Physical limits to resource access and utilisation and their economic implications in Mediterranean economies

This paper applies Ecological Footprint accounting to Mediterranean countries to track ecological asset balances and investigate the long-term feasibility of fulfilling natural resource and service needs. Our findings are that the Mediterranean region currently uses approximately 2.5 times more natural resources and ecological services than their ecosystems can provide. We argue that when consumption exceeds local availability, countries either resort to depletion of ecological assets or turn to international trade in order to satisfy their demands. Access to outside resources is however limited by (a) the availability of resources on international markets and (b) their affordability. Countries highly dependent on natural resource imports therefore expose their economies to the macroeconomic consequences of price volatility. We find that trade-related effects of natural resource price volatility are significant for Mediterranean economies as a 10% increase in the price of natural resources corresponds with a change in the trade balance between +7% and −2.4% of the GDP. We conclude that, in a world characterised by the existence of physical limits to the availability of global ecological assets, a systemic risk may exist for Mediterranean economies due to the concurrence of (1) ecological asset scarcity, (2) increasing prices and (3) challenging financial situations.