Keeping the planet happy and well-fed

How plant-based diets and innovative food production methods could ease climate change.

Questions you can ask your UBS Financial Advisor

  • How has climate change affected agriculture?
  • What innovative farming methods can help keep our planet healthy?
  • Why is a plant-based diet essential to slowing global warming?

Farm differently, eat more veggies, says the UN. In a report released last week, the UN Intergovernmental Panel on Climate Change (UNIPCC) highlighted the many ways in which rising temperatures have affected agriculture and conversely, the way our current methods of food production contribute to climate change. Extreme weather events such as drought, floods and thawing permafrost are destroying crop yields and threatening food security. At the same time, the report* notes, current farming practices that involve deforestation and dedicating large tracts of land to the breeding of livestock are compounding the problem by increasing emissions and exacerbating climate change.

"Land is both a source and a sink of greenhouse gases and plays a key role in the exchange of energy, water and aerosols between the land surface and atmosphere," according to the report. When land is degraded, it becomes less productive, restricting what can be grown and limiting the ability of the soil to absorb carbon.

Land use including agriculture and forestry account for about 23% of human greenhouse gas emissions, notes the UNIPCC. Sustainable land management practices such as improved management of cropland and grazing lands,improved and sustainable forest management could help mitigate the problem, the agency points out.

Moving to a more plant-based diet could help drive a shift towards more sustainable farming methods, the panel said. Livestock require more land and water and emit a significant amount of greenhouse gases. A 2013 study by the UN Food and Agriculture Organization estimated that animal agriculture accounts for 14.5% of all humaninduced emissions.

Balanced diets with plant-based foods and animal-sourced food produced sustainably in low greenhouse gas emission systems, present major opportunities for adaptation to and limiting climate change, the IPCC said.

The good news is that we may be on the cusp of major innovations in food production and consumption. For example, companies such as Beyond Meat and Impossible Foods have garnered attention for taking plant-based burgers mainstream. The UBS Chief Investment Office (CIO) estimates the plant-based meat market could grow to USD 85bn by 2030 from just under USD 5bn in 2018.

Lab-grown meat is also a technique being explored. "Using stem cells from living animals, cultured meat can be grown in a lab, using fewer animals per pound of protein an in turn, reducing the amount of emissions associated with raising cattle," says CIO strategist Laura Kane.

A notable innovation is vertical farming - producing food in vertical stacks such as in tall buildings – which could lead to better utilization of land and water. Vertical farming may use 95-99% less water than conventional farming and encourage people to eat locally, lowering the resources needed to transport food. High levels of energy use is often cited as a negative of vertical farming, but according to CIO analyst Wayne Gordon, advances in LED technology may lower the energy needed.

These are just a few of the developments in the rapidly changing landscape of food production. CIO projects food innovation to become a USD 700bn market by 2030, from USD135bn as of 2018.

"As policy¬makers and investors sharpen their focus on the economic and financial implications of climate and other issues, markets will likely reward those companies that are proactive and innovative in establishing their role in a rapidly evolving world. Investors who are ahead of the curve in identifying the winners and losers of these 'long-term' changes will benefit too," says Kane.

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