The “limits to growth” question is receiving a lot of attention this week.  On Monday, the Wall Street Journal had a front-page feature length story (“New Limits to Growth Revive Malthusian Fears”) that looked at a number of possible resource constraints, including water and food.

Today, Andrew Revkin of the New York Times writes in his blog (Dot Planet) about an eye-opening presentation made by Dr. Daniel G. Nocera at the first Aspen Environment Forum this week in Colorado.  A professor of energy at the Massachusetts Institute of Technology, Dr. Nocera talked about the energy choices we face, if we don’t develop far more efficient solar technologies.

As Revkin reports: 

Dr. Nocera said human activities, in energy terms, right now are essentially a “12.8 trillion watt light bulb.” Our energy thirst will probably be 30 trillion watts, or 30 terrawatts, by 2050 with the human population heading toward 9 billion.

If that energy is supplied with coal and oil, an overheated planet is almost assured, he said. Finding other options is a huge challenge, he added. To illustrate, he provided one hypothetical (and impossible) menu for getting those 18 additional terawatts without emissions from coal and oil:

- Cut down every plant on Earth and make it into a fuel. You get 7 terawatts, but you need 30. And you don’t eat.
- Build nuclear plants. Around 8 terawatts could be gotten from nuclear power if you built a new billion-watt plant every 1.6 days until 2050.
- Take all the wind energy available close to Earth’s surface and you get 2 terawatts.
- You get 1 more terawatt if you dam every other river on the planet and reach 30.

As he summed up, “So no more eating, nuclear power plants all over, dead birds everywhere, and I dam every other river and I just eke out what you’ll need in 40 years.”

Revkin blog post is entitled, “All Energy Roads Lead to the Sun.”  If so, let’s hope that there aren’t too many bumps, detours and tolls on all those roads.

Rice is nice...but desperate times require desperate measures. The Economist this week reports (“Empty Bowls, Stomachs and Pockets”) that:  

THE soaring price of rice and dwindling stockpiles of Asia’s staple food are causing anxiety across the continent. In particular the Philippines, a big, hungry country which cannot grow enough to feed itself, could be in trouble. The front pages of Manila’s newspapers scream about a “rice crisis”, as politicians float drastic solutions, such as forcing the country’s top 100 companies to take up rice farming.  

And that’s not the half of it. With the price of premium Thai rice jumping by nearly 30 percent in the past month and further prices increases expected, reports of rice banditry and hoarding are soaring in Thailand and other countries.  As harvest times nears in many areas, rice producers and transporters are hiring armed guards.

All across Southern Asia there is a mad scramble to guard and lock in supplies. Cambodia this week suspended rice exports for two months.  Several major rice exporting countries have already done so.   The Philippines recently signed an agreement with Vietnam to guarantee future shipments, but The Economist describes the agreement as “more of a face-saving measure than a firm pledge.” 

And now it appears that the government of the Philippines is appealing to a higher authority for help.  A news report ("Arroyo seeks divine help to fight high oil, rice prices") this week from the Philippines indicates that President Arroyo visited a holy site and asked for a miracle to help feed the Philippines and the rest of the world.  

With rice inventories at near record lows and rice exporting countries limiting rice exports, it may, in fact, take a miracle to feed the world’s appetite for rice. About half the world’s population depends on rice as a staple.  And with rice exports accounting for only 7 percent of world rice production, major rice importing countries like Indonesia and The Philippines are justifiably worried.   

According to a report from India News “rice yields in the Philippines are nearly double those of Thailand, but production is not keeping up with rising demand." The story quotes Robert Zeigler, the President of the International Rice Research Institute, as saying that in The Philippines, as in Indonesia, "there is just not enough land."

After reading the quote from Zeigler, I went to the IRRI’s website for more information.  On the homepage there is a world population counter ominously ticking away.  Underneath is a counter measuring the number of productive hectares devoted to rice production, but the number is not rising…it’s slowly decreasing.

It’s probably safe to say that the American Bakers Association (ABA) does not command the same amount of attention in this town as does the American Bankers Association, so it should come as little surprise that the  ABA’s recent “march” on Washington failed to gather much attention.

Still, for all those who follow the food crisis, it’s worth listening to what the ABA has to say. With the price of a load of bread now achieving parity with the price of a gallon of gasoline, the bakers of America are worried about the “wheat crisis.”  During their March 12th “march” on Washington, the bakers stopped just short of calling for restrictions on grain exports, urging instead a “USDA review of wheat export policies in light of the new market dynamics.”

American bakers, of course, are not the only people sounding the alarm.  In China, there appears to be growing concern and debate about the size of country’s grain reserves. A news report yesterday quoted Premier Wen Jiabao as saying that China's current grain reserves are between 150 million tonnes to 200 million tonnes, adding "we are confident in curbing overly fast price rises".  But Beijing News quoted Yuan Longping, a top rice scientist and a Chinese government advisor, as saying that some local grain reserves are actually empty, suggesting that Chinese grain reserves may be overstated.

But if there is a grain crisis, let’s remember it’s a global problem. A few weeks ago, the New York Times, ran a feature story (“A Global Need for Grain That Farms Can ’t Fill”) that warned:

Farmers the world over are producing flat-out. American agricultural exports are expected to increase 23 percent this year to $101 billion, a record. The world’s grain stockpiles have fallen to the lowest levels in decades.

“Everyone wants to eat like an American on this globe,” said Daniel W. Basse of the AgResource Company, a Chicago consultancy. “But if they do, we’re going to need another two or three globes to grow it all.”

The ABA notwithstanding, it’s probably not a good idea for the U.S. to impose grain restrictions or embargoes in the interest of keeping U.S. bread prices low. Several other major grain exporters, including China, have already announced export restrictions, but if the current grain crisis takes another turn for the worst, a wave of grain embargoes could be the worst possible reaction.  For the world’s poor who survive on less than $2 a day and happen to live in a grain-importing country, it could spell disaster.  Better that the price of bread rise in the U.S. than to deny bread to the world’s poorest and hungriest.

Danny Leipziger, the World Bank's vice president for poverty reduction and economic management, told Reuters, yesterday that the sharp hike in world oil and food prices is “not a short-term cycle issue.” 

Adding the World Bank to the growing chorus of international agencies voicing concern about the emerging food crisis, Leipziger was quoted as saying: 

“It has reached a critical stage where you do have food riots in a dozen countries or some related disturbance…. The research part of the World Bank tends to think this is not a short-term cycle issue, that this is a structural issue for reasons of global demand, for reasons of what is happening in biofuels and oil prices, and this is likely to be sustained for a number of years."

Leipziger expressed concern about 30 to 40 developing nations that could be severely impacted by rising food costs.  He said, “Particularly in countries that have made progress in terms of poverty reduction, we don't want to see this crisis put people back and undo the progress that has been made.”

Despite the very vocal concerns now being expressed about the food crisis by UN agencies, including WFP and FAO, I do have to wonder how many people on Capitol Hill are really listening.  Now, if we could only tie it to the sub-prime mortage crisis....

In the past few days, global commodity prices for oil, grain and other commodities have retreated from their new record highs. The price of oil, which reached a new record of $111.80 a barrel on Monday dropped below $100 a barrel this morning.  Similarly, prices for wheat and soybeans have also fallen in the past few days.

If the U.S. has fallen into a recession and the global economy slows down, commodity prices are likely to fall even further in the weeks and months ahead.  In times past, economic downturns have always cooled off commodity prices, but until this week global commodity prices have appeared to defy economic “gravity”, by rising at a time when demand should be falling.

Commodity prices have risen so far and so fast in the past year that some analysts are worried that demand is confronting an inelastic supply curve, meaning that suppliers simply can’t keep up with rising demand.  Oil producers, in other words, simply cannot—in the short-term at least—produce any more oil.  Farmers—despite record grain prices last year—cannot boost grain production fast enough in 2008 to meet rising consumer demand.

A growing number of analysts, in fact, fear that—unless there is a major economic downturn—demand for oil, grain and other commodities will continue to outpace supply for years to come, leading to higher and higher prices and a growing risk that the world’s poor will not be able to keep up.

If demand for commodities is growing too fast, what’s the problem?  Is it global population growth?  Or is it rising living standards? 

Moises Naim, the editor in chief of Foreign Policy, wrote a column this month (“Can the World Afford a Middle Class?”) that explores this question:

The middle class in poor countries is the fastest-growing segment of the world’s population. While the total population of the planet will increase by about 1 billion people in the next 12 years, the ranks of the middle class will swell by as many as 1.8 billion. Of these new members of the middle class, 600 million will be in China. Homi Kharas, a researcher at the Brookings Institution, estimates that by 2020 the world’s middle class will grow to include a staggering 52 percent of the global population, up from 30 percent now. The middle class will almost double in the poor countries where sustained economic growth is lifting people above the poverty line fast. For example, by 2025, China will have the world’s largest middle class, while India’s will be 10 times larger than it is today.

Naim says that this rising middle class is feeding the world’s appetite for fuel and meat, which, in turn, is putting pressure on the world grain markets, as more and more grain is being used to produce food or feed cattle.  He warns that this competition for resources will lead to “dislocations” that are “painful and difficult to predict.”  He concludes:

The debate about the Earth’s “limits to growth” is as old as Thomas Malthus’s alarm about a world where the population outstrips its ability to feed itself. In the past, pessimists have been proven wrong. Higher prices and new technologies, like the green revolution, always came to the rescue, boosting supplies and allowing the world to continue to grow. That may happen again. But the adjustment to a middle class greater than what the world has ever known is just beginning. As the Indonesian and Mexican protesters can attest, it won’t be cheap. And it won’t be quiet.

Naim’s article is a valuable contribution to the debate about global resources and possible “limits to growth.”  It’s a debate that policymakers in Washington and around the world should be having…right now.

My fear, however, is that a global economic downturn will eclipse this debate.  Commodity prices will fall and policymakers will assume that global resources are still limitless and the potential for growth still unlimited.  Then, a year or two from now, when the global economy recovers and commodity prices resume their meteoric rise, policymakers will scratch their collective heads and ask “What’s the problem?”

It’s often assumed or asserted that population growth is critical to maintaining economic prosperity.  Countries with shrinking populations are supposed to be headed towards economic malaise.   Maybe not, according to an article in the March 13th edition of The Economist.

It turns out that over the past five years, at least, growth in per capita gross domestic product (GDP) has actually been higher in some ‘birth dearth’ countries than in some countries whose populations are still expanding:

WHICH economy has enjoyed the best economic performance over the past five years: America's or Japan's? Most people will pick America. The popular perception is that America's vibrant economy was sprinting ahead (albeit fuelled by credit and housing bubbles that have now painfully burst), whereas Japan crawled along at a snail's pace. And it is true that America's average annual real GDP growth of 2.9% was much faster than Japan's 2.1%. However, the single best gauge of economic performance is not growth in GDP, but GDP per person, which is a rough guide to average living standards. It tells a completely different story.

GDP growth figures flatter America's relative performance, because its population is rising much faster, by 1% a year, thanks to immigration and a higher birth rate. In contrast, the number of Japanese citizens has been shrinking since 2005. Once you take account of this, Japan's GDP per head increased at an annual rate of 2.1% in the five years to 2007, slightly faster than America's 1.9% and much better than Germany's 1.4%. In other words, contrary to the popular pessimism about Japan's economy, it has actually enjoyed the biggest gain in average income among the big three rich economies. Among all the G7 economies it ranks second only to Britain.

The article even looks at the track record of countries like Australia and Brazil, and finds that they trail both Japan and Russia (another ‘birth dearth’ country).

Australian politicians often boast that their economy has had one of the fastest growth rates among the major developed nations—an average of 3.3% over the past five years. But Australia has also had one of the biggest increases in population; its GDP per head has grown no faster than Japan's over this period. Likewise, Spain has been one of the euro area's star performers in terms of GDP growth, but over the past three years output per person has grown more slowly than in Germany, which like Japan, has a shrinking population.

Some emerging economies also look less impressive when growth is compared on a per-person basis. One of the supposedly booming BRIC countries, Brazil, has seen its GDP per head increase by only 2.3% per year since 2003, barely any faster than Japan's. Russia, by contrast, enjoyed annual average growth in GDP per head of 7.4% because the population is falling faster than in any other large country (by 0.5% a year).

The economic disparities observed by The Economist don’t quite prove that “birth dearth” countries fare better—in per capita GDP—than countries with growing populations.  Many other factors—other than population growth rates--could explain why standards of living are rising faster in Japan and Russia than in countries like the U.S. and Australia.  Russian living standards, for example, have benefited mightily from rising oil prices. In addition, past performance is no guarantee of future results.  Japan and Russia may yet fall behind in per capita GDP.  Still, it does call the conventional wisdom into question.

There may, or may not, be a “birth dearth” dividend, but the numbers cited by the article do suggest that declining populations are not necessarily doomed to economic stagnation, as many have suggested.  More research please.

All of a sudden, newspapers around the world are reporting that soaring food prices have evolved into a full-blown food crisis. Sunday’s New York Times had a front page story (“A Global Need for Grain that Farms Can’t Fill”).  Today, Scotland’s Sunday Herald ("2008:  the Year of the Global Food Crisis") and the Asian Tribune (“Grain Shortage”) have feature stories.  For several weeks, the Manila Times and other East Asian newspapers have been focusing on record rice prices and their impact on the urban poor.  Middle East newspapers have also been on high alert.

For any newspaper reporter wanting to do a feature story on soaring food prices, there is a large and growing number of angles to cover: angry food protests, major grain exporting nations limiting their grain exports, new commodity prices records, soaring production costs, the diversion of farmland to biomass production, pleas for more international food aid, the plight of the urban poor in Asia and sub-Saharan Africa, and growing fears of political destabilization in many parts of the world.

But, if it is a global food crisis, you could hardly tell it by following the presidential race or the debate in Congress. It may not be a conspiracy of silence, but it’s a testament to how far removed America and its leaders are from the problems that afflict most of the world. 

Americans live so far up the food chain that soaring costs of staples like flour and rice, barely registers with the average household.  Or sure, American are concerned that food prices have gone up 5-6 percent in the past year, but that’s nothing compared to the food inflation faced by those living overseas on less than $2 a day.  When the price of flour doubles, it doesn’t set off any alarm bells in U.S. homes, nothing compared to the level of concern registered in Morocco, Jordan or Nigeria. 

Americans, of course, will not be untouched by a global food crisis should one be around the corner.  If population pressures, changing diets, and the growing demand for biomass are outstripping our ability to ramp up food production, there is an ultimate price to be paid. And it’s not just higher gas prices or food bills for American consumers. 

A genuine food crisis would be very destabilizing for grain-importing countries like Afghanistan, Egypt, Jordan, and the Philippines that have large populations already struggling with food costs. Pakistan is already on the verge of crisis. If U.S. foreign policy makers are not concerned about the impact of a food crisis on global stability, they ought to be. And so should the average American.

At a news conference in late February, Hania Zlotnik, head of the U.N. Population Division, unveiled the 2007 Revision of World Urbanization Prospects, which indicated that half the world's population will live in urban areas by the end of 2008 and about 70 percent will be urban dwellers by 2050.

It’s hoped, of course, that urbanization will lead to improved living standards in Asia and Africa, where urbanization is spreading most rapidly.  It’s certainly easier and more cost effective to deliver medical and other vital services to urban populations, but urbanization has its own set of potential problems, including crime, unemployment, and the rapid spread of communicable diseases. 

One potential downside of urbanization that is often overlooked is that the urban poor are at the mercy of food prices.  Poor farmers, too, can go hungry due to drought or other setbacks, but they are often removed from the global economy.  When Thai rice prices spike above $500 a ton as they did this week, many poor farmers actually benefit, but not the urban poor. 

In the Philippines this week, World Food Program Country Director Valerie Guarnieri warned that due to rising grain prices, the government and international agencies may have to boost food aid to the poor.  The Manila Times article also said that local officials are expressing concerns:

Karen Serrano of barangay (village) Marquez in Legazpi City, the provincial capital, told The Manila Times that the prevailing price of rice from the National Food Authority in the public markets is P28 to P30 per kilo. This price, Serrano said, cannot possibly be within reach of poor families who are earning less than a dollar (P41) a day. Mayor Noel Rosal of Legazpi admitted to The Times that many poor families in the city already are skipping meals due to the high price of government rice. “There are families who could no longer take their meals [regularly], specifically their children, because their parents could no longer afford to buy several kilos of rice due to the high price and lack of supply. This is not a joke. At P30 per kilo of rice, numerous families might already be suffering from starvation,” Rosal said.

During the past several months, protests over rising food prices have broken out in numerous cities in Asia and Africa. Last year, when corn prices spiked, there were protests over the costs of corn tortillas in Mexico City.

Earlier this week, the European Union announced its biggest-ever food aid package – €160 million ($243 million) – to help relieve hunger in Africa, Asia, and the Middle East.  Meanwhile, the World Food Programme announced that between now and mid-2008, WFP will provide food to 2.5 million people in Afghanistan because they can no longer afford to buy wheat.

Ch Wu Jianmin, a spokesman for the Chinese People's Political Consultative Conference, an advisory body to China’s parliament, created an international stir earlier this week when he announced that China might consider changes to its one-child policy. 

Since then Zhang Weiqing, the top official in charge of family planning, has denied the rumors, telling a Chinese news source that “Changes to the family planning policy now could lead to population rises, posing higher pressure on China's future development."

But, as Robert Engelman noted in a recent blog post for Worldwatch, a change in China’s one-child policy might not lead to a major surge in population growth.  The number of children desired by Chinese couples has almost certainly declined in the years since the policy was first instituted.  Without coercion, fertility rates in other parts of East Asia have fallen dramatically in recent decades; couples in China today might also desire much smaller families. As Engelman observes in his posting:

Paradoxically, women in Taiwan and in the special administrative regions of Hong Kong and Macao actually have about one child on average, and the one-child policy has never been a factor for these populations. True, they’re not fully comparable to China’s population as a whole, but their hyper-low fertility does speak to the feasibility of achieving lower fertility based not on coercive policies but on the reproductive choices of couples and individuals and good access to family planning services.

As Engelman notes, “Chinese women and couples undoubtedly want the same high-quality health care and contraceptive options that women do elsewhere in the world. Whether an end to global population growth is imminent has much more to do with policies in all countries that help people reach those aspirations than with policies in any one country…”