Agri-Warfare: Eating Fossil Fuels, by Dale Allen Pfeiffer

“But the agenda-setting process seems useful only if we consider what the media do place on the agenda. This study shows that agenda-setting may have a dark side, when we consider what the media do not cover. To generalize from this study, it seems likely the media have a blind spot regarding the basic layers of multilayered causality. The deep causes that drive daily events remain off the agenda. Certainly this is the case with population growth, but such causal dissociation may keep many other deep-seated causes of social problems off the agenda.”
~ 'WHAT BLEADS, LEADS'?: Media's Population Agenda & 'War on Terror' Outcome: "HOW and WHY Journalists Avoid the Population-Environment Connection", by Univ. of SW Louisiania ~

Today, 6.5 billion humans depend entirely on oil for food, energy, plastics & chemicals. Population growth is on a collision course with the inevitable decline in oil production.
~ The Oil Factor: Behind the War on Terror, Free Will Production ~

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Eating Fossil Fuels,

by Dale Allen Pfeiffer, FTW

[Note: The most frightening article FTW has ever published is now a free story for all to read. Our paid subscribers read it last October. As Peak Oil and its effects become a raging national controversy it's time everyone reads the story that puts the most serious implications of Peak Oil and Gas into perspective. Your biggest problem is not that your SUV might go hungry, it's that you and your children might go hungry. What has been documented here is no secret to US and foreign policy makers as China experiences grain shortages this year and, as CNN's Lou Dobbs recently reported, the US and Canada will soon no longer be the world's breadbasket. - MCR]

Eating Fossil Fuels
by Dale Allen Pfeiffer

© Copyright 2004, From The Wilderness Publications, www.copvcia.com. All Rights Reserved. May be reprinted, distributed or posted on an Internet web site for non-profit purposes only.

[Some months ago, concerned by a Paris statement made by Professor Kenneth Deffeyes of Princeton regarding his concern about the impact of Peak Oil and Gas on fertilizer production, I tasked FTW's Contributing Editor for Energy, Dale Allen Pfeiffer to start looking into what natural gas shortages would do to fertilizer production costs. His investigation led him to look at the totality of food production in the US. Because the US and Canada feed much of the world, the answers have global implications.

What follows is most certainly the single most frightening article I have ever read and certainly the most alarming piece that FTW has ever published. Even as we have seen CNN, Britain's Independent and Jane's Defence Weekly acknowledge the reality of Peak Oil and Gas within the last week, acknowledging that world oil and gas reserves are as much as 80% less than predicted, we are also seeing how little real thinking has been devoted to the host of crises certain to follow; at least in terms of publicly accessible thinking.

The following article is so serious in its implications that I have taken the unusual step of underlining some of its key findings. I did that with the intent that the reader treat each underlined passage as a separate and incredibly important fact. Each one of these facts should be read and digested separately to assimilate its importance. I found myself reading one fact and then getting up and walking away until I could come back and (un)comfortably read to the next.

All told, Dale Allen Pfeiffer's research and reporting confirms the worst of FTW's suspicions about the consequences of Peak Oil, and it poses serious questions about what to do next. Not the least of these is why, in a presidential election year, none of the candidates has even acknowledged the problem. Thus far, it is clear that solutions for these questions, perhaps the most important ones facing mankind, will by necessity be found by private individuals and communities, independently of outside or governmental help. Whether the real search for answers comes now, or as the crisis becomes unavoidable, depends solely on us. – MCR]

October 3 , 2003, 1200 PDT, (FTW) -- Human beings (like all other animals) draw their energy from the food they eat. Until the last century, all of the food energy available on this planet was derived from the sun through photosynthesis. Either you ate plants or you ate animals that fed on plants, but the energy in your food was ultimately derived from the sun.

It would have been absurd to think that we would one day run out of sunshine. No, sunshine was an abundant, renewable resource, and the process of photosynthesis fed all life on this planet. It also set a limit on the amount of food that could be generated at any one time, and therefore placed a limit upon population growth. Solar energy has a limited rate of flow into this planet. To increase your food production, you had to increase the acreage under cultivation, and displace your competitors. There was no other way to increase the amount of energy available for food production. Human population grew by displacing everything else and appropriating more and more of the available solar energy.

The need to expand agricultural production was one of the motive causes behind most of the wars in recorded history, along with expansion of the energy base (and agricultural production is truly an essential portion of the energy base). And when Europeans could no longer expand cultivation, they began the task of conquering the world. Explorers were followed by conquistadors and traders and settlers. The declared reasons for expansion may have been trade, avarice, empire or simply curiosity, but at its base, it was all about the expansion of agricultural productivity. Wherever explorers and conquistadors traveled, they may have carried off loot, but they left plantations. And settlers toiled to clear land and establish their own homestead. This conquest and expansion went on until there was no place left for further expansion. Certainly, to this day, landowners and farmers fight to claim still more land for agricultural productivity, but they are fighting over crumbs. Today, virtually all of the productive land on this planet is being exploited by agriculture. What remains unused is too steep, too wet, too dry or lacking in soil nutrients.1

Just when agricultural output could expand no more by increasing acreage, new innovations made possible a more thorough exploitation of the acreage already available. The process of “pest” displacement and appropriation for agriculture accelerated with the industrial revolution as the mechanization of agriculture hastened the clearing and tilling of land and augmented the amount of farmland which could be tended by one person. With every increase in food production, the human population grew apace.

At present, nearly 40% of all land-based photosynthetic capability has been appropriated by human beings.2 In the United States we divert more than half of the energy captured by photosynthesis.3 We have taken over all the prime real estate on this planet. The rest of nature is forced to make due with what is left. Plainly, this is one of the major factors in species extinctions and in ecosystem stress.

The Green Revolution

In the 1950s and 1960s, agriculture underwent a drastic transformation commonly referred to as the Green Revolution. The Green Revolution resulted in the industrialization of agriculture. Part of the advance resulted from new hybrid food plants, leading to more productive food crops. Between 1950 and 1984, as the Green Revolution transformed agriculture around the globe, world grain production increased by 250%.4 That is a tremendous increase in the amount of food energy available for human consumption. This additional energy did not come from an increase in incipient sunlight, nor did it result from introducing agriculture to new vistas of land. The energy for the Green Revolution was provided by fossil fuels in the form of fertilizers (natural gas), pesticides (oil), and hydrocarbon fueled irrigation.

The Green Revolution increased the energy flow to agriculture by an average of 50 times the energy input of traditional agriculture.5 In the most extreme cases, energy consumption by agriculture has increased 100 fold or more.6

In the United States, 400 gallons of oil equivalents are expended annually to feed each American (as of data provided in 1994).7 Agricultural energy consumption is broken down as follows:

• 31% for the manufacture of inorganic fertilizer


• 19% for the operation of field machinery


• 16% for transportation


• 13% for irrigation


• 08% for raising livestock (not including livestock feed)


• 05% for crop drying


• 05% for pesticide production


• 08% miscellaneous 8

Energy costs for packaging, refrigeration, transportation to retail outlets, and household cooking are not considered in these figures.

To give the reader an idea of the energy intensiveness of modern agriculture, production of one kilogram of nitrogen for fertilizer requires the energy equivalent of from 1.4 to 1.8 liters of diesel fuel. This is not considering the natural gas feedstock.9 According to The Fertilizer Institute (http://www.tfi.org/), in the year from June 30 2001 until June 30 2002 the United States used 12,009,300 short tons of nitrogen fertilizer.10 Using the low figure of 1.4 liters diesel equivalent per kilogram of nitrogen, this equates to the energy content of 15.3 billion liters of diesel fuel, or 96.2 million barrels.

Of course, this is only a rough comparison to aid comprehension of the energy requirements for modern agriculture.

In a very real sense, we are literally eating fossil fuels. However, due to the laws of thermodynamics, there is not a direct correspondence between energy inflow and outflow in agriculture. Along the way, there is a marked energy loss. Between 1945 and 1994, energy input to agriculture increased 4-fold while crop yields only increased 3-fold.11 Since then, energy input has continued to increase without a corresponding increase in crop yield. We have reached the point of marginal returns. Yet, due to soil degradation, increased demands of pest management and increasing energy costs for irrigation (all of which is examined below), modern agriculture must continue increasing its energy expenditures simply to maintain current crop yields. The Green Revolution is becoming bankrupt.

Fossil Fuel Costs

Solar energy is a renewable resource limited only by the inflow rate from the sun to the earth. Fossil fuels, on the other hand, are a stock-type resource that can be exploited at a nearly limitless rate. However, on a human timescale, fossil fuels are nonrenewable. They represent a planetary energy deposit which we can draw from at any rate we wish, but which will eventually be exhausted without renewal. The Green Revolution tapped into this energy deposit and used it to increase agricultural production.

Total fossil fuel use in the United States has increased 20-fold in the last 4 decades. In the US, we consume 20 to 30 times more fossil fuel energy per capita than people in developing nations. Agriculture directly accounts for 17% of all the energy used in this country.12 As of 1990, we were using approximately 1,000 liters (6.41 barrels) of oil to produce food of one hectare of land.13

In 1994, David Pimentel and Mario Giampietro estimated the output/input ratio of agriculture to be around 1.4.14 For 0.7 Kilogram-Calories (kcal) of fossil energy consumed, U.S. agriculture produced 1 kcal of food. The input figure for this ratio was based on FAO (Food and Agriculture Organization of the UN) statistics, which consider only fertilizers (without including fertilizer feedstock), irrigation, pesticides (without including pesticide feedstock), and machinery and fuel for field operations. Other agricultural energy inputs not considered were energy and machinery for drying crops, transportation for inputs and outputs to and from the farm, electricity, and construction and maintenance of farm buildings and infrastructures. Adding in estimates for these energy costs brought the input/output energy ratio down to 1.15 Yet this does not include the energy expense of packaging, delivery to retail outlets, refrigeration or household cooking.

In a subsequent study completed later that same year (1994), Giampietro and Pimentel managed to derive a more accurate ratio of the net fossil fuel energy ratio of agriculture.16 In this study, the authors defined two separate forms of energy input: Endosomatic energy and Exosomatic energy. Endosomatic energy is generated through the metabolic transformation of food energy into muscle energy in the human body. Exosomatic energy is generated by transforming energy outside of the human body, such as burning gasoline in a tractor. This assessment allowed the authors to look at fossil fuel input alone and in ratio to other inputs.

Prior to the industrial revolution, virtually 100% of both endosomatic and exosomatic energy was solar driven. Fossil fuels now represent 90% of the exosomatic energy used in the United States and other developed countries.17 The typical exo/endo ratio of pre-industrial, solar powered societies is about 4 to 1. The ratio has changed tenfold in developed countries, climbing to 40 to 1. And in the United States it is more than 90 to 1.18 The nature of the way we use endosomatic energy has changed as well.

The vast majority of endosomatic energy is no longer expended to deliver power for direct economic processes. Now the majority of endosomatic energy is utilized to generate the flow of information directing the flow of exosomatic energy driving machines. Considering the 90/1 exo/endo ratio in the United States, each endosomatic kcal of energy expended in the US induces the circulation of 90 kcal of exosomatic energy. As an example, a small gasoline engine can convert the 38,000 kcal in one gallon of gasoline into 8.8 KWh (Kilowatt hours), which equates to about 3 weeks of work for one human being.19

In their refined study, Giampietro and Pimentel found that 10 kcal of exosomatic energy are required to produce 1 kcal of food delivered to the consumer in the U.S. food system. This includes packaging and all delivery expenses, but excludes household cooking).20 The U.S. food system consumes ten times more energy than it produces in food energy. his disparity is made possible by nonrenewable fossil fuel stocks.

Assuming a figure of 2,500 kcal per capita for the daily diet in the United States, the 10/1 ratio translates into a cost of 35,000 kcal of exosomatic energy per capita each day. However, considering that the average return on one hour of endosomatic labor in the U.S. is about 100,000 kcal of exosomatic energy, the flow of exosomatic energy required to supply the daily diet is achieved in only 20 minutes of labor in our current system. Unfortunately, if you remove fossil fuels from the equation, the daily diet will require 111 hours of endosomatic labor per capita; that is, the current U.S. daily diet would require nearly three weeks of labor per capita to produce.

Quite plainly, as fossil fuel production begins to decline within the next decade, there will be less energy available for the production of food.

Soil, Cropland and Water

Modern intensive agriculture is unsustainable. Technologically-enhanced agriculture has augmented soil erosion, polluted and overdrawn groundwater and surface water, and even (largely due to increased pesticide use) caused serious public health and environmental problems. Soil erosion, overtaxed cropland and water resource overdraft in turn lead to even greater use of fossil fuels and hydrocarbon products. More hydrocarbon-based fertilizers must be applied, along with more pesticides; irrigation water requires more energy to pump; and fossil fuels are used to process polluted water.

It takes 500 years to replace 1 inch of topsoil.21 In a natural environment, topsoil is built up by decaying plant matter and weathering rock, and it is protected from erosion by growing plants. In soil made susceptible by agriculture, erosion is reducing productivity up to 65% each year.22 Former prairie lands, which constitute the bread basket of the United States, have lost one half of their topsoil after farming for about 100 years. This soil is eroding 30 times faster than the natural formation rate.23 Food crops are much hungrier than the natural grasses that once covered the Great Plains. As a result, the remaining topsoil is increasingly depleted of nutrients. Soil erosion and mineral depletion removes about $20 billion worth of plant nutrients from U.S. agricultural soils every year.24 Much of the soil in the Great Plains is little more than a sponge into which we must pour hydrocarbon-based fertilizers in order to produce crops.

Every year in the U.S., more than 2 million acres of cropland are lost to erosion, salinization and water logging. On top of this, urbanization, road building, and industry claim another 1 million acres annually from farmland.24 Approximately three-quarters of the land area in the United States is devoted to agriculture and commercial forestry.25 The expanding human population is putting increasing pressure on land availability. Incidentally, only a small portion of U.S. land area remains available for the solar energy technologies necessary to support a solar energy-based economy. The land area for harvesting biomass is likewise limited. For this reason, the development of solar energy or biomass must be at the expense of agriculture.

Modern agriculture also places a strain on our water resources. Agriculture consumes fully 85% of all U.S. freshwater resources.26 Overdraft is occurring from many surface water resources, especially in the west and south. The typical example is the Colorado River, which is diverted to a trickle by the time it reaches the Pacific. Yet surface water only supplies 60% of the water used in irrigation. The remainder, and in some places the majority of water for irrigation, comes from ground water aquifers. Ground water is recharged slowly by the percolation of rainwater through the earth's crust. Less than 0.1% of the stored ground water mined annually is replaced by rainfall.27 The great Ogallala aquifer that supplies agriculture, industry and home use in much of the southern and central plains states has an annual overdraft up to 160% above its recharge rate. The Ogallala aquifer will become unproductive in a matter of decades.28

We can illustrate the demand that modern agriculture places on water resources by looking at a farmland producing corn. A corn crop that produces 118 bushels/acre/year requires more than 500,000 gallons/acre of water during the growing season. The production of 1 pound of maize requires 1,400 pounds (or 175 gallons) of water.29 Unless something is done to lower these consumption rates, modern agriculture will help to propel the United States into a water crisis.

In the last two decades, the use of hydrocarbon-based pesticides in the U.S. has increased 33-fold, yet each year we lose more crops to pests.30 This is the result of the abandonment of traditional crop rotation practices. Nearly 50% of U.S. corn land is grown continuously as a monoculture.31 This results in an increase in corn pests, which in turn requires the use of more pesticides. Pesticide use on corn crops had increased 1,000-fold even before the introduction of genetically engineered, pesticide resistant corn. However, corn losses have still risen 4-fold.32

Modern intensive agriculture is unsustainable. It is damaging the land, draining water supplies and polluting the environment. And all of this requires more and more fossil fuel input to pump irrigation water, to replace nutrients, to provide pest protection, to remediate the environment and simply to hold crop production at a constant. Yet this necessary fossil fuel input is going to crash headlong into declining fossil fuel production.

US Consumption

In the United States, each person consumes an average of 2,175 pounds of food per person per year. This provides the U.S. consumer with an average daily energy intake of 3,600 Calories. The world average is 2,700 Calories per day.33 Fully 19% of the U.S. caloric intake comes from fast food. Fast food accounts for 34% of the total food consumption for the average U.S. citizen. The average citizen dines out for one meal out of four.34

One third of the caloric intake of the average American comes from animal sources (including dairy products), totaling 800 pounds per person per year. This diet means that U.S. citizens derive 40% of their calories from fat-nearly half of their diet. 35

Americans are also grand consumers of water. As of one decade ago, Americans were consuming 1,450 gallons/day/capita (g/d/c), with the largest amount expended on agriculture. Allowing for projected population increase, consumption by 2050 is projected at 700 g/d/c, which hydrologists consider to be minimal for human needs.36 This is without taking into consideration declining fossil fuel production.

To provide all of this food requires the application of 0.6 million metric tons of pesticides in North America per year. This is over one fifth of the total annual world pesticide use, estimated at 2.5 million tons.37 Worldwide, more nitrogen fertilizer is used per year than can be supplied through natural sources. Likewise, water is pumped out of underground aquifers at a much higher rate than it is recharged. And stocks of important minerals, such as phosphorus and potassium, are quickly approaching exhaustion.38

Total U.S. energy consumption is more than three times the amount of solar energy harvested as crop and forest products. The United States consumes 40% more energy annually than the total amount of solar energy captured yearly by all U.S. plant biomass. Per capita use of fossil energy in North America is five times the world average.39

Our prosperity is built on the principal of exhausting the world's resources as quickly as possible, without any thought to our neighbors, all the other life on this planet, or our children.

Population & Sustainability

Considering a growth rate of 1.1% per year, the U.S. population is projected to double by 2050. As the population expands, an estimated one acre of land will be lost for every person added to the U.S. population. Currently, there are 1.8 acres of farmland available to grow food for each U.S. citizen. By 2050, this will decrease to 0.6 acres. 1.2 acres per person is required in order to maintain current dietary standards.40

Presently, only two nations on the planet are major exporters of grain: the United States and Canada.41 By 2025, it is expected that the U.S. will cease to be a food exporter due to domestic demand. The impact on the U.S. economy could be devastating, as food exports earn $40 billion for the U.S. annually. More importantly, millions of people around the world could starve to death without U.S. food exports.42

Domestically, 34.6 million people are living in poverty as of 2002 census data.43 And this number is continuing to grow at an alarming rate. Too many of these people do not have a sufficient diet. As the situation worsens, this number will increase and the United States will witness growing numbers of starvation fatalities.

There are some things that we can do to at least alleviate this tragedy. It is suggested that streamlining agriculture to get rid of losses, waste and mismanagement might cut the energy inputs for food production by up to one-half.35 In place of fossil fuel-based fertilizers, we could utilize livestock manures that are now wasted. It is estimated that livestock manures contain 5 times the amount of fertilizer currently used each year.36 Perhaps most effective would be to eliminate meat from our diet altogether.37

Mario Giampietro and David Pimentel postulate that a sustainable food system is possible only if four conditions are met:

1. Environmentally sound agricultural technologies must be implemented.

2. Renewable energy technologies must be put into place.

3. Major increases in energy efficiency must reduce exosomatic energy consumption per capita.

4. Population size and consumption must be compatible with maintaining the stability of environmental processes.38

Providing that the first three conditions are met, with a reduction to less than half of the exosomatic energy consumption per capita, the authors place the maximum population for a sustainable economy at 200 million.39 Several other studies have produced figures within this ballpark (Energy and Population, Werbos, Paul J. http://www.dieoff.com/page63.htm; Impact of Population Growth on Food Supplies and Environment, Pimentel, David, et al. http://www.dieoff.com/page57.htm).

Given that the current U.S. population is in excess of 292 million, 40 that would mean a reduction of 92 million. To achieve a sustainable economy and avert disaster, the United States must reduce its population by at least one-third. The black plague during the 14th Century claimed approximately one-third of the European population (and more than half of the Asian and Indian populations), plunging the continent into a darkness from which it took them nearly two centuries to emerge.41

None of this research considers the impact of declining fossil fuel production. The authors of all of these studies believe that the mentioned agricultural crisis will only begin to impact us after 2020, and will not become critical until 2050. The current peaking of global oil production (and subsequent decline of production), along with the peak of North American natural gas production will very likely precipitate this agricultural crisis much sooner than expected. Quite possibly, a U.S. population reduction of one-third will not be effective for sustainability; the necessary reduction might be in excess of one-half. And, for sustainability, global population will have to be reduced from the current 6.32 billion people42 to 2 billion-a reduction of 68% or over two-thirds. The end of this decade could see spiraling food prices without relief. And the coming decade could see massive starvation on a global level such as never experienced before by the human race.

Three Choices

Considering the utter necessity of population reduction, there are three obvious choices awaiting us.

We can-as a society-become aware of our dilemma and consciously make the choice not to add more people to our population. This would be the most welcome of our three options, to choose consciously and with free will to responsibly lower our population. However, this flies in the face of our biological imperative to procreate. It is further complicated by the ability of modern medicine to extend our longevity, and by the refusal of the Religious Right to consider issues of population management. And then, there is a strong business lobby to maintain a high immigration rate in order to hold down the cost of labor. Though this is probably our best choice, it is the option least likely to be chosen.

Failing to responsibly lower our population, we can force population cuts through government regulations. Is there any need to mention how distasteful this option would be? How many of us would choose to live in a world of forced sterilization and population quotas enforced under penalty of law? How easily might this lead to a culling of the population utilizing principles of eugenics?

This leaves the third choice, which itself presents an unspeakable picture of suffering and death. Should we fail to acknowledge this coming crisis and determine to deal with it, we will be faced with a die-off from which civilization may very possibly never revive. We will very likely lose more than the numbers necessary for sustainability. Under a die-off scenario, conditions will deteriorate so badly that the surviving human population would be a negligible fraction of the present population. And those survivors would suffer from the trauma of living through the death of their civilization, their neighbors, their friends and their families. Those survivors will have seen their world crushed into nothing.

The questions we must ask ourselves now are, how can we allow this to happen, and what can we do to prevent it? Does our present lifestyle mean so much to us that we would subject ourselves and our children to this fast approaching tragedy simply for a few more years of conspicuous consumption?

Author's Note

This is possibly the most important article I have written to date. It is certainly the most frightening, and the conclusion is the bleakest I have ever penned. This article is likely to greatly disturb the reader; it has certainly disturbed me. However, it is important for our future that this paper should be read, acknowledged and discussed.

I am by nature positive and optimistic. In spite of this article, I continue to believe that we can find a positive solution to the multiple crises bearing down upon us. Though this article may provoke a flood of hate mail, it is simply a factual report of data and the obvious conclusions that follow from it.

Source: From the Wilderness :: PDF: Eating Fossil Fuels - 138k

Water Scarcity & Climate Change: Growing Risks for Businesses & Investors

Today, 6.5 billion humans depend entirely on oil for food, energy, plastics & chemicals. Population growth is on a collision course with the inevitable decline in oil production.

To think that we can advocate for human rights, peace, and social justice while ignoring their necessary ecological basis—is both intellectually dishonest and ultimately self-defeating.

The longer we put off choosing the nicer methods of achieving demographic stability, the more likely the nasty ones become, whether imposed by nature or by some fascistic regime. Urine Good Company might represent a mild version of what could actually be in store if we let the marketplace, corporations, and secretive, militaristic governments come up with eugenic solutions to our population dilemma.
~ Population, Resources, and Human Idealism, Energy Bulletin | Population Growth: Most Powerful Force on Earth, Money&Markets ~

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Report Finds Water Stress Rapidly Becoming Key Strategic Risk to Commerce; Impending Water/Energy Collision

17 March 2009 | by Jack Rosebro

Water consumption or withdrawals per unit of energy produced, by energy type, in the United States. Source: DHI Group. Click Image to Enlarge

A Pacific Institute report commissioned by Ceres, whose Investor Network on Climate Risk advises investors with more than US$7 trillion in assets, concludes that impacts of declining water quality and availability will be “far-reaching” for business and industry in the developed as well as the developing world, and that companies which address water stress as a key strategic risk will be better positioned to adjust to negative effects such as reduced water allotments, rising water costs, community opposition, and increased public scrutiny of corporate water practices.

Among the increasing challenges is that while the sourcing, processing, and delivery of clean water is becoming more energy-intensive, the extraction and refining of fossil fuels and their substitutes is trending towards increasing water requirements per unit of fuel produced as energy companies work with progressively lower grade resources.

Processes such as oil extraction from sources such as tar sands and deep-water offshore oil wells, as well as the expansion of first-generation biofuels such as corn-based ethanol are setting the stage for a “water/energy collision” of resource management policies. “With increasing frequency,” write the Pacific Institute researchers, “we value energy production over water production.”

Citing a study by Danish water consultancy DHI Group as well as a study from the University of Texas, the researchers point out that the water footprint of renewable energy sources varies widely, and is particularly intense for first-generation biofuels made from sugar, starch, vegetable oils, animal fats, or other food-source feedstocks, rather than non-food sources such as cellulose.

Climate change. The report “Water Scarcity and Climate Change: Growing Risks for Businesses and Investors” notes that drought conditions are currently causing water shortages in Australia, Asia, Africa, and the United States, and that drought patterns are in many cases mirroring previously predicted effects of climate change. While climate change is projected to increase precipitation in some areas, it is also likely to destabilize freshwater supply in other areas by compressing precipitation and snowmelt into shorter and more intense periods, overwhelming existing catchment infrastructure and creating longer periods of drought.

The percentage of the world’s population living in water-stressed regions—currently one out of every three—is expected to double to two of every three by 2025 as declining water supplies are further stressed by increased water demand for irrigation, hydration, and industrial cooling in warming regions. Although desalination has the potential to reduce freshwater demand in relatively affluent coastal urban areas by providing an alternative source for drinking water, it remains the most expensive demand-management option due to its energy-intensive processes, and is particularly vulnerable to rising energy prices.

Last year, a special report by the Intergovernmental Panel on Climate Change (IPCC) forecast that the effects of rising temperatures would lead to “changes in all components of the [global] freshwater system” in the 21st century. The IPCC’s Fourth Assessment Report, released in 2007, had also forecast that “climate change will challenge the traditional assumption that past hydrological experience provides a good guide to future conditions.”

However, the authors of the Ceres report note that “businesses and investors are largely unaware of water-related risks or how climate change will likely exacerbate them.” Industries which face the greatest risks include the agriculture, beverage, electronics, energy, apparel, pharmaceutical, forest products, and mining sectors.

Sectoral Water Risks

20th century world water withdrawals by sector, in cubic kilometers. Source: UNESCO. Click Image to Enlarge.

Apparel. Cotton production, which requires 25 cubic meters of water for every 250 grams of finished product—the approximate weight of a T-shirt—is both water-intensive and highly vulnerable to risk. Cotton is typically grown in arid regions converted to farmland; in Uzbekistan, for example, which is one of the world’s largest exporters of cotton, the extraction of water from rivers that supply the Aral Sea is a key contributor to its deterioration and desertification. Wastewater from cotton production degrades local water supplies, but many countries which export cotton have relatively weak wastewater regulations

Electronics. Semiconductor wafer production is extremely water-intensive: in 2007, Intel and Texas Instruments used a total of 11 billion gallons of ultra-pure water (UPW), which requires significant amounts of energy to purify. Eleven of the world’s fourteen largest semiconductor factories are located in Pacific Rim regions which are already water-stressed.

Food Production. The largest and fastest-growing use of water is embedded in modern food production. Although livestock production requires many times the amount of water per calorie of plant-based food production, agricultural water requirements have also intensified as a result of the conversion over the past century of many naturally arid regions, such as California’s San Joaquin Valley, Texas, and parts of Egypt and Pakistan, to high-volume farming regions.

Drought is expected to become more common in many of these areas, as well as higher surface temperatures, which dry out soils, evaporate snowmelt, and require accelerated water inflows. Beverage manufacturers also face direct competition with local communities for affordable drinking water, and bottled water sales are beginning to decline in some developed countries because of environmental concerns.

Biotechnology. Chemicals and microorganisms in biotech wastewater present a particular threat to local ecosystems. Synthetic chemicals are typically developed for persistence, and do not readily break down in nature when discharged by pharmaceutical manufacturers.

Forestry. Pulp and paper manufacturing is the third largest consumer of water as well as fossil-based energy in the United States. While the sector is at particular risk from climate change, forests are also key components of watersheds, influencing water availability, transport, and quality.

Metals and Mining. The mining sector is restricted by the location of ore, and water must be imported to support mining operations. Development of new sites may also face local opposition; Canadian mining company Barrick Gold, for example, plans to mine gold from beneath glaciers in Chile; Andean farming communities which rely on the glaciers for their water supply oppose the project.

Electric Power. The electric power industry accounts for more than a third of all freshwater withdrawals in the United States, with nuclear power plants requiring about 40% more water per kilowatt-hour produced than fossil-fuel power plants. Declining levels and/or warmer temperatures of cooling water supplies during periods of extreme heat and/or drought have triggered nuclear plant shutdowns in the US and Europe in the past five years. Hydropower-based generation is also at risk, particularly in the Western United States, due to drought.

The Ceres report poses five primary questions as discussion points for exploring the level of risk that a company’s water policy might pose to its own long-term economic health:

• Does the company know and measure its water footprint, including wastewater discharges, and understand the relationship between its energy and water use?
  
• Has the company assessed business risks associated with its water footprint, including both direct and indirect risks (e.g. supply chain), and developed contingency plans for potential future risks such as those associated with climate change?
  
• Is the company engaged with key stakeholders, including consultation and collaboration with affected communities, government entities, and NGOs?
  
• Has the company integrated ongoing assessments of water risk into its business planning, governance, and risk management structures?

Does the company disclose and communicate its water performance and associated risks, using comprehensible and broadly accepted metrics?

• The report concludes by pointing out several cross-sectoral trends in water risk for businesses:
  
• Typically, water risk is embedded more in the value chain, especially of raw material production, than in operations or assembly of final product. This risk is rarely reflected in corporate sustainability reports or security filings.
  
• Industries that require large amounts of water withdrawals, ultra-pure water, or both face increased risk of competing directly with local populations for water access. Fallout ranges from reputational damage to shutdown or relocation of facilities.
  
• Wastewater discharges for industries with large gray water footprints are an increasing problem as developing countries adopt environmental regulations.
  
• Fragmented information about corporate water risk as well as underlying supply conditions often make it extremely difficult for investors to assess the true magnitude of the risk.
  
• As water supply declines, the quality of available water also typically declines, requiring more treatment and increasing the amount of energy embedded in the delivery of adequate water supplies.

Resources

PDF: Water Scarcity and Climate Change: Growing Risks for Businesses and Investors

Source: GreenCarCongress [PDF: Water Scarcity and Climate Change: Growing Risks for Businesses and Investors]

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The upside to peak fertilizer

Thursday, Feb. 7, 2008 08:27 PST | Andrew Leonard, Salon

Synthetic fertilizer prices are spiking upwards all over the world, inflicting economic pain on farmers everywhere. Another sign of the peak oil apocalypse? The industrial production of nitrogen -- a key synthetic fertilizer ingredient -- is extraordinarily energy intensive. So when energy prices rise, so do fertilizer prices. And if you buy the thesis that without manmade fertilizer the world will be physically incapable of supporting a population of nine billion, then you start to get very nervous.

Opponents of biofuels have been quick to point the finger at the stampede to divert farming land to energy crops as another reason explaining the fertilizer market's failure to keep up with global demand. But that's only one factor. Population growth and the explosion of meat and dairy consumption in the rising middle classes of the developing world are also contributing to the worldwide agricultural boom. Even without rising energy prices, the surging demand for fertilizer would be overwhelming suppliers.

When demand rises, supply follows -- and sure enough, investment in synthetic fertilizer production is booming. Intriguingly, the global center for synthetic fertilizer production appears to be the oil states of the Mideast. A new study by the Doha-based Gulf Organization for Industrial Consulting reports that UAE, Saudi Arabia, Kuwait, Bahrain, Qatar and Oman are expected to invest billions of dollars in the next few years ramping up ammonia and urea production.

Which drops a big fat dollop of synthetic fertilizer irony in our laps. The growth of energy crops is in part directly attributable to rising energy prices. But the demand for synthetic fertilizer to nurture those energy crops requires the consumption of even more fossil fuel, thus likely pushing energy prices further, and creating even more demand for energy crops. On second thought, that's not ironic. That's tragic.

The price-mechanism doesn't only work in the direction of encouraging more synthetic fertilizer. One news report, while predicting that the current imbalance between supply and demand could last as long as two years before new supply came on line, observed that in the meantime farmers might be forced to "consider converting to organic production."

So you can forget about the endless argument over whether organic food is healthier for human consumption than the product of the industrial agricultural system. If synthetic fertilizer prices continue to rise, organic food may end up cheaper than the alternative.

Source: Salon

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'The Saudi Arabia of fertilizer'
One big corpration dominates the soon-to-be-prized potash market

Tom Philpott, Grist | 15 May 2008

Industrial agriculture currently stands as humanity's big plan for "feeding the world" as global population moves toward 10 billion and the earth warms. Increasingly, as oil supplies tighten and prices rise, we're looking to industrial ag to fill our gas tanks, too.

Unhappily, this relatively new form of farming relies utterly on three elements -- two mined (potassium and phosphorus) and one synthesized from natural gas (nitrogen) -- to maintain the productivity of soil.

In other words, unless we quickly move toward other agriculture models, we're likely to see increased geopolitical competition for these fertilizer resources, outsized power for the entities that control them -- and diminishing efforts to minimize the ecological effects of extracting them.

I've written before about Mosaic, the world's largest phosphorus supplier, and the devastations of its Florida mining operations. Two-thirds owned by agribusiness conglomerate Cargill, Mosaic has seen its share price rise seven-fold since the fall of 2006 (roughly when corn prices began to jump).

Now let's look at Canada's Potash Corporation of Saskatchewan, whose shareholders, like Mosaic's, have enjoyed an ecstatic run of late. The company so dominates potash (potassium) production that one stock analyst has hailed it as "the Saudi Arabia of Fertilizer."

The analyst, Ben Johnson of Morningstar, has this to say about Potash's market position:

PCS is the world's largest potash producer, with 22% of world capacity. ... PCS is also the world's second-largest nitrogen producer by volume (with 2% of world capacity). ... PCS is the world's third-largest phosphate producer (with 6% of world capacity).

Wow, so in the big-three macronutrients, the company ranks one, two, and three. But it's the company's position in the potash market that really has investors licking their chops. Get this:

I feel [an] apt analogy would be to call [Potash Corporation of Saskatchewan] the Saudi Arabia of the "other OPEC" -- Organization of Potash Exporting Countries! ... PCS owns 22% of the world's potash production capacity, while Saudi Arabia accounts for roughly 13% of global oil production. Both enjoy low-cost positions in their particular markets, thanks to scale and the attractive natural resources they control. The Middle East has more than 60% of the world's proven oil reserves, while Canada sits on about 57% of the world's potash reserve base, according to the U.S. Geological Survey.

The analyst says that the company's dominant potash position has made it extraordinarily profitable as fertilizer prices have surged recently, pushed up by the biofuel boom and rising demand from Brazil and China. He writes that "gross profit per metric ton of potash sold nearly doubled to $97 in 2007 from $51 in 2004." He adds:

And there will be more to come. Given recent price announcements for potash, average selling prices will easily double from 2007 levels in the coming quarters.

Similar trends are playing out with nitrogen and phosphorous:

Unit gross profit in nitrogen has more than doubled from $45 to $94 over this same span, and phosphate unit margins have compounded an eye-popping 14 times from $4 in 2004 to $57 in 2007.

Several questions arise here. Is it really sustainable to "feed the world" -- much less move its cars -- using technologies that require ravenous doses of finite resources?

How long before big buyers in places like China start to balk at paying such elevated prices -- and supporting such monopoly-style profit margins? Already, we're seeing countries that are cash-rich and food-poor (think China and Saudi Arabia) buy up farmland in places like Brazil and Africa, the Financial Times reports.

Fertilizer, a critical input for industrial food, is darting down the unhappy path forged by crude oil. It looks set to become the globe's next "prize" -- to paraphrase Churchill's famous quote at the dawn of the oil age. Other ways of "feeding the world," of course, are possible.

Source: Grist