The Stress Nexus

LONDON – Every day, the number of people inhabiting our planet grows by more than 210,000. That adds up to 1.5 million more people each and every week, adding to the demands on our vital resources.

At the same time, the world is becoming more prosperous, improving the quality of life almost everywhere. Over the past few decades, an estimated two billion people have risen into the middle class worldwide. That is a remarkable achievement.

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But this ongoing global rise in prosperity also generates stresses that threaten to undermine prosperity. Call this the “prosperity paradox.”

By 2030, it is estimated that our world will need 30% more water, 40% more energy, and 50% more food to keep up with rising demand. And we will need to provide that additional energy, water, and food in ways that significantly reduce CO₂ emissions.

Addressing any of these resource needs individually would be an immense task. But the challenge of ensuring sufficient supplies of water, energy, and food is magnified many times by the linkages between them. The potential effects of climate change will influence all three. So, if we are to succeed, meeting our resource needs must be addressed intelligently and in unison.

Energy, water, and food are our most vital resources, sustaining life itself and fueling our modern societies. And they comprise a tightly intertwined network: nearly all forms of energy production require water; energy also is needed to move and treat water; and producing food requires both energy and water.

Yet, around the world, little has been done to address our needs in a comprehensive way. Inefficient use of our resources remains the norm. In developing countries – where most of the world’s population growth is occurring – sound water management is lacking, and up to 40% of electricity is lost due to poor transmission infrastructure. In the developed world, waste is also prevalent: more than one-third of the food produced in the United States goes uneaten, for example.

At the same time, we are in an era of greater economic volatility. This, in turn, is generating more political volatility, which tends to impede progress on large-scale global issues.

We need to learn to adapt our resource systems and institutions to deal with the new pace of change and uncertainty. To that end, last year Shell embarked upon a major effort to understand the future implications of what scientists refer to as the “stress nexus” of energy, water, and food. We are searching for innovative ways to make the most of the world’s finite resources and thereby ensure greater security for our vital energy, water, and food supplies.

So, what can business do? Plenty. Rather than wait for governments to act, we need to take a leadership role in offering ideas and solutions. We need to explore new forms of partnership and collaboration with governments, academia, interest groups, and businesses outside our own industries.

Shell recently brought together a small group of CEOs who have committed their companies to joint projects that may demonstrate what can be done to mitigate resource stresses. We are trying to find practical ways to make local economies and resource systems more resilient.

What is interesting about this initiative is that it involves companies from different economic sectors, not just the energy industry. We are also collaborating closely with top academics and researchers to develop a resilience methodology. We want to identify what works, then replicate it elsewhere and potentially create new business opportunities in the process.

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We recognize that actions are more persuasive than words, which is why we have not really talked much about this initiative yet. It is still in its early days, and we want to wait until we have some results.

Perhaps the accumulation of collaborative efforts like this will grow into a movement and larger-scale success. In fact, this “bottom-up” approach may be more viable and build more momentum in the long run, given the obvious failure of ambitious “top-down” approaches in recent years.