Investment priorities need to change to reflect the forthcoming race for energy, commodities, food and water, according to asset management company Beetle Capital.

Beetle predicts a number of investment themes in the fast-growing 'natural capital' market over the next decade. These include the decoupling of gross domestic product (GDP) growth from oil prices, the use of electric power and technology to cut resource use and more efficient use of existing resources. Water should be used more efficiently and effectively when used to generate power overall.

In its inaugural investment strategy document, authored by Beetle managing partners Sofia Fenichell and John Maxwell, III, the company suggests there will be a structural change in economic conditions as a result of increased global competition for energy, food and other natural resources.

"Without a roadmap it will be difficult for most investors to adjust their asset allocation strategies to these new and changing conditions. In order to take these coming risks and opportunities into account, we are proposing an investment framework built around the concept of natural capital, the combination of the world's renewable and non-renewable resources," said Maxwell and Fenichell.

The report said investors needed to refocus away from "narrow verticals" such as carbon or clean technology and look at the bigger picture.

"Achieving sustainable growth will cause an uncomfortable realignment in global balances of power, with conflicts likely to emerge over water, food, and arable land. How nations integrate natural resource use and depletion into their policy planning will affect both their energy security and the sustainability of their economic growth," wrote the authors.

Beetle predicted that China would outpace the US in the race to create a green economy, but other emerging markets could struggle in the increased competition for resources.

In conclusion, Maxwell and Fenichell said: "Sustainable investing requires a more disciplined and systemic approach to modelling and valuation. In the post oil economy, economic models or investment strategies that do not employ a natural capital framework will underperform."

Beetle has also announced the appointment of Alex Veys, a former senior fixed income
manager at Fidelity International, to run its first fund focusing on natural capital.