1. Resource Constraints Sharing a finite world
Dr Aled Jones Global Sustainability Institute, Anglia Ruskin University
Resource Constraints
Sharing a finite world

2. Resource constraints research project
Taking a systems view of the natural and social (human) capitals what do scarce resources potentially mean for the system flows in a global economy and in particular to financial capital?
Energy availability
Food availability
Water availability
Land availability
Metals availability
Social mobility and health
Capital availability
Environmental loading

3. Global pressures & trends

4. A growing world population

5. 4

6. But…

7. Local challenges: Water availability
Date
Local challenges: Water availability
Slide 6 6

8. Local challenges: Degradation of soils
Date
Local challenges: Degradation of soils
Slide 7 7

9. Global challenges: resource constraints
[1] Current global reserves divided by current annual consumption (assuming no growth in demand).
[2] Data taken from BP Statistical Review 2012, and
David Cohen, 'Earth's natural wealth: an audit', New Scientist, Issue 2605 (23 May 2007) pp

10. Global challenges: Environmental loading

11. Economic losses already occurring

12. Limits to growth: financial imbalances

13. Summary Resources are getting more expensive
Environmental damage is getting more expensive
Capital is becoming more constrained
(Global) population will peak
… and they are all interconnected

14. So What?

15. So What? Commentary Growth is the solution Green growth
The end of growth
Beyond the limits

16. Possible financial impacts
Reduced economic growth.
Reduced access to many commodities, and hence increased prices (or price shocks) or lack of availability.
Reduced international security and coordination.
Repression of investment returns by governments.
Possible changes to life expectancy and morbidity.

17. Inflation
A series of economic price shocks from lack of availability of resources would lead to short-term inflation.
Government response to price shocks, in particular their approach to money supply, is key for long-term inflation.
Wage expectations will go up with more expensive resources however capital may be needed for resource extraction potentially keeping wages down.

18. Demographic assumptions
Impact of climate change: increase the incidence of premature deaths from heat-waves but lower cold winter deaths.
Lack of access to resources: Certain elements, such as rare earth metals, may become unavailable and could lead to disruption in medical supply chains.
Change in societies’ priorities: economy as a whole will have to devote more (economic) resources to securing (physical) resources which could lead to less investment in healthcare.

19. Scenarios for the future

20. Scenario runs for actuarial model
Each scenario has an optimistic and pessimistic outcome
4 scenarios deliver 8 sets of outcomes that are tested
Compared to a ‘no constraints’ world
No resource constraints basis (N):
Under this scenario resources to do not constrain growth
Discount rate: 3%
Investment return: 3%
Wage inflation: 2%
Mortality: PMA92/PFA92 (Medium cohort 2005 projections): life expectancy to increase by 1 year every 5 years
Business as usual (B)
Severe Decline (Scenario B1):
Investment return: 3% reducing to 0% with severe periodic negative shocks
Wage inflation: 2% reducing to 0%
Mortality: PMA92/PFA92 (Medium cohort 2005 projections): life expectancy to increase in line with N, then remain static with periodic negative shocks
Islands of stability (B2):
Investment return: 3% reducing to 0% with periodic negative shocks
Mortality: PMA92/PFA92 (Medium cohort 2005 projections): life expectancy to increase in line with N, then remain static

21. Defined contribution replacement ratios

22. Defined benefit assets

23. Defined benefit (increasing contributions)

24. Contact details Dr Aled Jones, Director
Global Sustainability Institute
Anglia Ruskin University
Tel: