All great points. Sad if this is not baseline thinking.
These points are why innovations need to be better and cheaper. Cheaper meaning they reduce cost for the producer and the consumer. On the consumer side inclusive of some externalities (like healthcare) if the consumer internalizes it (total factor productivity). Said in English, if eating a slightly more expensive food cures my diabetes, but the diabetes is covered by Medicaid, I will pay slightly more.
We have always taken the view in our investment process as characterized by Jess. I feel sorry for any investor who sees carbon offsets as permanent markets. Insets motivating gen 1, carbon, gen 2, nutrient density though may be permanent if they cure diabetes/obesity. But CPGs have a lot of change to occur before this happens.
We will see mis-allocation of capital with Type 1/2 error. For example Nestle things you need a cover crop to do regen wheat. While someone like Matt Moreland sees wheat as a revenue cover crop and uses 400 cows to improve soil and reduce fertilizer.
When Obama underwrote wind, he overinvested by 50B in gen 2 wind, instead of waiting a few years for Gen 3. The gen 2 was more costly, and dropped demand for wind, killing the Gen 3 market for 7-10 years.
A nuance though to consider. Microsoft has to offset more than Exxon. They are buying out into 10-25 year contracts. They have also said in disclosures customers and employees expect them to offset. I am thinking that may be a more durable payment stream than we realized. Not sure whether to trust it, but 25 year contracts to improve soil health is a slightly different beast.
Same shift in the livestock 'sustainability' space - the return to the fundamentals (and mostly on the economical pillar of the three given the market and input costs). What's old is new again. Thanks for voicing this Janette. As you said, onwards unto the breach.
All great points. Sad if this is not baseline thinking.
These points are why innovations need to be better and cheaper. Cheaper meaning they reduce cost for the producer and the consumer. On the consumer side inclusive of some externalities (like healthcare) if the consumer internalizes it (total factor productivity). Said in English, if eating a slightly more expensive food cures my diabetes, but the diabetes is covered by Medicaid, I will pay slightly more.
We have always taken the view in our investment process as characterized by Jess. I feel sorry for any investor who sees carbon offsets as permanent markets. Insets motivating gen 1, carbon, gen 2, nutrient density though may be permanent if they cure diabetes/obesity. But CPGs have a lot of change to occur before this happens.
We will see mis-allocation of capital with Type 1/2 error. For example Nestle things you need a cover crop to do regen wheat. While someone like Matt Moreland sees wheat as a revenue cover crop and uses 400 cows to improve soil and reduce fertilizer.
When Obama underwrote wind, he overinvested by 50B in gen 2 wind, instead of waiting a few years for Gen 3. The gen 2 was more costly, and dropped demand for wind, killing the Gen 3 market for 7-10 years.
A nuance though to consider. Microsoft has to offset more than Exxon. They are buying out into 10-25 year contracts. They have also said in disclosures customers and employees expect them to offset. I am thinking that may be a more durable payment stream than we realized. Not sure whether to trust it, but 25 year contracts to improve soil health is a slightly different beast.
"I feel sorry for any investor who sees carbon offsets as permanent markets." <-- THIS
Same shift in the livestock 'sustainability' space - the return to the fundamentals (and mostly on the economical pillar of the three given the market and input costs). What's old is new again. Thanks for voicing this Janette. As you said, onwards unto the breach.
so good to see the shift, isn't it?!