LONDON: International trade in a highly interconnected world is putting more pressure on water, energy and land resources than domestic productions, says a new study. The results suggest that globalisation may be decreasing, rather than increasing, the security of global supply chains.
"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 Oliver Taherzadeh from University of Cambridge.
"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."
Over the past several decades, the worldwide economy has become highly interconnected through globalisation: it is now not uncommon for each component of a particular product to originate from a different country.
Globalisation allows companies to make their products almost anywhere in the world in order to keep costs down.
Many mainstream economists argue this offers countries a source of competitive advantage and growth potential.
However, many nations impose demands on already stressed resources in other countries in order to satisfy their own high levels of consumption.
This interconnectedness also increases the amount of risk at each step of a global supply chain.
For the study, the researchers quantified the global water, land and energy use of 189 countries and showed that countries which are highly dependent on trade are potentially more at risk from resource insecurity, especially as climate change continues to accelerate and severe weather events such as droughts and floods become more common.
"This type of analysis hasn't been carried out for a large number of countries before," said Taherzadeh.
"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 authors of the study linked indices designed to capture insecure water, energy, and land resource use, to a global trade model in order to examine the scale and sources of national resource insecurity from domestic production and imports.
Countries with large economies, such as the US, China and Japan, are highly exposed to water shortages outside their borders due to their volume of international trade.
However, many countries in sub-Saharan Africa, such as Kenya, actually face far less risk as they are not as heavily networked in the global economy and are relatively self-sufficient in food production.
In addition to country-level data, the researchers also examined the risks associated with specific sectors. Surprisingly, one of the sectors identified in Taherzadeh's wider research that had the most high-risk water and land use was dog and cat food manufacturing in the US, due to its high demand for animal products. (IANS)