November 27, 2011

The Next Agro-Industrial Revolution

new report published by the McKinsey Global Institute and the McKinsey Sustainability and Resource Productivity practice claims we can save as much as $2.9 trillion by extracting and using the world’s resources more productively.

About 70% of these savings come from 15 areas, ranging from reducing food waste to improving the energy efficiency of buildings. With carbon dioxide emissions priced at $30 a tonne these saving rises to $3.7 trillion. But these big numbers beg the question, if these savings can be identified by McKinsey, why aren’t businesses, countries and individuals making them?

McKinsey preface their report of 130 individual "opportunities" with a Malthusian tract explaining that the flat or falling resource prices of the last century cannot last into the next. Though the world population quadrupled and GDP increased by roughly 20 times in the 20th century, larger resource needs were satisfied by new discoveries and technological advances which made better use of existing supply without driving prices upwards. But the index of commodity prices (at right) shows that this balance and the era of low commodity prices may be well over and the report cites some reasons why the next twenty years don’t look all that bright either.

McKinsey argue that the speed and scale of India and China’s development, bringing three billion more people (in addition to the current 1.8 billion) into the "middle class" (those spending between $10 and $100 a day in PPP terms), will put increased strain on resources at a time when finding new sources of supplies is getting harder and more expensive. New mining discoveries have been broadly flat despite a quadrupling of spending on exploration. Environmental concerns further constrain the world’s ability to increase production to meet demand.

Read full report>>

McKinsey Global Institute, McKinsey Sustainability and Resource Productivity, Agro-Industrial Revolution, Economic Geography, Energy Efficiency

Source: The Economist

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