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  July 22nd, 2022 | Written by

War and the Collateral Damage of Nature Dependent Trade

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By John Willis, Director of Research, Planet Tracker

Over the last decade, 40 percent of annual world trade (USD 7.6 trillion), was made up of nature dependent exports – 36 percent of which derived from non-democratic regimes, as defined by the Economist Intelligence Unit’s Democracy Index. The risks
associated with an over-dependency on non-democratic regimes, for this sector of global trade in particular, have been instantiated by the conflict in Ukraine – forcing leaders to re-assess the vulnerabilities of their current supply chains.

It is crucial that the nations that rely on non-democratic political systems for certain commodities, reconsider where they source these products from, in order to avoid similar disruptions in the future.

The commodities in danger

Natural capital, defined as the world’s stocks of natural assets, which include geology, soil, air, water and all living things, provide a wide range of services that make human life possible. For instance, nature provides both renewable (e.g. crops) and non- renewable goods (e.g. fossil fuels), which can be traded.

Annually, the global cotton trade is valued at approximately USD 269 billion. But it is not just the most valuable agricultural commodity – it is also the one most dependent on non-democratic states, with China alone accounting for 30 percent of its global trade.

The fish trade is in a similarly precarious position. It matches the meat trade in value at roughly USD 160 billion worth of annual exports, yet it is three times more dependent on non-democratic states.

As the third most dependent commodity, cereal appears at first glance to be well insulated from non-democratic governments, given that 76 percent of the trade is dependent on democratic states. However, the conflict between Russia and Ukraine has brought to light the very fragile nature of trade flows. The disruption of supply chains by just one or two states can have a huge ripple effect globally, in this case making scarce commodities that are already at record prices even more costly, with poorer countries suffering disproportionately as a result.

A system on the blink

One of the primary challenges with exporting commodities lies in the friction between short-term economic goals and longer-term environmental policies. Many of the production methods taking place in these supply chains exacerbate environmental concerns,  including land and water use, the degradation of vital ecosystems and reduced biodiversity.

The global demand for natural capital is already putting pressure on limited resources, ecosystems and biodiversity, and this is rising at an unprecedented rate. But despite this, the problems associated with natural capital and those associated with the climate, continue to be separated by governments and institutions. This division is
demonstrated by the separation of two different Conferences of the Parties (COPs): one for climate change and another for biodiversity. However, climate and nature are closely interlinked. Climate change is having an effect on crop yields but also seafood catches.

Reducing emissions by growing biofuels, rather than edible crops, raises the question of whether climate should take priority over feeding the global population. The particularly alarming issue is that the countries that are the least climate resilient are also among
the biggest exporters of nature-dependent trade.

What the future holds

The global landscape is changing, and nature-dependent trade, both imports and exports, must be re-evaluated to account for this. There must also be a greater understanding of the consequences of a reliance on non-democratic actors for certain commodities.

There are many political considerations associated with food security, and as such, policies must be formed with a longer-term view in mind and acknowledge that climate change will have an effect on future sources of natural capital. Many states have been
forced to reassess trading relationships for both renewable and non-renewable goods as a result of the conflict. In doing so, this has reinforced the interwoven relationship between natural capital, biodiversity and the climate.

This is why it is essential for governments to build trading relationships with actors who share their policies, and commit to protect, not just the profits that the land provides, but to protect the land itself.