When Growth Hits a Wall

• Growth used to follow a familiar pattern, stimulus in, recovery out. But that rhythm is breaking. Behind the slowdown is not just policy fatigue or cyclical drag, but a deeper supply-side problem: we’re pushing against the limits of labour, capital, and above all, energy.

• Energy isn’t just one input among many. It’s the input that makes everything else work. Yet we’ve long ignored the ecosystems that underpin it. Soils, water systems, minerals, once treated as infinite, are now bottlenecks. And in a Leontief world, where production depends on the scarcest input, those cracks matter more than ever.

The Natural Capital Gap

• For decades, natural systems sat quietly off-balance sheets. But data now shows they’re in retreat. Renewable natural capital, forests, aquifers, fertile land, is declining. Non-renewables are flatlining. Productivity isn’t just stalling because of tech plateaus or demographic shifts. It’s because we’re eating into the very foundation growth relies on.

• That degradation is no longer invisible. From food price volatility to grid instability and insurance blowouts, the economic effects are mounting. And as Christina Caron makes clear, it’s time we treated nature not as background noise, but as a risk that could entail negative outcomes.

Politics and Power in a Scarce World

• Ecological stress is reshaping migration, fuelling border tension, and turning climate policy into a cultural wedge. Water is becoming a strategic asset. Solar farms, batteries, and AI datacentres are creating new land and resource demands just as old buffers erode. That means geopolitics is entering a new, geoecological phase.

• The countries best positioned won’t just be those with capital, but those with stable ecosystems, access to clean energy, and room to restore what’s been lost. This shift will redraw risk maps and redefine economic advantage over the next decade.

Our View

• We’re treating ecological fragility as macro risk. That means favouring sovereigns with strong environmental buffers, diversified resource access, and investment in infrastructure resilience. We’re watching for where climate-linked migration may reshape demographics, and stress urban systems and spending priorities.

• On the thematic side, we see long-term upside in restoration-linked assets and frontier technologies aimed at bridging the natural capital gap. That includes precision agriculture, circular water systems, bio-based inputs, and firms building natural defences into cities and supply chains. These are early signs of how value is changing.

• We’ll be breaking this down in upcoming notes, focusing on where ecological constraints are starting to price in. That includes sovereign spreads, insurance premia, food and water-linked assets, and demographic shifts. The goal is to help map where capital can still compound in a world facing harder limits, and which models are built to last.