HISTORY'S GREATEST INVESTMENT OPPORTUNITY
Chapter 4. The Shape of the Eco-Economy
Lester R. Brown, Eco-Economy: Building an Economy for the Earth
(W.W. Norton & Co., NY: 2001).
Restructuring the global economy so that
economic progress can be sustained represents the greatest investment
opportunity in history. As noted in Chapter 1, the conceptual shift
is comparable to that of the Copernican Revolution in the sixteenth
century. In scale, the Environmental Revolution is comparable to
the Agricultural and Industrial Revolutions that preceded it.
The Agricultural Revolution involved restructuring the food economy,
shifting from a nomadic life-style based on hunting and gathering
to a settled life-style based on tilling the soil. Although agriculture
started as a supplement to hunting and gathering, it eventually
replaced it almost entirely. The Agricultural Revolution entailed
clearing one tenth of the earth's land surface of either grass or
trees so it could be plowed. Unlike the hunter-gatherer culture
that had little effect on the earth, this new farming culture literally
transformed the surface of the earth.17
The Industrial Revolution has been under way for two centuries,
although in some countries it is still in its early stages. At its
foundation was a shift in sources of energy from wood to fossil
fuels, a shift that set the stage for a massive expansion in economic
activity. Indeed, its distinguishing feature is the harnessing of
vast amounts of fossil energy for economic purposes. While the Agricultural
Revolution transformed the earth's surface, the Industrial Revolution
is transforming the earth's atmosphere.
The additional productivity that the Industrial Revolution made
possible unleashed enormous creative energies. It also gave birth
to new life-styles and to the most environmentally destructive era
in human history, setting the world firmly on a course of eventual
economic decline.
The Environmental Revolution resembles the Industrial Revolution
in that each is dependent on the shift to a new energy source. And
like both earlier revolutions, the Environmental Revolution will
affect the entire world.
There are differences in scale, timing, and origin among the three
revolutions. Unlike the other two, the Environmental Revolution
must be compressed into a matter of decades. The other revolutions
were driven by new discoveries, by advances in technology, whereas
this revolution is being driven more by our instinct for survival.
As noted earlier, there has not been an investment situation like
this before. The amount that the world spends now each year on oil,
the leading source of energy, provides some insight into how much
it could spend on energy in the eco-economy. In 2000, the world
used nearly 28 billion barrels of oil, some 76 million barrels per
day. At $27 a barrel, this comes to $756 billion per year. How many
wind turbines will it take to produce this much energy? How many
solar rooftops? How many geothermal wells?18
One big difference between the investments in fossil fuels and those
in wind power, solar cells, and geothermal energy is that the latter
will supply energy in perpetuity. These "wells" will not run dry.
If the money spent on oil in one year were invested in wind turbines,
the electricity generated would be enough to meet one fifth of the
world's needs.19
Investments in the infrastructure for the new energy economy, which
would eventually have to be made as fossil fuels are depleted, will
obviously be huge. These include the transmission lines that connect
wind farms with electricity consumers, and the pipelines that link
hydrogen supply sources with end-users. To a substantial degree,
the infrastructure for the existing energy economythe
transmission lines for electricity and the pipelines for natural
gascan
be used in the new energy economy as well. The local pipeline distribution
network in various cities for natural gas can easily be converted
to hydrogen.
For developing countries, the new energy sources promise to reduce
dependence on imported oil, freeing up capital for investment in
domestic energy sources. Although few countries have their own oil
fields, all have wind and solar energy. In terms of economic expansion
and job generation, these new energy technologies are a godsend.
Investments in energy efficiency are also likely to grow rapidly
simply because they are so profitable. In virtually all countries,
industrial and developing, saved energy is the cheapest source of
new energy. Replacing inefficient incandescent light bulbs with
highly efficient compact fluorescent lamps offers a rate of return
that stock markets are unlikely to match.
There are also abundant investment opportunities in the food economy.
It is likely that the world demand for seafood, for example, will
increase at least by half over the next 50 years, and perhaps much
more. If so, fish farming outputnow
31 million tons a yearwill
roughly need to triple, as will investments in fish farming. Although
aquaculture's growth is likely to slow from the 11 percent a year
of the last decade, it is nonetheless likely to be robust, presenting
a promising opportunity for future investment.20
A similar situation exists for tree plantations. At present, tree
plantations cover some 113 million hectares. An expansion of these
by at least half, along with a continuing rise in productivity,
is likely to be needed both to satisfy future demand and to eliminate
one of the pressures that are shrinking forests. This, too, presents
a huge opportunity for investment.21
No sector of the global economy will be untouched by the Environmental
Revolution. In this new economy, some companies will be winners
and some will be losers. Those who anticipate the emerging eco-economy
and plan for it will be the winners. Those who cling to the past
risk becoming part of it.
ENDNOTES:
17.
Total land area is 14.8 billion hectares, according to Charles R.
Coble et al., Earth Science (Englewood Cliffs, NJ: Prentice-Hall,
1987), p. 102; arable land is 1.4 billion hectares according to
FAO, op. cit. note 2.
18. World oil consumption and price per barrel for 2000 from U.S.
Department of Energy (DOE), Energy Information Administration, www.eia.doe.gov
.
19. Based on $1 million/megawatt installed cost of wind turbines
and 40-percent capacity factor, and on 12.8 trillion kilowatt-hours
world electricity consumption from DOE, op. cit. note 18.
20. FAO, op. cit. note 14.
21. FAO, Forest Resources Assessment (FRA) 2000, www.fao.org/forestry/fo/fra/index.jsp,
updated 10 April 2001.
Copyright
© 2001 Earth Policy Institute
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