Climate Change and Agriculture

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Climate change is one of the major issues of our time. Here, we're focused on solutions, particularly agricultural ones. But, to build solutions you have to understand the problem. This isn't meant to be a doomer post, but we must build a base understanding of the challenges in the context of agriculture.

TL;DR

• Climate Change will affect crop yields as soon as 2030

• Agriculture contributes about 10% of the world's Greenhouse gas emissions

• Green Agriculture Solutions will see about $20 billion of investment from the US government through the inflation reduction act. Up to $1 trillion will be invested through the Paris Accords, making this a space with massive growth potential.

• Net 0 emissions is a scientific and concept that gives us the framework for reducing emissions.

Climate Change Big Picture

We all know what climate change is. But here is a quick summary of what Climate Change actually means. According to NASA, it could affect crop yields as soon as 2030. On the chart below you'll see the steady increase of average global temperature, with sharp increases over the last decade. The pattern is clear.

For 98% of the planet the 20th century was the warmest century of the last last 2000 years. On the chart below you'll see the steady increase of average global temperature, with sharp increases over the last decade.

The goals set forth by the UN are to keep warming under an average global increase 1.5 to 2 degrees celsius. To do this we need to reach net 0 carbon emissions. Parts of the globe will see the effects more than others, but this number is an average of the entire planet. While this may not seem like a large change, our ecosystems are sensitive. Small changes make big differences.

Why does this matter for Agriculture?

This year, China and Western Europe, saw extreme drought. Pakistan had record floods, Greenland saw massive ice melting events, and wildfires burned in the mediterranean. The more warming continues, the more extreme and common these events will become.

Agriculture contributes to about 10% of the world’s green house gas emissions. Much of that comes from methane (animal digestive tracts), and nitrous oxide (fertiliser). Farmers in developing parts of the world tend to optimise for high yields, which produce more greenhouse gases. This forces governments to invest to achieve Paris accord agreements.

Extreme weather events are dangerous for the yields of both crops and livestock. Once these extreme weather events begin to affect crop yields we could be in danger.

How's this going to work?

Here we're going to talk about the daddy of all climate change efforts... the most boring one... policy. We're not going to belabour the boring stuff.

While it's a strange thought, government spending dictates much of innovation. Most of our favourite consumer technologies come from government spending. That makes it important to understand where governments spend money. Government investment de-risks innovation in those areas for private investors.

First is Article 6 of the Paris Accords. It should generate about $1 trillion of new capital investment towards developing sustainable infrastructure and battling climate change globally.

Next is the new Inflation Reduction Act (IRA) in the United States. The law, as passed, will raise $738 billion and spend $391 billion on energy and climate change. Those are big numbers. The IRA should reduce Greenhouse Gas emissions by up to 40% over the next decade, and create up to 9 million jobs.

The IRA earmarked about $20 billion for agriculture. This includes agricultural conservation, reduction of methane emissions, improving soil carbon, and sequestering carbon pollution.

These spaces will see increased investment not only from governments but from private markets. When governments decide to invest dollars in a space, private investors are de-risked. They get the signal that more resources should be spent here. Higher risk assets in those sectors are then funded more aggressively.