Challenges of Abundance March 2013
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New approaches and novel technologies could improve availability of affordable food, energy, and health care substantially, quite possibly eliminating the impending shortages many experts anticipated previously. Such supply increases are good news for consumers; however, industries will have to face new market structures, employed approaches, and economic dynamics, and societies will experience geopolitical shifts, environmental issues, and demographic problems, to name just a few major areas of concern.
A shift from scarcity to abundance will naturally have an impact on the global economy, affecting trade, business models, value creation, and political-power structure.
Global agriculture has seen tremendous yield improvements in the twentieth century, but a growing population, water-availability issues, and climate-related changes are challenging future growth potential. Altering crops provides a promising path for expanding production substantially. Genetic modification of crops has become a growth market because of its ability to increase yields, although the technology is controversial in some areas of the world. But microbiome research may also provide a pathway to improvements in crop agriculture. Microbiomes are the communities of microbes that live inside, for example, the human gut or plant-root nodules, and an increasing body of research suggests that plant microbiomes influence a plant's ability to adapt to its environment. Russell Rodriguez, affiliate associate professor in the University of Washington's (Seattle, Washington) department of biology, and his group transferred endophytes (symbiotic fungi and bacteria that grow within plants) from grass that grows in hot springs at 70°C into wheat seeds. The group found that the supplemented wheat also could grow at 70°C and use 50% less water than ordinary wheat seeds do. The same group of scientists showed similar transferability of adaptability traits when transferring endophyte fungi from salt-tolerant or cold-tolerant species into rice. Researchers from New Mexico State University (Las Cruces, New Mexico) have performed similar work and achieved similar results. These results suggest that in the future, companies could sell plants that contain microorganisms transferred from a different plant that has a particular trait that farmers need to grow food and feed crops on land that is otherwise unsuitable for farming.
Automation in agriculture improves efficiency and yields by delegating time-consuming tasks to machines, and anticipated growing demand from Asia is spurring investment in agricultural automation in Australia. Japan's Dream Project farm can offer a glimpse into the future of automation. The farm occupies a 250-hectare area damaged by the 2011 tsunami and is used as a testing ground for autonomous agricultural machines, carbon-capture-and-reuse techniques, and other experimental farming technologies. Although currently experimental, vertical farming is a novel concept that could enable agriculture in urban areas. Plantagon (Stockholm, Sweden) and AeroFarms (Ithaca, New York) are among the companies providing infrastructure for urban-farming experiments.
Much like agriculture, the consumption of fossil fuels places stress on the environment and therefore will likely have substantial economically negative effects in the future. Until fairly recently, reaching peak oil—the point of maximum oil extraction—was a short-term possibility. Shale production, though, is set to revolutionize the energy landscape: The International Energy Agency (Paris, France) predicts that US oil output could overtake that of Saudi Arabia by 2020. Current exploration and extraction opportunities seem mostly to favor North America, but the Chinese government intends to take advantage of shale-gas opportunities as well. At present, China's annual shale-gas output is essentially nonexistent, but the nation plans to increase its output to 230 billion cubic feet by 2015 and to as much as 3.53 trillion cubic feet by 2020. The potential amount of natural gas and tight oil available has led analysts to caution that the atmosphere lacks the capacity to absorb the greenhouse gases that the use of those fuel supplies would produce. And a major geopolitical concern is that power structures could shift substantially in a fairly short period. A study by the Bundesnachrichtendienst (Pullach, Germany), Germany's foreign-intelligence agency, foresees a number of developments: The boom in US crude-oil production could end US dependence on oil from the Middle East, radically changing politics in the Persian Gulf region. China will be negatively affected by the development, and the political power structure between the United States and China will change dramatically. Russia also will experience problematic developments. The global oversupply of gas and oil, though, will benefit Germany and increase its energy security. US deficits will fall as a result of the increase in US energy resources, stabilizing the US dollar as the world's dominant currency.
Health care is another scarce resource, both in the developing world (where millions of people still lack access to basic care) and in the developed world (where accessibility of services can be an issue). Technology, though, could portend major change; for example, advances in nanotechnology may be ushering in a new era of personalized medicine. Lab-on-a-chip technologies offer the promise of improved and increasingly automated point-of-care diagnostic testing. Mobile and sensor technologies also offer a completely new approach to the diagnosis and treatment of various medical conditions. Instead of addressing health issues when they emerge, novel approaches enable constant monitoring of vital data to discover medical conditions at their onset. A previous Scan article, "Preparing for Immortality," highlights future drugs and procedures that could alleviate the physical and mental issues associated with old age and perhaps extend people's lives significantly. But that same article also mentions some problem areas of extending life. And most countries' retirement, social-security, and health-care systems currently are not prepared to deal with substantial increases in the ratio of senior citizens to working citizens; generational conflicts would become another area of concern.
The above developments have the potential to remove some of the supply constraints on affordable food, energy, and health care—even if they fulfill only parts of the currently conceivable potential. A shift from scarcity to abundance—or, more prudent, from restricted availability to potential oversupply—will naturally have an impact on the global economy, affecting trade, business models, value creation, and political-power structure. A potential simultaneous change across these resource areas will have an accumulative effect on economic developments, resulting in both positive and negative effects. The change will affect countries, companies, and individuals, and the process of change will create political, economic, and societal uncertainties that will require strategy and policy changes. Problematically, the outcome of these changes is unpredictable, and various scenarios exist. The resulting uncertainty requires companies to monitor these areas closely and develop flexible strategic plans.