Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Network analysis shows systemic risk in mineral markets

16.11.2015

A shortage of a rare mineral could spur global market instabilities, according to a new analysis of international commodity trade networks.

Shortages of natural resources—minerals such as copper, aluminum, and mercury—could lead to cascading shocks and lead to instabilities in the global trade system, according to a study published today in the journal Science Advances.


Trade networks of platinum, lithium, and copper

Klimek et al, 2015

Mineral resources are increasingly important in the production of modern devices such as mobile phones and medical technologies. These resources are mined and shipped around the world through increasingly interlinked global trade networks.

“Regional shortages of minerals necessary for the manufacture of modern technologies could ripple throughout the trade system, leading to a sharp increase in the price volatility of such minerals in the global markets,” says Peter Klimek, a researcher at the Medical University of Vienna, who led the study in collaboration with IIASA researchers.

The study examined trade flows of 71 mineral commodities between 107 countries, using a new method to assess the systemic risk in commodity trade networks.

It shows that minerals that are produced as a byproducts of other processes—for example rare earth metals produced as a byproduct of phosphorus mining for fertilizer—are the most susceptible to price volatility leading to systemic instabilities, “The beauty of this methodology is that it allows the data to tell its own story,” says IIASA Ecosystems Services and Management Program Director Michael Obersteiner.

The new study grew out of a conversation with IIASA Advanced Systems Analysis researcher Stefan Thurner, who has previously applied similar methods to the study of systemic risk in financial markets.

“Commodity markets, like financial markets, are highly international and interconnected,” explains Thurner. “Understanding these networks gives us a handle to explain and possibly predict a large portion of the instabilities in terms of price volatility in the markets.”

In particular the study finds shortcomings in the management of non-fuel mineral resources that increase the systemic risk, and provides a method for countries to assess their resilience with respect to such rippling network effects. It proposes policy measures, for example a tax based on commodity risk that could create more stable markets.

The researchers plan to continue their collaboration, extending the methodology to explore other networked systems, for example the agriculture system, food trade, and food security.
Reference:
Klimek P, Obersteiner M, Thurner S, (2015). Systemic Trade Risk of Critical Resources. Science Advances 1, e1500522 doi:10.1126/sciadv.1500522

About IIASA:
The International Institute for Applied Systems Analysis (IIASA) is an international scientific institute that conducts research into the critical issues of global environmental, economic, technological, and social change that we face in the twenty-first century. Our findings provide valuable options to policy makers to shape the future of our changing world. IIASA is independent and funded by scientific institutions in Africa, the Americas, Asia, Oceania, and Europe. www.iiasa.ac.at 

MSc Katherine Leitzell | idw - Informationsdienst Wissenschaft

More articles from Studies and Analyses:

nachricht Real-time feedback helps save energy and water
08.02.2017 | Otto-Friedrich-Universität Bamberg

nachricht The Great Unknown: Risk-Taking Behavior in Adolescents
19.01.2017 | Max-Planck-Institut für Bildungsforschung

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Safe glide at total engine failure with ELA-inside

On January 15, 2009, Chesley B. Sullenberger was celebrated world-wide: after the two engines had failed due to bird strike, he and his flight crew succeeded after a glide flight with an Airbus A320 in ditching on the Hudson River. All 155 people on board were saved.

On January 15, 2009, Chesley B. Sullenberger was celebrated world-wide: after the two engines had failed due to bird strike, he and his flight crew succeeded...

Im Focus: Breakthrough with a chain of gold atoms

In the field of nanoscience, an international team of physicists with participants from Konstanz has achieved a breakthrough in understanding heat transport

In the field of nanoscience, an international team of physicists with participants from Konstanz has achieved a breakthrough in understanding heat transport

Im Focus: DNA repair: a new letter in the cell alphabet

Results reveal how discoveries may be hidden in scientific “blind spots”

Cells need to repair damaged DNA in our genes to prevent the development of cancer and other diseases. Our cells therefore activate and send “repair-proteins”...

Im Focus: Dresdner scientists print tomorrow’s world

The Fraunhofer IWS Dresden and Technische Universität Dresden inaugurated their jointly operated Center for Additive Manufacturing Dresden (AMCD) with a festive ceremony on February 7, 2017. Scientists from various disciplines perform research on materials, additive manufacturing processes and innovative technologies, which build up components in a layer by layer process. This technology opens up new horizons for component design and combinations of functions. For example during fabrication, electrical conductors and sensors are already able to be additively manufactured into components. They provide information about stress conditions of a product during operation.

The 3D-printing technology, or additive manufacturing as it is often called, has long made the step out of scientific research laboratories into industrial...

Im Focus: Mimicking nature's cellular architectures via 3-D printing

Research offers new level of control over the structure of 3-D printed materials

Nature does amazing things with limited design materials. Grass, for example, can support its own weight, resist strong wind loads, and recover after being...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Booth and panel discussion – The Lindau Nobel Laureate Meetings at the AAAS 2017 Annual Meeting

13.02.2017 | Event News

Complex Loading versus Hidden Reserves

10.02.2017 | Event News

International Conference on Crystal Growth in Freiburg

09.02.2017 | Event News

 
Latest News

New technology offers fast peptide synthesis

28.02.2017 | Life Sciences

WSU research advances energy savings for oil, gas industries

28.02.2017 | Power and Electrical Engineering

Who can find the fish that makes the best sound?

28.02.2017 | Information Technology

VideoLinks
B2B-VideoLinks
More VideoLinks >>>