The technical ability to radically reduce this waste is well within our means yet inefficient pricing is inhibiting its application.
Whilst there is often a strong economic case for price reform, the politics tend to be messy and complex. As is well-documented, ‘subsidy elimination’ risks political backlash, harming vulnerable groups, social instability and loss of competitiveness in the short-run.
There is urgent need for a more inclusive dialogue about how to assess the value of resources considered social goods and the role of policy in influencing their domestic allocation and use.
The Valuing Vital Resources initiative aims to encourage incentives for the sustainable use of energy, water and food through furthering understanding of the economic and societal costs of their interlinked modes of use and production.
It involves a series of dialogues, materials and country focused reports to gather and make available international experience in cost-assessments, price reform and related policies.
The idea is to provide tools and expert networks that can support countries which currently administer resource prices and are in the process of or considering reform.
The initiative looks at energy, water and food because production and/or use of these three resources are often interlinked. The graphic below, for example represents, the situation in the Gulf Cooperation Council (GCC) countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE, whose economies rely heavily on national reserves or oil, gas and water.
Such interdependencies between resources mean that the price of one commodity will have implications for costs and stresses for another. As governments seek to integrate resource management understanding pricing linkages and developing valuation tools will become essential for sustainable policy-making.