Where do we go from here?

Since we are in a thinking mode, let us take a relook at Mckinsey's study on Mobilising for a resource revolution.

From 1980 to 2009, the global middle class3 grew by around 700 million people, to 1.8 billion, from roughly 1.1 billion. Over the next 20 years, it is likely to grow by an additional 3 billion, to nearly 5 billion people. The world has never before witnessed income growth of this speed and magnitude: China and India are doubling their real per capita incomes at about ten times the pace England achieved during the Industrial Revolution and at around 200 times the scale.

Can business and government leaders, not to mention consumers, move with the speed and scale needed to avoid a period of dramatically higher resource prices, along with their destabilizing impact on economic growth, welfare, and political stability?

Going by the report, market forces, and the innovation they spark, could ride to the rescue in the 21st century too. Their research on the supply- and-demand outlook for energy, food, steel, and water suggests that without a step change in resource productivity and a technology-enhanced expansion of supply, the world could be entering an era of high and volatile resource prices. Nothing less than a resource revolution is needed.

The report places much confidence on technological know-how bringing on the needed supply expansion and productivity rise. However, while supply expansion is mooted, it is also noted that this will mean more deforestation, more water consumption and more emissions! So, the question is, is this a wise solution? It simply prolongs the apocalypse.

Resource productivity should be the better option. Among the 15 such points listed, are improving energy efficiency in buildings, bringing on next generation vehicles, cutting food waste and developing high-strength steel! Yes, queer as that may sound, ArcelorMittal, the world’s largest steel company, estimates that high-strength steel would reduce the weight of steel columns and steel beams by about 32 and 19 percent, respectively. Qube Design Associates has developed advanced reinforcing bars that weigh 30 percent less than conventional ones.

Government challenges will be many, including working across ministries as resources will be such that they span the range from agriculture, industries, water, energy, forestry and urban development!

The report also feels fiscal regimes in many countries provide a disincentive to the productive use of energy, land, and water resources by subsidizing them to the tune of more than $1 trillion per year. Replacing these subsidies with market-based prices would improve the attractiveness of resource productivity opportunities to private-sector investors.

Alongwith all these options it would be prudent to adopt a conservation approach to resources. If one believes in saving for the future...