Soil Erosion in Africa

More and more as I write for this blog I realize that it is actually serving as a training ground for my understanding of an economic world. Everything is now filtering through my view of consequences and outcomes. Today I read a really interesting article about a project called the Global Soil Map which is being developed based on soil mapping in Africa. It’s supported by the Bill and Melinda Gates foundation (an $18 million dollar grant) and is hoping to be able to map the surface of Africa in order to educate farmers about the best places to grow, the areas most likely to erode, and what type of crops to grow in which areas. Read more at IRIN Africa.

Again this seems to be an area where a mideconomic view or a multi-year view could work perfectly along with good predictive analysis in order to develop a wonderful theory of commodity prices in Africa. If one were to use the global soil map and overlay it with annual weather pattern models, there is the possibility of being able to predict which products are going to be needed most in which areas. As an investor, that means that I would be able to either redirect resources there or bet against the resources that are heavily influenced by African imports.

It’s interesting to think about using predictive modeling in this way. The question in some senses becomes “if you can predict what’s going to be short, why would you try to make money off of it rather than fixing the problem?” I believe that trying to make money off of the situation is in fact fixing the situation. Think about it. If I find an inefficiency in the market, an accurate prediction of crop shortages, then I should announce my findings to the world. So what happens when two or three people have differing findings? Who decides what gets done? That’s where capitalism becomes the amazing voting machine. I vote with my dollars that the crop is going to be short this year. You vote that it’s not. The winner gets paid. And, by betting that the crop is going to be short this year, I am redirecting crops to the area that need them most because that is the singular area that I can make the most money from it. If demand is very high, price is as well. Price is simply a rationing tool that allows us to ensure that everything is distributed in as fair a manner as possible.

I say predict away. Place your bets and move resources to the places that need them the most. And really, the better capitalists and investors get at predicting things, the less money that gets made and the less crisis happen. Place your bets on investors, they usually steer you right (until they all start referencing each other hoping the other guy is right, then all bets are off.. good luck).