Thursday, May 17, 2012

Investment News and Commentary from Emerging Markets in Asia - China, India and ASEAN





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2point6billion.com discusses investment news and events from the emerging markets of Asia - including India, China and the ASEAN countries. It is produced by the Asian foreign direct business advisors at Dezan Shira & Associates from their offices across emerging Asia.




Of melting mountains, drying rivers and starving stomachs

Melting Himalayan glaciers which perennially feed the Ganges and Yangtze, India and China’s main rivers, may soon dry up in summer, leading to drastic food shortages at a time when prices and populations are growing unanimously. China and India are the world’s leading producers of both wheat and rice, humanity’s food staples. In the Ganges, the Yellow River and the Yangtze River basins, where irrigated agriculture depends heavily on rivers, this loss of dry-season flow will shrink harvests.

“In a world where grain prices have recently climbed to record highs, with no relief in sight, any disruption of the wheat or rice harvests due to water shortages in these two leading grain producers will greatly affect not only people living there but consumers everywhere,” the Times of India quoted Lester Brown, President of the Earth Policy Institute as saying.

praying-in-the-ganges.jpgAn Intergovernmental Panel on Climate Change says that Himalayan glaciers are receding rapidly and that many could melt entirely by 2035. If the giant Gangotri Glacier that supplies 70 percent of the Ganges flow during the dry season disappears, it warned, the Ganges could become a seasonal river, flowing during the rainy season but not during the summer dry season when irrigation water needs are greatest.

Moreover, Brown said, in both of these countries, food prices will likely rise and grain consumption per person can be expected to fall. In India, where just over 40 per cent of all children under five years of age are underweight and undernourished, “hunger will intensify and child mortality will likely climb.”

The Ganga is the largest source of surface water irrigation in India and the leading source of water for the 407 million people living in the Gangetic Basin, a population larger than any other single country other than China. The Yellow River and Yangtze basin hold a similar position in China.

Brown said that as food shortages unfold, China will try to hold down domestic food prices by using its massive dollar holdings to import grain, most of it from the United States, the world’s leading grain exporter. As irrigation water supplies shrink, Chinese consumers will be competing with Americans for the U.S. grain harvest. India too may try to import large quantities of grain, although it may lack the economic resources to do so, especially if grain prices keep climbing, the paper forecast.

The alternative to this civilization-threatening scenario is to abandon business-as-usual energy policies and move to cut carbon emissions 80 percent, not by 2050 as many political leaders suggest because that will be too late, but by 2020. One route that the paper recommended is for China and India to shift energy investment from coal-fired power plants into energy efficient wind farms, solar thermal power plants, and geothermal power plants.

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