An Investing Megatrend: How Climate Change and Resource Scarcity are Shaping the Future - Visual Capitalist
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An Investing Megatrend: How Climate Change and Resource Scarcity are Shaping the Future

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If you’ve ever played with dominos, you’re familiar with their cascading effects. Gently nudge one piece, and the force will ripple throughout the rest.

This process of cause and effect works much the same way in society and business: as global forces take hold, their effects are deeply intertwined with the financial markets.

The Climate Megatrend

Today’s infographic comes from BlackRock, and it explains how one such megatrend, climate change and resource scarcity, will be a long-term opportunity for investors.

Climate Change and Resource Scarcity

Earth in the Hot Seat

In 2018, global CO2 emissions rose 1.7% to the highest level since 2013. These rising emissions have intensified the effects of climate change, with 2015-2018 being the four hottest years ever recorded. Society and the economy are starting to feel its negative consequences:

  • Extreme weather events have become more frequent. In particular, floods and other hydrological events have quadrupled since 1980.
  • In hotter, wetter conditions, infectious diseases spread more easily—between 2004-2017, total tick-borne illnesses increased by 163%.
  • The global insured losses from natural catastrophes was $79 billion in 2018.
  • Extreme weather effects, and the health impact of burning fossil fuels, cost the U.S. economy at least $240 billion in 2018.

It’s clear that climate change is having an immediate, serious impact on the world.

Many see climate change as a long-dated future risk, however, our research findings show that compared to the 1980’s, there are measurable GDP impacts in the market today

-Brian Deese, Global Head of Sustainable Investing at BlackRock

In addition to these issues, climate change is contributing to another problem: it’s becoming harder to feed the global population.

Over 7 Billion Mouths to Feed

Climate change significantly threatens global food security. As glaciers melt, the world’s freshwater supply—including what’s available for food production—melts with it. This is a significant problem, considering that between 2,000-5,000 liters of fresh water are needed to produce one person’s daily food intake.

As an added hurdle to food production, supply and demand are pulling in opposite directions.

The share of total employment in agriculture has dropped significantly over time. Even worse, among the food that is able to be harvested, roughly 30% is lost or wasted globally.

On top of limited resources, the world will have to contend with forces driving up food demand.

  • Population growth: By 2050, the global population will grow by about two billion.
  • More calorie-rich diets: As emerging economies grow their wealth, their populations seek richer foods like meat and dairy products.

How can society combat these pressing issues?

A Greener, More Plentiful Future

As society works to slow climate change and produce more with less, a myriad of investment opportunities will emerge.

  • Renewable energies are becoming increasingly competitive.
  • Electric & fuel cell vehicles are growing in market share.
  • Products made from recycled materials are appealing to environmentally-conscious consumers.
  • Agricultural machinery counters the declining workforce and increases productivity.
  • Precision agriculture leverages real-time environmental data to help farmers make decisions.

Climate change and resource scarcity will be a driving force behind the actions of consumers, companies, and governments for years to come.

By staying attuned to this megatrend, investors will be able to spot long-term opportunities.

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Agriculture

What are the Most Produced Cash Crops in Africa?

From wheat to cassavas, also known as yuca, here are the top cash crops in Africa and their share of global production.

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Cash Crops

What are the Most Produced Cash Crops in Africa?

Agriculture makes up nearly 20% of Sub-Saharan Africa’s economy—a higher percentage than any other region worldwide.

From Nigeria to the fertile land across the East African Rift Valley, the continent is home to 60% of the world’s uncultivated arable land.

Given the massive role of agriculture across the region, this infographic from Zainab Ayodimeji shows the most produced cash crops in Africa and their share of total global production.

The Top 20 Cash Crops in Africa

Cash crops, such as coffee or rice, are crops that are produced for a salable market.

With data from the Food and Agriculture Organization Corporate Statistical Database (FAOSTAT), here are the most produced cash crops in Africa:

Cash Crop
Tonnes Produced 2019
% of World Production
Cassava192.1M63%
Sugar cane97.3M5%
Maize81.9M7%
Yams72.4M97%
Rice, paddy38.8M5%
Sorghum28.6M49%
Rice, paddy (rice milled equivalent)
25.9M5%
Sweet potatoes27.9M30%
Wheat26.9M4%
Plantains26.7M64%
Potatoes26.5M7%
Fresh vegetables22.0M7%
Oil palm fruit21.9M5%
Tomatoes21.7M12%
Bananas21.5M18%
Groundnuts, with shell16.6M34%
Sugar beet14.3M5%
Onions, dry13.9M14%
Millet13.7M48%
Oranges9.8M12%

Cassava, also referred to as yuca, is the most produced cash crop by a wide margin. With nearly 200 million tonnes of it produced annually, Africa’s production of cassava makes up a majority (63%) of the global total.

While cassavas are not well known in the Western world, they feed 800 million people globally. Cassavas are an essential root vegetable that has similar uses to potatoes.

Sugar cane, maize, and yams are also significant cash crops.

Notably, Africa’s yam production is 97% of the global total. West Africa is known as the “yam belt,” covering Nigeria, Ghana, Benin, and Côte d’Ivoire. With over 60 million people across the yam belt directly or indirectly involved in its production, yam cultivation is an important component of the region’s economic vitality.

Agriculture Composition of GDP, by Region

While agriculture plays a significant role in Africa’s GDP, what role does it play across other regions around the world?

Agriculture portion of GDP, by global region

Like Sub-Saharan Africa, agriculture is a major part of South Asia’s economy. India produces nearly 24% of rice around the world, while Bangladesh produces over 7% of total global production. Meanwhile, over 14% of the global wheat supply is also produced by India.

On the other hand, agriculture makes up just 1% of North America’s GDP. The number of farms in the U.S. peaked in the 1930s and has sharply declined from almost 7 million to 2 million in 2020.

The Future of Africa’s Cash Crops

Despite Africa’s expansive agriculture sector, there remain bottlenecks to productivity.

In light of these challenges, several technological advances have the potential to improve farmers’ bottom lines. For instance, precision technology measures rainfall, soil information, and soil productivity. At the same time, remote sensing technology can provide information on weather and climate.

This, coupled with the majority of the world’s uncultivated arable land, presents a significant opportunity for cash crops going forward. By one estimate, cereal and grain production has the potential to increase threefold.

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Agriculture

Visualizing the World’s Loss of Forests Since the Ice-Age

How much has the world’s land use changed over the last 10,000 years, and how have forests been impacted?

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The World’s Loss of Forests Shareable

Visualizing The World’s Loss of Forests Since the Ice-Age

How much of Earth used to be covered by forests, and what portion is covered today?

The effects of deforestation on the climate are already being seen and felt, and these repercussions are expected to increase with time. That’s why more than 100 world leaders pledged to end and reverse deforestation by 2030 at the COP26 climate summit.

As today’s graphic using data from Our World in Data highlights, the world’s forests have been shrinking since the last ice age at an increasingly rapid pace.

Earth’s Surface Area: 10,000 Years Ago

To examine the deforestation situation properly, it helps to understand Earth’s total available surface area. After all, our world can feel massive when glancing at maps or globes. But of the roughly 51 billion hectares in total surface area on Earth, more than 70% is taken up by oceans.

What’s left is 14.9 billion hectares of land, not all of which is habitable. Here is how the land was allocated 10,000 years ago, after the last ice age and before the rise of human civilizations.

Uninhabitable land on Earth (10,000 years ago):

  • Barren land (19% or 2.8bn ha)—Includes deserts, salt flats, exposed rocks, and dunes
  • Glaciers (10% or 1.5bn ha)—The vast majority concentrated in Antarctica

Habitable land on Earth (10,000 years ago):

  • Forest (57% or 6bn ha)—Includes tropical, temperate, and boreal forests
  • Grassland (42% or 4.6bn ha)—Wild grassland and shrubs
  • Freshwater (1% or <510M ha)—Lakes and rivers

By 2018, forests had receded to just 4 billion hectares. What happened?

Forests and Grassland Recede for Agriculture

Once humans figured out how to cultivate plants and livestock for regular sources of food, they needed land to use.

For centuries, the loss of greenery was relatively slow. By 1800, the world had lost 700 million hectares each of forest and grassland, replaced by around 900 million hectares of land for grazing animals and 400 million hectares for crops.

But industrialization in the 1800s rapidly sped up the process.

Percentage of Habitable Land17001800190019502018
Forest52%50%48%44%38%
Grassland38%36%27%12%14%
Grazing6%9%16%31%31%
Crops3%4%8%12%15%
Freshwater1%1%1%1%1%
Urban<1%<1%<1%<1%1%

While half of Earth’s loss of forests occurred from 10,000 years ago to 1900, the other half or 1.1 billion hectares have been lost since 1900. Part of this loss, about 100 million hectares, has occurred in the more recent time period of 2000 to 2018.

The biggest culprit?

Though urban land use has rapidly grown, it still pales in comparison to the 31% of habitable land now being used for grazing livestock. Most of that land came at first from repurposed grasslands, but forests have also been cleared along the way.

Where Will Food Come From?

Countries pledging to stop deforestation have two major hurdles to solve: financial and survival.

Firstly, there are many companies, jobs, and economies that rely on producing and marketing goods made from forests, such as lumber.

But more importantly, the world’s rising use of land for crops and agriculture reflects our rapidly growing population. In 1900, the global population numbered just 1.6 billion people. By 2021, it had exceeded 7.9 billion, with hundreds of millions still affected by food shortages every day.

How do you feed so many without needing more land? Meat’s extremely large footprint makes prioritizing crops more attractive, and research into other solutions like lab-grown meat and grazing erosion prevention is ongoing.

As the effects of climate change become increasingly felt, it’s likely that countries, companies, and people will have to embrace many different solutions at once.

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