Over the next decade, as the GCC population soars by 30 percent to over 50m people, the Gulf region will see an increasing strain on its supplies of basic commodities, particularly electricity, food and water. And the ways in which the region faces up to these challenges will have a major impact on its prosperity and quality of life, not only in 2020 but in the decades to come, a new study by the Economist Intelligence Unit dubbed “The GCC in 2020: Resources for the future” said. “In the coming decade, the GCC countries will face pressure to use their energy resources more efficiently, in order to supply their rapidly growing populations, free up resources for export, and address concerns about climate change and pollution.” The study, assessing the long-term resource strategy of the countries of the Gulf Cooperation Council (GCC), noted that the regional economic slowdown has temporarily reduced the risk of power cuts and water shortages, but the GCC states need to move fast to improve the management of power, water and food resources in order to forge a more sustainable growth path. “Inefficient energy and water consumption has significant economic costs, while the possibility of future food price spikes poses an inflation risk to an import-dependent region,” the study said. The in-depth study suggested that conservation of electricity and gas is a must. Blackouts and brownouts are already common during peak times, and energy subsidies represent an increasing cost for GCC governments. “While governments realize that current consumption patterns are not sustainable, curtailing subsidies remains a political challenge,” it said. The study noted that GCC governments are overhauling the way they manage hydrocarbons, with most governments planning to reserve a greater proportion of crude oil to produce value-added and refined products for export, and to use natural gas to fuel power plants. It also pointed out that investment in renewable fuels is on the rise. GCC states will invest in alternatives such as solar and nuclear power to help them meet the shortfall in electricity supplies, and free up oil and gas for export. Moreover, there is also a notable investment increase in minerals development, with foreign companies also playing a role. Alongside investments in energy, GCC governments are investing more in exploiting non-oil minerals such as gold, silver, iron ore, copper and bauxite with the aim to diversify economically and create jobs, the study noted. However, the study stressed that rising temperatures and expanding populations will place increasing pressure on the Gulf's water supplies, which are already heavily reliant on desalination and if not addressed “urgently”, will lead to potential serious water shortages. At present, the vast majority of water goes into agriculture, a sector that provides less than 5 percent of GDP. The study encouraged investments in farmland abroad to ensure food security, “but must be structured carefully to avoid conflicts with host governments.” It cited some foreseeable risks that must be managed in such investments, among them, are: ensuring a transparent land valuation and transfer process, ensuring a broader range of stakeholders than just governments, providing clear and visible benefits for local communities, and respecting the host country's trade rules and export regulations. The Qatar Financial Centre (QFC) Authority sponsored the study.
