Buying marginal agricultural land in northern areas - a hedge against climate change?

[NPV]

Had this idea for a while but never researched thoroughly. What do y'all think about buying land which is now agriculturally marginal but stands to appreciate greatly in a +2-3C world? E.g., land which is otherwise good (reasonably thick, rich, good access to water etc.) but is currently either not suitable for agriculture at all and hence next to worthless, or is agriculturally marginal and hence cheap because of cold weather, but would become agricultural or increase crop yields in a 2-3C warmer world? It does not even have to increase crop yields in absolute terms - significantly increasing them relative to agricultural land currently in use would already probably make it an attractive investment.

According to this map, this means Canada, Alaska or Siberia: http://vignette2.wikia.nocookie.net/con ... 1119150310

Russia's history does not exactly make it a safe investment destination, hence this leaves Canada and Alaska.

This leaves two questions:

1. What are the main challenges to this investment thesis?

2. Practically, how would one go about implementing this? I've tried looking up the usual sites like Landwatch and the kind of deals there are not really what I am talking about - they are typically smaller (<15 acres) sold as a hunting and/or recreational property at prices already roughly in line with good agricultural land ($500-1000/acre). While what would work for the investment thesis is large areas (buying land by quarter, basically) at prices significantly lower than prime agricultural land. I have looked a bit into buying land from the government and this seems to be mostly restricted to residents of that state or territory (e.g., Alaskan residents get to bid before non-Alaskans, and what remains for non-Alaskans is again these smaller "getaway" properties at quite high prices: http://dnr.alaska.gov/mlw/landsale/regi ... fm?all_otc ; in Canada very strict limits exist to buy land in the main agricultural provinces such as Saskatchewan while land is very expensive in BC and Ontario. I have not found much info on the northern ones where land should actually be cheap such as Yukon, Northern Territory, Labrador and Newfoundland).

[Lucky C]

Is the problem really that it's going to get too hot and the solution is that we need to move somewhere colder? Or are there bigger threats than rising temperature to producing enough food in the future (e.g. more droughts, more storms, loss of topsoil, invasive species)? If these other threats are bigger than a couple of degrees average temperature rise, is it still a valid assumption that we will need to start farming in remote Northern areas?

Or can we adapt in existing farm areas and still feed everyone, by better controlling waste and growing better-suited crops as the climate changes?

Will the potential shortage of farmland make the land more valuable even after considering the need for shipping long distances and adding any needed infrastructure to remote locations?

How long would you expect to hold this hedge and how much would you expect to sell it for? Not in an extreme case but your best guess at the average outcome? How does this compare to expected return on other investments over long time periods?

Will you be paying taxes or other costs all this time, every year until you wait for your big payday?

In however many years (50+?) will we still be getting food from large tracts of privately owned farmland? Or will we be getting it from suburban permaculture gardeners producing on a small <1 acre scale in every neighborhood? Or automated urban growing centers? Or solar powered waste->food direct conversion systems?

[theanimal]

Most of that OTC land you see is far off the road system. You are only really going to be able to access it by a fairly long boat ride if you're lucky or most often by plane. There are some properties closer to Fairbanks and in the busy stretch of the Mat-Su valley near Talkeetna but they are unimproved and still not easy to access.

Furthermore, a lot of the land that is being sold is just bad. Many bogs and essentially all of the land is underlain by permafrost. What type of timeline are you thinking? It'll be a while before all that permafrost melts and the land will shift around a bit if it's unstable.

If you want to have it as an investment or hedge, avoid the cheap stuff. Find land that does not have permafrost. It'll be more expensive but that is going to be your best bet. I recommend checking out land near Palmer, Wasilla and Willow. Those areas already have a 4.5 month growing season that's going to continue to extend. That's where all those 100+ lb cabbages and watermelons come from.

[George the original one]

Those areas already have a 4.5 month growing season that's going to continue to extend. That's where all those 100+ lb cabbages and watermelons come from.

Daylight hours are the limiting factor on how far north you can grow. There's 3+ months that nothing will grow because there's no light.

Any hedging land investment should be multi-purpose in case your primary thesis falls apart. Look for land that has timber, water, transportation, & urban growth potential in addition to farming.

[jacob]

I think the better hedge would be to relocate northwards. I can't imagine investing sufficiently much in crappy(*) AL farmland to afford living in Phoenix, say ...

(*) AL is going to be/stay marginal for a good while. Sun light (as mentioned above) and top soil issues abound.

[jennypenny]

You're talking about crappy farmland in Alaska, right? Alabama (AL), specifically Hunstville, is going to become the Shangri-La of the south.

[theanimal]

@GTOO- Believe me, I'm well aware. I live in the Arctic.

Daylight is one factor. Temperature is the other. Where I live we have over 2 months with greater than 20 hrs of light. Over one month with 24 hrs of continuous light. Our growing season is about half that of southern AK even though we have way more light.

Cook inlet is a huge heat sink and provides a big growing season (relatively speaking) combined with longer daylight hours. Their average nighttime temps in summer are above 50F. Ours are around 40F. We only have 2 months frost free. They have over 4. Every degree below 50 is about a 5% growing restriction. 50 F is the minimum temp that plants need to metabolize photosynthesis.

[mfi]

Some are adapting to climate change by buying farmland in Arizona and the Southwest....
http://www.cnbc.com/2016/01/15/saudi-ar ... hwest.html

[Kriegsspiel]

Some are adapting to climate change by buying farmland in Arizona and the Southwest....
http://www.cnbc.com/2016/01/15/saudi-ar ... hwest.html

"However, the issue of land rights comes into play. As the owners of the land, the Saudis appear to be playing by the rules. The area of the Arizona desert where the Saudis bought land is a region with little or no regulation on groundwater use. That's in contrast to most of the state, 85 percent of which has strict groundwater rules.

Local development and groundwater pumping have contributed to the groundwater table falling since 2010 by more than 50 feet in parts of La Paz County, 130 miles west of Phoenix. State documents show there are at least 23 water wells on the lands controlled by Alamarai's subsidiary, Fondomonte Arizona. Each of the wells is capable of pumping more than 100,000 gallons daily.

"You can use as much water as you'd like, as long as it's put to a beneficial use, and you're not required to report your water use," said Michelle Moreno, a spokesperson for the Arizona Department of Water Resources, which has scheduled a public meeting for Jan. 30 in La Paz County to hear concerns from residents."


I just finished The Water Knife and grabbed Cadillac Desert from the library, so I'm an expert now and can lulz at Arizona.

[Riggerjack]

Some are adapting to climate change by buying farmland in Arizona and the Southwest....
http://www.cnbc.com/2016/01/15/saudi-ar ... hwest.html

So CNBC is pushing the "OMG dirty furunerz takn our waters!" angle, to push for water regulation. What a surprise.

I expect their "Each of the wells is capable of pumping more than 100,000 gallons daily" is a regulatory limit, rather than an actual statement of capacity. But then this whole article is a push for regulation to stop Saudis from farming, in the exact same way everybody else in the area does.

So, the alarm here is that a farmer sold his land instead of his crops. Oh, and them oil shieks are gonna grow their own alfalfa, and pay TAXES! They are probably gonna drive up the price of taxes, too! Quick, stop em by enacting more regulation!

Sorry for the sarcasm, but that page of gibberish rubbed me wrong this morning.

[Riggerjack]

I meant to come here and suggest that if you are betting on long term land deals, Washington coastal property is exceptionally cheap by pacific coastal property standards.
Mainly, because it is cold, steep, and almost empty. Oh, and it rains all the time. But if you are betting on climate change, it's the Malibu if the future!

[CECTPA]

You might not need to buy. You could get free land in Canada if you're going to develop it.
http://www.theloop.ca/9-canadian-towns- ... free-land/

[NPV]

Taking the feedback from the posters above and hence expanding the thesis beyond agriculture, and moving a bit south to milder and more "civilized" areas, I have been looking into properties in Northern Ontatio which could serve multiple purposes: a long term (decades) investment, a hedge against climate change and other SHTF events to serve as a self-sustenance / homestead land in that scenario, and as a recreational property (fishing, camping, hunting) in a more optimistic scenario (again not so much next year as 5, 10, 20+ years from now).

What do y'all think of this kind of properties in Northern Ontario?
http://www.landwatch.com/Matheson-Ontar ... /200622739

There is a bunch of similar properties for sale: http://www.recreationland.net/recreatio ... index.html

They offer timber rights, hunting, often fresh water such as a creek, sometimes road access and sometimes not (could be a good and a bad thing), and depending on zoning it could be used for other purposes (some are unorganized hence pretty great; others zoned for something specific, e.g. a hunting camp).

Anyone has any experience being an "absentee owner" / investor in such properties? Or anyone who looked into this as an investment?

[George the original one]

Don't buy property without road frontage or an easement. The market for resale would be small.

[fiby41]

http://vignette2.wikia.nocookie.net/con ... 1119150310

If "Bangladesh is largely abandoned" I wonder where it's population which is the same as Russia would go.

[chenda]

@fiby41 - Long since died I would imagine.

[jacob]

Nice map.

The world would reach 4C by year 2100 if countries maintain business as usual. 3C will be possible if countries meet their climate targets which so far few of them do. Insofar they do that, 4C will be delayed until 2130-40. The primary concern are the brown and red areas of the map. IIRC, about 600 million migrants are expected by 2080. In contrast, there are about 50 million in today's world. However, it's not like people can't live in the yellow areas. They will just have to import food as long as they can afford it---same way the ME is currently buying food with oil money. Both China and South Korea have started buying farmland in Africa. It will not work in the 4C world, but their problem happens before this. As for Bangladesh, I understand India is trying to fence it in. Problem there is not so much ocean rise as storm surges and salt water intrusion.

Best advice is to move polewards (or upwards into the mountains) before everybody else figures it out. I live at 45N which is just about the furthest south I would want for my remaining lifespan. As for farmland, buy the top (poleside) of the corn belts. Sell the bottom (subtropical side). Also note, that soil doesn't magically appear out of nothing just because it got warmer. Insofar humans manage to grow much in the ex-tundra, it will only be after a massive effort. This also requires that people take a very long-term view, which is a suggestion that's so funny that it isn't even funny.

[The Old Man]

Given an assumption of climate change, wouldn't enclosed farming areas (i.e. greenhouses) become economically feasible? There are far more ways to solve the food problem, then to move north. Economics will dictate the exact path forward.

[chenda]

Yes it really hammers home the scale of the problem. Although I was surprised how much green there was in Australia; I had assumed all but the far south would be doomed to desertification.

[jacob]

Economically, the easiest way to solve the food problem is to get rid of meat eating voluntarily. Most likely, this would not happen (it isn't happening today). In terms of biomass, the majority of calorie production goes to feed livestock (about 60% of the planet's total mammalian biomass, humans are only about 30%, the remaining 10% is the remaining wildlife). If that corn and soybean feed was directed towards humans, the planet could currently feed 10B people easily (we're currently at 7.65B humans and still growing by about 0.1B/year).

Currently, we're relying on price signals. The issue is that rich humans can easily afford to convert 10lbs of corn calories into 1lbs of beef calories thus pricing out poor humans. Americans spend about 20% of their budget on food. W/o changing the composition, food prices could double or triple and yet remain affordable. Compare to Egypt where people spend 60% of their budget on food. If food prices double or even rise (as they did after the Russian droughts in 2010 when wheat exports were banned(*)), Egypt, say, would be and was in trouble.

(*) Export bans squash economic signals. Countries do tend to put their own people over profits. In that sense, countries in the yellow areas better be somehow valuable to the green areas. Like how the ME is valuable to the western world today because they have oil, but Africa is not so they're largely ignored. This is a very ugly game.