January 29, 2008
Column: The battle for food, oil and water
Soccer crowds in England like to abuse match referees by chanting: “You don’t know what you’re doing.” If protesters had been able to get near the World Economic Forum in Davos last week, they could justifiably have aimed the same chant at the world leaders who assembled in the Alps.
These people are meant to be the “masters of the universe”: presidents, prime ministers, bankers, billionaires. If anybody can make sense of world events, it should be them. But the air of confusion in Davos was both palpable and alarming.
The meeting took place against a background of crashing stock markets, panicky interest-rate cuts and a massive bank fraud. The global financial system is now so complicated that nobody really knows how deep its problems run. This central “known unknown” means that all the subsequent big questions are much harder to answer. Will America face a serious recession? It all depends. How bad will the knock-on effects be for the rest of world? Search me. How should politicians and regulators react? Difficult to say.
Continue reading this column here.
There is a need for speculative comment on where globalisation and subsequent overgrazing has taken us. Bad news has been swept under the carpet in recent times awaiting a day of reckoning that’s continually been put off. The peasants are revolting and leaders are fearful. Cracks are being papered over and there is a dam somewhere that must burst.
Posted by: Tom | January 29th, 2008 at 4:08 am | Report this comment.
Blaming global capitalistic greed is very satisfying at many levels ,
those plutocratic lubricious snakes probably deserve some stick on general principle anyway .
They are however quite blameless for the present crux,some bad weather,bad subsidies are the immediate causes .
Australia is a parched land , no doubts but the water problem in the capital cities are due to population increase and water increase per capita
Ultimately the population elephant is not mentioned by Gideon ,
At the date of his birth the world population had just passed the 3 billions people mark
should the good lord and right living keep him alive for sixteen more years , the number
would be eight billions …
There probably will be no collapse ,
just increasing occurrences of crisis ,depending on circumstances ,
a smaller disturbance creating stronger and stronger effect
until the population is first stabilized then downward adjusted by the usual means
aka …the four horsemen
The political consequences shouldn’t be ignored either , the countries which are not self sufficient in food/energy are exposed to the grossest kind of blackmail ,
this is a very real card held by whoever has the control of the sea lanes .
.
Posted by: jeannick | January 29th, 2008 at 7:04 am | Report this commentThere are contradictions:
Yesterday Spanish farmers were destroying thousands of tons of fresh tomatoes because prices were falling as imports from Morocco (a very dry country) reached the European Union.
At the same time, a big desalinisation factory in Almerica (Southern Spain) is in overproduction and water has to be exported as it is not used in the Andalusian countryside.
Add that the European Union has increased the milk quotas for Spain by over 100,000 tons…but the increase can be almost as much as we want as Spain has the capacity for a much larger production.
So things are not so easily to describe, hehe
Posted by: Enrique Costas Mira | January 29th, 2008 at 8:15 am | Report this commentSpot on column. Of all the issues that the international system is badly configured to handle, global food security - with all its complex linkages - is right up there at the top of the heap.
I did a briefing on the international implications of rising food prices for the UK Cabinet Office Strategy Unit last December, which may be of interest -it’s available to download at http://tinyurl.com/2pxheh. See also regular coverage of related issues at GlobalDashboard: http://www.globaldashboard.org/category/scarcity/
Cheers, Alex
Posted by: Alex Evans | January 29th, 2008 at 8:58 am | Report this commentAll of these comments, which match Martin Wolf’s recent article about a “Zero Sum Economy” come back to the same thing. Despite triumphantly declaring the 1970s Club of Rome Report on the “Limits for Growth” disproven by the responsiveness of the market the ‘limits to growth’ have suddenly re-appeared with a vengeance. This is only the beginning. Until and unless the basic model and mind set of business and society changes we can expect the situation to get worse. As Gideon Rachman shows each limit re-inforces the others - in his example trying to overcome the fuel and climate crisis with bio-fuelishness intensifies global food and water shortages.
Another example that I would give would be that trying to overcome the oil and gas shortages with coal power as a substitute accelerates greenhouse gas emissions. In response to this the global business and political elite are dreaming techno fantasies. For example carbon capture and storage to deal with the greenhouse threat from resurgent coal power. CCS could not be generalised until at least the end of the 2020s and 2030s by which time the climate damage will have been done and 2 to 3 gT of Carbon would have been put in the atmosphere for a decade or more.
From this point of view the current global financial turmoil and the threat of a recession is actually good news for the planet because the only times that greenhouse gas emissions fall is during a recession. The discrediting of the global financial and banking system is also good news because it impels us to fundamentally re-make the financial system. Since the banking system depends on the destructive growth process - because it demands extra production that can be paid back to match the interest on loans - a fundamental transformation of the banking system is needed. At some point the news, that the general public hears again and again and again, that “the banks do not trust each other” will translated into something. Not just one bank but the entire system is not to be trusted.
The realisation will kick in that we are all dependent on a system for the transactions of everyday life - and yet this ‘commons’ has been privatised and run for the benefit of bankers who are interested in their bonuses but are totally indifferent to the interests of society. At that point we will start to get to grip with the fundamentals of our problems - hopefully by the launching of alternative DIY money systems that are not based on debt. Such money systems would be run in the interests of a sustainable society rather than for private gain.
The sooner the better - in fact cutting edge climate science left behind the linear models on which Stern was built some years ago. The new well grounded fear is that we are already over the critical limits for run away climate change because of at least 30…yes 30…amplifying feedback effects over which humanity has little influence. The struggle is therefore on not only to reduce greenhouse gas emissions to next to nothing as quickly as possible but to take CO2 out of the atmosphere too. In fact this could be done by converting biomass into low temperature charcoal bio-char and putting it back into the ground - where it is very stable but acts as a soil improver, retains water and encourages microbial and fungal growth which also take CO2 out of the atmosphere.
It will be touch and go. Climate Scientist David Wasdell makes this analogy Think of trying to run up an descending escalator. Economists like Stern are living in a fantasy that we can do this and still grow because the effort needed (costs) are manageable. They think the
escalator is descending at a rate we can cope with. They think we can even go down a few steps - emit more - because we will still be able to get back up later. However, if we go down more steps - emit more greenhouse gases - the escalator will accelerate. What is more, because the escalator descent is accelerating anyway, because we have unleased a cycle of amplifying feedbacks
like an avalanche - the longer we leave it the faster it will be going down when we try to get to the top. At some point (which is incidentally quite soon) we will have lost the ability to get up it. We are probably very close to that point - we may already have passed it.
On the way down expects quite a few poor harvests and water shortages, not to mention rising sea levels, hurricanes, wars and refugee crises….
At the bottom of this escalator is human and multiple species extinction.
What are the solutions to all of these problems Gideon asks and answers “Search me”.
That just about sums it up. Honest people looking at this situation will draw the necessary conclusions - they must get together in their communities and start to develop initiatives like Transition Towns which develop the emergency economic responses to allow people to support each other through the difficult times ahead. It would be nice to hope that they would get some support from government and the financial elite. I won’t be holding my breath. Behind the imposing facade nothing much else than panic and confusion reigns. Thanks for being so honest Gideon.
Posted by: Brian Davey | January 29th, 2008 at 9:09 am | Report this commentWell, given that this is the Financial Times, how about trying some economics? Oil, in real terms, fell for twenty years after 1980, with the result that usage intensified. A higher price should lead to conservation.
Water, in the developed world, is similarly underpriced, with special interests seeking to keep it so: look at the kerfuffle in the UK over water metering. In the developing world–similar to food in a famine–it is not so much a problem of amount as distribution.
The economic development of India and China has led to a marked decrease in aggregate world poverty–surely a good thing. Their integration into the world economic system should (hopefully) lead to a diminution of military tensions–another good thing. (About this last I am the least certain, pols. like power and nothing augments power so much as a “splendid little war”–ask George II, well, maybe his father George HW Bush.)
Posted by: MaryCunningham | January 29th, 2008 at 9:43 am | Report this commentVery topical and well argued column. When the Dutch stop making milk because it is cheaper to do so in Thailand, some fundamental questions need to be asked. Are the Dutch really that much more productive–adding value to the global society–behind keyboards than on farms?
Political agendas may be less visibly alarming, but none of those represented amongst Davos participants is focussed on the realities Mr Rachman, Mr Wolf and others are reporting.
Posted by: WCM | January 29th, 2008 at 11:06 am | Report this commentA very apt post Mr. Rachman (Personally, I was hoping to hear something from you about the victory of the Left in the recent German elections and its implications for the EU’s most important country and, more generally, for the left-Right balance in Europe, but this post is certainly a refreshing change from reporting the Punch and Judy show in the US).
We all know about the competition for oil but I have heard it frequently said that water will replace oil as the critical resource of the 21st century.
I remember reading an article (I think in the Atlantic Monthly?) about how a parched America might one day make a grab for Canada’s waters (and, I guess, its oil too). We also know that part of Israel’s reluctance to make peace is a lot to do with the water resources that it has grabbed. Turkey has also been screwing Iraq and Syria by the dams she is building.
The nuclear issue for Iran and her neighbours is tied into the needs for desalination plants that are powered ny nuclear energy.
Indeed, in a geoploitical blog, there is much space to talk about watery things!
Best,
P
Posted by: Pacifist | January 29th, 2008 at 11:07 am | Report this commentA just rebuke from Mary Cunningham. Missing from this column was any reference to economics - or, indeed, technology.
Posted by: Gideon Rachman | January 29th, 2008 at 11:44 am | Report this commentI did have a paragraph on that, but cut it out for reasons of space. (Feeble excuse, I know).
But yes - market forces will probably increase the supply of food. And there may be technological fixes to some of these problems - desalination plants for water for example.
The one thing that I find it hard to see either a market or a technological fix for at the moment is global warming. Carbon trading is very much not proven as an effective solution. And carbon capture and storage - well it would be great, but times seems to be running out.
I think the topic to which you allude - of men of power confronting a new era of challenges using the ways of thought of a prior era - is most insightful. The bedrock of metaphor relating to “innovation” and “collaboration” is the software trade, which until now imposed its shorthand on the ways in which any number of unrelated topics are considered. Software metaphor for example has created a particularly strong influence on management studies. The software success story metaphor is unlikely to do us much good going forward as it is far too simple. A better metaphorical bedrock may lie in the practise of diplomacy but naturally enough it has no visiblity today.
Posted by: Richard Moon | January 29th, 2008 at 11:45 am | Report this commentHi Gideon, while approaching asteroid may attract attention and produce action, GW will obviously not. Davos crowd simply lacks imagination, so sensible person has to prepare for a future where one is left to his own devices.
In the meanwhile, an interesting subject to discuss would be recent scandal in Slovenian (current EU Presidency) Diplomatic Service. Slovenian ‘Delo’ has published a leaked ‘to do list’, sent by Daniel Fried, Assistant Secretary, Bureau of European and Eurasian Affairs- US State Department, on 27 th of Decembre, to Slovenian Foreign Ministry. This list contains detailed tasks Slovenia is to complete in course of its EU Presidency. Responsible person, Political Director of Slovenian MFA who was intended recipient, has resigned today.
It would be interesting to find out if this is another first in Slovenian Presidency, or is this a practice that has been going on for a while, and if it has, for how long.
Kind regards,
Dusan
Posted by: Dusan | January 29th, 2008 at 1:55 pm | Report this commentA timely, thought provoking article.However, it is unfortunate that the comments of the likes of Brian Davey - with his nihilistic global climate catastrophe sub text - are all too typical a reaction to the problems we face in a complex global exconomy. Like it or not, the demand drivers Gideon identifies for all these resources are a function of human nature and the idea that economic policy is going to be driven on the basis of a model based scenario of natural disasters - the avoidance of which will require some kind of global equality model of energy and raw material usage is frankly absurd. What is really depressing is that just as the bankers worry about the salvation of their own business models, the anti globalisation lobby groups (who have now morphed into climate change activists) are presenting their own agenda as being that most pressing for global economic leadership attention. Stealing the clothes of genuine hardship - population growth, poverty, famine, drought - and dressing up their own issues as providing the soloution to these issues is almost criminal - the more so when it takes on the ” it’s almost/may already be too late” doomsday clock style of analysis. The soloution to many of these issues still lies with the promotion of economic growth - not economic rationing of resources according to a pre-determined agenda. Whether you believe in the anthropomorphic global warming scenario or not - surely economic policy making should be addressing current problems just as urgently as future fears however much they are “apparently” brought into the current day.
Posted by: Christopher Tinker | January 29th, 2008 at 4:48 pm | Report this comment“Cutting edge climate change models left behind the linear models on which Stern was built years ago”. Call me old fashioned but the feedback loops essential to these models have yet to actually appear in the real world. Moreover even the apocalyptic forecasts are predicated on an assumption of continued growth and no change in policy. Keep the people in Bangladesh on 50p a day because if we have the economic growth that would get them up to current european living standards by 2050 then sea levels might rise. Anybody asked the Bangladeshi’s which they would prefer? Thought not.
Posted by: Mark T | January 29th, 2008 at 5:08 pm | Report this commentYes indeed - how about some economics. Will increased prices lead to increased supply?
What is true in individual markets may not be true for the global energy market. For example, there may still be lots of oil in the ground but if the energy needed to discover it, then pump and process it, is greater than the energy yielded then it is not worth trying to increase the supply. That’s because not only energy prices rise (hence revenues) but energy costs rise too (hence costs). When the energy return on energy invested falls to zero forget rising prices bringing forth increased supply.
The same goes for natural gas. And since the output of the agricultural system and the food distribution system is heavily dependent on fossil fuels (as well as water) if there is an energy crisis there will be a food crisis too. Especially when we have physical limits on water usage and when there is climate change producing harvest crises.
Add to that fact that the last sputter of growth means that the Chinese and Indian consumer class want meat. That means more grain must be put through cattle - hence more fuel is needed. But what if the extra fuel cannot be obtained? Or it can only be obtained by processes like coal to liquids that destroy the climate because they have such high emissions? For the truth is that CCS is still 15 to 20 years away and only partially effective anyway.
The answer is that the market does not produce the extra supply - but the market does give us rising prices and then, well, as Australian academic Ted Trainer puts it:
“A Market economy is an ingenious device for ensuring that when things get scarce only the rich can get them” Ted Trainer “Developed to Death”
Some people are being driven out of the market entirely. The poor. They riot.
Some people are being driven out of the market partially (the impoverishing middle classes). They protest and write books or form movements for reform and do what they can to organise communities with alternative economic arangements, ecological design, enegy light life styles - the very opposite of Nihilism Mr Tinker.
Some people barely notice the difference i their own life style because their purchasing power is so great. Indeed they may be better off because of the high price of what they sell and because other people’s weakness, vulnerability and distress opens up business opportunities. They get huge rents and other opportunities too. What did Lord Lucan do in the Irish famine? It was a wonderful opporunity to evict his tenants and turn the land over to cattle.
The cartoon that went with Gideon’s article said it well. Kindly don’t attack me for pointing out what that cartoon said Mr Tinker. The Nihilists are those who avoid looking at the truth for what it is. There’s always business opportunities if you know where to look for them - e.g. for building security walls and armaments. It’s what Naomi Klein calls “Disaster Capitalism” - John Auther explained not long ago how arms stocks were doing well.
Here’s a quote from Naomi Klein
Anyone tired of lousy news from the markets should talk to Douglas Lloyd, director of Venture Business Research, a company that tracks trends in venture capitalism. “I expect investment activity in this sector to remain buoyant,” he said recently. His bouncy mood was inspired by the money gushing into private security and defense companies. He added, “I also see this as a more attractive sector, as many do, than clean energy.”
Got that? If you are looking for a sure bet in a new growth market, sell solar, buy surveillance; forget wind, buy weapons.
End of Quote
That’s the unrestrained market for you. That’s a particular kind of economics - the kind that refuses to recognise the capacity limits of the economic system in the global ecological system and the kind that does not recognise that equity and justice issues arise as a result of this. Unless we recognise this then indeed, we will have those inside that fortress represented by that cartoon, with the oil, the food, the water - and those outside. It is nihilism to refuse to acknowledge that this is a major problem for global politics, for the future of humanity. Once people acting as citizens and as part of a global community have been able to impose capacity limits (e.g. on greenhouse gas emissions) to prevent the destruction of the eco-sphere) and once they have found a way of doing that equitably, then, and only then, can the market be allowed to allocate resources.
As for Mark T - sorry you are old fashioned. The melting ice caps are changing the earth’s albedo for example. Would you like to deny that?
Posted by: Brian Davey | January 29th, 2008 at 5:24 pm | Report this commentDear Mr. Tinker,
Didn’t you mean to include the word “sustainable” in your sentence “The solution to many of these issues still lies in the promotion of economic growth”?
Dear Mark T,
As a native of the Third World, I fully sympathise with what you say. Unfortunately, as far as I can see, nobody in the West is saying the obvious that in order to save the planet whilst allowing the Third-Worlders some progress, the “First World” must live more frugally and reduce their claims on the planet’s resources.
(Now, I know that much of the prosperity of, say, China and India depends on making goods for N America and Europe and if the latter live more frugally, the former will have nobody to sell to but squaring this circle is what is needed if there is true leadership.)
Best,
P
Posted by: Pacifist | January 29th, 2008 at 5:29 pm | Report this commentt was encouraging that UN Secretary General Ban-Ki Moon spoke out at Davos warning the private sector of the ‘looming water crisis’. As water becomes increasingly scarce, greater priority must be given to the sustainable and equitable management of water resources. Greater competition through the demands of agriculture and industry, along with the effects of climate change, are exacerbating drinking water shortages in the developing countries where WaterAid works. In a world where 1.4 billion people still lack access to safe drinking water and where 5,000 children are dying each day as a result of water-borne diseases, the first priority of government should be to ensure their citizens’ access to safe and affordable drinking water. The private sector has a critical role to play, alongside government, in safe-guarding the rights of all - particularly the vulnerable and marginalised. As water is increasingly viewed as a commodity that can be bought, sold and traded, so drinking water as a human right must be recognised and protected.
Posted by: Nick Edmans - WaterAid | January 30th, 2008 at 11:40 am | Report this commentConsidering the contribution to this of biofuel targets, which will require a further, several-fold increase in production, what starker example will there be of world leaders making the right noises and doing precisely the wrong thing?
Posted by: Jim Roland | February 1st, 2008 at 1:29 pm | Report this comment