Capitalism Is Great, But It Assigns No Value To Your Grandchildren, GRANTHAM

It started [in the mid-1990s] with a visit to the Amazon and to Borneo with the kids. And without thinking about it you start talking about the logs along the side of the river and the lack of mature forests in Borneo.

Jeremy Grantham

We were on family trips and happened to do a couple of tropical forests back to back. I'm sure that played a role, but we didn't treat it as an epiphany. I would argue that one of our children got there first. While we were environmentalists, but low key, one of my sons happened to get a job which saw him end up in a dry tropical forest in Paraguay for five years and then off into the forestry business. Shortly behind that, we [his investment company GMO] began to follow that interest in forestry. We started our own forestry operation 15 years ago [at GMO] because our interest in forestry and of our realisation that land is so important. Forests were mispriced and were an attractive investment. My interest in forestry at that point was entirely commercial and then it began to morph into a decent investment, plus, "look how important these forests are to maintain fresh water, carbon sequestration, etc"…

I picked up none of that [James Hansen's 1988 testimony before Congress on climate change and the 1992 Rio Earth Summit]. No. Absolutely not. I was following along afterwards [once the foundation launched in 1997] asking the big NGOs where was the leverage for the birds flying through Costa Rica and Panama. Let's put our money there. Where were the hotspots? The climate question wasn't there for me at that time. Now it is at least half of the focus for the foundation. And in the other half it brushes up against climate all the time. We are late arrivals to all this and I have nothing but admirations to those who beat me to the punch by a few decades.

On why his environmental interests moved beyond habitat conservation:

I was a moderate environmentalist 10-15 years ago. But then I started to get embroiled in resources and that [the rise in price of] oil was the first paradigm shift that we'd ever come across in an important asset class, and nothing is more important than oil. I realised that the price of oil had changed forever and is not going back to the old $15 a barrel. There had been a majorly important shift. That led us to asking the question, why only oil? Why not every finite resource? And so we ended up about four years ago saying, "watch out, we seem to be running out of things". Two years ago, we did a very detailed paper which took on a life of its own and helped to put these issues onto institutional agenda items, I think. That led me to the realisation, by looking at the data, that between population growth and China gobbling up the world that the world had changed – and dangerously so – and hidden under that that oil and food were the two most dangerous components and within that [the availability of] phosphorous was perhaps the most dangerous long-term issue of all. Digging into the phosphate problem, you realised that it can be handled, but only if the great majority of the world is fed via sustainable farming which means nurturing the soil and having it once again full of micro-organisms. If you kill them every year with herbicides and pesticides then you're dealing basically with sand. You've got to restore and renew the ability to grow by re-applying all the nutrients in very big, expensive doses every year. This is in contrast to well-nurtured soil. There's a 30-year patch in Pennsylvania at the Rodale Institute where they've never put on any phosphorous at all and they are getting productivity equal to regular farming up the road.

We arrived at all this just by looking at the numbers and the more I did the more I became concerned that we were already deep into a food crisis. Arab Spring countries were already getting throttled a bit by rising price of energy and food. They don't spend 8-10% of their budget on these, they spend 40%. So when that starts to double on you, you can see how quickly why people take to the streets. And that's where we are. The rich countries are really not that concerned and their casual behaviour is only serving to push up the price which is not that big a deal to them, certainly not the movers and shakers who make all the money. But it's a terrible deal for the poor half of the world and a disaster for the poorest 10% or so. That's the world we're in and it could lead to country after country being destabilised.

It has forced me to go back and read all the classics. On my iPad I think I have 40 or so books now. I recommend a book by a scholar who summarises all these works back to Gibbon's Decline and Fall of the Roman Empire. It's calledImmoderate Greatness: Why Civilisations Fail by William Ophuls. And then there's perhaps my favourite book of a more detailed type which is called Dirt: The Erosion of Civilisation [by David R Montgomery]. That's a really good read. Then there's Collapse by Jared Diamond, which seems to have done quite well and is reasonable. A lot of details are queried by the experts in the field, but I thought it was fine. Then there are books on peak oil and shortages of raw materials. Books on the whole package of long-term growth on a finite planet, going back to the Limits to Growth and a book by one of the co-authors that looks at the next 40 years. That's called 2052 [by Jorgen Randers]. And so on and so forth.

On the strengths and weaknesses of capitalism:

Capitalism does millions of things better than the alternatives. It balances supply and demand in an elegant way that central planning has never come close to. However, it is totally ill-equipped to deal with a small handful of issues. Unfortunately, today, they are the issues that are absolutely central to our long-term wellbeing and even survival. It doesn't think long-term very well because of high discount rate structure. If you're a typical corporation anything lying out 30 years literally doesn't matter. Or, as I like to say: QED, your grandchildren have no value. And they usually act as if that was true, even though I'm sure they are actually very kind to their grandchildren. More

 

We Can Reforest the Earth by Lester R. Brown

Protecting the 10 billion acres of remaining forests on earth and replanting many of those already lost are both essential for restoring the earth’s health.

Since 2000, the earth’s forest cover has shrunk by 13 million acres each year, with annual losses of 32 million acres far exceeding the regrowth of 19 million acres. Restoring the earth’s tree and grass cover protects soil from erosion, reduces flooding, and sequesters carbon.

Global deforestation is concentrated in the developing world. Tropical deforestation in Asia is driven primarily by the fast-growing demand for timber and increasingly by the expansion of oil palm plantations for fuel. In Latin America, the fast-growing markets for soybeans and beef are together squeezing the Amazon. In Africa, the culprit is mostly fuelwood gathering and land clearing for agriculture.

In recent years, the shrinkage of forests in tropical regions has released 2.2 billion tons of carbon into the atmosphere annually. Meanwhile, expanding forests in the temperate regions are absorbing close to 700 million tons of carbon. On balance, therefore, some 1.5 billion tons of carbon are released into the atmosphere each year from forest loss, roughly one fourth as much as from fossil fuel burning.

Fortunately, there is a vast unrealized potential in all countries to lessen the various demands that are shrinking the earth’s forest cover. In industrial nations, the greatest opportunity lies in reducing the amount of wood used to make paper. The goal is first to reduce paper use and then to recycle as much as possible. The rates of paper recycling in the top 10 paper-producing countries range widely, but South Korea, which recycles an impressive 91 percent, stands out. If every country recycled as much of its paper as South Korea does, the amount of wood pulp used to produce paper worldwide would drop by more than one third.

In developing countries, the focus needs to be on reducing fuelwood use. Indeed, fuelwood accounts for just over half of all wood removed from the world’s forests. Some international aid agencies, including the U.S. Agency for International Development and the United Nations Foundation, are sponsoring projects to increase fuelwood efficiency through the use of more efficient cookstoves. Over the longer term, pressure on forests can be reduced by replacing firewood with solar thermal cookers or even with electric hotplates powered with renewable energy.

One major challenge is to harvest forests responsibly. There are two basic approaches to timber harvesting. Clearcutting is environmentally devastating, leaving eroded soil and silted streams, rivers, and irrigation reservoirs in its wake. The alternative is to selectively cut only mature trees, leaving the forest largely intact. This ensures that forest productivity can be maintained in perpetuity.

Forest plantations can reduce pressures on the earth’s remaining forests as long as they do not replace old-growth forest. As of 2010, the world had 652 million acres in planted forests, more than one third as much land as is planted in grain. Tree plantations produce mostly wood for paper mills or for wood reconstitution mills. Increasingly, reconstituted wood is substituted for natural wood as lumber and construction industries adapt to a shrinking supply of large logs from natural forests.

As tree farming expands, it is starting to shift geographically to the moist tropics, where yields are much higher. One hectare (2.47 acres) of forest plantation produces 4 cubic meters of wood per year in eastern Canada and 10 cubic meters in the southeastern United States. But in Brazil, newer plantations are getting close to 40 cubic meters. The U.N. Food and Agriculture Organization projects that as plantation area expands and yields rise, the harvest could more than triple between 2005 and 2030. It is entirely conceivable that plantations could one day satisfy most of the world’s demand for industrial wood, thus helping protect the world’s remaining natural forests.

Although banning deforestation may seem far-fetched, environmental damage has pushed Thailand, the Philippines, and China to implement partial or complete bans on logging. All three bans followed devastating floods and mudslides resulting from the loss of forest cover. In China, after suffering record losses from weeks of nonstop flooding in the Yangtze River basin in 1998, the government discovered that it simply did not make economic sense to continue deforesting. The flood control service of trees standing, they said, was three times as valuable as the timber from trees cut.

International environmental groups such as Greenpeace and WWF have negotiated agreements to halt deforestation in the Brazilian Amazon and in parts of Canada’s boreal forests. Daniel Nepstad and colleagues reported in Science in 2009 on two recent developments that together may halt deforestation in the Amazon basin. One is Brazil’s Amazon deforestation reduction target that was announced in 2008, which prompted Norway to commit $1 billion if there is progress toward this goal. The second is a marketplace transition in the beef and soy industries to avoid Amazon deforesters in their supply chains.

Finally, we need a tree planting effort to both conserve soil and sequester carbon. To achieve these goals, billions of trees need to be planted on millions of acres of degraded lands that have lost their tree cover and on marginal croplands and pasturelands that are no longer productive.

Recognizing the central role of forests in modulating climate, the Intergovernmental Panel on Climate Change has examined the potential for tree planting and improved forest management to sequester CO2. Since every newly planted tree seedling in the tropics removes an average of 50 kilograms of CO2 from the atmosphere each year during its growth period of 20–50 years, compared with 13 kilograms of CO2 per year for a tree in the temperate regions, much of the afforestation and reforestation opportunity is found in tropical countries. More

 

A message from Pandora: In the Amazon

Take action now to join the battle: http://bit.ly/AWatch

"A Message from Pandora" is a special feature produced by James Cameron about the battle to stop the Belo Monte Dam on the Xingu, one of the great tributaries of the Amazon River.

NASA Map Sees Earth's Trees in a New Light

ScienceDaily (Feb. 17, 2012) — A NASA-led science team has created an accurate, high-resolution map of the height of Earth's forests. The map will help scientists better understand the role forests play in climate change and how their heights influence wildlife habitats within them, while also helping them quantify the carbon stored in Earth's vegetation.

Scientists from NASA's Jet Propulsion Laboratory, Pasadena, Calif.; the University of Maryland, College Park; and Woods Hole Research Center, Falmouth, Mass., created the map using 2.5 million carefully screened, globally distributed laser pulse measurements from space. The light detection and ranging (lidar) data were collected in 2005 by the Geoscience Laser Altimeter System instrument on NASA's Ice, Cloud and land Elevation Satellite (ICESat).

"Knowing the height of Earth's forests is critical to estimating their biomass, or the amount of carbon they contain," said lead researcher Marc Simard of JPL. "Our map can be used to improve global efforts to monitor carbon. In addition, forest height is an integral characteristic of Earth's habitats, yet is poorly measured globally, so our results will also benefit studies of the varieties of life that are found in particular parts of the forest or habitats." More

 

Amazon Basin shifting to carbon emitter, study says

 The Amazon Basin, traditionally considered a bulwark against global warming, may be becoming a net contributor of carbon dioxide (CO2) as a result of deforestation, researchers said on Wednesday.

In an overview published in the journal Nature, scientists led by Eric Davidson of the Woods Hole Research Center in Massachusetts say the Amazon is "in transition" as a result of human activity.

Over 50 years, the population has risen from six million to 25 million, triggering massive land clearance for logging and agriculture, they said.

The Amazon's carbon budget - the amount of CO2 that it releases into the atmosphere or takes from it - is changing although it is hard to estimate accurately, they said.

"Deforestation has moved the net basin-wide budget away from a possible late 20th-century net carbon sink and towards a net source," according to their paper.

Mature forests such as the Amazon are big factors in the global-warming equation.

Their trees suck up CO2 from the atmosphere through the natural process of photosynthesis. But when they rot or are burned, or the forest land is plowed up, the carbon is returned to the air, adding to the greenhouse effect.

The paper estimates that the biomass of the Amazon contains a whopping 100 billion tonnes of carbon - the equivalent of more than 10 years of global fossil-fuel emissions.

Global warming, unleashing weather shifts, could release some of this store, it warned.

"Much of the Amazon forest is resilient to seasonal and moderate drought, but this resilience can and has been exceeded with experimental and natural severe droughts, indicating a risk of carbon loss if drought increases with climate change." Read more: http://www.ottawacitizen.com/technology/Amazon+Basin+shifting+carbon+emitter+study+says/6016986/story.html#ixzz1jw0zTDTn