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Jeremy Grantham on population growth, China and climate sceptics – Part 1

Jeremy Grantham on population growth, China and climate sceptics – Part 1

‘The world’s most powerful environmentalist’ on battling the ‘misinformation machine’ and why China is his ‘secret weapon’

Jeremy Grantham, co-founder of GMO, speaks during the Ira Sohn Investmen Research Conference: Photograph: Daniel Acker/Getty Images
‘China knows this is serious’… environmental philanthropist Jeremy Grantham.

The following interview by Leo Hickman of the Guardian  with Jeremy Grantham, the environmental philanthropist and legendary fund manager, was published in the Guardian on Saturday.

Leo Hickman:  ”As I have done for my interviews with the likes of Al GoreBill McKibben and James Lovelock (in 2010 and 2012), I have taken the time to transcribe the full interview so readers can see what Grantham said in the kind of detail that the print edition of the Guardian can’t provide. The interview lasted three hours, so I have split the transcript in two. I will publish part two tomorrow, but here’s part one…”

Jeremy Grantham on why he has stepped up his environmental activities:

It’s data driven. We [the Grantham Foundation for the Protection of the Environment] were gracefully moving into the environment, save these animals and habitats, and all these good things, then the data on resources – starting about four years ago – made me realise that some of these were really urgent. That we were already entering a foodcrisis, for example. This time last year I thought it was clear from the data that we were already five years into a food crisis and it is highly unlikely to go away. And unless we get our act together it is likely to become a cascading problem.

On how much time we have to tackle the world’s environmental problems:

We’re already in a bad place. We’re on a sliding scale. The language “it’s too late” is very unsuitable for most environmental issues. It’s too late for the dodo and for people who’ve starved to death already, but it’s not too late to prevent an even bigger crisis. The sooner we act on the environment, the better. The sooner we cut off the carbon dioxide going into the air, etc. The worse accidents we will prevent from happening are 20, 30, 40 years from now. The same applies to food. The faster we act to improve the situation, the fewer Africans – North Africans, in particular – will come to grief. What is happening through the market mechanism is that the rich countries, by being unnecessarily sloppy – and by the Chinese getting richer in a real hurry and eating more meat – we are pricing up grain so that the poor are getting hungry. It’s hard to see this stopping in the immediate future. It’s also very hard to see the poor and hungry getting richer at the same speed as the way we are driving up the price of grain.

On feeding a growing human population:

There is a stretching disparity between the haves and have nots. It’s not the win-win of globalisation that we all grew up with studying in Econ 101. The irony is that as China gets richer, it burns more coal. They put pressure on the global environment and on global grain prices. So in order to give them a nice middle class, variegated diet, they could cause poorer Asians and Africans to starve. There is no mechanism to prevent that. Egypt runs a trade deficit. Their population is programmed to grow dramatically. Three million at the time of Napoleon. Eighty-three million, said their standard when they marched into the Olympic Games last year. And they’re on their way to 140m. They’ve always been very efficient, but they can’t feed much more than half their people. The price of grain from about 2002-2008 – a tiny window – tripled. Why did it grow so sharply? We knew population was growing, but it was growing steadily, if dramatically. When I was born there were two billion, now there are seven billion. It’s the kind of curve than anyone in finance would look at and jump nervously, when you see an exponential curve like that. That’s one factor, but nothing particular to the period of 2002-2008…

On the rising price of oil:

…2002 was a nothing year. The only numbers I was paying attention to in 2002 was for oil. A little wheel was turning at the back of my brain that noted that oil was beginning to act differently. Our firm specialises in the study of investment bubbles. We have the best data. Over the years, we have put together a database that has 330 bubbles of which about 40 are really important ones. What we found about the important bubbles is that every single one had burst completely back to the original trend. Three years up to something triple, and then three years down. They actually tend to go down a little more quickly than they went up, which is surprising. But they always broke. I used to specialise in asking financial audiences to give me an example of the paradigm shift, a major shift in a major financial asset class. And never was one offered. Six years ago I wrote about the paradigm shift in the New York Times. It had 100 years of oil prices – very volatile, but a very central, steady trend line of about 16 dollars a barrel in today’s currency. But then around OPEC in 1972/3, the price trend leaps up to $36.

On the unwillingness to process unpleasant data:

I find the parallels between how some investors refuse to recognise the trends and our reaction to some of our environmental challenges very powerful. There is an unwillingness to process unpleasant data. In a bull market you want to believe good news. You don’t want to hear that the market is going to go off a cliff. You don’t want to listen to the climate people who are telling you it is getting worse and even worse unless you do this and that. You want to listen to the good news. There were always people willing to tell you that smoking was OK and that stuff about cancer was exaggerated. There’s a professor at MIT who defended tobacco who now defends carbon dioxide saying it seems to have lost its greenhouse effect, or whatever. And then there are the vested interests. They are the single most powerful force because you are dealing with an audience who wants to hear good news and into the stock market come all the bullish stock market giant firms telling you everything’s fine because they love bull markets because they make a fortune. They don’t even mind crashes because they don’t do so badly there either. What they would die at is if the market went up at its long-term trend line at 1.8%, plus inflation, a year. But we’re not going back to 2% growth. Maybe we’ll do 1% and it will be reported as 1.5% and once again people don’t want to hear that. They want to hear Ben Bernanke‘s news that it should return to 3%…
Me calling bubbles correctly is all data driven and based on the optimism that is built into humans. Every time we see a bubble, we see an army of people screaming, “No, no, it’s not a bubble, everything is fine.” We see the climate and scores of people screaming the same that everything is fine, or that it’s a plot. It’s par for the course. The general public don’t want to hear it and will choose to listen to the optimistic interpretation. It’s a real uphill struggle. You don’t stop the bubble really until the damage is done. It goes so high that it can’t sustain itself and just pops. And maybe that will happen here and our job is to try to do a better job than we did in the tech bubble.

On climate sceptics:

The misinformation machine is brilliant. As a propagandist myself [he has previously described himself as GMO’s “chief of propaganda” in reference to his official title of “chief investment strategist”], I have nothing but admiration for their propaganda. [Laughs.] But the difference is that we have the facts behind our propaganda. They’re in the “screaming loudly” rather than the “fact based” part of the exercise, because they don’t have the facts. They are masters at manufacturing doubt. What I have noticed on the blogs and in the comments section under articles is that over several years, as the scientific evidence for climate change gets stronger, the tone of the sceptics is getting shriller and more vicious and nastier all the time. The equivalent on the other side is a weary resignation, sorrow and frustration and amazement that people on the other side can’t look at the facts. The sceptics are getting angrier and more vicious every year despite the more storms we have, and the more mad crazy weather we have…
One of the problems is that typically you are not dealing with the facts. Putting in more facts makes the sceptics more angry. They have profound beliefs – as opposed to knowledge – that they are willing to protect by all manner of psychological tricks. So you have people who are very smart – even great analysts and hedge fund managers – who on paper know that their argument is wrong, but who promote it fiercely because they are libertarians. Libertarians believe that any government interference is bad. Anyone with a brain knows that climate change needs governmental leadership and they can smell this is bad news for their philosophy. Their ideology is so strongly held that remarkably it’s overcoming the facts. They are using incredible ingenuity to steer their way around facts that they do not choose to accept philosophically. Laying down more facts just makes them more angry. You may win over a few neutrals. They are the people you can win over. But it’s very hard to win over the hardcore sceptics, of which there are plenty.
We can try to bypass them on one level and we try to contest the political power of the sceptics. They are using money as well as propaganda to influence the politicians, particularly in America. It almost doesn’t even exist in countries outside the US, UK and Australia. A cynic would say that the petrol-chemical industry also happens to be Anglo-Saxon. Where are the great oil companies based? They still have great power. The oil companies seem to have pulled back from directly supporting climate sceptics over the past few years because – in England, in particular – they were embarrassed and it became untenable to be so obvious. But they’re still influential. You don’t have go via back-channels any more, courtesy of the US Supreme Court, because it is completely legal for a corporation to invest tons of money in advertising programmes to say who is good and who is bad in a race for the Senate without even asking permission from the people who actually own the company. Corporations are treated as human beings and money is treated as having the right to speak. There’s dark money and light money. The anonymity they adopt is legal. They don’t have to say who their donors are. It is quite remarkable. And then you get the Something Something for the Environment, which are actually just sceptics funded by the bad guys. And then there are the thinktanks who have become propaganda-tanks. I used to respect the Cato Institute when it came out with reports on this, that and the other, and they have received a lot of hydrocarbon funding. But when the University of East Anglia break-in was engineered they had something like 20 press conferences the following month. The response to the break-in was almost immediate and co-ordinated. I don’t think it was suspiciously rapid, but I do think it was unusually and unexpectedly rapid. It’s very likely that it was simply a terrific response of their behalf. They moved very fast. The good guys are learning slowly, but surely, to step up their response time…
If you’re saying something that people don’t want to hear or accept, a significant proportion of them will reply with hostility. Not because they know the facts, or because they have researched it themselves, but because they’re so psychologically involved in believing good news that they will oppose it with a reflex. In addition, if the solutions proposed sound like they involve the government, you will have all the political rightwing try to block it as a reflex, even if it means them overriding hard science, which is what’s going on today. Changing people’s minds is almost impossible, even among scientists. Max Planck said, to paraphrase, that science advances one funeral at a time. You could add that economics advances the same way. You have to wait to get rid of the people who have career investment in a topic before a new generation can see the light.

On the UK’s unseasonably cold spring in 2013, and recent icy winters:

The scientists are getting very concerned privately – they are conservative in public and have yet to write it up – that blocking processes are sticking in the system. The jet stream is behaving very strangely. One very senior atmospheric scientist said to me recently off the record that we are liable to wake up one day and find ourselves on the latitude – which we are in the UK – of Montreal. It’s a liveable place, but not like London. They have underground tunnels because of their winters. The Gulf Stream is having a few wobbles, too, and the theory there is the melting in Greenland and the Arctic is creating a lot of cold, fresh water, which is a possible source for loss of power in the conductor, so it moves less warm water up from the Caribbean.

On how he chooses where to spend his foundation’s money:

We don’t fund the hard science of solar technology. That would take hundreds of millions. But what we are funding is bringing together the data and put it together and representing it conveniently to the outside world. And we want to train people with a good range of skills so they can produce good PhDs for the future at LSE and Imperial. We also fund old-fashioned style investigative journalism which is dying out in newspapers because the newspaper industry has become incredibly tough. The first people to get fired were the environmental journalists. We had a prize for environmental journalism which we brought in at the top of the market, but we discontinued it last year because there was basically no leverage left for the two-and-a-half environmental journalists left. All we were interested in was the net result of whether it could produce a more effective presentation of the facts. We got going in the nick of time to see that it could drag up environmental journalism, but then all the “dragees” were suddenly looking for different jobs, or put on different beats. Or that they were already working for the handful of independent investigative organisations. We fund about a dozen fledgling journalistic projects. Our argument was they are all fledgling so let’s fund them all first, then winnow them down later – come back in 3-4 years and pick eight and, a couple of years later, pick five. In the end, it doesn’t matter if there are one or two, but that they are the best. They whole point really is to allow these people to do their thing and to play to their skills and to pick the people who are highly motivated and very skilled. None of them would be very happy if we tried to tell them what precisely to do and we don’t know what they should do.

On assessing if the money his foundation spends has achieved its objectives:

It’s a great problem for philanthropists and NGOs. The problems where you can measure the impact are not common in the environmental field. If you can measure them, they tend to be over decades. One is the wildlife population of Namibia. That is by far and away the most successful [conservation project the foundation has funded], by the way. You can see the population of the various types of antelope have improved. But that is unusual. But the ones you feel are most important are the vaguest of them all. How do measure the shift in attitudes towards processing the data? There are guys working on studying the changes in attitudes in the media. But you have to take a leap of faith that they are smart and dedicated.

On whether he tries to persuade other philanthropists to support his causes:

No, I don’t. We might discuss such things informally over lunch. There’s a handful of hedge fund managers, mainly, who have decided to be aggressive about the environment, thank heavens. This doesn’t exist in England where you could get them all on the finger of one hand. I can try to persuade them. I gave a talk in London recently at the head office of a major financial player and someone went to considerably effort to make sure a couple of hundred potential philanthropists and wealthy individuals were there for me to have a go at them. A lot of them left their business cards and if you do that you are kind of asking for trouble. [Laughs.] I believe the majority left their cards, which as things go, is a huge potential hit because even if you get one or two that could be significant. They were a receptive audience. I try to paint the picture of how I got to where I am [as an investor] and then of how fact based the issues appear to be to me. I now try to add my thoughts about food and the “carbon math”…

On the “carbon math”:

…It’s simple, comprehensible maths, as Bill McKibbenexplained in Rolling Stone last year. There are five times the amount of proven carbon reserves as we can possibly allow to be burned if we want to remain under 2C of warming, which is now not even considered to be a safe margin. We must burn just a fifth of what’s there. We will burn all the cheap, high-quality oil and gas, but if we mean to burn all the coal and any appreciable percentage of the tarsands, or even third derivative, energy-intensive oil and gas, with fracking for shale gas on the boundary, then we’re cooked, we’re done for. Terrible consequences that we will lay at the door of our grandchildren. Some things might change very quickly, though. For example, the business mathematics of alternative energy are changing much faster than the well-informed business man realises.

On the falling costs of alternative energy:

Read my next quarterly newsletter entitled, “The Race of Our Lives”, [will be available here] on why civilisations fall and why they’ve always fallen and why we may not because we have two advantages that they did not – a voluntary fall in fertility, which is just amazing, and alternative energy. Every wave of technology has seen an incremental increase in energy needed – steam engines, cars, air conditioning, iPads – they all add to our energy needs and mean we dig a deeper hole, but we feel we are making wonderful progress. But now we have a technology wave which protects us from needing to burn every last ton of coal. Solar, wind, biomass, intelligent grids, and storage – please, more storage – protect us. That is the best part of capitalism. The price of solar panels is now 25% of what it was two years ago and that’s the bit people have missed. If these prices were to be held – they may not be – we are competitive, without a carbon tax, in the areas that have the sun – California, North Africa, Spain, etc. You can build a solar farm and it can be commercial. Meanwhile, the price of hydrocarbons are getting more expensive all the time, because you’ve extracted all the easy stuff first and with China rising and still growing at 7% a year. And that’s just China. Don’t forget India which actually has more coal power plants down to be built on the books at the moment than China. Now you start to get an idea of, wow, why this does not compute. If it computes, it’s only at the enormous increase in cost of digging and shipping coal. Meanwhile, back at the ranch, solar and wind power are getting cheaper and cheaper. Those lines are going to cross big time in the next 20 years. There is no such thing as “locked in and committed” because you can reverse. They might build a few more coal-fired plants, but then they will stop completely. The pay-off for China of getting out of the way of those lines crossing is so great.

On why China is his big hope:

China is my secret weapon. I call them the Chinese cavalry riding to the rescue. They have the capital. They have an embarrassment of capital – 50% of their GDP is capital investment. We have a shortage of capital and also have debts. Their problem is how to invest all that capital. My partners worry all the time about them wasting their money. What better programme could they possibly have, with huge social pay-off, than a massive replacement of sustainable energy? When you think what it would mean to them – it would get rid of their pollution – it makes sense. Because of that pollution, they announced recently an incredible increase of 65% in their plans to install by 2015 – just three short years away – 36GW, which is equivalent to 20 vast, state-of-art coal plants, of solar. Throw in wind, too. And, by the way, we will have many breakthroughs in storage. If I had to make a bet, I would say that’s the most promising, important breakthrough of the next several years. Everyone is working on this. If you have a big smart grid – and all the desert of Xinjiang and all the wind of Inner Mongolia – and it’s all swirling around with relatively little loss and you have a grid smart enough to go in there Chinese-style and turn your fridge off for half an hour to save energy, and do this and do that, you don’t need nearly the back-up. The bad guys will tell you that you need 100% back-up and messianic environmentalists will tell you that you need 0%. But maybe 20% back-up will be needed as everyone is working on storage. I’m certain it will happen. Some technologies take time then go, “Bang!”. Look at video conferencing. It has been around forever and the quality was terrible. But now it is so clear and instant. Technology has a habit of boring you to death and disappointing you for 20 years then suddenly it delivers a new world…
I have very high hopes for China because they have embedded high scientific capabilities in their leadership class. And that is huge. They know this is serious. They can calculate the social threat of getting this pollution, weather instability, water out of control. And they are acting much faster now than we are. They have it within their capabilities of coming back in 30 years with the guarantee of complete energy independence – all alternative and sustainable forever. They have an embarrassment of capital. We have an embarrassment of debt. So they can set a stunning pace, which they are doing. And they could crank it up. To hell with their five-year plans, they should move up to 25-year plans for alternative energy – energy security, reducing pollution and low cost. They would have such low-cost energy at the end of it they will be the terror of the capitalist system. With low energy and low labour, that’s the ball game. Five years into a 25-year programme and any capitalist will be urging their government to copy them.

On the Scandinavian countries:

I am inspired by [them]. They have to cope with short-term election cycles and a parliamentary system and all four of them nevertheless act responsibly, not just on alternative energy and environmental issues, but also on social issues that matter. They are, by and large, models of good behaviour. They say in America to me what’s the solution to all this, I say cede your government to Denmark. [Laughs]. They are good enough that they would get the job done.

On environmentalism’s track record of making predictions:

Go and read Limits to Growth, which I did recently. They pretty much predicted doom and gloom 20 years from now. They have been grossly misinterpreted and are pretty much on schedule. There are details that are over and under, but it is amazingly accurate. The William Ophuls model is that we are hard-wired to collapse. Given half a chance we will over-reach. We are over-confident that we will solve every problem. But we will leave it too late and we will crash. All the confidence that people try to give you – the “infinite capacity of the human brain”, unquote – all of that hinges on the apparent infinite supply of hydrocarbons. No civilisation looked durable and resilient until coal and then we acquired this amazing power. We are now coming to the end of that era. If we don’t use that window to fix it and have a sustainable replacement, we are toast. Don’t worry about peak oil, worry about peak temperature. All our flora and fauna has thrived in the last 10,000 years since the end of the last ice age, a period which has seen unbelievable stable weather by long-term standards. Now it is becoming unstable. If you drive the temperature above 40C, well-known brands of corn will not produce. They just stop. You might be able to twist and turn and get it to produce at 41C, and you might move further north in latitude, but temperatures rises are very bad news for grain. The wider point is it [temperature rise] is generally bad for everything that evolved in one stable environment. It has no resilience to produce outside the temperatures experiences during this 10,000 year period. Quite a few grains are now topping out in terms of productivity. I look around and I say just look at the food-producing problems we face. In fact, let’s make it even simpler: look at the grain-producing problems we face around the world. We’ve just had three consecutive monster-bad grain harvests. Not one of those three poor harvests was more likely than a one-in-25-year harvest. But the terrible thing is they went, “whack, whack, whack”. I took some grief when I wrote about the first one and said next year was bound to be less bad, but the next year became a monster. I’ve done more research and reading in the last two years than I ever did at college. I’ve read all the classics. All the limits to growth, all the end of civilisations stuff, all the peak everything stuff, all the soil destruction stuff.

On confronting our environmental problems:

Asking, “Are we too late?”, is not the logic for this problem. It is too late for the dodo. It is too late for the one third of arable land that we have destroyed in 10,000 years. It’s too late for 10% of global biodiversity, and almost certainly another 10%, and 50/50 for yet another 10% after that. But it would be nice to end up with a planet that we can still relate to, that still has a fairly handsome biodiversity. We can still do that. There is one chance that the real pessimists are right. The chance that on our way to a 4-8C rise, and a 10-15ft rise in the oceans, which is probably what’s going to happen over the next two centuries, that things will get worse before they get better, because there is inertia built into the system. You can easily imagine resource wars breaking out unless we put our best foot forward on alternative energy. This would buy us time for everything else to be solved. If you can become energy sustainable in the next 40 years and suck up the pain that will have been paid by then, then you have probably bought the time for another 40 years to transfer the whole of global agriculture into a fully sustainable system before we run out of the resources to run old-fashioned agriculture. And if you do that then, in turn, you have probably bought enough time to deal with the intractable long-term issue of metals, which are entropy writ large. No matter how careful you are with them, they slip through your fingers. In the end, you will need to use organic replacements, which will take a long, long time [to develop]. We’d better start working on it now, but not too many are and they’re not getting much funding. You’ve got to get the population down and you’ve got to ignore the Economist magazine and others talking about rising population as a terrible economic problem. It is a necessary, short-term, intermediate pain to pay for the absolute minimum hope of survival, which is a gracefully declining population, because if you don’t do that you will have a rapidly imploding population one day.

Continue to PART 2

by Anric


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Desertification now crisis affecting 168 countries worldwide, study shows

Desertification now crisis affecting 168 countries worldwide, study shows

  • By Ed King for RTCC
  • Severe land degradation is now affecting 168 countries across the world, according to new research released by the UN
MDG : Burkina Faso : Desertification

A Burkinabe man from the village of Selbo village, in northern Burkina Faso, gestures near grass he planted to help stop the advance of the Sahara desert. Photograph: Issouf Sanogo/AFP/Getty Images

Severe land degradation is now affecting 168 countries across the world, according to new research released by the UN Desertification Convention (UNCCD).

The figure, based on submissions from countries to the UN, is a marked increase on the last analysis in the mid-1990s, which estimated 110 states were at risk.

In an economic analysis published last week the Convention also warns land degradation is now costing US$490 billion per year and wiping out an area three times the size of Switzerland on an annual basis.

“Land degradation and drought are impeding the development of all nations in the world,” UNCCD Executive Secretary Luc Gnacadja told RTCC.

“This is a challenge that is causing governments to take this issue seriously, but how do you get them to take it seriously? By showing them the rate of return on restoring degraded land is one of the smartest investments of our time.

He added: “Desertification, land degradation and drought is an issue of market failure. The lack of economic market valuation has led to land being perceived as a cheap resource.”

The causes of land degradation are varied, but are widely attributed to drought, climate change, intensive farming practices and poor water management.

Desertification is low on many countries’ radar – illustrated by Canada’s recent withdrawal from the UNCCD – but its links to climate change and food security are starting to resonate with governments and business, particularly given fears over the world’s ability to feed a soaring population.

The UN’s Food and Agriculture Organisation (FAO) predicts demand for food will increase 60% by 2050. Experts say the world will need an additional 120 million hectares of agricultural land to support the required food production – that is a new farm the size of South Africa.

Meanwhile recent studies by the UK Met Office and USAID have linked the severe drought that hit East Africa in 2011 and falling rice yields in South East Asia to man-made climate change.

Since 2000, the prices of staples such as of meat, dairy, cereals and sugar have doubled, reflecting a lack of elasticity in the food market’s supply chain.

Vicious circle

Efforts to boost agricultural production often lead to deforestation, a major contributor to global greenhouse gas emissions.

This has a knock on effect in terms of reducing the planet’s store of natural carbon sinks and destroying the ‘ecosystem services’ trees provide such as water storage, exacerbating the problem.

The UNCCD hopes to adopt a ‘Zero Net Land Degradation by 2030′ resolution at its 2013 Conference of the Parties in Namibia later this year, and there are signs sustainable land management could form one of the Sustainable Development Goals set to be announced in 2015.

Last week former Finland President Tarja Halonen, now Chairman of the UN Global Sustainability Panel, indicated that the links between rural poverty, famine and land management should “guide the work” on those new set of targets.

“Sustainable land management, prevention of land degradation and rehabilitation of land is the most cost effective and cost beneficial ways to eradicate rural poverty,” she added.

In Africa alone a UNCCD expert panel estimates 4-12% of agricultural GDP is lost due to deteriorating environmental conditions, contributing to the high levels of chronic hunger and conflict on the continent.

This situation is acute in Somalia, Ethiopia, Djibouti and Kenya, where the combination of weak governments and a lack of annual rains linked to climate change are driving desertification levels.

In China over 400 million people are affected by soil erosion, causing annual economic losses of US$10 billion, while the UNCCD says Indian reports of degradation have increased “by a factor of six”.

Original source document: click here

by Anric


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Important wheat update

Wheat production: the outlook is worsening. Previously, we made the case that global wheat production was vulnerable to spreading drought. This week, the USDA left the U.S. wheat balance sheet unchanged and only made small adjustments to global wheat estimates. Although recent rains may allow U.S. farmers to increase wheat plantings by 2 million acres, the evidence increasingly suggests global wheat output could fall below expectations. This is due to intensifying drought in Russia, the third largest exporter, and the potential arrival of El Nino weather conditions, which historically brings drought to Australia, the world’s second largest wheat exporter. El Nino rains may also thwart market hopes for bumper South American wheat production to bolster world stocks. Already low inventories at major exporters, including Canada and Russia where wheat stocks are at multi-year lows, will help keep upward pressure on prices. As a result, we believe wheat could rally to new highs in the weeks ahead as El Nino conditions take hold and would be strong buyers on a pullback.

Britain faces food price hikes as fears grow that drought-hit Russia may impose export ban on grain – Russia expected to produce 75m tons this year – 30% less grain than 2011 – ‘Market is very fearful,’ said cereals analyst Jack Watts – Drop in yields could push up price of food across the world

The USDA now estimates global wheat production will be 0.6% lower than forecast a month ago, primarily due to drought in Russia. World wheat production is expected to total 658.73 million metric tons in the year ended May 31, down from a forecast of 662.8 million tons in August, and 695.04 million tons last year. Russian wheat output is forecast to fall to 39 million tons, down from 43 million tons estimated last month. Russian wheat production is now expected to be smaller than the 41.5 million metric tons produced during 2010, during Russia’s worst drought in 50 years, and the smallest crop since the 2003-04 season, according to SovEcon. More ominously, Russia’s wheat stockpiles are 15% to 17% smaller than in 2010, when severe drought and heat led to a doubling in the grain’s price, according to Oleg Sukhanov, head of analytics at Ikar, a Moscow-based institute. Russia may run out of exportable grain surplus by November.

Although Russia has said it won’t restrict wheat exports, observers believe this policy may change after local elections in October. Ukraine will likely follow suit if Russia moves to restrict grain exports. Ukraine exporters recently said they would voluntarily curb exports of all grains in early 2013, and agreed to limit wheat sales to 4 million MT, with about 40% already sold.

Market hopes for bumper southern wheat output to replenish world stocks are diming. Last week, Australia’s Bureau of Meteorology stated that oceanic indicators for El Nino conditions have surpassed all thresholds. Historically, El Nino conditions bring drought to Australia. Western Australia wheat production could fall to 6-8 million tons, from 11.7 million tons last year, as parts of the region received record low rains in July.

Estimates for Australian wheat output are now falling. This week, the Australian Bureau of Agricultural and Resource Economics and Sciences cut its forecast for the country’s wheat output to 22.5 million tons, due to drought, which is well below the USDA’s projection of 26 million tons. This follows last week’s reduction by Rabobank to 22.8 million tons, representing a 20% decline from last season’s record, and below a market consensus of 23.2 million tons. China, which has been suffering from spreading wheat fungus, may import up to 4 million tons of feed wheat this season (mostly from Australia), on a wheat harvest that may only total 105 million tons–13 million tons below the USDA forecast, according to Rabobank. The World Bank also warned that global food prices may extend gains if El Nino conditions develop or if importers begin hoarding supplies.

In Argentina, the southern hemisphere’s other major wheat exporter, wheat sowings fell more than 20% to historically-low levels, as farmers planted other crops that have less export restrictions. Last week, the Buenos Aires grain exchange also said that recent rains, which were initially viewed as helping increase wheat prospects, proved to be too much for some crops. “Rains recorded in the last few days have exacerbated the excess of water in extensive areas” of the Buenos Aires province, which produces nearly half of the country’s wheat production, said the exchange. Some areas west of Buenos Aires reportedly suffered total or partial loss of crops from soil saturation.


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Water is the new gold, big commodity bet

In 2010 global water investments generated over a half trillion dollars
In the 12 short years leading up to 2011 the world added a billion people. China’s population is now 1.3 billion. Plus they will add another 100 million in the next generation while India adds 600 million. Today Americans use 150 gallons a day, compared with 23 gallons in China. But they’re catching up, just check out any panoramic travel photos of China’s beautiful megacities, Shanghai, Beijing, and Guangzhou. India expects their water demand to double in one decade while Fortune says “expanding populations will also swell demand for agricultural water some 42% by 2030,” in two decades. You probably “think individuals consume the most water,” says Fortune. Not so. Agriculture accounts for 71% and industry another 16% for a total 86% of all water use in the world. It even takes 71 gallons to produce a single cup of coffee, forcing Starbucks to “cut its in-store water usage by 25% by 2015 with, for example, espresso machines that dispense less water.” in revenue.

WaterGlobal world population will explode from 7 billion today to 10 billion in 2050. And over one billion “lack access to clean drinking water”. Climate and weather patterns are changing natural water patterns. And industrial pollution is making water a scarce commodity. So the good news is that huge “opportunities exist for businesses that can figure out how to keep pipes flowing”.

Total worldwide revenues of $508 billion in 2010 … the bottled water market generated $58 billion of that total and growing fast … industry needs $28 billion for water equipment and services to all kinds of businesses … another $10 billion covers agricultural irrigation … another $15 billion in retail products like filters and various heating and cooling systems … $170 billion is used for waste water, sewage systems, waste-water treatment and water recycling systems … and $226 billion for water utilities, treatment plants and distribution systems.

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Posted by on July 25, 2012 in Investments, Water


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Can we really feed 9 Billion people

By 2050, the planet will need at least 70 percent more food than it does today as population soars, cities sprawl and climate change takes its toll. Will it be possible?

That’s a question AlertNet, the global humanitarian news service run by Thomson Reuters Foundation, put to experts the world over for a special multimedia report probing the future of food.

The answer: The planet can feed itself – but only with the help of myriad “green bullets” designed to change the way food is planted, watered, harvested, stored, transported, owned and shared.

For the full package, including stories, interviews, videos, info-graphics and commentary, visit

Here is a summary

Local initiatives will be critical if the world is to feed itself over the coming decades

In flood-hit fields in the Philippines, farmers are testing a hardy new variety of rice that can survive completely submerged for more than two weeks. In Kenya’s Kibera slum, poor urban families are turning around their diets and incomes just by learning to grow vegetables in sack gardens outside their doors. And in India, a push to help marginalised rural communities gain title to their land is leading to a significant drop in hunger. These are just a few of the kinds of innovations and initiatives that experts say will be critical if the world is to feed itself over coming decades as the population soars, cities sprawl and climate change takes its toll.

By 2050, the planet will need at least 70% more food than it does today to meet both an expected rise in population to 9bn from 7bn and changing appetites as many poor people grow richer, experts say.

“Can we feed a world of 9bn? I would say the answer is yes,” said Robert Watson, chief scientific adviser to Britain’s Department of Environment and Rural Affairs and a former chair of the Intergovernmental Panel on Climate Change. But doing so will require fundamental changes to unsustainable but well-entrenched policies and practices, from eating so much meat to spending trillions on agriculture and fuel subsidies, he said. In the meantime, many hunger fighters say the answer lies in clever alterations to the way food is planted, watered, harvested, stored, transported, sold, owned and shared. Many of those changes are already being tested in the world’s farms and fields, in laboratories and government offices, in factories and markets. Some are even speaking of the beginnings of a 21st century food revolution.

Myriad ‘green bullets’

Unlike the last century’s agricultural “Green Revolution”, which dramatically boosted world food production with new high yielding crop varieties and more irrigation, this revolution must rely on myriad “green bullets” to tackle hunger. They range from persuading farmers in Africa’s drought zones to switch from water-hungry rice to hardier crops like sorghum or millet, to helping them build pest-proof grain silos that allow food to be stored longer or sold when prices are higher.

With 70% of the world’s people expected to live in cities by 2050, finding ways to help city dwellers grow food in small urban plots or roof gardens, or group together to buy food at cheaper prices, is a major focus. In California’s East  Palo Alto, for instance, older inner-city residents — who are particularly vulnerable to high food prices — are learning growing techniques for the first time and producing food for themselves and a neighbourhood market. Other urban areas are turning to vertical hydroponic gardens clinging to the edge of skyscrapers. Women — who grow at least 40% of food in Africa and Asia — will need improved land rights and better access to information, something being made much easier by the spread of mobile phone technology, experts say. Rural women in India’s Andhra Pradesh state now use advance drought warnings, relayed by Internet and mobile phone, to switch to more drought-tolerant crops — a move that has saved harvests and helped stem the usual wave of migration to cities in drought times.

Changing farming practices by adopting more water-conserving drip irrigation or planting crops amid fertilising trees, as is now happening throughout Africa, will also be key. So will cutting the at least 30% of the world’s food supply eaten by pests, spoiled on the way to market or thrown away unused from plates and supermarkets. Simply getting supermarkets to stop offering two-for-one specials — which can encourage people to overbuy — would be a start, some antihunger activists say, as would improving roads in regions like South Asia and Africa where transport delays mean produce often rots on the way to market. Solutions to the threat of worsening hunger will vary by region, by country, sometimes even from one farm or village or apartment building to the next, experts say. Not all ideas will succeed, and scaling up those that do prove to work, as quickly as possible, will be essential.

In a world where an estimated 900mn people are already hungry today, curbing surging consumption in rich nations and those fast getting rich, especially India and China, will be particularly important, experts say. “If we look at the graph of (rising) human consumption, that’s the one to worry about,” said Phil Bloomer, director of campaigns and policy for Oxfam Great Britain. “That is a graph that should strike panic in our hearts.”Persuading rich people to eat less meat and fewer milk products, which take a lot of grain to produce, would go a long way toward curbing ever-rising demand for grain.

‘No normal to go back to’

Many innovations focus on easing the adverse effects of climate change on food production. While warmer weather and growing levels of carbon dioxide in the atmosphere could spur plant growth and food production in some regions — and open a few northern reaches of the world to farming — many more regions are expected to see worsening losses from droughts, floods, storms, rising sea levels and higher temperatures that can cause crop yields to drop. “It used to be there was an extreme weather event here or there but we knew that in a year or so things would go back to normal,” said Lester Brown, a food security and sustainability expert, and president of the US-based Earth Policy Institute. “Now there is no normal to go back to.” That’s why scientists from Bangladesh to Tanzania are developing new resilient varieties of maize, wheat, rice and other crops that can survive underwater, or with very little rain, or even both extremes in the same season, and still produce a reliable crop. Other innovators are focusing on the effects of growing water scarcity. “A substantial amount of our food production worldwide comes from nonrenewable groundwater sources, and in the long run that is not sustainable,” said Peter Gleick, a leading water expert and head of the US-based Pacific Institute for Studies in Development, Environment and Security. In villages where glacier-fed streams are set to become more irregular or disappear in the years ahead, or where flooding from heavy rain is quickly followed by drought, communities are learning to harvest and store water to ensure supplies throughout the year. They are also developing water-conserving irrigation methods to make what they have available last. Will all such innovations be enough to feed 9bn people by 2050? Possibly, say experts, but success will depend on making enough key changes fast enough. In addition to on-the-ground solutions, those changes will need to include major policy shifts — including potentially a ban on turning grain into biofuel or limits on food speculation. “Food insecurity and climate change are already inhibiting human well-being and economic growth throughout the world, and these problems are poised to accelerate,” said John Beddington, Britain’s chief science adviser, in a March report by the International Commission on Sustainable Agriculture and Climate Change.“Decisive policy action is required if we are to preserve the planet’s capacity to produce adequate food in the future.”

— Reuters (These articles are  part of a special multimedia report on global hunger produced by AlertNet, a global humanitarian news service run by Thomson Reuters Foundation)


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Qatar to spend US$8.5B on water security in next 5 years


Qatar General Electricity and Water Corporation (Kahramaa) president Essa bin Hilal al-Kuwari has called upon GCC member states to explore long-term solutions to overcome the alarming situations they are facing on the water issue.
While insisting on the necessity of implementing practicable and systematic strategies to tide over the water crisis, Kahramaa president said Qatar and the other GCC countries are determined to find effective and long lasting solutions to the issue.
The Kahramaa chief said this while delivering the keynote address at the opening of the 10th Gulf Water Conference at Grand Hyatt Hotel in Doha yesterday.
Though there is no doubt that there have been so many achievements for the member states in several areas, each of them faces a daunting task as far as water is concerned in view of the huge growth expected in the region’s population in the next one decade.
Water, food and energy, said al-Kuwari, are the three main sources that constituted the foundation for achieving development in all sectors.
Speaking on Kahramaa’s role in building up the three main sources, he said the corporation had spent more than QR11bn in upgrading and launching projects in the water sector in the last five years.
The president said the corporation had earmarked about QR31bn for implementing new projects in the water sector in the next five years from 2012 to 2016.
“We are also in the process of building huge water reservoirs and also upgrade the levels of ground water as a strategic reserve. Kahramaa has paid great attention to the conservation of water and electricity by educating the public through periodical campaigns. And we are in the process of setting up a water desalination plant to be operated by solar energy on the principle of reverse osmosis,” he disclosed.
Speaking later at the opening session, chairman of Water Science and Technology Association (WSTA) president Ali Redha Hussain said the presence of a large number of experts at the three-day conference had come as a big boost to the GCC which are in the process of evolving new strategies for meeting their growing requirements in drinking water.
He said in the 25years since its formation in 1987, WSTA had made a remarkable progress towards accomplishing its goals by leveraging the know-how of its members in recognising the issues concerning water scarcity.

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Posted by on April 23, 2012 in Investments, Water


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$300 billion investment in GCC water projects

JEDDAH – Spurred by a buoyant economy and population growth, over $300 billion will be invested in the GCC water and desalination projects, between 2012 – 2022 periods, reported Friday.

Subsequent to its revolutionary discovery of hydrocarbons about three decades back, the GCC economies have come a long way into establishing themselves as a fast developing region boasting modern amenities and facilitating high standards of living.

It said the GCC have increased spending on job creation and infrastructure expansion and are opening up utilities to greater private sector involvement.

While privatization occupies centre stage in the overhauling process of the power and water sector, the initiatives toward alternative energy sources in the form of solar and nuclear power, as alternatives to the heavy dependence on the hydrocarbons sector, particularly to replace natural gas as a primary fuel in power generation, has been considered a highlight of the regional power reforms

The emergence of alternative power sources will enable GCC nations to successfully diversify their economic growth from a predominantly oil based economy thus bracing themselves against future adversities arising from oil fluctuations, the report noted. Renewable energies are about to capture a considerable segment of the global energy mix. This segment is only likely to grow given rising demand for energy, supply worries with regard to fossil fuels and environmental concerns. In particular solar energy offer huge potential for the GCC countries.

Rising domestic energy needs for power generation and desalination, favorable conditions for solar energy production and interest in acquiring technological know-how make a perfect argument for renewable energy in the Gulf.

All six nations of the GCC have either embarked upon or committed to investments in solar projects, with projects split between solar photovoltaic and solar thermal applications.

The GCC region also has considerable wind resources, even though these vary widely across the countries and wind installations are at a less developed stage than their solar counterparts.

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Posted by on April 14, 2012 in Solar, Water, Wind


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