The seven global megatrends that could change our future

SEVEN megatrends have been identified that could change our world forever, with devastating consequences for those who ignore the signs.

Iraqi youths watch a burning oil pipeline near Taji, north of Baghdad, Feb. 17, 2006. Insurgents blew up the main pipeline f...

OUR world is about to change dramatically, and if we don’t respond it could throw “societies into free fall”.

This is the alarming prediction from Australia’s national science agency CSIRO, which has published a book identifying seven megatrends they believe will change the world and have devastating impacts if people are not prepared to change with them.

Stefan Hajkowicz, the principal scientist working on strategy and foresight at the CSIRO, has written a book Global Megatrends: Seven Patterns of Change Shaping Our Future identifying trends that have the potential to disrupt society as we know it.

It defines a megatrend as a “profound trajectory of social, economic, environmental or technological change” that will occur over the coming decades. At first the change is gradual but it will eventually express itself with “explosive impact”.

Mr Hajkowicz told news.com.au that when people were feeling comfortable, they found it hard to change.

“I think there is evidence and information signals on things ... but we just sit tight and hope it will all go away,” he said. “But we can’t just wait for bad things to happen.”

In his book Mr Hajkowicz uses the decline of film company Kodak to illustrate the dangers in reacting too slowly to change. In 1976 Kodak reportedly captured 90 per cent of film sales and 85 per cent of camera sales in the US, but it failed to correctly forecast how digitisation would transform the industry.

In the end it tried to adapt, purchasing a website for people to share their digital photos and print them out but this failed. This once great company filed for bankruptcy in 2011.

Meanwhile Facebook saw the potential: “People didn’t want to print the photos. They wanted to interact with other people and build friendship networks in the virtual world.”

The revenue would come from advertising, not printing the photos.

“When the megatrends do express themselves it will be too late to act. Emerging successfully from a moment of free fall depends on reading early signals before they become strong, and taking proactive actions,” Mr Hajkowicz said in his book.

Businesses and governments are increasingly realising the importance of reading trends and adapting early, as well as the dangers of failing to act.

“The rise of a digital world was a megatrend that ... Eastman Kodak missed.

“Fijifilm on the other hand, foresaw and responded ... it saw its print film revenue drop from 60 per cent to virtually nothing but it found other sources.”

Mr Hajkowicz argues that when a megatrend expresses itself it will do so with “explosive force and throw companies, individuals and societies into free fall”.

“If we can read megatrends we can alter our destiny.”

1. MORE FROM LESS

As the population increases and more countries experience economic growth, this will put more pressure on humans to reduce waste and share limited resources including food, water, energy and minerals.

By the year 2050, food production will need to increase by 70 per cent in order to meet demand, according to forecasts from the Food and Agricultural Organization, based on assumptions about population growth, changing diets and agricultural systems.

In addition to rising food demand, diets are changing. People in developing countries are, on average, increasing meat consumption at the rate of 5 per cent per year with expectations of future growth.

High and volatile food prices can lead to riots, social unrest and geopolitical instability. When food is scarce, people panic and a fear factor sets in. This can permeate society and subsequently lead to instability.

Mr Hajkowicz said that the world was already experiencing higher and more volatile food prices.

“In 2008 and 2011 global food prices surged to levels higher than those experienced for the past 30 years,” the book notes. It is unclear why food prices shot up so dramatically.

But income growth, biofuel production, climate variability, trade distortions, rising oil prices and urbanisation are factors considered likely to push up food prices into the future.

Humans will need to learn to share limited resources better.

Oil prices are of particular concern because the liquid is an essential requirement for farming, it’s an essential ingredient for fertilisers, it powers tractors and machinery, is used to transport food from farms to customers, and there are few known substitutes for it.

Analysis of commodity price data over the past 40 years found that a 10 per cent rise in the oil price translated to 1.8 per cent increase in food prices, the book notes.

The world also loses 12 million hectares of productive agricultural land each year to land degradation resulting from human activities such as overcultivation and deforestation.

But the world does not have a problem with food scarcity, Mr Hajkowicz argues, with one-third of the food created today wasted and never eaten.

“As a general rule the world has enough, food, water, energy and minerals to meet the needs of current and future forecast populations,” the book says.

But billions of people are going hungry around the world because the human race has not done a very good job of managing natural resources sustainably or of distributing the wealth they create.

“The world doesn’t have a problem of food scarcity. But it does have problem about food distribution.”

The good news is that the world does have vast energy resources. A recent study found the total non-renewable energy resources (coal, uranium, natural gas and oil combined) will last the world another 574 years.

People queue to buy fuel in Nigeria on May 21 following a row over subsidy payment to petrol importers as well as sale of government oil blocks to private investors. Picture: Pius Utomi Ekpei / AFP

Mr Hajkowicz believes there will be a transition to new energy sources such as solar, wind and hydro because traditional sources will become more expensive. But he said the question was whether it would be a gradual transitions or an abrupt and painful one.

He also forecasts a future where property rights increasingly emerge for the world’s river systems and the supply of water.

Innovation could be the game changer. When innovation is combined with wise management of natural resources humanity can prevail, Mr Hajkowicz notes.

“Conversely, if managed poorly, food, water, energy and mineral insecurity could trigger armed conflict, famine, economic collapse, social unrest and poverty.”

2. GOING, GOING ... GONE?

This megatrend captures the unprecedented challenges facing the world’s biodiversity.

The coming decades are make-or-break years for many endangered plants, animals and ecosystems. The good news is that human beings are doing more than ever to protect vulnerable species and habitats.

3. THE SILK HIGHWAY

Change is being driven by the ongoing and rapid growth of emerging economies in Asia, Latin America and Africa.

As the more than one billion people in the Asian region shift from being poor to the middle-income class, this will see more spending on services.

Enormous new markets will be created but the wave of competition will also prove challenging, requiring western economies to innovate and therefore boost productivity.

The question is what can the world sell to China and the other rapidly growing emerging economies?

Overall, China is more likely to be a supplier, rather than a consumer of high-end research and development goods, as well as technical, scientific and engineering skills.

Where the Mr Hajkowicz does see potential is in Australia providing China with certain types of food.

China’s food demand is being driven predominantly by income growth, which means people will be able to afford to buy different types of food. Things like tropical fruit, wheat, wine, dairy products, chicken or pork have potential in the Chinese market.

As Mr Hajkowicz notes, China’s transition to a services sector economy will dampen demand for Australia’s minerals but not for food: “To the contrary: people working in the services sector still need to eat, and as their incomes rise, are likely to eat more food and be more selective with a preference for boutique goods and high-protein foods”.

People waiting outside a popular restaurant in the Dongzhimen district of China. Picture: Alamy

Another area where there is potential is financial investment.

There is an increased likelihood of investment funds flowing into stable and wealthy western countries. There has already been an increase in interest from Chinese people buying Australian property.

“If governments can find a way to capture the benefit of capital inflows while protecting Australian homebuyers then the new wave of investment could present a huge opportunity.”

4. FOREVER YOUNG

Another trend reshaping lifestyle patterns is the world’s ageing demographic, increased life expectancy, the rise of chronic illness and the increased infectious disease risk in a more mobile world. This has implications for retirement and the productivity of the labour force. There will be relatively fewer people in the workforce, having to support more people in retirement.

Staying healthy for a longer life, will require major innovations in healthcare and labour market models.

Mr Hajkowicz said he thought health, along with education, would be big job creators in the future, more so than other parts of the economy.

5. VIRTUALLY HERE

There are signs that digital technology is growing and the exponential growth of computing power combined with deeper immersion of social and economic systems into the virtual world, has the potential to change business models and lifestyles.

Perhaps one of the most impacted industries is the retail sector including fashion shops and other stores that sell goods and services directly to customers.

But while online purchases are increasing, they aren’t capturing all the new growth. The area that shows the most growth is the “bricks and click’s” model of retail, where a physical store and a virtual presence cleverly combine.

More goods will be sold online. But people will increasingly visit physical shops for advice, services, experiences and interaction with other people. Mr Hajkowicz believes it’s unlikely that city CBDs will be deserted. They could become even more important in a digital world with virtual shops and virtual offices.

People will still want to shop in physical stores like Lula for advice and services.

The growth of the virtual world will also likely see the continued rise of the freelancer who can sell their services to global markets from any location. It could also see offices become more enjoyable places to be as employers realise employees will only come in if they like being there.

Many jobs in mining, defence, aviation, logistics, administration and transportation will be replaced with robotics.

But the internet will bring people closer together and will make things happen by making new linkages.

According to recent research that looked at the Facebook network, there are no longer “six degrees of separation” between people on Earth. It is now possible to connect to every other person in the world by no more than four acquaintances.

6. GREAT EXPECTATIONS

As people’s incomes rise, there will be a shift away from the focus on the essentials of life, with many now craving experiences instead of material goods.

By 2060, the world will contain people who are about 4.4 times wealthier than they are today.

“When you’ve got enough stuff, you want something else,” the book notes.

The shift towards the “experience economy” is already happening. Successful manufacturers know that it’s not just the product that’s important anymore but the broader feel-good factor that surrounds the product.

“Apple is one company that has recognised that consumers want more than a gadget. They wanted a product that was simple, visually appealing and made them feel good.”

Apple understands the emotional appeal that mobile phones can have. Picture: Jeff Chiu / AP

“The power company doesn’t sell electricity; it sells warmth and light. The carpet company doesn’t just sell floor coverings; it sells softness, sound insulation and cleaner air. The cafe doesn’t just sell coffee, milk and sugar; it sells ambience, aroma and a moral feel-good factor.”

The rise in discretionary expenditure combined with the online world where you can get just about any service or product delivered any time of the day, may also see more people craving experiences involving social interaction and emotional depth.

The shift towards the “experience economy” could take place alongside a “counter-gadget” trend where people could become so exhausted with advanced technology that they turn increasingly towards authentic experiences such as having a conversation with a friend over a cup of tea.

“I think that as digital technology advances into every part of our lives, we become not only digitally immersed but digitally overwhelmed,” Mr Hajkowicz said. “We want that ability to unplug.”

He said there would always be room for human interaction.

“We are social beings and even if they invent a coffee machine that makes coffee better than a human ... I think people will still visit cafes because they like the fact that the barista smiles at them ... or they still want to meet their friends.

“I think it’s important to remember in this digital world, as companies more online, you don’t want to get rid of all your front line staff, this actually gets more important.

7. THE INNOVATION IMPERATIVE

The CSIRO has identified four key areas of technology development that have the potential to change the way we live, work and play. This includes regenerative medicine, the development of better batteries, robots that can do people’s jobs, and transforming data into useful knowledge and power.

The rise of regenerative medicine could keep human beings living for hundreds of years, advanced batteries could revolutionise the way we power our cities, our cars, our planes and the whole economy, and the rise of autonomous systems capable of replicating human tasks may reshape labour markets. Meanwhile the rise of the information era points to a world where human innovation makes just about anything possible.