By Global Footprint Network
What happens when increasing populations and incomes lead to higher demand for resource-intensive food while climate change and resource scarcity disrupt food supply? A new report released today by Global Footprint Network and the UNEP Finance Initiative finds that this growing imbalance of food demand and supply will lead to higher food prices and food price volatility, ultimately resulting in material impacts on national economies.
If global food prices double, then China could lose $161 billion in GDP and India could lose $49 billion, according to the new report, titled ERISC Phase II: How food prices link environmental constraints to sovereign credit risk.
The report models the impact of a global food price shock on 110 countries to assess which countries face the greatest economic risk from the growing imbalance between food supply and demand. It summarizes the results in a ranking of countries according to impact on GDP.
The report finds that countries with higher credit ratings tend to be less exposed to economic risks resulting from a food price spike. In addition, countries whose populations have the highest consumption of natural resources and services, and are therefore most responsible for the environmental constraints that make future food prices higher and more volatile, tend to face the lowest risk exposure.