Paul B. Farrell: Environmental clues to global growth sectors
By Paul B. Farrell, MarketWatch
SAN LUIS OBISPO, Calif. (MarketWatch) — The Worldwatch Institute is a great source of global economic information. Launched in 1974, it was the first research organization devoted to analysis of global environmental issues. And that’s why its new “Vital Signs 2012” is so important, highlighting growth sectors that can be mined for investment opportunities.
Yes, huge challenges, and also new opportunities. And we have their “Vital Signs 2012” before they’re presenting it at a United Nations Conference next month.
Worldwatch’s goal for this year’s update is to help world leaders move toward “sustainable prosperity. … over the past 40 years, the world’s middle and upper classes have doubled their consumption levels, and in the coming years, an additional 1 to 2 billion people may well be joining the consumer class.”
See the paradox? On one hand the numbers promise sales to aggressive capitalists, financiers, producers and retailers. On the other, they’re driving environmentalists nuts.
Economic tug-of-war: growth capitalism vs. the environment
In the report Worldwatch President Robert Engelman and project co-directors Michael Renner and Erik Assadourian tell us there’s a global “tug-of-war between carrying capacity and rising demand.”
Engelman notes this is “an ongoing challenge” for global leaders: “Population growth combined with rising resource use, is heavily tilted toward the world’s wealthy on a per-capita basis but growing rapidly among the expanding global middle class … reflected in rising worldwide resource consumption.”
The report’s executive summary highlights some crucial growth data: “Oil use reached an all-time high of 87.4 million barrels a day in 2011. Meat consumption increased 2.6% in 2010. Growing demand for timber translated into forested areas shrinking by 1.3%, or 520,000 square kilometers, from 2000 to 2010, an area roughly the size of France.”
And, yes, all this does pinpoint both growth sectors for investing opportunities and also their risks to the planet’s carrying capacity. In fact, the facts speak loudly, some positive, especially in food and energy arenas:
Population growth: global fertility rates are falling
Back during the Great Depression the world had 3 billion people. Twelve years ago it had doubled to 6 billion. Now 7 billion, with the United Nations predicting 10 billion by 2050.
Yes, Worldwatch data does offer some good news: “Fertility rates are falling worldwide.” But “many countries with high birth rates will have to accommodate a rapidly expanding labor force in the next few decades.” Uganda is an example: “Women give birth to six children on average; this means needing to generate more than 1.5 million new jobs by the late 2030s.”
Solution? The Bill & Melinda Gates Foundation is a leader in population control, Gates recently committed $4 billion to develop new contraceptives. And is also partnering with GlaxoSmithKline GSK +0.09% and other drug companies to develop vaccines.
Agriculture and global farming, a growth business
Worldwatch reports that big agricultural firms have “contributed to a tripling in global meat production over the last four decades.” So Texas cattlemen are getting richer but this trend is also “associated with heavy use of chemical inputs, spread of disease, antibiotic overuse and resistance, massive water consumption, and declines in human health.”
Grain production: strong demand, prices increase
Last year’s Worldwatch data now suggests that “grain production is recovering from a slump.” Although a long-term recovery may be “hindered by climatic changes and by rising demand for ethanol fuel, producing ripple effects throughout the economy through increased grain prices,” with accelerating prices hitting poor nations most.
Help is available with another winner among the agribusiness companies. Example: Agrium AGU -1.77% integrates everything from the seeds and nutrients, “into the fields where our customers use our products.”
Rain forests, timber lands: losses due to population growth
The demand for food is rising steadily. That in turn is adding pressure on world markets pushing food prices and agricultural land prices steadily higher. And that’s forcing rapid conversion of the world’s forests into farm lands. As a result, species and habitat disappear and native cultures disappear, disrupting climate patterns and contaminating the environment.
For example, a few years ago Bloomberg Markets put the spotlight on Cargill, a private company, and Alcoa AA 0.00% for “destruction of the world’s largest rainforest” and “robbing the earth of its best shield against global warming.” On the plus side, there’s Weyerhaeuser WY -0.70% .
Meat products: gas emissions impact climate
Meat production has negative side effects that are dismissed by climate deniers: “Livestock are responsible for 40% of the world’s methane emissions and 65% of nitrous oxide emissions,” emitting toxic “greenhouse gases 25 to 100 times more potent than carbon dioxide.” Solution? Very few, time to get out of denial, folks.
Organic foods: some pluses and some minuses
Calling food “organic” makes it sound almost spiritual. However, the organic movement is now being challenged by “rising farmland prices, inconsistencies in organic standards and higher prices of organic foods.” Moreover, organic farming is actually impeding “a broad global shift to sustainable agriculture.”
I shop at our local Trader Joe’s, a privately-held company. And I’m told they outperform the Albertson SVU +2.15% . You can invest in Whole Foods WFM +0.98% which acquired Mrs Gooch’s a decade ago, another of my old favorites.
Oil vs alternative energies: endless growth favors new energies
Global oil consumption reached an all-time high of 87.4 million barrels per day in 2010. Oil remains the largest commercial source of energy. Worldwatch also noted that global biofuel production reached an all-time high of 105 billion liters in 2010, up 17% from 2009. See 19 solar, wind and biofuel stocks to watch. Biofuel increases were “mostly as a result of high oil prices, global economic rebound, and new biofuel-related laws and mandates.”
Natural gas: consumers love the falling prices
Fossil-fuel demand is being “driven by surging natural-gas consumption in Asia and the United States.” As a result natural-gas consumption increased 7.4% in 2009-2010 hitting a record 113 trillion cubic feet, and yes, consumers do love the falling prices.
The dark side: New technologies tied to fracking and shale gas are now environmental threats along with spill risks to aquifers and from deep-water explorations.
Nuclear power: Fukushima memories linger
Yes, the “generation of nuclear power fell in 2011” due to the “increasing costs of production, a slowed demand for electricity, and fresh memories of disaster in Japan.” And yet, the U.S. Nuclear Regulatory Commission just approved a new plant in Georgia for the Southern Company SO +0.20% .
Auto industry: so far demand unfazed by energy limitations
Auto sales are accelerating long-term trends, our endless need for new energy sources: Sales are back in high gear “with China eclipsing all other contenders and producing more vehicles than Japan and the United States combined.”
So even if sells nothing but hybrids, as China adds another three hundred million people (more than today’s U.S. population!) you can bet they’re headed for trouble. Do your part, invest in and buy domestic hybrids from Ford F +0.09% and General MotorsGM +1.81% .
For more information on these sectors from one of the next research organization: Just take a few moments, download and read the Worldwatch report, “Vital Signs 2012.” Find out more about the “growing demand for food and energy” and their evaluation of our planet’s “shrinking resources.”
Until we wake up to the coming crisis, till we start preparing in advance, all we can do is wait for a global disaster to shock world leaders out of fantasy land. Until then, we “brace for impact,” as former Greenpeace CEO Paul Gilding warned a sleeping world in “The Great Disruption.”