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Commodity trade disruption in the wake of the Russian invasion of Ukraine is pushing sovereign states to seriously reflect on the type of governments with which they trade, exposing the dubious source of many western nations’ nature-based imports, according to new research by Planet Tracker.

While governments in Europe and the US scramble to replace Russian oil and gas imports following the introduction of sanctions designed to deprive the country of the economic resources it uses to continue its aggression against its neighbour, the UK-based non-profit financial think tank warns that a wider look at natural capital trade is needed to ensure countries are not exposed to further sudden disruptions caused by non-democratic actors.

Natural capital is defined as the world’s stocks of natural assets which include geology, soil, air, water and all living things. It can be divided into renewable sources, such as crops, meat, dairy and seafood, and non-renewables, such as fossil fuels and metals.

In a 2020 report, titled The New Nature Economy, the World Economic Forum found that over half of the world’s GDP is moderately or highly dependent on nature and its services, with many industries having significant “hidden dependencies” on nature in their supply chain – putting them at higher risk of disruption than might be expected at first glance. It identified six industries which, although less than 15% of their direct gross value added is highly dependent on nature, over 50% of their supply chains’ gross value added is highly or moderately nature-dependent. The industries are chemicals and materials; aviation, travel and tourism; real estate; mining and metals; supply chain and transport; and retail, consumer goods and lifestyle.

Rather than looking at the obvious oil and gas flows, Planet Tracker has chosen to focus on renewable sources, and has uncovered worrying vulnerabilities in the trade of commodities including cotton, fish and cereals.

“Obviously, oil and gas are a very big part of trade. We’re seeing world leaders going around to try to secure energy supplies, but it’s also important to look at how we feed ourselves, because if a country is happy to cut off your gas supply, who’s to say they wouldn’t cut off your cereal supply, for example?” John Willis, director of research at Planet Tracker and research author, tells GTR. “This is a particular concern for countries in North Africa which have suffered grain disruption, and we’ve also seen civil unrest in places like Sri Lanka as a result of food shortages.”

To investigate how democratic political systems engage with nature-dependent trade on the world stage, Planet Tracker examined each country’s or territory’s export data based on goods categories identified by UN Comtrade, a repository of official international trade statistics. It analysed this dataset and classified all exports into those dependent on nature, which included both renewable and non-renewable resources, and those which were not.

To classify exporters as non-democratic or democratic, the think tank used the Economist Intelligence Unit’s Democracy Index, which covers 165 independent states and two territories. The Democracy Index is based on five categories: electoral process and pluralism, functioning of government, political participation, political culture and civil liberties. Based on scores on a range of indicators within these categories, each country is then classified as one of four types of regime: full democracy, flawed democracy, hybrid regime, and authoritarian regime.

For the purposes of its research, Planet Tracker has classified full democracy and flawed democracy as ‘democratic’ and hybrid regime and authoritarian as ‘non-democratic’.

It found that 40% of total global trade between 2010 and 2019 derived from nature-dependent exports, with 36% of these exports originating from non-democratic countries during this period.

Among the non-democratic countries that are most important to global trade in natural capital are Russia, which accounts for 5.4% of exports, China, which accounts for 5.3%, and Saudi Arabia, which accounts for 3.3%.

These countries are large players in non-renewable nature capital trade – that is, fossil fuels, metals and ores – which account for two-thirds of all nature-dependent exports.

Renewable nature-dependent trade – cotton, cereals, oilseeds, sugar, meat, dairy and fish – is less dominated by non-democratic states, which only account for 25% of total exports. However, a closer look at individual commodities uncovers indications of concentration risk. Planet Tracker found that cotton, for example, accounts for the largest share of trade in agricultural products by value, at an average of US$260bn over the last 10 years. It is also the most dependent on non-democratic countries, at 64%. While China accounts for 30% of cotton exports, Bangladesh, Turkey and Pakistan hold important shares.

Democratic cotton and cotton product exporters, such as India and Indonesia, may represent alternatives for companies and countries looking to diversify their supply chains away from geopolitically risky areas.

With its research, Planet Tracker aims to highlight the extent to which the interconnectivity of the global supply chain has been taken for granted by many, and provide something of a wake-up call for importers who may be relying too much on one risky source for the raw materials that fuel their economy.

Egypt is one such example. The North African country, by some counts the world’s biggest importer of wheat, gets more than 80% of its total supplies from Russia and Ukraine. Struggling to shore up supply in the face of conflict-related disruptions, it has approved India as an import market, but it is unclear whether it will be able to secure enough wheat to replace the imports it has lost from its erstwhile trading partners.

“40% of trade is directly nature-dependent, whether you like it or not,” says Willis. “Since the invasion of Ukraine, natural capital has been rising up the agenda, because people have been struggling to get commodities such as wheat or sunflower oil.”

While the political system of trading partners can serve as a useful indicator of the risk of future supply disruptions, it is far from the only one to bear in mind, Willis adds.

“Is it just the politics of our trading partners that we should be most worried about? Maybe, maybe not. Everyone will have their view on that. Maybe it is the most water stressed areas that should be of concern,” he says.

However, data such as Planet Tracker’s shows that, given the global dependence on nature-based trade, it might be prudent for governments around the world to start thinking long-term about securing trade contracts with other partners, to avoid being caught out by geopolitical upheaval.