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Business News of Friday, 16 October 2015

Source: GNA

Trade shifting burden of environmental impacts

As countries become increasingly dependent on world trade, with 40 per cent of resources extracted and used worldwide linked directly or indirectly to trade, new policies are needed to address adverse environmental impacts.

According to a new report: “International Trade in Resources: A biophysical assessment,” produced by the United Nations Environment Programme (UNEP)-hosted International Resource Panel (IRP), available to the Ghana News Agency, reveals that the value of international trade has increased over six-fold and its volume more than doubled between 1980 and 2010.

It said the increase in trade has been accompanied by a shift in resource-intense processes, and associated environmental burdens, to developing nations.

Achim Steiner, Executive Director of UNEP said: “The benefits of international trade can include better access to resources and even more efficient production techniques from economies of scale. Yet the associated increase in global consumption and production results in overall environmental impact, from pollution to resource depletion.”

“That these impacts are being transferred to poorer nations is further cause for concern. In taking advantage of the benefits of international trade, we will need policies that protect the environment from trade’s detrimental effects.”

The report examines the upstream resource requirements of trade, which refers to the materials, energy, land and water used in the country of origin for producing traded goods, but left behind as wastes and emissions.

It noted that while trade has risen for most materials, dependency on world markets is highest for fossil fuels and metals. Around half of the volume of extracted fossil fuels and metals is reallocated through trade.

Estimating upstream requirements of traded commodities is challenging, with estimates ranging from 40 to up to 400 per cent of traded materials.

The report’s conclusions were that the amount of global resource extraction and use-65 billion tonnes in 2010-has increased at a slower rate than trade, which signifies the rising overall dependency of countries on trade.

It added that of the resources extracted and used worldwide, 15 per cent are directly traded. This proportion rises to around 40 per cent when including resources indirectly associated with trade-that is, used in the production process, but not physically included in the traded good.

High-income countries have up to twice as large positive trade balances when measured in raw materials rather than direct trade, while for low-income countries the opposite is true. This signifies a shift in resource-intensive processes from high-income countries to developing and emerging economies, with a corresponding shift in associated environmental burdens.

The report said the distribution of trade dependency has changed. Although high-income countries continue to be main recipients of resources via trade, emerging economies such as China have switched to becoming major importers.

The world trading system has come to rely on ever fewer net exporters, which makes it increasingly vulnerable to disruptions in supplies.

Dr Ashok Khosla and Dr Janez Potocnik, co-chairs of the IRP, said in a statement, '”This extraordinarily readable report manages to present the essential insights decision-makers need to design and implement policies that will ensure international trade is a positive instrument for building more prosperous economies, a fairer world and a healthier global environment.”

Appropriate trade and environmental policies and agreements are therefore required in order to limit over-exploitation of resources, waste and environmental destruction linked to expanded levels of trade.