7 billion people on the planet creates investment opportunities

Either way, the changes in population and global demographics are affecting investment opportunities, and some investment funds are taking note.

Global population has been growing consistently since, and grows at a rate of around 70 million a year, the UN estimated that the 7 billionth baby would be born today, and the child chosen to represent this was Danica May Camacho, who was presented with a small cake by officials from the UN. Predictions vary, but population is expected to continue to grow and could reach 9 billion by 2050. As pointed out by this comment article in the Guardian, it is not population alone that raises the scarcity issue, but its interaction with per capita consumption.

Population and Consumption

As population grows, overall consumption tends to grow also, there will simply be more mouths to feed. However, population growth at the moment is coming mainly from developing countries, who do have lower per-capita consumption than developed countries, but their standards of living are rising rapidly. As millions of children are being born in India and China, they are also expected to consume much more over their lifetimes than their parents. If this joint growth in population and consumption outweighs any consumption decrease from declining populations in the developing world, then we are facing a problem of scarcity.

Technological Progress

There are some, such as Jeremy Grantham, who see this situation through the eyes of Thomas Malthus, who believed that sooner or later population will be limited by the scarcity of resources. However, critics of Malthus, whose argument still applies today, rely on technological innovation to ensure we do not run out of essential resources. The original critics were vindicated by the Industrial Revolution, and a more recent example is the Green Revolution in crop produce, however, there are still stocks of resources which we rely on greatly, such as fertilisers, coal and oil, that we are slowly diminishing.

Investment Opportunities

This increasing scarcity is the main driver for many of the investment themes on Worldwise Investor, particularly Agriculture, Timber and Clean Energy. The idea is that in the long run these increasing pressures will inevitably lead to higher prices and profits for companies providing these essential products and services. There are gains to be made from investing directly in companies that cater to demographic changes, such as health and insurance companies, or companies that provide services for the elderly. Another area that will benefit from this phenomenon is the area of efficiency; this could take many forms such as energy efficiency, water efficiency or fertiliser efficiency. The gains from efficiency are both short term and long term, particularly energy efficiency where companies can see financial benefits over even a few months, whereas we could suffer the results of over-zealous energy use for centuries or longer.