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Six Billion Consumers and Rising

Author: Lee Hudson Teslik
May 19, 2008

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"The wars of the twenty-first century will be fought over parking spaces." So writes Suketu Mehta in his recent portrait of Mumbai, a city pushing the limits of overpopulation, struggling with sewage overflows, and clawing for limited electricity, water, and gas supplies. The wars Mehta predicts in fact are well under way. Easily missed in the clamor over the spiking prices of oil, natural gas, coal, iron, aluminum, copper, and a long list of other commodities (WSJ)—not to mention shortages of wheat, rice, flour, and other basic foodstuffs—is that population pressures weigh on the availability of all these goods.

Currently, some 6.6 billion humans inhabit the Earth. By 2050, experts say that number will likely hit 9 billion. The rate of global population growth has abated in recent years, and some regions, mostly in the developed world, even fear population decline (Foreign Affairs). But global population growth remains a long-term dilemma for producers of food, energy, and raw materials. At current levels, there are almost two-and-a-half times as many people in the world as there were in 1950, when global population sat around 2.5 billion. The world has largely been able to make up for this growth through increased efficiency, and by finding new sources for materials. Substantial gains have been made against global hunger, as displayed in this chart (PDF) by the UN's Food and Agriculture Organization, though international targets for hunger reduction remain unmet. Firms that produce commodities have also ramped up their operations to meet rising demand. Rio Tinto PLC, the multinational mining giant, says it plans to increase production 8 percent (DowJones) across all commodities by 2015.

Yet experts worry about the world's ability to keep up these gains. Projections from the International Food Policy Research Institute show the world's need for food rising significantly (PDF) in the first two decades of the twenty-first century. The prominent academic Jared Diamond says demand problems could be exacerbated as consumption rates rise (NYT) in the developing world, as seems likely. Improvements in agricultural efficiency may continue, but at some point they will be limited by physical factors. One acre, however efficiently it is cultivated, can only grow so much food.

A similar challenge faces commodity producers. A July 2007 report from the National Petroleum Council says the world will need to produce 125 million barrels of oil per day to meet global demand by 2030, given rising need from global population hubs like China and India (global production is currently about 80 million barrels per day). Yet many analysts see practical limits on how much oil the world will be able to produce. Chevron Vice Chairman Peter J. Robertson, in a recent interview with CFR.org, says supply is not limited by the amount of oil in the ground but that geopolitical factors could undermine efforts to meet demand over the coming decades.

These problems could be compounded by trade policy. As food shortages mounted in early 2008, many of the world's food exporters decided to look after their own populations first, imposing export bans that in turn sharpened problems in neighboring states. World Bank President Robert Zoellick denounced such bans (Reuters), but in the absence of strong international governance, observers wonder if they might become yet more prevalent. A similar shift is unfolding in the energy industry, where national oil companies, or NOCs, now control the overwhelming majority of the world’s oil supply. A report from Rice University posits that this trend could hamper global oil supplies, given that NOCs tend to work less efficiently (PDF) than independent oil firms.