NewEnergyNews: TODAY’S STUDY: CLIMATE CHANGE COMES TO THE CORN BELT

NewEnergyNews

Gleanings from the web and the world, condensed for convenience, illustrated for enlightenment, arranged for impact...

December 7, 1941: Time to forgive but not forget.

The challenge now: To make every day Earth Day.

YESTERDAY

  • TODAY’S STUDY: How To Balance Competing Solar Interests
  • QUICK NEWS, December 6: Sliver Of Hope? Al Gore In Climate Change Meet With Donald Trump; The Opportunity In New Energy; Google Seizing New Energy Opportunity
  • THE DAY BEFORE

  • TODAY’S STUDY: A Way For New Energy To Meet Peak Demand
  • QUICK NEWS, December 5: Trial Of The Century Coming On Climate; The Wind-Solar Synergy; The Still Rising Sales Of Cars With Plugs
  • THE DAY BEFORE THE DAY BEFORE

  • Weekend Video: Trump Truth And Climate Change
  • Weekend Video: The Daily Show Talks Pipeline Politics
  • Weekend Video: Beyond Polar Bears – The Real Science Of Climate Change
  • THE DAY BEFORE THAT

  • FRIDAY WORLD HEADLINE-Aussie Farmers Worrying About Climate Change
  • FRIDAY WORLD HEADLINE-The Climate Change Solution At Hand, Part 1
  • FRIDAY WORLD HEADLINE-The Climate Change Solution At Hand, Part 2
  • FRIDAY WORLD HEADLINE-New Energy And Historic Buildings In Europe
  • AND THE DAY BEFORE THAT

    THINGS-TO-THINK-ABOUT THURSDAY, December 1:

  • TTTA Thursday-First Daughter Ivanka May Fight For Climate
  • TTTA Thursday-Low Profile High Power Ocean Wind Energy
  • TTTA Thursday-A Visionary Solar Power Plant
  • TTTA Thursday-EVs Have A Growth Path
  • THE LAST DAY UP HERE

  • ORIGINAL REPORTING: How The Clean Power Plan Drove The Utility Power Mix Transition
  • ORIGINAL REPORTING: How Utilities Are Answering The Distributed Energy Resources Challenge
  • ORIGINAL REPORTING: Looking At New Rates To Unlock The Utility Of The Future
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    Anne B. Butterfield of Daily Camera and Huffington Post, f is an occasional contributor to NewEnergyNews

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    Some of Anne's contributions:

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT), November 26, 2013
  • SOLAR FOR ME BUT NOT FOR THEE ~ Xcel's Push to Undermine Rooftop Solar, September 20, 2013
  • NEW BILLS AND NEW BIRDS in Colorado's recent session, May 20, 2013
  • Lies, damned lies and politicians (October 8, 2012)
  • Colorado's Elegant Solution to Fracking (April 23, 2012)
  • Shale Gas: From Geologic Bubble to Economic Bubble (March 15, 2012)
  • Taken for granted no more (February 5, 2012)
  • The Republican clown car circus (January 6, 2012)
  • Twenty-Somethings of Colorado With Skin in the Game (November 22, 2011)
  • Occupy, Xcel, and the Mother of All Cliffs (October 31, 2011)
  • Boulder Can Own Its Power With Distributed Generation (June 7, 2011)
  • The Plunging Cost of Renewables and Boulder's Energy Future (April 19, 2011)
  • Paddling Down the River Denial (January 12, 2011)
  • The Fox (News) That Jumped the Shark (December 16, 2010)
  • Click here for an archive of Butterfield columns

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    Some details about NewEnergyNews and the man behind the curtain: Herman K. Trabish, Agua Dulce, CA., Doctor with my hands, Writer with my head, Student of New Energy and Human Experience with my heart

    email: herman@NewEnergyNews.net

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      A tip of the NewEnergyNews cap to Phillip Garcia for crucial assistance in the design implementation of this site. Thanks, Phillip.

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    Pay a visit to the HARRY BOYKOFF page at Basketball Reference, sponsored by NewEnergyNews and Oil In Their Blood.

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  • TODAY AT NewEnergyNews, December 7:

  • ORIGINAL REPORTING: Turning Distributed Energy From Threat To Opportunity
  • ORIGINAL REPORTING: Solar Policy Action Heats Up
  • ORIGINAL REPORTING: Maine’s Almost Solar Policy Breakthrough

    Wednesday, June 18, 2014

    TODAY’S STUDY: CLIMATE CHANGE COMES TO THE CORN BELT

    Water & Climate Risks Facing U.S. CornProduction; How Companies & Investors Can Cultivate Sustainability

    Brooke Barton and Sarah Elizabeth Clark, June 2014 (Ceres)

    Executive Summary

    Recent extreme weather events such as the devastating Midwest drought of 2012 helped drive record corn prices ($8/bushel). This provided a taste of what is predicted to become the new normal in many parts of the Corn Belt thanks to climate change—a point powerfully reinforced by the latest National Climate Assessment.

    Growing irrigation demand for corn production, alongside unchecked withdrawals of groundwater from stressed water sources—in particular, the High Plains aquifer that spans eight Great Plains states and California’s over-extended Central Valley aquifer—create additional risks for the $65 billion a year corn industry, which has nearly doubled in size over the past two decades. Economically wasteful and unregulated pollution from fertilizers running off cornfields into waterways—a key contributor to a Connecticut-sized hypoxic “dead zone” in the Gulf of Mexico—is still another area of risk.

    Given the scale of the challenges facing U.S. corn production and the key industries that depend on it, investors need to understand how companies in the grain processing, food, beverage, livestock, ethanol, grocery and restaurant sectors are addressing these risks in their supply chains. Already, there is growing demand from food retailers and manufacturers for more sustainable products and new supply chain initiatives that encourage more resilient and sustainable agricultural production. But these efforts have not been moving at the pace and scale necessary to address the risks at hand.

    This report provides new data and interactive maps on the risks facing U.S. corn production, as well as detailed recommendations for how corn-buying companies and their investors can catalyze more sustainable agricultural practices that will reduce these risks, preserve and enhance yields, and protect precious water resources.

    The U.S. Corn value Chain

    Corn is the nation’s biggest crop economically, outpacing both soy and wheat in production value, number of acres planted and overall water use. The United States is the world’s largest producer and exporter of corn grain, dedicating nearly one-third of its cropland to corn -- The U.S. Corn value Chain Corn is the nation’s biggest crop economically, outpacing both soy and wheat in production value, number of acres planted and overall water use. The United States is the world’s largest producer and exporter of corn grain, dedicating nearly one-third of its cropland to corn…

    Corn is a key commodity for major industries across the U.S. economy. In assessing the U.S. corn value chain, this report finds that 16 separate sectors—from fast food companies to fertilizer manufacturers to grocery retailers—depend on U.S. corn as a key ingredient of their products or as a market for their inputs and services (Exhibit ES2). In 2013, the top 45 companies in the corn value chain earned $1.7 trillion in revenue, more than the value of Australia’s annual GDP.

    Increasingly severe weather events and higher domestic demand for corn by the ethanol industry have contributed to a steady uptick and unprecedented volatility in corn prices, which ranged from $2 a bushel 10 years ago to a record $8 a bushel during the devastating 2012 drought. This volatility, extreme even within a broader context of commodity price volatility, has vast implications for the many industries that rely on corn. High corn prices in the wake of extreme flooding in spring 2011 and the prolonged drought in 2012 shuttered ethanol plants, contributed to the culling of beef herds, and reduced margins for many processed food and beverage companies.

    Rising corn prices have also triggered unsustainable farming practices, including the expansion of corn production into highly erodible and ecologically sensitive land. 1 There has also been a dramatic shift away from the traditional annual rotation of corn and soybeans in favor of “continuous corn”(i.e. no rotation), which increases vulnerability to pests, and diminishes soil quality and long-term yields.

    Extreme Weather & Climate Change

    Despite a bumper U.S. harvest in 2013 and lower corn prices in early 2014, many of the drivers of high corn prices, price volatility and overall risk are likely to worsen. Severe droughts, floods and heat waves at key moments in the growing season are becoming increasingly common, causing dramatic year-to-year supply shocks. The Federal Crop Insurance Program, which subsidizes approximately 60 percent of farmer premiums, is paying out unprecedented losses to corn farmers as a result of this extreme weather, including a record payment of $10.8 billion in 2012.

    Corn is uniquely sensitive to hotter temperatures and water stress. According to the latest National Climate Assessment, farmers can expect a higher incidence and intensity of floods, droughts and extreme heat, which can reduce corn’s ability to pollinate. 4, 5 Given limited water availability in parts of the Great Plains region, a northward shift in corn acreage is predicted, increasing the risk of stranded agricultural assets such as processing, storage and transportation infrastructure.

    Irrigation Demand & Groundwater Depletion

    Corn is a thirsty plant, and receives the most irrigation water overall of any American crop: 15.4 million acre-feet annually, 7 or the equivalent of more than 7 million Olympic-sized swimming pools. While per bushel water use has improved over time, total irrigated water demand for corn has grown due to geographic expansion of the crop, especially in areas with high water stress and groundwater depletion. Our analysis of corn production and water stress data developed by the World Resources Institute shows that 87 percent of irrigated corn is grown in regions with high or extremely high water stress (Exhibit ES3), meaning that a large portion of existing water supplies are already spoken for. Many of these same regions can also expect worsening water shortages due to climate change. The most vulnerable regions are Nebraska, Kansas, California, Colorado and Texas.

    Over half of the country’s irrigated corn production—worth nearly $9 billion annually—depends on groundwater from the over-exploited High Plains aquifer. In western Kansas, for example, more than 30 percent of the aquifer’s total volume has already been withdrawn, with another 39 percent projected to be pumped over the next 50 years.

    This report finds that $2.5 billion-worth of corn grain is grown in 20 counties over portions of the High Plains aquifer where groundwater levels are rapidly declining. Of these, five counties have over $150 million each in annual corn grain production at risk from groundwater depletion: Yuma County in Colorado and York, Hamilton, Adams and Filmore counties in Nebraska.

    California’s agricultural economy is also highly reliant on groundwater-irrigated corn production, most of which goes to feeding the state’s 1.8 million dairy cows. As of spring 2014, California’s record drought had forced a reduction in deliveries of surface water to irrigation districts in the state’s Central Valley, leading many farmers to either fallow corn acres or redouble their use of already depleted local groundwater supplies.

    In the face of these trends, there are significant opportunities to reduce irrigation demand. Roughly one-fifth of irrigated corn acres still use inefficient flood or furrow irrigation, and only a handful of irrigated corn farms (0.1 percent) utilize highly efficient drip irrigation. What’s more, many farming practices that help retain soil moisture and reduce irrigation demand—such as no till, extended crop rotations, and cover-cropping—are not yet widely adopted.

    The ethanol industry, which uses 35 percent of all U.S. corn, adds further stress to regions experiencing declining water tables. This report finds that 36 ethanol refineries are located in and source corn irrigated with water from the High Plains aquifer (Exhibit ES4). Of these, 12 refineries with an ethanol production capacity worth nearly $1.7 billion a year are in areas where the aquifer is experiencing water-level declines.

    Inefficient Fertilizer Use

    Compounding these environmental challenges, corn uses the most fertilizer of all major U.S. crops. 11 In 2010, U.S. corn production required 9.5 million tons of nitrogen, phosphorus and potash12—the equivalent of 380 million 50-pound bags of household lawn fertilizer. Nitrogen run-off from cornfields is the single largest source of nutrient pollution to the Gulf of Mexico’s “dead zone,” an area the size of Connecticut that is essentially devoid of life due to agricultural run-off (Exhibit ES5). 13 According to the USDA, only 34 percent of U.S. corn acres are farmed using best practices for nitrogen fertilizer management, such as not over-applying fertilizer and applying fertilizer at the right time during the growing season. Fertilizer run-off can be further addressed by practices such as extended crop rotations, cover-cropping, and the development of buffer strips and artificial wetlands that naturally filter excess nitrogen and phosphorus.

    Because water pollution from agricultural run-off is largely unregulated, drinking water utilities, and the commercial fishing and outdoor recreation industries currently bear the financial burden of nutrient pollution. The USDA estimates that the cost of removing nitrate alone from U.S. drinking water supplies by large water utilities is more than $4.8 billion per year.

    Nutrient pollution also represents a direct loss to corn farmers: this report finds that in 2013, $420 million in fertilizer washed off corn acres into the Mississippi River and eventually the Gulf of Mexico.

    The ethanol sector also makes a significant contribution to water pollution through its corn purchases. This report identifies 60 corn ethanol refineries with $8.8 billion in annual production capacity that are sourcing corn from watersheds with high local nitrogen pollution from agriculture (Exhibit ES6). Several large ethanol producers including POET Biorefining, Valero Renewable Fuels and Flint Hill Resources have more than 50 percent of their production capacity in high pollution watersheds.

    State-level strategies to reduce agricultural run-off as well as growing pressures from some food retailers and processed food companies are creating new drivers for more efficient fertilizer use in the Corn Belt. Walmart recently announced a goal for U.S. farmers in its supply chain to increase efficiency of their fertilizer use by 30 percent on 10 million acres of corn, wheat and soybeans by 2020.

    Recommendations for Companies

    This report highlights many of the farming practices that can help reduce the risks facing America’s corn growers, while also improving yields and saving on input costs. It also provides recommendations for companies that source U.S. corn—and their investors—on how to be key partners in mitigating impacts to water resources. The recommendations for companies include:

    1. Setting meaningful policies and goals. Companies that buy corn should develop a corporate policy that commits them to sourcing agricultural inputs that are grown in ways that reduce impacts to freshwater and the environment. These policies should be tied to measureable, time-bound goals.

    2. Communicating clear expectations to suppliers. For companies not dealing directly with farmers (i.e. those buying grain from intermediary suppliers), priorities for reducing environmental risks in farming practices should be well communicated to suppliers and integrated into supplier codes and procurement contracts. Where possible, policies, metrics and data requests should be aligned with others in the industry.

    3. Incentivizing the procurement function. To enable improved sourcing practices, supply chain managers will need additional expertise on environmental risks in agriculture, and should be compensated against performance objectives that include reducing these risks.

    4. Prioritizing action based on risk. Companies should develop sourcing strategies that prioritize action in sourcing regions of higher risk, such as those associated with water stress, groundwater depletion and/or nutrient pollution, using the maps in this report.

    5. Joining multi-stakeholder efforts to develop shared metrics and approaches. Companies should consider constructive participation in initiatives such as Field to Market that are providing U.S. corn growers with the tools, information and other resources to improve farming practices.

    6. Providing value to farmers. Farmers should not be expected to change their practices without incentives and support from others in the value chain. Companies can help growers by providing direct agronomic assistance, performance guarantees and credit, as well as financial support to local and regional organizations that assist farmers.

    7. When possible, buying less corn. Corn has an inherently higher fertilizer and water use profile than many other crops. For sectors with a heavy reliance on corn such as meat and ethanol, substitute grains with a preferable environmental risk profile may already be available or their production can be encouraged by working with growers to select profitable alternatives.

    8. Taking public policy positions that support sustainable agriculture. Government policies that mitigate climate change and encourage risk-reducing, environmentally beneficial farming practices and long-term land and water stewardship will lead to more stable commodity prices and resilient agricultural markets. Companies should ensure that their own policy positions, lobbying activities, and industry groups support legislation and regulation that advances those ends.

    9. Being transparent.Disclose to investors and stakeholders the company’s exposure to climate and water-related risks in its agricultural supply chain, as well strategies and progress toward mitigating these risks.

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