Extinction Event: An Investment Imperative

Remember the dinosaurs?  Of course not.  They went extinct several million years ago.  Volcanic activity and possibly the impact of a very large meteor led to loss of plant life needed to sustain the lower end of the food chain.  At the time, 80% of species were lost in what is now called the Cretaceous-Paleogene era.   

The demise of the dinosaurs did make way for sharks in the oceans and land mammals, including humans.  The disappearance of one group made way for the other.  Indeed, the dinosaurs were able to thrive in the first place because extreme volcanic activity some 50 million years earlier had led to toxic carbon dioxide and methane levels.  An extraordinary 96% of species were wiped out by those gases.  The remaining few evolved into new sea life and eventually the dinosaurs.

One has to wonder then what sort of animal life will take over when humans are no longer around. Wait, what?  Human extinction?  

Yes, humans could easily be replaced in the current geological period, the Holocene era.  That is because the planet is experiencing the sixth mass extinction event since Earth did it first turn around the Sun.  As much as half of known species today could be extinct  -  no living member  -  by the middle of the current century.

The cause?  Human activity is causing loss of habitat.  Human carelessness has increased emission of toxic pollutants that kill animals and bird.  Combusting fossil fuels by humans is putting greenhouse gases into the Earth atmosphere, warming the air shell around the globe.  Pollution and global warming are leading to warmer and increasingly acidic oceans.  The consequences are extreme weather events that reduce or destroy agriculture crops as well as alter ocean shorelines.   

A number of species have already been lost, some of them famous such as the Dodo Bird or the Tasmanian Tiger.  Others are less well known, like the the Passenger Pigeon or the Western Black Rhinoceros.

Human activity has had a profound impact on the two island-continents Australia and Antarctica.  Pollution and the introduction of foreign species such as sheep, horses, rabbits, cats and rats has led to the disappearance of hundreds of species in Australia.  Global warming is deeply impacting Antarctica

Ok, but why does it matter?  Australia still has plenty of kangaroos and platypus around.  There are still penguins in Antarctica.  It is perhaps wise to look beyond the tourism posters. 

Scientists working across Australia and Antarctica have identified nineteen ecosystems that are collapsing due to the impact of humans.  They point to dying coral reefs, drying tropical savanna, shrinking mangroves in the Gulf of Carpenteria and damaged moss bends in eastern Antarctica.

Why should humans care?  The breakdown of an ecosystem has a profound impact on the food chain and water resources upon which humans count for sustenance.  An ecosystem is put into peril by the loss of a keystone species  -  an organism that regulates all animal and plant life.  Take for example, the African Elephant.  There is much more to them than eye candy for safaris.  They shape their habitat with their elephant ways.  During the dry season they use their tusks to dig up dry riverbeds, creating watering holes that other species can also use.  Their dung is full of undigested plant matter that feeds insect life and fertilizes the savanna.  They keep brush growth at bay by breaking down and eating trees, allowing grasses to grow for grazing animals.  These activities also favorably impact the watershed at the earliest sources.

Elephants are struggling against illegal poaching and the loss of habitat due to agriculture expansion and logging. They are getting more attention than some animals in danger of imminent extinction.  For example, the Amur Leopard is a cat species in particular peril in its home turf in China, Russia and Korea.  There are less than six dozen in the wild.  The Amur Leopard is known to be a keystone species within certain habitats by keeping in balance prey populations such as deer.  Overgrazing by a large deer population gives rise to erosion that interrupts the flow of rainwater into watersheds  -  the very watersheds that supply humans with vital water resources.

Breeding programs for captive Amur Leopards are valiantly attempting to keep the gene pool above a critical threshold.  Indeed, adequate gene levels is vital to maintain diversity and robust resistance to disease.  Otherwise, a species is likely to be on the list when scientists tally up the lost animals and bird of the Holocene.  Humans need to realize they could be on that list as well.

Seriously, why all the drama?  Why is extinction important for investors?  A solution is needed.  The existence of wild animals is a key to maintenance of human food and water supplies.  Even an animal as obscure as a wild cat halfway around the world.  One ecosystem falls, then another and finally enough ecological dominoes are tipped over to reach one that impacts your food, your water.  Test how long it will take.  Where does your food come from.  Down the road?  Other side of your continent?   Another continent?

There is no environmental fairy god mother to fix things.  No bright shiny spaceship to take us to a different planet.

Companies either to make the problem worse or support solutions.  As an investor or even a short-term trader providing liquidity, how is your capital allocated?  To the perpetrators of the problem or to the supporters of solutions? 

The allocation of capital to an investment, to a trade, makes you either part of the problem or part of the solution.  Is your capital going into the current meme stock?  Are they a water polluter?  An emitter of greenhouse gases?  Does the company seeking resource efficiency or conduct business like there is no tomorrow?       

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.