic of necessities – food, water and energy – underpins the critical functioning of societies. Early data suggests that current crises are driving a worrying reversal of recent progress. An additional 200 million people faced acute food insecurity last year compared to 2019, and the number of people worldwide without electricity rose to an estimated 774 million, the equivalent of pre-pandemic levels.2 As noted in Chapter 1.2, Cost-of-living crisis, supply crises of this nature can be highly destabilizing, exposing the fragility of states and leading to loss of life, widespread violence, political upheaval and involuntary migration.
Demand for food, water and critical metals and minerals is escalating. This reflects a range of factors, including continued population growth, anticipated to reach 8.5 billion by 2030,3 and socioeconomic advancement, with a push to achieve the UN’s Sustainable Development Goals (SDGs) by the target date of 2030. Global food consumption is projected to increase by 1.4% annually over the next decade, concentrated in low- to middle-income countries, versus a 1.1% per annum increase in production.4 One estimate places the gap between water demand and supply at 40% by 2030, with a dramatic and unequal increase in demand between countries.5 The continued expansion into secure, renewable energy and related infrastructure will also drive exponential demand for finite critical metals and minerals.6 Significant even in absolute terms, annual demand for these resources, such as graphite, lithium and cobalt, is anticipated to hit 450% of 2018 production levels by 2050.7
Together, the set of emerging demand and supply concerns around natural resources are already becoming an area of growing alarm. GRPS respondents identified strong relationships and two-way linkages between “Natural resource crises” and the other risks identified in previous chapters (Figure 3.1), pointing to the potential polycrisis that may evolve over the medium term
In the 2030 time frame, two critical factors will determine the trajectory of our ability to match supply and demand for these resources as well as the scale of the associated polycrisis: 1) the degree of global cooperation that allows the flow of resources across national borders, and 2) the impact of climate change on the supply of natural resources and speed of the low-carbon transition (Box 3.1).
Together, these two axes lead to four hypothetical futures for 2030:
– Resource collaboration – the danger of natural scarcity: effective climate action measures and flexible supply chains enabled by global cooperation largely absorb the impacts of climate change on food production. However, shortages in water and metals and minerals cannot be avoided. Persistently high commodity prices slow climate mitigation – despite ambitions – and add to inflationary pressures in broader value chains, while water stress leads to a growing, but comparatively contained, health and humanitarian crisis in developing nations.
– Resource constraints – the danger of divergent distress: current crises draw focus and slow climate action, exposing the most vulnerable countries to hunger and energy shocks, even as countries cooperate to partially address constraints. In the absence of intervention, the water and mineral shortages experienced in the Resource collaboration scenario act as a multiplier to broader risks. A multi-resource, humanitarian crisis emerges in developing markets as food and water resources are impacted by the physical consequences of climate change, alongside global disruptions to trade, political stability and economic growth.
– Resource competition – the danger of resource autarkies: distrust drives a push for self-sufficiency in high-income countries, limiting the need for rivalry over food and water to a degree, but widening divides between countries. State intervention is centred on the resource most exposed to a concentration in supply – critical metals and minerals – leading to shortages, price wars and the transformation of business models across industries. Resource power shifts, driving the formation of new blocs as well as wedges in existing alliances between mineral-rich and -poor countries, while the potential for accidental or intentional conflict escalates.
– Resource control – the danger of resource wars: alongside the weaponization of metals and minerals explored in Resource competition, geopolitical dynamics exacerbate climate-induced shortages in food and water. This results in a truly global, multi-resource crisis, with widespread socioeconomic impacts that exceed those faced in other futures in both scope and scale, including famine and water scarcity refugees. Geoeconomic warfare is widespread, but more aggressive clashes between states become one of the few means to ensure supply of basic necessities for populations.
Given the nature of the polycrisis in each scenario, we face various environmental and socioeconomic upsides and downsides. The following section outlines an illustrative, but non-exhaustive set of mid-term futures to help support business leaders and policy-makers in preparing for – and preventing – the progression of the crises we are facing today.
BOX 1 | Futures framework
By 2030, the world is subject to more widespread and dramatic climate impacts – but we are prepared. Capital, intellectual property and technological innovations flow relatively freely across borders (x-axis). Multilateral and market-led initiatives have unlocked a range of financing mechanisms and innovation to support climate-proofing against future disasters and a rapid shift to climate mitigation efforts (y-axis). In response to public pressure, governments have broadly prioritized spending towards adaptation – and in some cases mitigation – alongside other social and security concerns, dampening the impact of climate change on societal vulnerabilities. In this future, the scaling of food has been supported by international flows of financing and technology, and shortages muted by flexible supply chains. Downside impacts are primarily focused on resources that face barriers to trading or scaling: water and critical minerals.
Climate-driven declines in agricultural productivity have been met with a range of measures in most countries, with climate and nature-based interventions helping to transform food systems to be regenerative, climate-smart and healthy. Global sharing of data and technologies has allowed more effective pre-emptive adaptation measures to be taken, such as the targeted use of flood- and drought-resilient seeds in some vulnerable geographies. Although environmental degradation continues to threaten aquaculture and fisheries, targeted nature-based adaptation measures have shored up domestic food networks (see Chapter 2.2: Natural Ecosystems).
The allocation of risk has begun to shift away from vulnerable workforces and communities. The burden of continued weather shocks has been partially offset through adaptation actions, financed by fit-for-purpose financial products, including weather-based index insurance, climate-related loan products, guaranteed credit lines, and well-managed risk-based exits from extreme-event-prone geographies.8 Supply shocks stemming from natural disasters are quickly absorbed by flexible, market-driven supply chains, and global food insecurity continues to slowly trend downwards.
Risks remain: some natural resources are scarce, even in a climate-adapted, geopolitically cooperative world. Demand for geographically concentrated critical metals and minerals has risen dramatically, reflecting a push for secure, renewable energy sources in the wake of the war in Ukraine, and renewed urgency of net-zero ambitions over recent years. Despite sufficient resource deposits in most minerals,9 this exponential increase in demand has proved difficult to meet through a rapid expansion of supply. Shortages initially stemmed from limited exploration and significant capital requirements, but the rise in commodity prices have subsequently helped to scale production, with companies now targeting deposits previously deemed unextractable for economic or technological reasons.
However, shortages in key materials remain a near- and mid-term concern, given time lags to production. Further, environmental concerns have limited domestic extraction in several advanced and some emerging economies, as well as by multinational mining companies headquartered in the West. Scrutiny from investors, downstream industries and the public have led to longer approval processes and more stringent environmental and social standards. For example, since the early 2020s, the expansion of lithium mining in Portugal has been significantly delayed due to environmental approvals; projects in Canada and Australia have slowed based on concerns relating to indigenous communities; and a rare species of buckwheat has limited domestic mining in key locations in the United States of America.10
Higher commodity prices have driven inflationary impacts along the wider value chain, explored further (and felt more acutely) in the section on Resource competition. This has encouraged some countries and multinational companies to accelerate efforts to turn towards the circular economy as a means of securing and diversifying the supply of critical minerals and metals, reducing the need for extraction and associated emissions. Industry coalitions are working with future-focused governments to establish the incentives, policy frameworks, standards and certifications, and circularity-focused capabilities that are necessary to scale.11 In some markets, business models are being transformed to decrease demand and increase both the recovery potential and actual recovery of metals and minerals, partially mitigating the demand-supply gap going forward.
Despite these efforts and continued climate ambitions, higher prices and shortages are slowing momentum for the green energy transition in the short-term. In lower-income economies without local minerals and metals assets, the promise of support with green energy infrastructure is partly unfulfilled, and some are considering reverting to carbon-intensive energy sources to secure energy.12
The ability to scale water supply has similarly been constrained. Water monitoring, efficiency and production measures have been prioritized by cities, local and national governments to address more frequent and severe droughts and the growing water footprint of food production. Water remains heavily subsidized, but pricing is used to curb demand and encourage investment by the private sector and households in water-efficient, re-usable solutions, including rainwater harvesting and stormwater runoffs. Some countries have limited the use of price controls to industrial use, while others apply them more broadly across populations, further fueling inflation, cost-of-living pressures and unrest. But even significant drops in water demand and waste have not kept pace with the impact of climate change on water resources in the most exposed regions (Figure 3.3). The capacity to scale supply through mechanisms such as desalinization and purification differ between countries for geographical and economic reasons. Water security continues to be threatened in some of these countries, with growing regional impacts from hygiene and health crises, urban migration, internal displacement and involuntary migration
Note: Level of water stress (SDG 6.4.2) by major river basin (reference year 2018). It is calculated as the ratio between (a) the amount of total freshwater resources withdrawn in the three economic sectors (Agriculture, Service and Industry) and (b) the total renewable freshwater resources after detracting the amount of water needed to support existing environmental services.
Despite strong headwinds in the early 2020s, geoeconomic cooperation resumes in the latter half of the decade, with stronger global trade as well as efforts on climate cooperation (x-axis), mirroring Resource collaboration. However, domestic funding – and therefore overall investment – in adaptation measures as well as technological innovation has not kept pace with climate impacts to date (y-axis), given competing priorities, a growing insurance gap and continued costs of disaster recovery. In this future, even international coordination cannot address triple-shortages in food, water and energy in the most vulnerable nations, with extended climate-induced distress and disruptions to trade, and political and economic stability.
In the absence of appropriate intervention, water availability is now a concern in all regions. Snowmelt, glacial melt and groundwater availability has diminished, while 10% of global land area has experienced an increase in extremely high and low river flows in the same location. Continued geopolitical cooperation is evident through widespread engagement in the range of multilateral mechanisms governing these resources, from the 1992 Convention on the Protection and Use of Transboundary Watercourses and International Lakes (Water Convention) and the 1997 Convention on the Law of the Non-navigational Uses of International Watercourses (Watercourses Convention), to bilateral and regional agreements.
However, water stress acts as a multiplier to shortages of other key resources. In the absence of effective adaptation, agricultural productivity is severely impacted by climate change, diverging in intensity between regions. Crop yields have fallen in volume and nutritional value due to heat, changing weather patterns, dry and wet precipitation extremes, and shifts to the distribution of insects, pests and diseases.14 Agricultural output in the United States of America has declined overall due to decreased production of rice, corn, soy and wheat.15 Russian agricultural yields have fallen in the country’s most productive southern regions and have not been fully balanced by the expansion of arable land in the country’s north, where soils remain less productive.16 Climate change has reduced rice, wheat and corn yields by 8% in China.17 Without focused conservation and restoration efforts, ocean warming and acidification has caused broadscale declines in aquaculture and fisheries, threatening not only food security but also livelihoods in some of the most climate-exposed countries.
High-latitude, high-income and high-tech countries are comparatively less impacted, either due to contained climate impacts for now, or leveraging of rapid innovation to address food and water security challenges.18 Free-flowing global supply chains have helped distribute the overall hit to food production levels, but the most resource-insecure countries are those vulnerable to two prolonged crises: debt and climate change. Given the extended capital flight earlier in the decade, and without the fiscal space to speed up adaptation measures (see Chapter 1.2, Economic downturn), these countries have become even more heavily import-dependent, unable to scale food production to meet the demands of population growth, given water stress and deteriorated soil conditions.
Green-energy supply is also at risk. Companies mining critical metals and minerals in water-stressed regions face regular interruptions to operations or closures, or are forced to invest in water sources that do not directly compete with human consumption, partially exacerbating shortages, as described in Resource collaboration. This elevates commodity prices further, slowing the roll-out of green energy infrastructure. In parallel, the frequency and severity of heatwaves and droughts has forced green energy sources – biofuels, hydropower and nuclear – into periodic production cuts, and some are on the verge of becoming stranded assets. Electrical supply has been destabilized in the near-term for many countries, including Brazil, South Africa, China, Germany and the United States of America, increasingly turning these markets towards alternate energy sources.
Even in the absence of geopolitically fuelled shocks or constraints, continued price pressures on food, water and energy have resulted in an elongated cost-of-living crisis in selected markets, ushering in wage strikes, violent protests and state instability. Socioeconomic impacts have also begun to spread to more advanced economies, with a risk of partial deindustrialization caused by combined energy-water shortages. The shutdown of waterborne transport of trade is more regularly disrupting global supply chains, placing pressure on road and rail transports and dampening global economic growth.19 Energy- and water-intensive strategic industries, such as semiconductor manufacturing, located in resource-insecure areas, have become new geopolitical hotspots, raising the risk of prolonged disputes and possible conflicts.
In this future, there is accelerated climate action by 2030 (y-axis), but global powers are aiming for self-sufficiency in key resources, leaving many emerging and developing countries comparatively exposed. Heightened geopolitical confrontation is focused in the most geographically concentrated resource: metals and minerals (x-axis).
In anticipation of a deteriorating geopolitical environment, self-sufficiency in sources of food production has been scaled up in countries that can afford it, alongside a focus on adaptation, as considered in Resource collaboration. Food productivity has been enhanced, in part via technology, such as gene editing of crops, even in the absence of extensive multilateral cooperation on such technology. A sharper focus on productivity of existing farmlands, dietary shifts and reductions in food loss and waste are being utilized as levers. Efficiency in agricultural practices, land-use and food systems have allowed some countries to decouple food security and biodiversity trends, partially addressing the estimated 33% of global food production previously wasted through unsustainable production and consumption.
While this has led to enhanced food production overall in many advanced economies, the benefits have not been widely shared, with significant divergence in the level of food security between countries. Even as some global trade in protein has continued, shortages and higher prices have hit lower socioeconomic groups, and developing and emerging countries the hardest, particularly those least able to scale food production in the absence of international support. This includes parts of Africa, Central and South America, Small Island Developing States (SIDS) and South Asia, where many economies have faced nearly decade-long triple crises: debt, population growth and climate change. Global poverty, climate-sensitive livelihood crises, malnutrition and diet-related diseases, state instability and involuntary migration have all risen, elongating and spreading the instability and humanitarian crises described in Chapter 1.2, Cost-of-living crisis.
Critical metals and minerals are a key area of geopolitical confrontation due to their geographic concentration. These resources are not only essential to renewable energy capture, storage and efficiency, but also continue to be leveraged for a wide range of other industrial applications, including technological and military end-uses (Figure 3.4).21 Indium is part of touch screens as well as solar panels; lithium compounds are utilized by the pharmaceutical industry; cobalt has multiple aerospace applications but is also of increasing interest as a catalyst for green hydrogen production; and vanadium is used as an input for industrial-scale batteries as well as a steel alloy in nuclear reactors, space vehicles and aircraft carriers. The resulting demand-supply gap described in Resource collaboration is exacerbated in this future because of geopolitical rivalries, exposing the brittleness of global supply chains with limited opportunities for geographic diversification. For example, in the early half of the 2020s, the United States was 100% net import-reliant for 14 critical minerals, including gallium, natural graphite, indium and vanadium.22 At the time, China was the leading producer for 16 of 32 strategic minerals, including the aforementioned resources, representing 98%, 82%, 58% and 66%, respectively, of the world’s total production.23
With a trend towards remilitarization (see Chapter 2.4: Human security), these strategic resources have become one of the primary fronts of economic warfare over the latter half of the decade. Despite competing fiscal priorities, more states have sought to diversify supply through domestic extraction where available, although many face significant environmental constraints, as outlined in Resource collaboration. Enhanced capacity in processing and refining has been targeted in particular by states with limited resource reserves (Figure 3.4). Resilience, particularly for import-reliant markets, has partially translated into redundancies, with the building of stockpiles of key materials exacerbating supply crises. Inbound investment screening – which only advanced economies have been able to afford the opportunity cost – has been expanded to mining and related industries to minimize foreign interference. Other countries have followed the lead of Canada, ordering certain foreign companies to unwind investments in mining due to the perceived threats to national security.24 With limited options, outbound investment screening is now being contemplated by import-reliant markets as a potential lever, although most major powers continue to leverage increasingly state-directed investment in emerging export markets across Latin America and Africa as a means of securing access to these resources.
The importance and influence of allied blocs have grown, with countries building and favouring domestic and “trusted” supply chains in their search for resource security. The geographic distribution of numerous metals and minerals has ensured a degree of mutual interdependence. For example, Brazil has scaled lithium, rare earth elements and nickel production, but has remained dependent on others for refining and on neighbours for other resources such as copper and cobalt.26 The EU and Canada have continued their Strategic Partnership on Raw Materials, extending the scope of the agreement beyond the development and financing of critical mineral projects to increased collaboration on related technologies.27
Yet resource nationalism has also driven cracks in existing alliances – becoming the next Airbus vs. Boeing – with disputes arising first around the application of state aid to boost domestic mining and processing industries. The expanding use of the national security exemption at the WTO has also increasingly paralysed multilateral trade mechanisms, rendering them ineffective in addressing geopolitical confrontation in a world where local resilience and security is prioritized over comparative advantage and efficiency. Bilateral mechanisms are elevated in importance as the primary vehicle for disputes.
Shortages artificially inflated by geoeconomic rivalries and price volatility, including of related products such as batteries and semiconductors, have reverberated throughout the supply chains of multiple industries. Shorter supply chains reflecting geopolitical alliances have ensued. State intervention has become more common and stringent, with government planning directly and indirectly allocating available resources for prioritized industries; some followed Mexico’s suit by renationalizing assets associated with key metals and minerals.28 Multiple “civilian” sectors have been forced to adapt to greater cross-industry competition. For example, Tesla built a lithium refinery in the United States of America,29 and an uptick in offtake agreements have quickly spiralled into direct investments and more vertical integration, creating fresh challenges for competitiveness regulations.
A number of developing and emerging markets have become net beneficiaries of this heightened interest of both the public and private sector, including Indonesia, Morocco and the lithium triangle of Plurinational State of Bolivia, Argentina and Chile. However, these countries have had to walk a tightrope as global powers exert control through trade, investment and technological ties and seek to constrain access by rival states. Alongside enhanced nationalization, this has led to the relatively recent creation of OMEC: an organization of mineral exporting countries, similar to OPEC.30 While the resource boom has offered a path to growth for some of these countries, for others the focus on these assets has created a “Dutch Disease” phenomenon, or led to increased corruption, inequality, violence and humanitarian crises.31
Further, illicit activities and the risk of accidental or intentional escalation into hot warfare over resources has risen, particularly in border zones and global commons. Export constraints on minerals have placed upwards pressure on broader international governance and enforcement mechanisms that oversee new exploration zones – including those relating to mining in international waters, polar regions and in space. As the hunt for new mineral sources turns to the ocean, national marine jurisdictions are increasingly contentious, with a growing proportion of territory under dispute.32
By 2030, investment in adaptation measures has not kept pace with climate impacts to date (y-axis). At the same time, geopolitical dynamics have turned the natural resource crisis from one of affordability to one of availability (x-axis), creating a cascading economic, environmental and humanitarian crisis in all but a handful of select countries – but even these remain exposed through cross-border effects. In this future, the resulting socioeconomic fall-out exceeds the scope and scale of all other futures, and state intervention turns even more aggressive, expanding beyond economic confrontation to secure supply of necessities for populations.
Building on Resource constraints, both affordability and availability concerns are widening inequality. Reflecting Resource competition, self-sufficient sources of food production have been scaled up, but with limited sharing of innovation and financing, the tipping point of overall productivity growth in agriculture has already passed. Without effective policy, financing and technological support for adaptation practices, lower socioeconomic communities and countries have resorted to changes in crop choice and large shifts in land-use patterns to maintain current production growth.33 Agriculture has become an even larger driver of global emissions. Land-clearance for crops and grazing have led to deforestation, and an increase in livestock has resulted in even more emissions, including the very potent methane. Intensive and inefficient farming has exacerbated soil degradation, water stress, pollution and the decline in production capacity. This has created broader domestic trade-offs, particularly with sectors directly dependent on biological resources, with knock-on impacts for economic growth and productivity and the speed of the green transition. Arable land has been increasingly prioritized for agriculture, shifting away from biofuels and green energy infrastructure.
Similar to Resource constraints, water stress is now widespread. In developing countries, this particularly impacts women and girls responsible for water collection, with knock-on impacts for health and education outcomes. More widespread scarcity, combined with paralysis of international cooperation mechanisms, has necessitated a degree of water nationalism, resulting in prolonged disputes between neighbouring countries.34 In the face of spreading humanitarian crises and state instability, water infrastructure continues to be used both as a weapon and target, mirroring past water conflicts and terrorism in India, Pakistan and Afghanistan.35 In addition, there is less visible abuse and depletion of shared “non-renewable” groundwater reserves, such as in Saharan Africa and the Middle East, raising the risk of conflict.36
Conditions of scarcity initially consolidated the influence of geopolitical blocs, heavily reflecting raw resource trade dependences, as well as innovation and information flows. Increasingly however, distrust between global powers is artificially exacerbating supply crises on a global scale. Beyond Resource competition, all three resources are weaponized by resource-rich countries where possible, as both offensive and defensive tools in a more zero-sum geopolitical environment (see Chapter 1.2, Economic warfare). In this world, the export of resources will soon supplant investment as a measure of global soft power, although economic power will continue to be leveraged to achieve strategic objectives by more subtle, indirect means. Facing actual or perceived shortages, states continue to quickly and regularly exercise control over key resources to protect their own population, which will fracture alliances, deepen conditions of scarcity, and result in escalating trade tensions that restrict the flow of climate technologies. Exposed on multiple fronts, state intervention grows in a broader range of industries, including renationalization of industries.
Confrontations regularly extend beyond the economic sphere. Transboundary conflicts and violence have become more common as one of the few ways in which states can secure supply of strategic resources. Hotspots reflect shifts to biodiversity patterns, heightened competition over terrestrial and marine foodstocks, and the pressing need for metals and minerals that underpin secure energy and technological development. Food, energy and water insecurity becomes a driver of social polarisation, civil unrest and political instability in advanced and developing economies alike. It also becomes a driver for cross-border terrorism, with devastating impacts given the proliferation of high-tech weaponry (see Chapter 2.4: Human security).
In this future, there has been little incentive – or fiscal room – to invest in climate change and environmental protection. Overexploitation and pollution – the tragedy of the global commons – has expanded, but continues to go unpunished or undiscovered, and existing agreements and regulations are regularly breached or not enforced. Famine has returned at a scale not seen in the last century. The sheer scale of humanitarian and environmental crises showcases broader paralysis and ineffectiveness of key multilateral mechanisms in addressing crises facing the global order, spiralling downwards into a self-perpetuating and compounding polycrises.