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Has China’s Economic Shift Really Ended the Commodity Super-cycle?

This post is an overview of the Vital Signs Online trend “Commodity Prices Kept Slowing in 2013 but Still Strong Overall

The most recent economic “super-cycle,” a decades-long trend of rising commodity prices, has been influenced by the surging growth of China since the turn of this century. Now, as China begins its shift from an export-led growth model to a model based on internal investment and consumption, the super-cycle has slowed. Despite this shift, however, commodity prices suffered a notable drop in 2013 but remained high compared to historical averages, suggesting that the super-cycle may have been and continues to be driven by other substantial global factors,  write Worldwatch Institute’s Mark Konold, Caribbean Program Manager, and Jacqueline Espinal, intern with the Climate and Energy Program.

Commodities markets are composed of physical goods and raw materials that are bought and sold in large quantities on exchanges around the world. Global commodities markets fell an average of almost 9 percent in 2013, continuing the 2012 slowdown of the most recent super-cycle. Critical commodities groups—including energy, metals, and foodstuffs—are closely watched as a bellwether of the overall commodities market (Figure 1).

Commodities Figure 1

Since introducing environmental targets to reduce carbon emissions, China has been diversifying its energy sources. However, recent price stability in the oil market continued in 2013, despite uncertainty regarding output from conflict-stricken producers such as Iraq and Libya. Further, widespread use of fracking technology, although contentious, has significantly reduced the price of natural gas. So while China may have affected global energy markets, many factors may be playing a role in determining overall prices.

Metals prices continued their recent downward trend, sliding 33 percent since 2011. Last year, gold saw its biggest annual drop since 1981. China’s economic rebalance was supposed to usher in lower demand for imports, including metals like copper and iron ore. But an additional 260 million rural citizens are expected to relocate to urban areas in China, which will sustain a higher need for such resources. Geological factors and higher energy prices, the latter being a main input for metals production, also have contributed to this sustained price level.

Despite a 7.1 percent drop in 2013, food prices remain at historic highs. In China, environmental strain has led to increased imports of wheat, corn, and rice to support a growing population. Although this does affect global markets, it appears that a wider range of factors is keeping food prices up, including high demand for livestock feed, renewable fuel standards (supporting fuels that rely heavily on agricultural products as inputs), declines in global buffer stocks, and policy choices such as export bans in some regions. Further, increasing extreme weather events due to global climate change have negatively affected agricultural yields, exacerbating high prices.

Clearly, China’s choice to become a more consumer-driven rather than an export-driven economy has affected areas such as energy, metals, and food. However, data from all countries continue to suggest that more than just one factor creates a “super-cycle,” as price levels remain significantly higher than they have been in decades past.

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About Vital Signs Online:

Vital Signs Online provides business leaders, policymakers, and engaged citizens with the latest data and analysis they need to understand critical global trends. It is an interactive, subscription-based tool that provides hard data and research-based insights on the sustainability trends that are shaping our future. All of the trends include clear analysis and are placed in historical perspective, allowing you to see where the trend has come from and where it might be headed. New trends cover emerging hot topics-from global carbon emissions to green jobs-while trend updates provide the latest data and analysis for the fastest changing and most important trends today. Every trend includes full datasets and complete referencing.

Visit Vital Signs Online to subscribe today.

 

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5 Easy Ways to Chase Away Monsters (While Saving Energy)

Worldwatch sustainable living blog by Aaron Schwarze and Gaelle Gourmelon

Cold winds are howling. Nights are getting longer. Are energy monsters creeping into your house? This Halloween, kick them out while preventing terrifyingly high power bills. Read these money-saving tips, and keep your home monster-free and energy-happy.

  1. VAMPIRES (and the cold) HATE SUNLIGHT

vampireOpening your curtains on your south-facing windows during the day is a great way to allow sunlight to naturally heat your home. The extra warmth enables you to rely less on natural gas or electricity for heating. Plus, vampires hate sunlight, so that’s an easy fix. Don’t forget to close your curtains at night, though, to keep drafts (and spirits) out.

Did you know? Up to 40 percent of the heat escaping from your home in the colder seasons is from uncovered windows.

 

  1. GOBLINS (and high power bills) ARE DRAWN TO LIGHT

goblinAs the days get shorter, you’ll turn your lights on earlier in the evenings. Unfortunately, that’s an invitation for sneaky goblins and hair-raising power bills. So, turn off the lights when you don’t need them. Also, look for energy-efficient light-emitting diodes—or “LEDs”—when you shop for bulbs, including holiday light strings to decorate your home for the coming holidays. Can’t find LEDs? Compact fluorescent lamps (CFLs) are another energy-saving alternative.

Did you know? LED and CFL light bulbs use less than a quarter of the electricity of conventional incandescent light bulbs and last 8–40 times longer. Despite their higher price, CFLs and LEDs can lower your electricity bill for lighting by nearly 75 percent.

 

  1. SWAMP CREATURES (and energy waste) LOVE HOT WATER

swamp creatureSwamp creatures love scalding hot water. You probably don’t. Switch your water heater from 140 to 120 degrees Fahrenheit to save as much as $46 a year. Not only will you send the swamp creatures packing, you’ll save money for candy treats.

Did you know? Water heaters can consume up to a quarter of the energy in your home. Turning down the temperature 20 degrees saves 6–10 percent a year on hot water heating costs.

 

  1. ZOMBIES (and your thermostat) WANT YOUR BRAIN

zombieIf you put a little bit of thought into it, saving energy is easy. Lower the setting of the thermostat to a comfortable 68 degrees when you are home. Use your brain and remember to lower the temperature (but don’t let your water pipes freeze!) when you leave home or go to bed. Zombies don’t produce body heat like you do, so they’ll soon be heading out.

Did you know? Turning down the thermostat 10–15 degrees for eight hours a day can save you up to 15 percent on your heating bill.

 

  1. GHOSTS (and drafts) CAN FIT THROUGH SMALL GAPS

ghostWhen you notice a draft or a cold spot in your home, it’s time to act! Ghosts can squeeze through the smallest of cracks, and so can heat. Buy low-expanding foam to fill gaps or weak spots in old insulation and door sweeps to close gaps under doors. These adjustments take only a few dollars and a little bit of time, yet they work wonders. Remember, your attic door can be responsible for up to 15 percent of your home’s heat loss (and for those eerie creaking sounds), so don’t forget to check it, too.

Did you know? Reducing air leaks could cut 10 percent from an average household’s monthly energy bill.

TAKE THE EXTRA STEP!

Want to get rid of even the smallest gremlin, all while saving even more money? Have your home checked by an energy auditor. Schedule a room-by-room examination of your home by finding an auditor near you. An infrared thermographic scan may even detect any remaining monsters in your closets.

Monsters are often uninvited house guests, and so is energy waste. Following these tips can free your home from spooky creatures and save you loads on your power bill. It’s so easy, it’s scary!

Aaron Schwarze was an intern at the Worldwatch Institute. He is a student at the Technical University Berlin studying environmental engineering in Germany. Gaelle Gourmelon is the Communications and Marketing Manager at Worldwatch.

 

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Global Economy Inches Up as Environmental & Social Concerns Mount

Washington, D.C. National progress is often measured almost exclusively by growth in the gross domestic product, or GDP. Yet as the global economy inches upward, actual social and environmental well-being lags. Alternative measures for gauging progress are needed to determine true prosperity, write Worldwatch’s Mark Konold and Climate and Jacqueline Espinal in the Institute’s latest Vital Signs analysis (bit.ly/VSOEcon).

Growing economy. The global economy grew moderately (at 4.49 percent) in 2013, resulting in a total combined GDP of $87 trillion for all countries in the world (Figure 1). Emerging markets accounted for a large part of the growth (representing 50 percent of the total), as an affluent middle class formed and young workers migrated into cities, encouraging business investment in developing countries.

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Growing inequality. Even as the global economy picks up, however, social challenges continue to mount. According to the United Nations Development Programme, average household income inequality in recent decades has risen in both industrial and developing countries. One billion out of 7 billion people live below poverty levels and experience most acutely the dark side of development, such as global climate change, water depletion, food shortages, and biodiversity destruction.

In 2013, nearly 202 million people worldwide were unemployed.

There also continued to be labor shortages, increased globalization, and mismatches between current skill levels and job requirements. Developing countries were faced with a growing pool of willing workers in 2013, but limited access to credit for many small enterprises contributed to a lack of investment and job creation in these markets. In 2013, nearly 202 million people worldwide were unemployed, a 6 percent unemployment rate.

Growing consumption. World population is expected to reach 9.6 billion people by 2050, with much of that expansion happening in developing countries. As the world’s population continues to grow, there is legitimate concern about depleting Earth’s resources faster than they can be replenished. The Global Footprint Network, an agency that tracks humanity’s ecological footprint and nature’s capacity to replenish its resources, estimates that the world is consuming resources at the rate of 1.5 planets per year.

Some studies have argued that the world must replace its growth economy with a steady-state economy, in which production is only replaced, not increased, while the economy continues to develop by improving and renewing its existing resources.

Measuring true progress. Studies suggest that although people’s level of happiness increases significantly when societies develop, high levels of uncertainty and social and economic inequality may run counter to this development. Measures such as the Genuine Progress Indicator account for the social, educational, economic, and environmental activities that contribute to economic growth but that go unnoticed in current national accounting frameworks.

Regional Highlights:

  • Although employment rates improved in the United States in 2013, much of the improvement is attributed to fewer people participating in the labor force—mainly newly retired Baby Boomers.
  • In the United States, Baby Boomers—individuals born between 1945 and 1965—continued to retire at an approximate rate of 10,000 per day. It is expected that in retirement, Boomers reduce their levels of disposable income, leading to a decrease in economic growth by as much as 0.7 percent.
  • In Japan, GDP growth between 2000 and 2013 shrank by 0.6 percentage points annually due to an aging population retiring from the workforce.
  • Worldwide, employment rates declined in all regions except South and East Asia, which continued to experience higher levels of growth through 2013.

 

Notes to Editors:     

Journalists may obtain a complimentary copy of “Global Economy Inches Upward as Environmental and Social Concerns Mount”  by contacting Gaelle Gourmelon at ggourmelon@worldwatch.org.

About the Worldwatch Institute:

Worldwatch is an independent research organization based in Washington, D.C. that works on energy, resource, and environmental issues. The Institute’s State of the World report is published annually in more than a dozen languages. For more information, visit www.worldwatch.org.

About Vital Signs Online:

Vital Signs Online provides business leaders, policymakers, and engaged citizens with the latest data and analysis they need to understand critical global trends. It is an interactive, subscription-based tool that provides hard data and research-based insights on the sustainability trends that are shaping our future. All of the trends include clear analysis and are placed in historical perspective, allowing you to see where the trend has come from and where it might be headed. New trends cover emerging hot topics-from global carbon emissions to green jobs-while trend updates provide the latest data and analysis for the fastest changing and most important trends today. Every trend includes full datasets and complete referencing. Visit http://vitalsigns.worldwatch.org to subscribe today to Vital Signs Online.

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