Choice: Food or Fuel / Oil or Water

As mentioned in the previous post, should the Tata group in India produce cars at a cheaper cost to enable transportation by car for many Indians or not develop as cars are the major problem in environmental degradation?

Darryl D’Monte writing in InfoChange India on WorldWatch’s new Vital Signs report comments on the lack of focus on the looming water problems in the world and concentrating the hot issue of oil.

If one wanted to pose the problem with such US-based think-tanks and their worldviews, one could ask the question: Which is more important, the shortage of oil or the shortage of water?

If one takes food itself, there is a serious underlying water dimension, as most grain-growing countries spend 70% and more of their water resources on irrigation. Only recently, the Earth Policy Institute, run by Worldwatch founder Lester Brown, reported: “Together, China, India and the United States produce nearly half the world’s grain, and these three countries plus Pakistan collectively account for over three-fourths of the world’s reported groundwater extraction for agricultural purposes.”

This shows the dramatically different needs of the developed and the developing world. Each have different environmental concerns. A NGO based in Washington targeting a large western population concentrates more on oil problems than water or sanitation.

In the same article, he connects to the issue of Food or Fuel from Lester Brown. Brown writes “Supermarkets and Service Stations Now Competing for Grain”

Cars, not people, will claim most of the increase in world grain consumption this year. The U.S. Department of Agriculture projects that world grain use will grow by 20 million tons in 2006. Of this, 14 million tons will be used to produce fuel for cars in the United States, leaving only 6 million tons to satisfy the world’s growing food needs.

With so many distilleries being built, livestock and poultry producers fear there may not be enough corn to produce meat, milk, and eggs. And since the United States supplies 70 percent of world corn exports, corn-importing countries are worried about their supply.

As the price of oil climbs, it becomes increasingly profitable to convert farm commodities into automotive fuel, either ethanol or biodiesel. In effect, the price of oil becomes the support price for food commodities. Whenever the food value of a commodity drops below its fuel value, the market will convert it into fuel.

This was a startling fact for me. The world markets are more inter-connected than ever before. Bio-fuels are better than oil, but if they increase the price of food grains it will effect 2 billion poorest people in the world, many of whom spend half or more of their income on food, rising grain prices can quickly become life threatening.

There are no easy answers to this paradox of choice. Food or Fuel?

Brown writes in a subsequent Eco-Economy update.

By the end of 2007, the emerging competition between the 800 million automobile owners who want to maintain their mobility and the world’s 2 billion poorest people who want simply to survive will be on center stage.

The attempt to solve one problem—growing U.S. dependence on imported oil—is creating another far more serious problem. Fortunately this can be avoided. The 3 percent of U.S. automotive fuel supplies now coming from ethanol could be achieved, several times over and at a fraction of the cost, by raising automobile fuel-efficiency standards by 20 percent.

On the food-versus-fuel issue, the world desperately needs leadership—a strategy to deal with the emerging food-fuel competition. As the world’s leading grain producer and exporter, as well as its largest producer of ethanol, the United States is in the driver’s seat.

Update:

Larry West from About.com – Water Now More Valuable Than Oil?

The most valuable commodity in the world today, and likely to remain so for much of this century, is not oil, not natural gas, not even some type of renewable energy. It’s water—clean, safe, fresh water.

When you want to spot emerging trends, always follow the money. Today, many of the world’s leading investors and most successful companies are making big bets on water. Do a little research, and it’s easy to see why. There simply isn’t enough freshwater to go around, and the situation is expected to get worse before it gets better.

The United Nations estimates that by 2050 more than two billion people in 48 countries will lack sufficient water. Approximately 97 percent to 98 percent of the water on planet Earth is saltwater (the estimates vary slightly depending on the source). Much of the remaining freshwater is frozen in glaciers or the polar ice caps. Lakes, rivers and groundwater account for about 1 percent of the world’s potentially usable freshwater.

GE’s strategy is for its water division to invest in desalinization and purification in countries that have a shortage of freshwater. Saudi Arabia is expected to invest more than $80 billion in desalinization plants and sewer facilities by 2025 to meet the needs of its growing population. And while China is home to 20 percent of the world’s people, only 7 percent of the planet’s freshwater supply is located there.

Clearly, natural resources like freshwater are becoming scarcer and hence, costlier.

Advertisements

2 thoughts on “Choice: Food or Fuel / Oil or Water

  1. Well written. Food or Fuel ???? It is defenitely worthy to think about their priority. But before we raise our hand to answer this, it very important to analyse the need of time and place. I always think that food has taken the first position in the list by the developing countries and so called under developed countries. But when it comes developed countries, you know the names, its always a dilemmena to decide which one is first. I assume that traditional food programme and alternate fuel programmes has to be taken on serious note.

    Thanx.

  2. Jag, it is not always that simple. If 70% of the corn in the world is produced in the US and if some of it is diverted to produce ethanol, this will decrease world-wide supply and increase the price.

    Any of those could have devastating effects on the developing world. So, something which is prioritised in the developed world (fuel) can have an effect on the developing world (food).

    In the same way, if the market price for food commodities in the developing world increases due to the market for bio-fuels, will more farmers produce food grains for food or fuel?

    The answer most of the time will be – whatever has the higher price in the market.

    Price determines the production/consumption priority.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s