February 28, 2011

The 9 billion-people question


The world’s population will grow from almost 7 billion now to over 9 billion in 2050. John Parker asks if there will be enough food to go round
THE 1.6-hectare (4-acre) Broadbalk field lies in the centre of Rothamsted farm, about 40km (25 miles) north of London. In 1847 the farm’s founder, Sir John Lawes, described its soil as a heavy loam resting on chalk and capable of producing good wheat when well manured. The 2010 harvest did not seem to vindicate his judgment. In the centre of the field the wheat is abundant, yielding 10 tonnes a hectare, one of the highest rates in the world for a commercial crop. But at the western end, near the manor house, it produces only 4 or 5 tonnes a hectare; other, spindlier, plants yield just 1 or 2 tonnes.
Broadbalk is no ordinary field. The first experimental crop of winter wheat was sown there in the autumn of 1843, and for the past 166 years the field, part of the Rothamsted Research station, has been the site of the longest-running continuous agricultural experiment in the world. Now different parts of the field are sown using different practices, making Broadbalk a microcosm of the state of world farming.
The wheat yielding a tonne a hectare is like an African field, and for the same reason: this crop has had no fertiliser, pesticide or anything else applied to it. African farmers are sometimes thought to be somehow responsible for their low yields, but the blame lies with the technology at their disposal. Given the same technology, European and American farmers get the same results.
The wheat bearing 4 or 5 tonnes a hectare is, roughly, like that of the Green Revolution, the transformation of agriculture that swept the world in the 1970s. It has been treated with herbicides and some fertilisers, but not up to the standard of the most recent agronomic practices, nor is it the highest-yielding semi-dwarf wheat variety. This is the crop of the Indian subcontinent and of Argentina.
The extraordinary results in the centre of the field are achieved by using the best plants, fertilisers, fungicides and husbandry. The yield is higher than the national average in Britain, and is as good as it gets.
Seeds of doubt
But the Broadbalk field shows something else. Chart 1 tracks its yields from the start, showing how the three different kinds of wheat farming—African, Green Revolution and modern—have diverged, sometimes quite suddenly: in the 1960s with the introduction of new herbicides for Green Revolution wheat, and in the 1980s with new fungicides and semi-dwarf varieties. Worryingly, though, in the past 15 years the yields of the most productive varieties of wheat in Broadbalk have begun to level out or even fall. The fear is that Broadbalk may prove a microcosm in this respect, too.
At the start of 2011 the food industry is in crisis. World food prices have risen above the peak they reached in early 2008 (see chart 2). That was a time when hundreds of millions of people fell into poverty, food riots were shaking governments in dozens of developing countries, exporters were banning grain sales abroad and “land grabs” carried out by rich grain-importing nations in poor agricultural ones were raising awkward questions about how best to help the poor.
This time, too, there have been export bans, food riots, panic buying and emergency price controls, just as in 2007-08. Fears that drought might ruin the current wheat crop in China, the world’s largest, are sending shock waves through world markets. Discontent over rising bread prices has played a part in the popular uprisings throughout the Middle East. There are differences between the periods, but the fact that agriculture has experienced two big price spikes in under four years suggests that something serious is rattling the world’s food chain.
The food industry has been attracting extra attention of other kinds. For years some of the most popular television programmes in English-speaking countries have been cooking shows. That may point to a healthy interest in food, but then again it may not. The historian Livy thought the Roman empire started to decay when cooks acquired celebrity status.
At a meeting of the Group of Eight (G8) industrial countries in 2009 the assembled leaders put food alongside the global financial crisis on their list of top priorities, promising to find $20 billion for agriculture over three years. This year the current president of the Group of 20 (G20), France’s Nicolas Sarkozy, wants to make food the top priority. The Gates Foundation, the world’s richest charity, which had previously focused on health and development generally, started to concentrate more on feeding the world. At last month’s World Economic Forum, a gathering of businesspeople and policymakers in Davos, 17 global companies launched what they described as “a new vision for agriculture”, promising to do more to promote markets for smallholders—a sign of rising alarm in the private sector.
Anything for dinner?
Some of this public and political attention has been sporadic, but it is justified. An era of cheap food has come to an end. A combination of factors—rising demand in India and China, a dietary shift away from cereals towards meat and vegetables, the increasing use of maize as a fuel, and developments outside agriculture, such as the fall in the dollar—have brought to a close a period starting in the early 1970s in which the real price of staple crops (rice, wheat and maize) fell year after year.
This has come as a shock. By the 1990s most agricultural problems seemed to have been solved. Yields were rising, pests appeared under control and fertilisers were replenishing tired soil. The exciting areas of research in life sciences were no longer plants but things like HIV/AIDS.
The end of the era of cheap food has coincided with growing concern about the prospects of feeding the world. Around the turn of 2011-12 the global population is forecast to rise to 7 billion, stirring Malthusian fears. The price rises have once again plunged into poverty millions of people who spend more than half their income on food. The numbers of those below the poverty level of $1.25 a day, which had been falling consistently in the 1990s, rose sharply in 2007-08. That seems to suggest that the world cannot even feed its current population, let alone the 9 billion expected by 2050. Adding further to the concerns is climate change, of which agriculture is both cause and victim. So how will the world cope in the next four decades?
That question forms the backbone of this special report. The answer to it cannot be a straightforward technical or biological one because food is basic to life. In the Maya creation myth, the first humans were made of maize dough. In the slang of Marathi, a language of west central India, the man on the street is known as “fried bread”—after the workers’ favourite snack.
Because food is so important, agriculture—more than any other form of economic activity—is expected to achieve a series of competing and overlapping goals that change over time and from place to place. The world looks to farmers to do more than just produce food. Agriculture is also central to reducing hunger (which is not quite the same thing) and provides many people’s main route out of poverty. Food is probably the biggest single influence on people’s health, though in radically different ways in poor countries and in rich ones, where the big problem now is obesity. Food is also one of the few pleasures available to the poorest. In thefavelas (slums) of São Paulo, the largest city in South America, takeaway pizza parlours are proliferating because many families, who often do not have proper kitchens, now order a pizza at home to celebrate special occasions.
Given these conflicting aims, it is not surprising that the food crisis has produced contradictory accounts of the main problem and radically different proposals for solving it. One group is concerned mainly about feeding the world’s growing population. It argues that high and volatile prices will make the job harder and that more needs to be done to boost supplies through the spread of modern farming, plant research and food processing in poor countries. For those in this group—food companies, plant breeders and international development agencies—the Green Revolution was a stunning success and needs to be followed by a second one now.
The alternative view is sceptical of, or even downright hostile to, the modern food business. This group, influential among non-governmental organisations and some consumers, concentrates more on the food problems of richer countries, such as concerns about animal welfare and obesity. It argues that modern agriculture produces food that is tasteless, nutritionally inadequate and environmentally disastrous. It thinks the Green Revolution has been a failure, or at least that it has done more environmental damage and brought fewer benefits than anyone expected. An influential book espousing this view, Michael Pollan’s “The Omnivore’s Dilemma”, starts by asking: “What should we have for dinner?” By contrast, those worried about food supplies wonder: “Will there be anything for dinner?”
This special report concentrates on the problems of feeding the 9 billion. It therefore gives greater weight to the first group. It argues that many of their claims are justified: feeding the world in 2050 will be hard, and business as usual will not do it. The report looks at ways to boost yields of the main crops, considers the constraints of land and water and the use of fertiliser and pesticide, assesses biofuel policies, explains why technology matters so much and examines the impact of recent price rises. It points out that although the concerns of the critics of modern agriculture may be understandable, the reaction against intensive farming is a luxury of the rich. Traditional and organic farming could feed Europeans and Americans well. It cannot feed the world.

U.N. Unveils Tool for Tracking Progress of Climate Talks


We’ll always have Cancún. Online, at least.
The United Nations office in charge of international climate change negotiations introduced a new online tool on Monday to track progress toward meeting the goals agreed to last December at an international climate conference in Cancún, Mexico.
That meeting, remember, got the international talks back on track after the debacle at Copenhagen a year earlier. Climate negotiators came to Cancún in a more businesslike mood and with more modest and realistic expectations. No one expected to conclude a binding international treaty, and none was produced.
But the more than 190 nations represented at the talks achieved marked progress on the main agenda items: mitigation of greenhouse gas emissions, adaptation to climate change, international financing arrangements, slowing deforestation and development of low-carbon energy sources. They recommitted to taking collective action to keep the rise in global temperature below 2 degrees Celsius over the next half-century.

The new Web site maintained by the United Nations Framework Convention on Climate Change details terms of the Cancún agreement and overall progress toward meeting them. A separate Web site compiles the pledges by individual nations toward those goals.
The United States, for example, offered a submission last week spelling out its views on how a committee on adaptation should be structured, financed and operated.

Oil leak


Could one of the world’s top petroleum producers really go bankrupt?
EVER since Greece plunged into a sovereign-debt crisis in 2009, investors have focused on which European country might be next. According to Capital Economics, a research firm in London, however, the next trouble spot could be Venezuela. “There is a growing risk that the government will default on its obligations in 2012,” its analysts wrote on February 17th. Some in the markets have taken fright, too: the country’s credit-default swaps imply a 50% chance of default by 2015. That may be overblown. Even so, Hugo Chávez, Venezuela’s leftist president, seems to be pulling off a dubious achievement by causing the bond markets to fear for the solvency of the world’s eighth-largest oil producer.
The chief cause of Venezuela’s travails has been Mr Chávez’s pillaging of PDVSA, the state oil firm. He has packed it with loyalists, starved it of investment and used it for social spending, cutting its output from 3.3m barrels per day (b/d) in 1998 to around 2.25m b/d, according to industry estimates. Of that, some 1m b/d is sold at subsidised prices at home or to regional allies, leaving just 1.25m b/d for full-price exports.
Meanwhile, the president’s hostility to business has devastated the rest of the economy. He has nationalised hundreds of companies and trumped up charges against their owners, causing much of Venezuela’s private sector to shut up shop and flee. As a result, the country has seen vast capital flight, and must import many goods that it used to produce. Non-oil exports have ground to a halt: petroleum now accounts for 92% of its dollar intake.
A misguided currency policy has exacerbated the malaise. In 2005 Mr Chávez pegged the bolívar at 2.15 to the dollar. However, he also tolerated a legal parallel market that kept the country supplied with hard currency at a higher rate (providing countless opportunities for arbitrage).
Last year he closed that market and created a new state body, which provides just over half the dollars that the old system did, at a price of 5.3 bolívares. Venezuela also reinforced its ban on black-market trading, making it punishable by up to seven years in jail. (Merely publishing the unofficial dollar price, now around 8-10 bolívares, has long been illegal.) As a result, foreign exchange is now scarce. Venezuelans have begun asking friends abroad to send them necessities like nappies, sanitary towels and baby milk.
The government has tried to compensate for these woes by raiding one of its piggy banks—this year it has grabbed all but $3m of the $832m in a rainy-day fund set up to even out oil-price fluctuations—and by leaning on its workers. Public employees have staged frequent protests over unpaid salaries, worsening conditions and a virtual freeze on collective bargaining.
But Mr Chávez’s main short-term solution has been borrowing. Since 2008 China has lent Venezuela $12 billion and is being repaid in oil shipments, cutting PDVSA’s annual revenues by a further 20%. The government’s opaque accounting makes it impossible to know how it has used the money. Net public debt rose from 14% of GDP in 2008 to 29% last year, and the Economist Intelligence Unit, our sister company, expects it to reach 35% in 2011. The country cannot continue borrowing at today’s rates: PDVSA’s latest dollar-denominated bonds pay a 12.75% coupon.
Yet even though things look bad now, a default probably does not loom in the near future. If oil stays at $100 a barrel, the Capital Economics report calculates, Venezuela’s export revenues should just cover its foreign-exchange requirements—$11 billion of debt service, $28 billion of capital flight, and $100 billion of imports—over the next two years. And even if petroleum prices drop, the central bank has $22.5 billion in cash and gold, and another $7.5 billion in further unspecified illiquid assets.
Moreover, since 2005 the government has squirrelled away $39 billion in a separate, unaudited fund called Fonden. Although analysts do not know how much of this has been spent, some part has probably been saved. There are rumours that the president is hoarding hard currency to prepare for 2012, when he faces a difficult re-election battle that will cost him money. The recent spike in oil prices caused by unrest in the Middle East will surely give Mr Chávez some extra breathing room. And at a pinch, he could probably turn to his friends in Beijing for a new loan.
Nonetheless, that sovereign default is even being mentioned in the same breath as a big oil producer in a fast-growing region says something about Mr Chávez’s economic stewardship. Even if he makes it past 2012, he will eventually either have to change his policies or deny bondholders what they are owed.

Breaking Bad Energy Habits


A behavior-modification program has preliminary success in getting people to cut consumption

What if smart meters, real-time monitors and rebates aren't enough to change the way people consume electricity? What if running the washer and dryer during peak hours turns out to be a habit as difficult to kick as, say, smoking?

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As part of an effort to convince more New Yorkers to install solar panels on rooftops, the City University of New York has created a color coded digital map of the city that identifies which buildings and roofs get the most sunlight.
Some utility companies think that might be the case.
In a pilot program designed by a Colorado energy-services company, Cape Light Compact of Barnstable, Mass., is trying to encourage energy conservation among a test group of its customers by using behavior-modification techniques, some of which resemble those that help people quit smoking.
The result: Average daily electricity consumption for participants in the first year of the test fell more than 9%.
The results are hardly definitive, of course. This test involved just 91 participants. In addition, it isn't clear at this point what kind of recurring costs would be involved with behavior-modification programs. The Cape Light test cost $75,000, says spokeswoman Briana Kane. A second phase, to begin this summer, is expected to involve 500 participants and cost $323,477.
Known Unknowns
Also, even if customers are persuaded to hang their laundry on a clothesline or adopt other energy-saving habits, no one can say how long the new habits will last. Such unknowns can make planning difficult for utilities.
Tendril's program aims to cut customers' energy use through a series of prompts and responses.
Cape Light is working with Tendril Inc., a smart-grid company based in Boulder, Colo., that specializes in energy-management technology. The company has several similar tests under way elsewhere and continues to pitch the concept to other utilities as well.
Here's how the Cape Light test worked in its first year, and some of what the company has learned so far.
Two basic tools are required: The test relied on a measuring device and a website, both designed by Tendril. The device consisted of something called a CT clamp—which attached to the main electrical wire coming into each house and measured the amount of electricity being used—and a monitor that transmitted the data in real time to the website.
The website displayed each participant's data on personalized and secure pages. The site also provided a network through which the participants interacted with one another and the utility, receiving energy-saving tips and other messages that aim to encourage conservation.
Get participants to set goals: For the first test, 91 participants were selected after they responded to a 2009 newspaper advertisement. At the outset, everyone was asked by how much they wished to reduce their electricity consumption for the coming year. The average goal: a cut of about 14%.
Setting goals is a key step in behavior modification, says Tendril's Mike Bhukin, an architect and director of the firm's consumer-products group. Setting goals helps a person move from vague interest to actual commitment, Mr. Bhukin says.
Indeed, the Cape Light test found that participants who set the highest goals also achieved the biggest energy savings.
Jeff Treiber, a 55-year-old consultant on organizational efficiency and employee morale, reached his goal of 30%. Mr. Treiber lives in a classic single-story cape in South Dennis, Mass. He has tried to save energy ever since the 1970s oil crisis, he says. "I thought I was doing the right thing, but I could never see a connection to my bill," Mr. Treiber says. "It was almost a lottery."
The Cape Light program, he says, changed his relationship with the energy bill and put him in control. A dehumidifier that he used to run 24 hours, for example, is now on for only eight hours a day. He says he doesn't notice a change, except in his electricity bill.
Ask for greater commitment as you go: Tendril came up with about 200 suggested actions to help participants meet their goals. Suggestions were specific to people's situations, such as whether they had electric heat. People also received reminders to follow through on actions which they committed to.
Just as important as asking people to commit to specific actions was the order in which the suggestions appeared. Simple tasks were suggested first, to make initial participation easier and build confidence, says Paul Cole, Tendril's vice president of consumer products.
After they pick all the low-hanging fruit and see the results, says Mr. Bhukin, people start seriously considering more significant engagement. "They are now on the path to consistent behavior change," he says.
Maggie Geist, 64, executive director of the nonprofit Association to Preserve Cape Cod, began with sweeping and mopping instead of running the vacuum, then moved on to insulating her home and installing solar panels. She lives in a "clunky old farmhouse" in North Falmouth, Mass., she says. She was already careful about energy use, she says, but reduced her usage 30%.
Use points as rewards: An important part of the program was the points each participant accumulated as they did something positive—logged on to the page, committed to an action, reached their goal on a particular day. And because the points were visible to everyone, they gave people a way to show off their accomplishments.
"I'm very competitive," Mr. Treiber says. The site showed stats on the kilowatt-hours and dollars he saved, he says, but the points made the experience more like a game.
Points could be redeemed for rewards such as gift certificates, too. Mr. Treiber used a $25 gift certificate to buy power strips into which he plugged his computers and stereo.
Help people teach and encourage one another: Social-networking features on the website were crucial, partly because they helped with learning. Users could ask questions, post comments and recommendations, and compare their energy usage with that of others. (Participants could see not only their own and other people's specific data, but compare how they were doing with similar households in aggregate. Aliases were used to protect participants' identities.)
The support participants gave one another was important, too.
"If you're starting to lose weight, no one knows what you're going through like other people going through the same thing," Mr. Bhukin says.
The community aspect also gave participants a forum in which they could be seen as experts, allowing them to feel good about themselves as they helped fellow participants. As Mr. Bhukin says, people who quit smoking stay off tobacco themselves by supporting others.
Early Conclusions
Cape Light and Tendril say they are encouraged by the results so far and are continuing to study behavioral techniques. The second phase of the study, with more participants, will begin this summer.
During the first year, 60% of participants saved some energy—between one and 26 kilowatt-hours a day. The average daily savings: 2.9 kilowatt-hours.
But a quarter of the participants actually increased their energy use. "We are only starting to look into the people who haven't had as much success in the program," says Mr. Bhukin, who thinks factors such as new appliances, building additions or additional occupants may have played a role.
It's also not clear whether habits adopted during the pilot will persist. Tendril says preliminary figures for participants still with the program continue to average savings of about 8% to 9%. But will someone who cut their usage 30% in the first year continue to achieve reductions in the years that follow, or will their good intentions slip?
Says Mr. Bukhin: "No one really knows what the end game is."
Ms. Chernova is a special writer for Dow Jones VentureWire in New York. She can be reached at yuliya.chernova@dowjones.com.

A Window Into the Nuclear Future


TerraPower—with the backing of Bill Gates—has a radical vision for the reactors of tomorrow

Bill Gates reshaped the computer industry by pumping out new versions of Microsoft Windows software every few years, fixing and fine tuning it as he went along.

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He's now betting that he can reshape the energy industry with a project akin to shipping Windows once and having it work, bug-free, for 50 years.
Thanks to his role funding and guiding a start-up called TerraPower LLC, where he serves as chairman, Mr. Gates has become a player in a field of inventors whose goal is to make nuclear reactors smaller, cheaper and safer than today's nuclear energy sources. The 30-person company recently completed a basic design for a reactor that theoretically could run untouched for decades on spent nuclear fuel. Now the company is seeking a partner to help build the experimental reactor, and a country willing to host it.
AFP/Getty Images
Bill Gates
It's a long-term, risky endeavor for Mr. Gates and his fellow investors. The idea will require years to test, billions of dollars (not all from him) and changes in U.S. nuclear regulations if the reactor is to be built here. Current U.S. rules don't even cover the type of technology TerraPower hopes to use.
"A cheaper reactor design that can burn waste and doesn't run into fuel limitations would be a big thing," Mr. Gates says. He adds that in general "capitalism underinvests in innovation," particularly in areas with "long time horizons and where government regulations are unclear."
TerraPower is one of a host of inventors, reactor makers and electric utilities trying to kick-start innovation in a field that hasn't seen a big technological advance in decades. President Barack Obama wants to help, too, designating $853 million for nuclear research, including small-scale reactors, in his proposed 2012 budget.
The type of reactor TerraPower is working on, a traveling-wave reactor, could reduce the need for enrichment and reprocessing of uranium. Executives at the Bellevue, Wash., company say their reactor could even be buried in the ground, where it could run for 100 years.
Green Wood
To understand how a traveling-wave reactor works, think of a wood-burning stove. Today's reactors use dried wood—enriched uranium-235—that burns hot and quickly. A traveling-wave reactor would start with a little bit of dried wood to get a hot flame going, but most of the fuel would be green, or wet, wood—depleted uranium-238. The wet logs wouldn't burn as hot as the dried ones, but they would continue to burn long after the hot flame goes out.
Burning the enriched uranium would shoot neutrons into the depleted uranium making up roughly 90% of the fuel. That process would produce plutonium, which would create energy as it continued to get hit by even more neutrons. It's a slow, controlled reaction that could continue over many years without need of human intervention. And in TerraPower's design, the core of the reactor, where fission takes place, would be small: a cylinder about 10 feet wide and 13 feet long.
View the parts of TerraPower's traveling-wave reactor.
Another plus: Large supplies of depleted uranium are available as a byproduct of today's water-cooled reactors. Removing it from those reactors and reprocessing it for reuse is a costly procedure, and a source of worry that radioactive material might fall into the wrong hands. Reducing the need for reprocessing could save money and reduce the risk of nuclear proliferation.
The idea for traveling-wave reactors has been around for decades but was mothballed amid waning U.S. interest in nuclear power. Then came a boost in the 1990s from a research paper by scientists at Lawrence Livermore National Laboratory, including Edward Teller, the father of the hydrogen bomb and the brain behind Ronald Reagan's Star Wars missile-defense initiative; and an acolyte of Mr. Teller's named Lowell Wood.
Mr. Wood recently found a receptive ear in Nathan Myrhvold, a former Microsoft executive and head of Intellectual Ventures, a patent and invention firm in Bellevue. Mr. Myrhvold is a close friend of Mr. Gates, who is also an investor in Intellectual Ventures. In recent years the three men have done a lot of brainstorming about future technologies, including the traveling-wave reactor.
The reactor idea intrigued Mr. Gates, who was studying energy and climate change at the time. Among the reactor's other potential advantages, Mr. Gates says he was interested in its potential for producing cheap, zero-carbon energy and its ability to turn "what is a waste product into fuel."
Mr. Gates got the project rolling with seed money in the tens of millions of dollars. Venture-capital firms Charles River Ventures and Khosla Ventures invested $35 million last year. Nuclear-industry veteran John Gilleland is TerraPower's chief executive; a network of part-time researchers and scientists around the country offer input.
Looking for a Home
The traveling-wave reactor is still virtual, existing only in software on computers at TerraPower headquarters. Mr. Myrhvold says there is a basic design, not a full blueprint. But it's enough for the next step: building a test version of the reactor. TerraPower is looking for a customer, such as an electric utility, and a country that is willing to house an experimental reactor.
The company has made pitches in France and Japan, Mr. Myrhvold says; both have big nuclear-power industries. He's also made the rounds in Russia, China and India, he says. So far, there have been no takers.
One country he is certain won't be a customer anytime soon is the U.S., which doesn't yet have a certification process for reactors like TerraPower's. It would likely be a decade or more before the reactor could be tested on U.S. soil. "I don't think the U.S. has the willpower or desire to build new kinds of nuclear reactors," Mr. Myrhvold says. "Right now there's a long, drawn-out process."
Policy experts say that's with good cause. "Our regulatory process, while burdensome, is there for a reason, and it does represent the gold standard around the world for nuclear safety," says Paul Genoa, director of policy development at the Nuclear Energy Institute in Washington.
Mr. Myrhvold says he hopes the process will speed up and spark innovation to meet the world's growing energy demand. "Let's try 20 ideas," he says. "Maybe five of them work. That's the only way to invent our way out of the pickle we're in."
Mr. Guth is the Los Angeles bureau chief for The Wall Street Journal. He can be reached at rob.guth@wsj.com.