Mediterranean region exposed to resource depletion and price volatility

The Mediterranean region currently uses approximately 2.5 times more natural resources and ecological services than its ecosystems can provide. Consequently, the region depends heavily on imports and is vulnerable to volatility in the international price levels of natural resources such as agricultural commodities, minerals and fossil fuels.

These are among the findings of a new article published April 25 in the journal Environmental Science & Policy (Elsevier). The paper was co-authored by three researchers from the international think tank Global Footprint Network (MIO-ECSDE’s Member) and titled “Physical limits to resource access and utilization and their economic implications in Mediterranean economies.” The article is available for free download at http://www.sciencedirect.com/science/article/pii/S1462901115000696.

The authors find that a 10% increase in the price of natural resources would result in a worsening of countries’ trade balances equivalent to as much as 2.4% of the GDP, as in the case of Jordan. Italy, France and Greece, moreover, would see their resource import bills increase by approximately US$ 9.2 billion (equivalent to 0.5% of its GDP), US$ 8.4 billion (0.3% of its GDP) and US$ 1 billion (0.4% of its GDP), respectively . Only two countries would see an improvement in their trade balance – Algeria and Libya – due to more revenues from oil exports.

In the last 50 years the Mediterranean region’s population doubled and its per-person consumption levels increased 54 percent since 1961, according to the article. Half of the region’s natural resources are imported, mainly from the USA, China, Germany, Belgium and the Netherlands.

Growth in population and consumption levels worldwide has led to more competition for resources at a time when the economies of many Mediterranean countries have suffered from economic downturns. The result, conclude the authors, is that the Mediterranean countries have less financial means to buy resources from outside their borders.

“Overall, it appears that the changing global context of resource availability is making the long-held pattern of resource consumption in the Mediterranean untenable“ the authors conclude.

FIGURE: Sensitivity to natural resource price changes (SPC) for Mediterranean countries.