Soil Erosion

Jeremy Grantham is the CEO of GMO, a global investment firm with almost a hundred billion dollars in client assets. He is a respected investment guru who successfully predicted the financial bubble, describing it as a “slow motion train wreck”.  His clients depend on his insightful analysis and this means he needs to be able to predict major global trends. Grantham is worried about a lot of things but nothing concerns him more than dirt. In fact, he see’s soil erosion as humanities greatest challenge, greater than peak oil, greater than global warming even. Grantham’s analysis is insightful. The following exerpts are  taken from GMO’s July 2011 Newsletter: Resource Limitations 2:Separating the Dangerous from the Merely Serious which begins with the following prophetic quote:

You and I, and our government must avoid the impulse to live only for today, plundering, for our own ease and convenience, the precious resources of tomorrow.

- Dwight D. Eisenhower, 1961

The nation that destroys its soil destroys itself.

- Franklin Delano Roosevelt, 1937

 

Exerpts taken from GMO’s July 2011 Newsletter: Resource Limitations 2:Separating the Dangerous from the Merely Serious

Introduction

Last quarter I tried to make the case that the inevitable mismatch between finite resources and exponential population growth had finally shown its true face after many false alarms. This was made manifest through a remarkably bubble-like explosion of prices for raw materials. Importantly, prices surged twice in four years, which is a most unbubble-like event in our history book. The data suggested to us that rarest of rare birds; a new paradigm. And a very uncomfortable one at that. (In general, though, I have tried here not to repeat arguments or data used last quarter.)

 

This quarter, I would like to focus on the most dangerous parts of the coming shortages. I will try to separate those that, for us rich countries, are merely going to slow down the growth rate of our wealth through rising prices, and those that will do not only that, but will actually be a threat to the long-term viability of our species when we reach a population level of 10 billion. In all cases, poorer countries will be the most threatened. Situations that will irritate some of us with higher prices will cause others to starve. Situations that will cause some of us to go hungry will before others a real disaster, and I believe this, unfortunately, will not be in the dim and distant future.

Capitalism does not address these very long-term issues easily or well. It seems to me that capitalism’s effectiveness moves along the spectrum of time horizons, brilliant at the short end but lost, irrelevant, and even plain dangerous at the very long end.

There is nothing about the resource limitation problem that we cannot resolve. We have the brain power and, especially, the inventiveness.We have some nearly infinite resources: the sun’s energy and the water in the oceans. We have some critically finite resources, but they can be rationed and stretched by sensible, far-sighted behavior to ll the gap between today, whenwe live far beyond a sustainable level, and, say, 200 years from now, when we may have achieved true long-term sustainability. Such sustainability would require improved energy and agricultural technologies and, probably, asubstantially reduced population. With intelligent planning, all of this could be reasonably expected. A population reduction could be arrived at by a slow and voluntary decline (perhaps with some encouragement of smaller family size achieved, for example, through greater education). Such a reduction might leave us with a world population of anywhere from 1.5 billion to 5 billion, depending on the subtleties and interactions of many complicated variables. We would then be in long-term balance with our resources, including what will remain by then of our current biodiversity,which will hopefully be as much as one-half to three-quarters of what we have today.

The problem is not what we are capable of, but how we will actually behave. The wasteful status quo has powerful allies in the present corporate and political system. We do not easily accept bad news, nor do we easily deal with long-horizon problems. As mentioned last quarter, we are not particularly good with numbers, especially when it comes to probabilities, compound growth, and discount rates. We have a capitalist system that reflects our weaknesses; one that is fine-tuned only for the present and immediate future. Because of these factors, we will probably wait to deal withthe obvious problems of living well beyond our means until the signs are powerful and clear that we must change;until, that is, it is basically too late. Too late in the sense of failing to protect much of what we enjoy and value today. Too late to have avoided plundering our grandchildren’s resources. It’s a shame, but it’s the bet a well-informed gambler, observing from another planet, would probably make. It’s why, in the environmental business, which shares many of the same problems with resource management, it can be honestly said that there are old environmentalists and optimistic environmentalists, but no old, optimistic environmentalists. I’m probably as close as you’re going to get. The following argument looks at the resource problems we face in order of declining optimism. I think what follows is reasonable rather than apocalyptic. And, there is one remarkable piece of good news – the steady rise of no-till farming. In this, the developed world at least seems to have truly lucked out! However, with the pressures of short-term profit maximizing, there is some chance that we will not capitalize on our good luck.

 

3. Agriculture

The trouble really begins with agriculture. This is the factor that I believe almost guarantees that we end up with aworld population between 1.5 and 5 billion. The only question for me is whether we get there in a genteel, planned manner with mild, phased-in restraints, or whether we run head down and at considerable speed into a brick wall.There are three particular aspects of agriculture where the shoe pinches the most: water, fertilizer, and soil. All three must be seen in the context of a rapidly growing population. To set the scene, Exhibit 1 shows arable land per person.Unlike us, suitable land for agriculture has not increased since farming started some 10,000 years ago. In fact, withour help it has declined considerably, perhaps by as much as half or more!
Exhibit 1

World Hectares of Arable Land per Capita
Source: United Nations Food and Agriculture Organization, U.S. Census Bureau As of 12/31/10

 

(Skip past water, fertilizers and straight to Soil Erosion)

 

C. Soil Erosion

Finally, there is the real bugbear: soil erosion. The Earth is a wonderful place that obligingly creates new soil from bedrock, using the wear and tear of weather plus bacterial and microbial action. Perhaps even more remarkably,this new soil arrives with a good complement of phosphorus and potassium. This is pretty good treatment from avery generous planet. Before humans appeared, the rains would dissolve and wash away the soil and its associated nutrients just as fast as it was produced, but no faster. That’s a pretty neat balancing trick too. We can record the steady, modest rate of erosion in ancient lake beds. Humans, alas, with their tree lust, initially for heat and shelter and later for arable space and fertilizer (burning the forest sheds its store of fertilizer and other nutrients), began to cut forests down so fast that the erosion rate increased. Nothing increases erosion and net nutrient loss faster than deforestation. (And, ironically, nothing encourages deforestation like erosion, because erosion decreases productivityand, hence, increases the pressure to bring on new land to fill the gap in a rather vicious feedback loop.) As our  population grew, the forests were thus diminished in size, and the arable land increased. Even plowing savannahs,where trees had seldom or never grown, increased erosion by a large multiple. Sometimes these factors would accumulate with predictable results. In Panama, for example, it is common to see very hilly land that was once totally forested being used for cattle grazing. The cattle create paths that form gullies that funnel the tropical rains, which in turn denude whole hillsides in a few decades.

 

What the precise situation is today is hard to tell: First, erosion varies widely from region to region by type of soiland agricultural practice. Second, its measurement must also be difficult, for scientists have widely different views as to the best methodology. At one extreme, the reports are almost terrifying. A group of scientists from Cornell University writing in Science magazine summarized their findings as follows: “Soil erosion is a major environmental threat to the sustainability and productive capacity of agriculture. During the last 40 years, nearly one-third of the world’s arable land has been lost by erosion and continues to be lost at a rate of more than 10 million hectares per year … In the U.S. an estimated 40 billion tons of soil … are lost each year.” Unfortunately, Cornell’s Agricultural School has high standing in its field – reading their summary, one’s instinct is to say, “Well that’s it then. In a hundred years,everyone starves.” Fortunately, there are also those at the other extreme who think we’ll muddle through just fine, at least in the U.S. And, as we will see, the rise of no-till farming has the potential to help a lot.

 

The brief nitty-gritty on erosion and replacement is that somewhere between 50 and 1,000 years is needed to naturally replace one inch (25mm) of subsoil, depending on local conditions and who is doing the research. Different soil has different weights, but averages about 5 tons per acre per millimeter or 125 tons per acre per inch. Therefore, the natural replacement rate is equal to 2.5 to 0.125 tons per acre per year, rather than the 5 tons per acre per year that the U.S.D.A. has been using as an acceptable erosion rate. To state this very conservatively, current U.S. soil losses are very probably higher than natural replacement and possibly considerably higher. In Australia too, where records go back into the nineteenth century, it is also clear that more than 70% of arable land has been degraded to some considerable degree. For the planet as a whole, soil losses are certainly higher than replacement, and for some areas,notably in Africa, they are disastrously higher.

 

Further offsetting any of the more favorable data in the U.S. is a recent report from Iowa State University. The report,which claims new accuracy levels, holds that typical erosion is not the issue, but that the rare extreme storm can cause one to several years’ erosion in a single night as new gullies form in a way totally unlike those that form duringregular rain storms. These outlier storms have unfortunately become much more common globally in recent years,with formerly rare weather events having become more frequent as a consequence of a warming climate.

 

History of Erosion

We now know that population density in the Fertile Crescent and some of the other centers of early civilization oftendropped precipitously as their soils, due mainly to plowing, eroded. By the time they were finally disposed of by invaders, they were often shells of their former might with tiny fractions of their original populations left. North Africa was home to empires such as Carthage, which were powerful enough to challenge Rome and, in other cases,fertile enough to help feed Rome, which was the case of ancient Libya and Tunisia. Most of this territory has lost the great majority of its former agricultural capacity. Ancient Greece, Central Italy under the Romans, Syria, Iraq,and many others all suffered from the effects of subsoil erosion over a period of one thousand or more years, thus limiting their populations and reducing their economic and military power. In its later years, Rome, once at the center of fertile plains, abandoned farms everywhere and was totally dependent on imports from Egypt and Syria. Syria’s history is one in which whole cities, with their dozens of surrounding villages, were later completely abandoned to the desert as their soil disappeared due to unsustainable agricultural practices. Fifteen hundred years ago in the Americas, civilizations such as the Mayans overtaxed their soils and provably lost enough soil to make it impossible to reliably feed their peak populations. (Two readable books for the summer that cover this topic in detail are: Dirt:The Erosion of Civilizations, by David R. Montgomery and Collapse: How Societies Choose to Fail or Succeed byJared Diamond.) The academic study previously cited, claims the loss of one-third of our soil globally in just a few decades. It is easy to believe that since the beginning of human history it might be fully one-half, or even more.

 

The history of soil erosion bringing ancient empires down might have served as a powerful warning, but it does not seem to have done so. Since Colonial times, the U.S. is thought to have lost one-third to one-half of its topsoil, and today is still losing at a rate faster than replacement, although at a recently much-reduced rate. Yet, as recently as the 1920s, the 1930s of Dust Bowl fame, and the 1940s, U.S. farms were eroding at disastrous rates – well over 10 times replacement, despite the historical warnings.

 

Globally, the situation has been, and remains, much worse than in the U.S. It is not clear what it will take to drive home the message that erosion is perhaps the single largest threat to our long-term well-being. It is certainly one of them. But erosion is insidious in that it has always crept up very slowly on both ancient and modern civilizations alike. Syrian farmers in 100 A.D. were concerned with supplying Rome in a year when prices were high. We can be sure that slow (even if steady) losses of productivity seemed to them to be academic abstractions in contrast. Today,what we might call the tyranny of the discount rate guarantees the same behavior. Damage far out has little value, and there is no adjustment factor for damage to all of us collectively. Only the gain of the individual or the corporation appears in the spreadsheet. This is a severe, perhaps even fatal, flaw in traditional free-market capitalism, and there are others that relate to this general topic: capitalism has not easily handled the finiteness of our resources. This topic – deficiencies in capitalism – is a big one and I will try to do it justice next quarter. For now, to link the current topic of erosion with that of next quarter’s on capitalism, I offer a brief story of the Devil and the Farmer.

 

The Devil and the Farmer

The Devil, disguised as an innocent agent of a large agricultural company, arrives at a typical Midwestern farm. He has come to suggest to the farmer that he engage in more aggressive farming, and he comes, as usual, with a contract.The contract, if signed, pledges the farmer to farm aggressively and pledges the Devil to guarantee that the farmer’s profits will be multiplied five-fold. But, as always, there is a catch: Footnote 23 is a clause that informs the farmer that squeezing out maximum short-term output will result in the loss of just 1% per year of his soil. The Devil’s dea lis dangerously reasonable, and therefore I would guess that 90% of farmers would feel that their families’ well-being requires that they accept it. The Devil has included a spreadsheet that accurately lays out the profits and also lays out the steady decline in the soil’s productivity and, fiendishly, does it honestly. By the end of the 40-year contract, the farm’s productivity is down by barely 5%, and the farmer’s net financial gains are enormous. So successful has this period been that the farmer re-ups for another 40 years. Once again, the Devil does not cheat. By the 80-year mark, the soil depth after some natural replacement is almost precisely half of its year 1 level (and,remember, it also lost one-third to one-half of its soil on average in the first 150 years of farming), but the farm has prospered enormously. And, even after the soil loss, it is still by no means particularly sub-average because it turns out that all of the local farmers have made the same deal. All of their productivities have dropped by 20% to 25% but, because of global pressures on grain prices, the deal still looks attractive. The spreadsheets, which have not lied in the past, still accurately and honestly show how profitable it will be for great-grandson and all of his neighbors to re-up yet again. In this way, by always adopting the plan with the optimal present value and by following strict capitalist principles, the Midwest and the planet marches off the edge of the cliff, as farmers, prosperous almost to the very end,are finally overwhelmed by armies of starving city dwellers! (Note: Appendix 2 shows the back-up material. It is not even close. Normal farmers, using any reasonable discount,would sign and re-sign until soil and productivity go to zero!)

 

 

Conclusion

 None of this changes the ultimate equation that we have a finite carrying capacity. As the population continues to grow, we will be stressed by recurrent shortages of hydrocarbons, metals, water, and, especially, fertilizer. Our global agriculture, though, will clearly bear the greatest stresses. It may have the responsibility for feeding an extrabtwo to three billion mouths, an increase of 30% to 40% in just 40 years. The availability of the highest quality landwill almost certainly continue to shrink slowly, and the quality of typical arable soil will continue to slowly decline globally due to erosion despite increased efforts to prevent it. This puts a huge burden on increasing productivity.Such increases have to contend not only with thinner soils, but also with increasing climate instability, rising costs of all inputs, and long-term availability limitations of fertilizer. In a way that has not applied to the last one or two hundred years but certainly did to many ancient civilizations, we will need to protect and nurture our resources –  particularly our farms – if we do not intend to follow them into sand and rocks and depopulation. 

 

Encouraged by higher prices, we will become more frugal and more sensible and stretch out our resources, buying us more time for a natural decline in population to eventually bring us into balance. (Leading candidates for greater frugality in grain consumption, for example, would be reduced meat consumption and the banning of the use of quality farmland to produce gasoline substitutes. The U.S. ethanol program is, on a global level, a callous trade-off between unnecessary help to U.S. farmers on the one hand and increasing malnutrition and outright starvation in some of the poorest countries on the other hand.)

 

Here, the discussion is about the pain and time involved in getting to long-term sustainability as well as trying to separate the merely irritating from the real, often surreptitious, threats to the long-term viability of our current affluent but reckless society. The moral however, is clear. As Jim Rogers likes to say: be a farmer not a banker – the world needs good farmers! I might add: or become a resource efficiency expert and help the world save some of them for our grandchildren. Farming will be a satisfying and enriching experience if, on a global basis, we rise to the long-term agricultural challenges. And, if good old short-term profit maximizing continues as it did for the Syrian, Greek,and Roman farmers before us, then at least today’s farm owners will go down with the ship, travelling in first class.