A food producing machine

Imagine a biologist on an excursion in the Amazon looking for new plant species.  He comes across a new grass he's never seen, and brings it back home to his lab in the U.S.  He finds that the grass grows exceedingly well in greenhouses with the right fertilizer and soil, and he immediately moves to field trials.  He also notices that the grass produces a seed that durable, storable, and extraordinarily calorie dense.  The scientist immediately recognizes the potential for the newly discovered plant to solve global hunger problems and to meet the dietary demands of a growing world population.

But, there is a problem.  Lab analysis reveals that the seeds are toxic to humans.  Despite the set-back, the scientist doesn't give up.  He toils away year after year until he creates a machine that can convert the seeds into a food that is not only safe for humans to eat but that is incredibly delicious to eat.  There are a few downsides.  For every five calories that go into the machine, only one comes out.  Plus, the machine uses water, runs on electricity, burns fossil fuels, and creates CO2 emissions.  

Should the scientist be condemned for his work?  Or, hailed as an ingenious hero for finding a plant that can inexpensively produce calories, and then creating a machine that can turn those calories into something people really want to eat?  

Maybe another way to think about it is to ask whether the scientist's new product can pass the market test; can his new food - despite it's inefficiencies (which will make the price higher than it otherwise would be) - compete against other foods in the marketplace?  Recall, that the new food must be priced in a way that covers the cost of all the resources it uses - from the fertilizer to grow the new seeds to the gasoline required to run the new machine.

Now, let's call the new grass "corn" and the new machine "cow".  The analogy isn't perfect (e.g., the cow is a living-feeling being and not a lifeless machine), but the thought experiment is useful nonetheless.

It's particularly useful in thinking about the argument that corn is "wasted" in the process of feeding animals.  It is one that appears - in one form - in a recent paper in Science.  West et al. write:

“Although crops used for animal feed ultimately produce human food in the form of meat and dairy products, they do so with a substantial loss of caloric efficiency. If current crop production used for animal feed and other nonfood uses (including biofuels) were targeted for direct consumption, ~70% more calories would become available, potentially providing enough calories to meet the basic needs of an additional 4 billion people (28). The human-edible crop calories that do not end up in the food system are referred to as the “diet gap.””

I'm not sure the logic of this sort of argument adds up.  

Unlike my hypothetical example, corn is not toxic to humans (although some of the grasses cows eat really are inedible to humans).  Nevertheless, few people really want to eat the calories that directly come from corn or other common animal feeds like soybeans.  

So, why do we grow so much corn and soy?  They are incredibly efficient producers of calories and protein.  Stated differently, these crops (or "grasses" if you will) allow us to produce an inexpensive, bountiful supply of calories in a form that is storeable and easily transported.  

The assumption in the quote of the Science article seems to either be that the "diet gap" will be solved by: 1) convincing people to eat the calories in corn and soy directly, or 2) that there are other tasty-edible crops that can be widely grown instead of corn and soy which can produce calories as efficiently as corn and soy.  Aside from maybe rice or wheat (which also require some processing to become edible), the second assumption is almost certainly false.  I'm also skeptical about the first assumption - that large swaths of people will voluntarily consume substantial calories directly from corn or soy.

What we typically do is take our relatively un-tasty corn and soy, and plug them into our machine (the cow or pig or chicken) to get a form of food we want to eat.  Yes, it seems inefficient on the surface of it, but the key is to realize the that the original calories from corn and soy were not in a form most humans find desirable.  As far as the human pallet is concerned, not all calories are created equal; we care a great deal about the form in which the calories are delivered to us.

The grass-machine analogy also helps make clear that it is probably a mistake to compare the calorie and CO2 footprint of the corn directly with the cow.  I suspect only a very tiny fraction of the world's caloric consumption comes from directly consuming the raw corn or soy seeds.  It takes energy to convert these seeds into an edible form – either through food processing or through animal feeding. So, what we want to compare is beef with other processed foods.  Otherwise we're comparing apples and oranges (or in this case, corn and beef).

Is Local Food More Environmentally Friendly?

As should be obvious to anyone who thinks about it a bit, the environmental impacts of consuming a local food depends on how efficient your particular locale is at producing the particular food.  One of the ironies of this insight is that areas that have more intensified livestock operations may, at least in some dimensions, be more environmentally friendly than areas with less intensified production (because greater intensity often means more efficient).

Some empirical support for these these insights was recently provided in an article by  Misak Avetisyan, Tom Hertel, and Gregory Sampson just published in the journal Environmental and Resource Economics.   

The abstract:

“With the increased interest in the ‘carbon footprint’ of global economic activities, civil society, governments and the private sector are calling into question the wisdom of transporting food products across continents instead of consuming locally produced food. While the proposition that local consumption will reduce one’s carbon footprint may seem obvious at first glance, this conclusion is not at all clear when one considers that the economic emissions intensity of food production varies widely across regions. In this paper we concentrate on the tradeoff between production and transport emissions reductions by testing the following hypothesis: Substitution of domestic for imported food will reduce the direct and indirect Greenhouse Gas (GHG) emissions associated with consumption. We focus on ruminant livestock since it has the highest emissions intensity across food sectors, but we also consider other food products as well, and alternately perturb the mix of domestic and imported food products by a marginal (equal) amount. We then compare the emissions associated with each of these consumption changes in order to compute a marginal emissions intensity of local food consumption, by country and product. The variations in regional ruminant emissions intensities have profound implications for the food miles debate. While shifting consumption patterns in wealthy countries from imported to domestic livestock products reduces GHG emissions associated with international trade and transport activity, we find that these transport emissions reductions are swamped by changes in global emissions due to differences in GHG emissions intensities of production. Therefore, diverting consumption to local goods only reduces global emissions when undertaken in regions with relatively low emissions intensities. For non-ruminant products, the story is more nuanced. Transport costs are more important in the case of dairy products and vegetable oils. Overall, domestic emissions intensities are the dominant part of the food miles story in about 90 % of the country/commodity cases examined here.”

Cost of Calories and Protein from Meat

Yesterday I gave a talk for some of the world's largest pork producers as part of an event put on by PIC, the world's largest supplier of pork genetics. 

In my presentation, I touched briefly on the environmental impacts of meat production, and showed the following slide, which made the rounds on Twitter yesterday.

I thought a few points of clarification and expansion were in order.  

First, note that Bailey Norwood and I published a paper a few years ago comparing the costs of producing different meats to producing corn, soybeans, wheat, and peanuts (also note that there was a calculation error in the tables; the corrected tables are here). As we show there, it is generally less expensive to get calories or protein from corn or soybeans or wheat than it is from cattle or hogs.   That's one reason we grow such much corn, wheat, and soy - they are incredibly efficient generators of calories and protein.  

I will also note that there have been many attempt to calculate the retail cost of eating "healthy vs. unhealthy" food.  Here, for example, is a paper by the USDA-ERS.  Adam Drewnowski also has several papers on this subject.  This work often shows that meat is relatively  (relative to many fruits and vegetables) inexpensive on a per calorie or per gram of protein basis, although meat looks more expensive when placed on a per pound basis.   If you want really inexpensive calories eat vegetable oil or crackers or sugar; if you want real expensive calories, eat zucchini or lettuce or tomatoes.

The reason I picked lettuce as an example is to make the point that people often do not reason consistently when they argue we should unduly focus on costs of calories.  I have never once heard anyone say how "inefficient" production of lettuce or tomatoes or peppers are, and yet I have repeatedly heard this argument about meat.  

Another important point is that efficiency or cost isn't everything.  What do we get in return?  Who cares if lettuce is really expensive on a $/kcal basis?  A nice salad is tasty.  And healthy.  The trouble is that many of our most efficient producers of calories or protein (field corn, soybeans, wheat) are not that tasty by themselves.  Given the choice to eat a raw soybean or a raw carrot, I'll take he latter any day despite the fact that the latter is "less efficient."  

This discussion reveals another point that Bailey and I discussed in our paper.  To get corn and soy and wheat into foods we like to eat requires processing, which takes energy and is costly.  Thus, one needs to look at the costs of the foods as we eat them not as they're grown.  And, there is generally much less cost wrapped up in the processing of meat and animal products than there is for grain-based products (based on the farm-to-retail price spreads reported by the USDA).

Finally, note that one of the ways we process corn and soybeans into something we like to eat is by feeding them to animals.  Animals convert relatively untasty grains into tasty milk, eggs, and meat.   And even if some energy is "lost" or "wasted" in that process, we're getting something in return.  Here's what I previously had to say about that:

Almost no one looks at their iPad and asks, "how much more energy went into producing this than my old Apple II." The iPad is so much better than the Apple II.  We'd be willing to accept more energy use to have a better computer.  Likewise a nice T-bone is so much better than a head of broccoli.  I'm willing to accept more energy use to have a T-bone than a head of broccoli.    

Information manipulation revisited

A few days ago, I posted on an article by Fuhai Hong and Xiaojian Zhao forthcoming in the American Journal of Agricultural Economics entitled "Information Manipulation and Climate Agreements."

I raised some questions about the ultimate desirability of information manipulation, and Fuhai and Xiaojian responded with a thoughtful email.  They agreed to let me share part of it here:

1. Our paper consists of two parts of messages, one positive (why there is media bias), while the other normative (what is the outcome of media bias). For the first part, media bias emerges as the unique perfect Bayesian equilibrium in our model. This provides an explanation on the phenomenon we observe from reality. Our abstract thus states that "This article provides a rationale for this tendency by using a modified International Environmental Agreement model with asymmetric information." By the Longman Dictionary of Contemporary English, rationale means "the reasons and principles on which a decision, plan, belief etc is based." Our "rationale" is essentially an explanation on why the media has incentives to accentuate or even exaggerate climate damage. It belongs to the approach of positive economics and is value neutral, up to this point.

2. Then we do have a "normative" analysis on the media bias. The main difficulty of the climate problem is that it is a global public problem and we lack an international government to regulate it; the strong free riding incentives lead to a serious under-participation in an IEA. We show that the media bias may have an ex post instrumental value as the over-pessimism from media bias may alleviate the under-participation problem to some extent. (In this sense, we are close to Dessi's (2008, AER) theory of cultural transmission and collective memory.) Meanwhile, we also address the issue of trust/credibility as people have Bayesian updating of beliefs in our perfect Bayesian equilibrium. We show that, ex ante (when there is uncertainty on the state of nature), the media bias could be beneficial or detrimental, due to the issue of credibility; as a result, the welfare implication is ambiguous.

The Dust Bowl

I just finished the Worst Hard Time by Timothy Egan, published back in 2006, about the Dust Bowl.  

On several levels, I had a deep connection to the themes in the book.  I can recall stories from both my mother's and father's mothers (my grandmothers) about growing up in the dust bowl era in and around the regions Egan discusses in his book.  As a child I can remember going with my dad to a nearby shelter-belt (which I presume was part of Roosevelt's plan to avert the dust bowl, at least according to Egan) to chop wood for our fireplace.  

Egan repetitively makes the argument (with a tedium that bored me at times) that the the great plains should have never been plowed.  It should, in his assessment, have been left in natural grasses.  The dust bowl itself, in Egan's account, was a result of man's hubris that nature could be tamed.  

Egan's account paints both a cynical and overly-optimistic view of government.   On the one hand, the government partially caused the great plow up (citing mainly from government reports at the time):

"Mistaken public policies have been largely responsible for the situation," the report proclaimed.  Specifically, "a mistaken homesteading policy, the stimulation of war time demands which led to over cropping and over grazing, and encouragement of a system of agriculture which could not be both permanent and prosperous."  

...

"The settlers lacked both the knowledge and the incentive necessary to avoid these mistakes.  They were misled by those who should have been their natural guides.  The Federal homestead policy, which kept land allotments low and the requirement that a portion of each should be plowed, it now seems to have caused immeasurable harm.  The Homestead Act of 1862, limiting individual holding to 160 acres, was on the western plains almost an obligatory act of poverty."

On the other hand, Egan suggests the government-man Hugh Bennett's plans of contour plowing and grass-reseeding along with Roosevelt's plan of shelter-belts and farm price support policies saved the day.  

I'm not so sure.  It is tough to separate compelling journalistic story from data-driven explanations.  My own  sense coming into the book is that much of the land I grew up around, which falls within the area Egan draws around the dust bowl era, is as plowed up as it ever has been.  The data would seem to support that too.  I dug up USDA data on the number of acres planted to wheat in Cimarron Co, OK (which is where Boise City is located - one of the spots featured in Egan's book).

While there was indeed a big plow-up just prior to the dust bowl (which occurred in the 1930s), we can see that we've had just as much land in wheat production in the late 1940s and almost as much in the late 1970s.  To the extent that the same is true in other regions and with other crops, it doesn't seem that replanting back to grass is THE explanation (although it might have played some role on more erodible lands in other areas).

A better question.

In the past several years, we've had severe droughts in the great plains similar to the one in the 1930's.  Why no repeat of the dust bowl?  

Egan asks a similar question, and he points mainly to the aforementioned government policies. He also gives the impression in the end that big corporate agribusinesses have taken over this land (which is largely false; there are fewer farmers today and those farmers are indeed bigger, but they are family farms; moreover his statements on this topic are somewhat ironic given the aforementioned quote that larger farm sizes were needed to avoid poverty).  As indicated in the graph above, I don't think the full answer can be that the land has reverted back to idyllic native grasses.  

My sense is that it is mainly a result of two factors: better farming technologies/practices and irrigation.  To be fair, Egan points to these as potential answers too.  Many of the people who moved out to farm the great plains had no prior farming experience.  Its no wonder they adopted some practices that were doomed for failure (I'm sure I'd have done the same thing; I'd hate to think what would happen if I were forced to try to make a living at farming today!)  Knowledge and experience matter.  And sometimes it takes really bad consequences to teach us to do things differently.

On the issue of irrigation, there was an interesting paper (earlier ungated version here) that recently appeared in the American Economic Journal: Applied Economics by Richard Hornbeck and Pinar Keskin.  They write:   

Agriculture on the American Plains has been constrained historically by water scarcity. Post-WWII technologies enabled farmers over the Ogallala aquifer to extract groundwater for large-scale irrigation. Comparing counties over the Ogallala with nearby similar counties, groundwater access increased agricultural land values and initially reduced the impact of droughts. Over time, land use adjusted toward water intensive crops and drought sensitivity increased. Viewed differently, farmers in nearby water-scarce areas maintained lower value drought-resistant practices that fully mitigate naturally higher drought sensitivity. The evolving impact of the Ogallala illustrates the importance of water for agricultural production, but also the large scope for agricultural adaptation to groundwater and drought.

Ultimately, we may never know the ultimate causes and consequences of the dust bowl.  It seemed to arise from a unique combination of an adverse turn in weather/climate, poor farming practices, poor economic conditions (the Dust bowl and the Great Depression occurred at the same time - how's that for bad luck!), unscrupulous land salesmen, and bad government policies.  The consequences, it seems, were long lasting.

Hornbeck has another 2012 paper (earlier ungated version) specifically on the dust bowl in the American Economic Review related to how long the impacts of the dust bowl were felt.  He wrote:

The 1930s American Dust Bowl imposed substantial agricultural costs in more eroded Plains counties, relative to less-eroded Plains counties. From 1930 to 1940,
more-eroded counties experienced large and permanent relative declines in agricultural land values: the per acre value of farmland declined by 30 percent in high erosion counties and declined by 17 percent in medium-erosion counties, relative to changes in low-erosion counties. 

and

The Dust Bowl provides a detailed context in which to examine economic adjustment to a permanent change in environmental conditions. The Great Depression may have slowed adjustment by limiting access to capital or outside employment opportunities. Agricultural adjustment continued to be slow, however, through the 1940s and 1950s. Further research on historical shocks may help understand what conditions facilitate long-run economic adjustment. The experience of the American Dust Bowl highlights that agricultural costs from environmental destruction need not be mitigated mostly by agricultural adjustments, and that economic adjustment may require a substantial relative decline in population.