Dr Aled Jones Global Sustainability Institute, Anglia Ruskin University

1. Dr Aled JonesGlobal Sustainability Institute, Anglia Ruskin University Resource Constraints Sharing a finite world

2. Resource constraints research project Taking a systems view of the natural and social (human) capitals what do scarce resources potentially mean for the system flows in a global economy and in particular to financial capital? Energy availability Food availability Water availability Land availability Metals availability Social mobility and health Capital availability Environmental loading

3. Global pressures & trends

4. A growing world population

6. But…

7. Local challenges: Water availability Slide 6

8. Local challenges: Degradation of soils Slide 7

9. Global challenges: resource constraints [1] Current global reserves divided by current annual consumption (assuming no growth in demand). [2] Data taken from BP Statistical Review 2012, http://bp.com/statisticalreview and David Cohen, 'Earth's natural wealth: an audit', NewScientist, Issue 2605(23 May 2007)pp. 34-41

10. Global challenges: Environmental loading

11. Economic losses already occurring

12. Limits to growth: financial imbalances

13. Summary Resources are getting more expensive Environmental damage is getting more expensive Capital is becoming more constrained (Global) population will peak … and they are all interconnected

14. So What?

15. So What? Commentary Growth is the solution Green growth The end of growth Beyond the limits

16. Possible financial impacts Reduced economic growth. Reduced access to many commodities, and hence increased prices (or price shocks) or lack of availability. Reduced international security and coordination. Repression of investment returns by governments. Possible changes to life expectancy and morbidity.

17. Inflation A series of economic price shocks from lack of availability of resources would lead to short-term inflation. Government response to price shocks, in particular their approach to money supply, is key for long-term inflation. Wage expectations will go up with more expensive resources however capital may be needed for resource extraction potentially keeping wages down.

18. Demographic assumptions Impact of climate change: increase the incidence of premature deaths from heat-waves but lower cold winter deaths. Lack of access to resources: Certain elements, such as rare earth metals, may become unavailable and could lead to disruption in medical supply chains. Change in societies’ priorities: economy as a whole will have to devote more (economic) resources to securing (physical) resources which could lead to less investment in healthcare.

19. Scenarios for the future

20. Scenario runs for actuarial model Each scenario has an optimistic and pessimistic outcome 4 scenarios deliver 8 sets of outcomes that are tested Compared to a ‘no constraints’ world

21. Defined contribution replacement ratios

22. Defined benefit assets

23. Defined benefit (increasing contributions)

24. Contact details Dr Aled Jones, Director Global Sustainability Institute Anglia Ruskin University Tel: 0845 196 2931 aled.jones@anglia.ac.uk http://www.anglia.ac.uk/gsi