Forecasting the perfect storm: the economics of resource scarcity

A report of the November 2011 meeting of the FEC’s Business Forum

The food and farming sectors are more aware than most that natural resources are under pressure. Agriculture and fisheries depend directly not only on energy generation, like many other industries, but also on the climate, fresh water availability, soils and biodiversity. What’s more, we have heard a crescendo of warnings, most recently from Foresight, that the sector faces a ‘perfect storm’ of resource constraints and other challenges.

Yet only in a few cases – oil, soils and water – is scarcity already directly affecting UK businesses and consumers. The warnings come less from immediate experience, than from economic and environmental models. While most of the modellers agree we face a problem – a big one – their prognoses and recommendations vary. Issues include how sharply the availability of key resources will peak, how much the ‘rebound effect’ will see us erode efficiency savings through increased consumption, and how far it makes sense to talk of resource ‘limits’.

The November 2011 meeting of the FEC Business Forum provided a primer on resource economics. We are very grateful to our speaker, Paul Ekins, Professor of Energy and Environment Policy at University College London. The meeting was chaired by David Croft, Director of Food Technology at Waitrose and a member of the Food Ethics Council.

To read a report of the meeting, click on the link below.