The food sector’s impact on the
environment is undeniable. It contributes about 1/3 of total greenhouse gas emissions
through energy/land use and methane/nitrous oxide emissions. Ironically the
changing climate it helps bring about will have an immense impact on the food sector
itself. With a projected population of 9.6 billion in 2050 a major global
concern will be to keep up with demand. The agricultural sector must produce 70
% more output (calories) without increasing water and land use, relying on
renewable energy (WRI, UNDP, UNEP, World Bank, 2013). In short more output
without increasing inputs, under the guise of sustainable agriculture. A
difficult equation aggravated by water scarcity, shortage of fertilizer, crop disease,
waste, urbanization, overfishing, droughts, floods and competing land use. Annual
productivity gains have been declining as these factors begin to take a toll, a
trend that needs to be reversed in order to eradicate hunger and poverty.
Waste
A shocking fact about waste - 1
trillion dollars worth of food is wasted annually, that is ¼ of all calories
produced for human consumption. The waste occurs on all levels, consumer,
retail, farming and transport. According to the World Resources Institute, halving
the level of waste would reduce the demand-supply gap in 2050 by 20 %. To put
the waste issue in its environmental context, wasted food uses 24 % of all
water used for agriculture and occupies a landmass about the size of Mexico. It
is also responsible for 3300-5600 megatons of greenhouse gases (UNEP, 2013). If
wasted food was a country it would only rank behind the US and China in terms
of emissions.
The waste issue is not new, part of the problem is
understanding its true scale. Many estimates are based on studies several
decades old and fieldwork is difficult to conduct. More exact monitoring and
estimation is needed in order to respond the right way. Fortunately new
initiatives are popping up, the WRI recently announced the Food Loss and Waste
Protocol on how to measure food loss and waste on a local level. UNEP, FAO and
other partners already work with campaigns such as Think Eat Save. Reduce Your
Food Print and Save Food Initiative.
Smart
agriculture and food production
Another important dimension to the food and
emissions conundrum is the food it self. What do we eat and how do we grow it? Along
with reducing waste, yields need to be increased to ensure global food
security.
GMO’s are a controversial topic. Strict labeling, following
the precautionary principle as well as further science is needed to arrive at a
conclusive position. Investigating both possible long-term drawbacks (declining
biodiversity, gene flow) and positive aspects (less insecticides and more
yields) is a must. Given that between 26 and 40 % of the potential global crop
production is lost due to weeds, pests and disease, the stakes are high (FAO,
2012).
Meat – we are eating more and more but the climate
effects are well known and pose a severe threat to the environment. Live stock
production accounts for 18 % of human caused emissions (World Watch Institute).
It uses a third of available land and a tenth of all water as well being a
leading source of water pollution and deforestation (FAO, 2012). A more varied
diet with less meat and/or more investments into synthetic foods are avenues we
must pursue.
We need to move
quickly towards climate-smart agriculture. Research indicates that using
organic and ecological farming methods, renewable energy, crop rotations,
protecting forests and improving the productivity of the smallholder farms will
go a long way to meet our food needs. Increased resilience and reduced
emissions are welcome bonuses.
Water-energy-food linkages and Impact Investing
In the pursuit of food security and
climate smart agriculture the linkages to water and energy need to be fully
realized and considered when making the necessary investments. For example, the
food production and supply chain is responsible for around 30% of total global
energy demand and agriculture alone uses 70 % of available freshwater.
Furthermore, competition between
sectors for land use, water rights and energy is becoming increasingly common,
the biofuel boom being case in point. Rainforests, grasslands and agricultural
land have been converted to produce first generation biofuels, leading to a
food price spike in certain regions and for specific products. This very
conversion process leads to GHG emissions on a scale that dwarfs the benefits
of using the biofuel instead of fossil fuels.
Aforementioned food price increases,
due to rising demand and competing land use, have steered considerable
investment to the agricultural sector. A word of caution is warranted as many
of these large scale farming initiatives run the risk of becoming stranded
assets as climate change makes previously fertile land unusable. As evidenced,
any investment analysis needs to go both deeper and broader.
The opportunities
for investment are nonetheless plentiful, The World Business Council for
Sustainable Development estimates 1.2 trillion USD annually through 2050.
Realizing the necessary shift to sustainable agriculture where more output is
produced while reversing the negative impact on the environment will need both
efficiency measures, for example drastically cutting waste, and investments in
new technology and smarter solutions, for example synthetic foods and yield
increasing innovations. In short, a combination of short and long term or
defensive and offensive investment strategies.
Envisioning the
investments as impact investments will go a long way in ensuring that they
consider more than economic profit from the very onset of the process, balancing
profit and environmental perspectives as equals and guaranteeing a long term
perspective. It will also facilitate collaboration and coordination between sectors,
including business and government. Alignment of interest between investors, investees
and public sectors partners is not a “nice to have”, it’s a “must have”. Using
specific, interdependent metrics to measure performance is another key tenant
of impact investing that will hinder the usual “silo” thinking that
oversimplifies investments and ultimately leads to underperformance. The world
is hungry, investments need to happen now, let the shift begin.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.