April 4, 2012

Conservation in a new age of high-valued commodities

Conservation biologists are working in a new era.  Frequent readers of this blog will recognize my constant drumbeat on this theme (here and here, for example).  Landscapes are changing, even as I write--with grass and trees being removed to make way for high-valued corn and beans.  Even the Nebraska Sandhills are seeing revitalization of center pivots that had been put to sleep 20 years ago.

I have previously shown a graphic of corn prices, showing that we are entering a new era in which CRP payments will find it hard to compete with potential rental rates paid by large-scale farmers.  I hear anecdotal evidence that land is selling at ever-increasing values across Iowa and Nebraska--land prices that push the limits of the margin that seems probable for making a profit.

Some have argued that we are in a bubble--that land and commodity prices will eventually crash, which will be horrible for farmers, but good for CRP and wildlife.  At a meeting of administrators of land grant universities today, I heard a different view. 

There is a group of economists who believe that world-wide commodities are indeed in a new era--and that they will not return to previous levels.  We are not in a bubble, they argue.

Jeremy Grantham has been a voice for this camp, and I have taken a graphic that he provides to support his argument.  The graphic shows a commodity index calculated by GMO Capital: the index includes agriculture commodities (but also several other commodities like coal, iron ore, and copper). 

Grantham's argument is that commodities (with the exception of some major fluxes caused by global wars) have decreased in relative value over the last century--at about 1.2% per year.  We became more efficient at producing them, essentially.  But, the recent up-tick since 2000, which I have also illustrated with my corn price graphic, is here to stay, Grantham argues.  He suggests that commodities are now raising in price because there are real shortages, caused by global population growth.  Grantham argues that this demand is real, and we are now in an era of continued demand for commodities with little room for efficiency of production (we are pretty much technologically maxed on efficiency) to balance the demand.

Commodities will remain high, says Grantham.  That has big implications for landscape use in agricultural and mining regions.  And, big implications for wildlife and conservation.  Is he right?

It is an exciting era if you are a creative conservation biologist, because new, innovative methods are going to be needed.  One can look at this as 'glass half full' if you want--and see how landscapes will be altered in ways that they may not have been altered before.  Or, you can be excited by the challenges.  For the time being, I'll put myself in the latter camp.  Regardless, it is clear that wildlife management will be conducted under a new paradigm.

2 comments:

  1. Excellent comments and blog. When I was hanging around with a global ag economists back in the 1990s they were predicting for the first time in more than 100 years that global food consumption would surpass global food production in about 2050. Depending on how you measure it all--likely already happened. Who would have predicted that the Chinese would have added 1b+ virtual people to the planet by doubling their calorie consumption in a little over 10 years? So we have gone from an era when distribution was really the problem to flat out production. We are in a new paradigm and even those of us not in the farm belt will see a completely new land use system.

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