An Investing Megatrend: How Climate Change and Resource Scarcity are Shaping the Future
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.
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.
Here’s Why the Amazon is So Important for Global Food Security
The Amazon rainforest plays a critical role in supporting crop growth by stabilizing the climate and balancing water cycles.
Why is the Amazon Rainforest Important for Food Security?
The Amazon rainforest is home to 400 billion trees and covers 6.7 million square kilometers, but the ‘Earth’s lungs’, as it is commonly referred to, is so much more than that.
Aside from being a key carbon sink, it also plays a critical role in supporting crop growth by stabilizing the climate and balancing water cycles.
In this infographic, our sponsor Brazil Potash looks at how the Amazon regulates rainfall and temperature and how crop yields can be optimized. Let’s dive in.
Rainfall as a Primary Water Source
“Flying rivers” are air currents that carry enormous amounts of water vapor over thousands of kilometers. These airborne rivers are responsible for influencing regional and global weather patterns, including rainfall.
The Amazon flying river cycle begins with water evaporating from the Atlantic Ocean. Wind currents then transport these vapors across the continent, exchanging moisture with the Amazon rainforest through evapotranspiration. Finally, these aerial rivers distribute the moisture as rain.
The trees in the Amazon rainforest release around 20 billion tonnes of water into the atmosphere daily—this is more water than the Mississippi River discharges in 13 months.
Because only around 6% of cropland in Brazil is irrigated, the region relies heavily on this rainfall as a primary water source to support crop growth that feeds both local and global communities.
The Amazon also absorbs billions of tons of carbon dioxide (CO2) a year through photosynthesis. By absorbing this CO2, it helps regulate temperatures and lessen the effects of climate change.
According to NASA research, the cumulative effects of climate change, accelerated by deforestation, may result in the loss of up to 11 million hectares of agricultural land in Brazil by the 2030s.
The continued sustainable production of Brazil’s crops is essential to food security, but deforestation can harm these efforts.
How to Grow More With Less
Brazil hosts the largest section of the Amazon rainforest at around 60%. The country is also one of the world’s largest exporters of agricultural goods.
It’s essential for global food security and for climate change that crop yields in Brazil are increased in areas already allocated for agriculture, instead of clearing new areas in the Amazon rainforest.
A recent study highlights a significant yield gap in Brazil’s primary export, soybeans.
A yield gap is the difference between actual crop yield and potential crop yield.
The following steps proposed could optimize land usage:
- Increase crop yields: This can be done in part by optimizing and increasing fertilizer use. Local fertilizer suppliers are essential to this by providing affordable and accessible fertilizer year-round.
- Double Crop: Continuing to grow a second crop of corn on soybean fields between seasons to optimize land usage. Additional fertilizer is essential to maintain the soil’s nutrients after harvests.
- Raise cattle on smaller pastures: By streamlining the space provided for cattle, additional cropland can be added to support food for both people and livestock.
The Role of Brazil Potash
Brazil Potash aims to support the preservation of the Amazon rainforest by working with farmers to increase crop yields and improve the quality and quantity of food grown, without the need for land expansion.
By keeping farmers informed of fertilizer’s benefits and supporting a more stable supply of local fertilizer, Brazil Potash will continue supporting farming communities for generations to come.
Click here to learn more about sustainable crop growth in the Amazon and Brazil Potash.
You may also like
Agriculture6 months ago
Ranked: The World’s Top Cotton Producers
As the most-used natural fiber, cotton has become the most important non-food agricultural product.
Agriculture7 months ago
How Big is the U.S. Cheese Stockpile?
The U.S. has 1.5 billion pounds of cheese in cold storage across the country—around $3.4 billion worth of cheese.
Agriculture10 months ago
Timeline: The Domestication of Animals
This graphic shows a timeline of when 15 different animals became domesticated, based on archaeological findings.
Environment1 year ago
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?
Agriculture1 year ago
Visualizing the World’s Biggest Rice Producers
Over half of the world’s population lives on rice as a staple food, but just a few countries dominate global rice production.
Misc2 years ago
The World’s Top Coffee Producing Countries
Coffee is the third most consumed beverage globally. Here we visualize the countries that have the highest coffee production in the world.
Demographics18 hours ago
Comparing Population Pyramids Around the World
Wealth2 weeks ago
Ranked: The World’s Top 50 Endowment Funds
Markets4 weeks ago
Visualized: Real Interest Rates by Country
Markets2 weeks ago
Charting the Rise of America’s Debt Ceiling
Money4 weeks ago
Comparing the Speed of Interest Rate Hikes (1988-2023)
Urbanization2 weeks ago
Ranked: The Cities with the Most Skyscrapers in 2023
War4 weeks ago
Map Explainer: Sudan
Urbanization2 weeks ago
Ranked: The World’s Biggest Steel Producers, by Country