Earth Day was marked last Wednesday. There are, of course, different viewpoints as to whether the claims being made about the extent of climate change and its impact on the environment are exaggerated or not.
However, irrespective of one’s viewpoint on this issue, there does appear to be agreement that the degradation of the environment and over-consumption will severely threaten the capability of the human race to provide safe drinking water and food for itself. This makes the issue one of survival, with a strong element of economics.
The thought that springs to mind is whether, in a few decades, the strongest economies will be those that have managed to safeguard their ability to provide food and water for themselves.
The Food and Agriculture Organis-ation of the UN has said: “There will be enough water to produce food for 10 billion people in 2050, but over-consumption and the impact of climate change threaten food security and water supplies in many regions.”
These are issues that cannot be ignored, and if we do, the economy will suffer
In a report issued jointly with the World Water Council, the FAO reported: “By 2050 some 60 per cent more food will be needed to feed the world’s people, and as farming remains the largest user of water, food must be produced sustainably to ensure future supplies of food and water.”
According to various reports, today there are over 850 million people who suffer hunger, while there are around 250 million people who are overweight or obese. This is an evident sign of an inequality in the distribution of income.
It could be the case that because those suffering hunger live in areas which are distant from the US and Western Europe, we only become aware of this problem when the media highlight it in a very vociferous manner.
However, this may not remain so in the medium and the long terms. The immig-ration issue is an issue of today and it is caused by conflict in Africa and the Middle East. It is also caused by a lack of food and water which causes people to leave their countries in the hope of a better life. Moreover, one of the reasons for conflict in Africa is also the lack of food and water.
The issue will loom larger for the deve-loped world when the lack of safe food and water affects neighbouring countries. How will the developed world respond then? Will it resort to an aggressive approach to defend itself? Will such neighbouring countries adopt an aggressive stance against the developed economies?
Three fundamental issues that the subject of economics seeks to address are what is produced, how it is produced and how goods are distributed. In our part of the world we may be too happy with the progress being made in the production of technology products and are not bothering enough about the basic necessities, as food and water are. We do not seem to be bothered enough about the way goods are distributed because there is generally enough food and water for our popul-ations. Until when will this remain so?
With regard to water, are the deve-loped economies facing pressures on their water resources because of weak governance, inadequate capacities and under-investment in the infrastructure? Are the excessive use of water and its level of pollution such that they are losing their capability to produce food? Is this situation threatening jobs that depend on agriculture and water?
The FAO and WWC called for government policies and investment by both private and public sectors to ensure that crops, livestock and fish are produced sustainably, and in ways that also protect water resources. This is essential to reduce poverty, increase people’s incomes and ensure food security, thereby linking the production of safe food and water to economics.
Last week, Malta’s Today Public Policy Institute (TPPI) issued a report which addressed the issue of water production in Malta. It needs to be remembered that in Malta we already import most of the food we consume, which makes us very vulnerable to any food scarcity.
We produce most of the water we consume through the desalination of sea-water, and some comes from ground water extraction.
The writers of the TPPI report rightly state that the current price of water does not reflect the environmental cost of ground water extraction and fossil fuel use to generate energy to power reverse osmosis plants. They recommend that the full cost of water should be reflected in water tariffs following a thorough analysis of the situation.
From an economic perspective, this implies that since we are using a vital and scarce resource, the full economic cost of this resource needs to become known in a transparent manner.
The technical issues raised by the TPPI report will hit us sooner rather than later. This would all seem to indicate that they are issues that cannot be ignored, and if we do, the economy – which everyone claims it is performing so well – will suffer.
Students of economics are taught that they should look at negative externalities when assessing the economic progress of a country. The TPPI report has brought out the negative externalities that are being, and will be, created unless we manage our water resources well.