Economics of Sand – The Dollars & Sands

Written by: Malvick Ong

 

“Nothing is built on stone; all is built on sand, but we must build as if the sand were stone.” Jorge Luis Borges

Whenever articles examine commodities, the impression of oil, cobalt or gold with its growingly limited quantities and ever-increasing demand will recollect in our minds. Sand on the other hand, has always been perceived as an abundant, infinite resource, incapable of exhaustion. However, recent studies show that our world is running out of sand. Sand is the modern day equivalent of oil, a key driver of global economy and urban growth. So how is it possible for something that is so seemingly abundant to ever be exhausted?

In this article, I seek to uncover demand factors that led to the depletion of the commodity, gain insights into how sand supply is further exploited in certain developing regions by the rise of “sand mafias” before concluding with some alternatives put forward on the direction ahead.

Uses of Sand

Building sandcastles aside, sand is widely used as a key ingredient to make concrete, glass, computer chips and even in shale oil extraction. From marine sand required to make concrete to the quartz sand required to produce computer chips, sand is more functional that most would think and is the essential base ingredient for most of the tools driving modern day development.

According to the United States Geological Survey (USGS), overall sand and gravel market was set to be valued at US$8.3 billion in the United States (US) and £1.7 billion (US$2.5 billion) in the United Kingdom (UK) ¹. Recent OECD report forecasts the world’s consumption of raw materials to double by 2060 with non-metallic materials such as sand, gravel, limestones and crushed rocks leading the pack ².

However, simply understanding the wide uses of sand only corresponds to a portion of the overconsumption problem. The main contributors came in recent decades with the rise of rapid urbanisation, land reclamation and hydraulic fracturing.

Urbanisation

Data from the United Nations (UN) 2014 World Urbanisation Prospects shows that 54% of global population resides in urban areas and is projected to add another 2.5 billion people by 2050 ³. With such an influx coupled with the growth of developing cities worldwide, infrastructure developments have been sprawling at record speed in an attempt to keep pace with the growth.

Fig 1. Urban & Rural Population of the World (source: UN WUP)

All of these cities are built with cement, of which its main ingredient is sand. It is estimated that 6 to 7 tons of sand is required to produce each ton of concrete. China alone accounts for half of global demand. According to The Washington Post, the country exhausted more cement in 3 years than what the United States used in the entire 20th Century ⁴.

Fig 2. Sand Consumption between US & China (source: The Washington Post)

This breakneck pace of construction is set to increase with the advent of more large-scale developments coming from its Greater Bay Area (GBA) and Belt & Road Initiative (BRI) projects. Recently opened, Pearl River Delta bridge which costs US$27.6 billion and spans 55,000m offers such glimpse of future mega projects to come. The Chinese government projected at least 32.3 million houses and 4.5 million kilometres (2.8 million miles) of road was built between 2011 and 2014 alone ⁵. With all these developments in mind, the demand of sand in the future is only set to increase exponentially.

Land Reclamation

With a small land area of 724.2 km² expected to hold 6.9 million people by 2030, land reclamation has played a pivotal role in Singapore’s constant search for space. Data from the Singapore Land Authority (SLA) shows a substantial 24.4% increase in land area since the 1960s. According to the UN, our country imported 38.6 million tons of sand in 2016 alone, half of which comes from Malaysia ⁶.

Even countries surrounded by sand like the United Arab Emirates (UAE) imported US$456 million worth of sand, stone and gravel from Australia in 2014 to build some of its iconic engineering marvels like the Burj Khalifa.

Their ambitious artificial islands projects – Palm Jumeirah & The World Islands is estimated to have used 385 million tons of sand alone making it one of the biggest importers of sand ⁷. Similarly, its neighbour Qatar imports over US$6 billion worth of sand annually ⁸.

Despite being surrounded by abundant sand, not all sands are created equal. Fine desert sand granules shaped by wind erosion are more rounded compared to coarse coastal sand shaped by water. This rounded characteristic makes the particles unable to bind well when mixing aggregate and are therefore not considered for construction.

The problem arises as formation of marine sand is a slow process which requires thousands of years of erosion. However, according to the United Nation Environmental Program (UNEP) estimates, 20 billion tons of sand were consumed in concrete production in 2012. To put things into perspective, this is sufficient to construct a 27m by 27m wall around the equator.

Hydraulic Fracturing

Hydraulic fracturing, also commonly known as fracking, refers to the process of oil extraction by ejecting a mixture of sand and water into tight oil formations, breaking the shale rock thereby making the oil in the rock easier to extract. Such an unconventional oil drilling process gain recent international attention in the last couple of years as shale oil has created a boom in US crude oil production. This drove US oil output from 5.7 million barrels per day in 2011 to a record 11.6 million barrels a day in 2018 and provided a strong buffer for Organization of the Petroleum Exporting Countries (OPEC)’s production cut back in late 2018 ⁹.

However, such a method calls for a greater demand for specific fracking sand (or frac sand) which compose of high quality quartz sandstone or tiny ceramic beads made from bauxite to be used as proppant. It is estimated 95 billion pounds of fracking sand and ceramics were pumped into the ground in the US in 2014 alone ¹⁰.

Sand Mining

Historically, sand has been a common-pool resource extracted and used locally. However, this combination of regional shortages and corruption has pivoted sand into an expensive, globalised commodity and sand mining into a thriving multi-billion dollar industry.

To meet this ever-increasing demand, huge sand dredgers (known as floating vacuum cleaners) utilize large powerful pumps and engines to engulf sand, clay, slit and gravel from the ocean floor in thousands of tons. Such sand mining activities have severe environmental impact on fisheries and coastal communities. Sediments removed from the ocean floor pollutes marine wildlife while making coastal regions more susceptible to erosion and frequent intense flooding. In recent years, riverbanks along the Mekong Delta have been reported to have collapsed due to illegal sand mining activities 11.

Following economic theory, a persistent shortage creates opportunities for black market to thrive. In recent times, criminal groups called “sand mafias” began to sprawl up across developing countries to get a slice of this lucrative pie which could fetch as high as US$107 per cubic meter of sand. With operations all over Asia & Africa and protected by local officials, some have been known to loot entire beaches overnight 12.

Dr Aurora Torres, an ecologist at the German Centre for Integrative Biodiversity Research neatly explained the behavioural incentives behind this thriving black market in a recent paper aptly titled “A looming tragedy of the sand commons”.

Future of Sand

With our insatiable appetite for sand set to increase exponentially in the foreseeable future and research showing that our current sand consumption rate is unsustainable, is this predicament irreversible? Perhaps not.

United Nations Environment Programme (UNEP) recommended the use of substitute materials such as quarry dust or recycled concrete aggregate (RCA). Alternative materials such as Mass Engineered Timber (MET), which provides fire protection and is more environmentally sustainable, has been incorporated by civil engineers in buildings construction. Nanyang Technological University (NTU) for instance, has exemplify the benefits of such a sustainable material in their recent construction of The Wave as well as a new S$180m academic building set to be completed in 2021 ¹³. Such initiatives to couple technological innovation with sustainability is vital to reduce reliance on sand. Furthermore, a shift in policy to include “sand tax” 14 (negative externality charge in economic terms – similar to a carbon tax) as a tool to encourage the construction industry to seek alternatives might be a viable option to consider.

Ultimately, sand is undeniably (and literally) the core building blocks of our modern civilisation. As much as most of the media attention have gone into global warming and climate change, this is an equally worrying trend that is a cause for concern. Can we ever imagine a future where homes are built on straws…

 

References

  1. Rayasam, R. (2016, May 05). Capital – Even desert city Dubai imports its sand. This is why. Retrieved from http://www.bbc.com/capital/story/20160502-even-desert-city-dubai-imports-its-sand-this-is-why
  2. Newsroom. (2018, October 22). Retrieved from http://www.oecd.org/newsroom/raw-materials-use-to-double-by-2060-with-severe-environmental-consequences.htm
  3. United Nations, Department of Economic and Social Affairs, Population Division (2014). World Urbanization Prospects: The 2014 Revision, Highlights (ST/ESA/SER.A/352) Retrieved from https://esa.un.org/unpd/wup/publications/files/wup2014-highlights.pdf
  4. Swanson, A. (2015, March 24). How China used more cement in 3 years than the U.S. did in the entire 20th Century. Retrieved from https://www.washingtonpost.com/news/wonk/wp/2015/03/24/how-china-used-more-cement-in-3-years-than-the-u-s-did-in-the-entire-20th-century/?noredirect=on&utm_term=.e5ecdf13d7d8
  5. Why there is a shortage of sand – World Ocean Initiative. (2017, April 24). Retrieved from https://www.woi.economist.com/shortage-sand/
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  7. Edwards, B. (2015, December). The Insatiable Demand for Sand. Retrieved from https://www.imf.org/external/pubs/ft/fandd/2015/12/edwards.htm
  8. Weyler, R. (2018, November 16). Sand Depletion. Retrieved from https://www.greenpeace.org/international/story/19351/sand-depletion/
  9. Amadeo, K. (2018, December 27). Behind the US Shale Oil Boom and Bust. Retrieved from https://www.thebalance.com/us-shale-oil-boom-and-bust-3305553
  10. Sunshine, W. L. (2018, August 21). What is Fracking Sand in Hydraulic Fracturing? Retrieved from https://www.thebalance.com/what-is-fracking-sand-1182604
  11. Hermesauto. (2019, January 14). From Tibet to the ‘Nine Dragons’, the Mekong is losing sand. Retrieved from https://www.straitstimes.com/asia/se-asia/from-tibet-to-the-nine-dragons-vietnams-mekong-delta-is-losing-sand
  12. Tweedie, N. (2018, July 01). Is the world running out of sand? The truth behind stolen beaches and dredged islands. Retrieved from https://www.theguardian.com/global/2018/jul/01/riddle-of-the-sands-the-truth-behind-stolen-beaches-and-dredged-islands
  13. Lee, V. (2018, September 05). NTU’s new $180m business school to be Asia’s largest wooden building. Retrieved from https://www.straitstimes.com/singapore/education/ntus-new-180m-business-school-to-be-asias-largest-wooden-building
  14. Peduzzi, P. (2014, March). Sand, rarer than one thinks. Retrieved from https://na.unep.net/geas/archive/pdfs/GEAS_Mar2014_Sand_Mining.pdf