Naturally Interesting

Investing in forests is nothing new. Timber companies have been doing it forever. But this time its different. Canopy Capital has bought a stake in the 1-million-acre Iwokrama rain forest in Guyana with the intent to preserve it. Forests today are gaining carbon value that companies Canopy Capital and Merrill Lynch are taking advantage of as wise investment moves. These forests can be used as carbon sinks and for emissions credits. Merrill Lynch lynch spent $9 million in Indonesia and expects to earn a healthy return on its investment.

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Merrill Lynch is doing the same in Indonesia.

In Science a few months back -  Economics of Overexploitation Revisited.

From the abstract:

About 25% of the world’s fisheries are depleted such that their current biomass is lower than the level that would maximize the sustained yield (MSY). By using methods not previously applied in the fisheries conservation context, we show in four disparate fisheries (including the long-lived and slow-growing orange roughy) that the dynamic maximum economic yield (MEY), the biomass that produces the largest discounted economic profits from fishing, exceeds MSY.

Translated: Commercial fishers should cut back on fishing now to boost long term profits.

For a long time now the fisheries management aim has been maximum sustainable yield (MSY). But many fisheries are still over exploited and biomass is under the MSY.  The paper suggests that increasing fish stocks beyond MSY to a level called maximum economic yield (MEY) would, as the name implies, deliver the greatest economic benefit.

The theory is simple. Right now there aren’t many fish in the sea. Finding and catching them requires a lot of effort (time, fuel, money). If fish stocks increase to a point where they are plentiful catching them becomes easy. Less effort expended + many fish caught = maximum economic benefit.

The researchers estimate MEY might be 10 to 20 percent over what fisheries managers now aim for (MSY). In the four fisheries studied for the paper the researchers found that once the fish reached their target abundance it took 20 to 30 percent less fishing effort to harvest the same catch as before.

My simple plan for salmon restoration here.

MIT:The Future of Coal

 Washington Post on Coal

NYT on Coal

Discussed at Ryan Avent’s The Bellows here and here.

Business Week examines why Exxon isn’t projecting increased oil production.

“It really goes back to what is an acceptable investment return for us,” Tillerson said. In other words, producing incremental barrels just to ease prices for consumers is not part of the company’s calculations. Last year, ExxonMobil led the industry with a return on capital of 32%.

It is not all malfeasance on Exxon’s part though.

Exxon plans on bringing new fields online in Russia, the Middle East, and Africa over the next four years but they won’t be enough to generate growth beyond what the company is losing due to the maturation of its fields in the North Sea and Alaska, the nationalization of its fields in Venezuela, and volumes lost due to those production sharing agreements with other countries. “It has always been a challenge to grow volumes when you are working off of a base as large as ours,” Tillerson told the analysts

Environmentalism taken too far. Seen recently:

• Buy a book. Then donate some money to plant trees because you’re using paper.
• Don’t fly. It’s bad for the environment.
• Don’t drive either. Also bad for the environment.
• Don’t eat meat. Mean to the animals. Also bad for the environment (versus being a vegetarian/vegan).

If you truly love the environment you will take the following steps, otherwise you’re just a hypocrite.

1. Sell your car.
2. Turn off the electricity.
3. Sit on your couch.
4. Stop eating and drinking.
5. Wait till you die. Killing yourself is good for the environment, everything else is just resource utilization.
6. Also, the single best thing you could do for the environment is not have children. If you already did, kill them too.

So I’m being a bit facetious but there is a point to be made. The earth is a closed system of limited resources. With increasing population there will be increasing competition for those resources.  And environmental advocates are starting to really preach minimizing your environmental impact. Reducing your environmental impact is simply reducing your resource utilization. The question is how far do you go? It used to be turn off the lights when you’re not in the room and recycle. Then it became drive less, and change your lightbulbs. Now some are saying don’t drive, don’t fly, don’t do anything. Because pretty much anything you do involves some form of resource utilization. Taken to the logical conclusion this ends up with you wearing all your clothes, sitting on the couch in the dark, not doing anything because you’ve turned off the heat and electricity and doing anything would use resources. The only thing left to do is kill yourself because everytime you exhale you release carbon dioxide into the atmosphere. Stop breathing right now!

Everything in moderation, including moderation.

 Growing demand + scarce resource = $$$

As population increases so will the demand for potable water. Investors are preparing to reap the benefits of this demand. More here.

Reported in the NYT and elsewhere - West coast salmon numbers are low, fishing likely to be shutdown. It seems like every 12-18 months there is a big outcry over the lack of salmon. You want more salmon? Here is your solution.

1. Remove dams and other river impediments.
2. Shutdown the fishery for 4-5 years.
3. Prosper.

And I mean that quite literally. This group, I believe, did an economic analysis and discovered that removing the Hells canyon dams would actually make money through tourism, fishing, etc..