“It is criminality beyond any language, concepts or laws that we presently have. It’s criminality that places the entire human enterprise at risk. And we simply have not been able to confront inaction that allows the entire human enterprise to slip into catastrophic failure. It really does beggar the imagination to understand why, given the consensus of the scientific community on this issue, why inaction was the order of the day.”

-David Orr, a professor of environmental studies and politics at Oberlin College on the failure of world governments to address the climate crisis.

When I last posted to this blog, it was March. Snowmageddon and climate denial were top of mind among most people. The climate talks in Copenhagen had crashed and burned. And, the US Senate was preparing to abandon even voting on an extremely watered-down, “energy bill,” essentially killing chances for even the mildest kind of climate reforms.

A few steadfast souls continued to peddle their arguments for reform, but few would indulge them. Even as 2010 continued to trend as the warmest year on record…snowstorms be damned. The world was seemingly lurching back to its bad old habits and burying its collective head under the sand.

But those sands shifted, and we’ve awoken to a summer from hell: Floods, fires, drought, wheat shortages, civil evacuations, landslides and worldwide deaths from record temperatures.

Despite all this news, this blog will not be updated as it once was. From time to time, I may add updates, but I think this blog has said what it can.

As you read it, you will find descriptions of woefully familiar crises that are playing out this summer, and which, according to climate models, will unfortunately prove routine. Let it stand as a record then, chronicalling the available understanding of climate change between 2009-2010 and how humanity decided to do nothing; when we chose ruin over hope.

Still, we can speculate with one eye on the climate models and another on the historical record.

To begin, let’s start with the future history, 2010-2100. As the title of this blog would indicate, the working hypothesis is that the likely scenario is a worst case scenario, where climate change occurs within the bounds of the more pessimistic climate forecasts. The argument for this is that, historically, the more we have learned about the climate system, the more likely the worst case scenario has become. For example, the IPCC has repeatedly been forced to update its conservative consensus reports over the years as our understanding of the climate system have advanced (More on that here). My own personal view is that we are hard-wired to view the Earth as a slow-moving, sturdy system that we cannot possibly alter in the span of our own lifetimes. But, scientists are discovering that feedback loops can shift us into spiraling, runaway warming. In last week’s blog, I wrote about the discovery of just such a feedback loop which may have been triggered in the Arctic.

For climate change wonks, the scenario this blog anticipates is something in the range of the A1 or A2 IPCC scenarios. The A1 family of scenarios are ones of rapid economic growth in an integrated world economy with rapid technological change and a global population of 9 billion by 2050. Some A1 scenarios expect efficient technologies to become available and widespread (A1B and A1T) while others see continued reliance on fossil fuels (A1FI). In the A2 scenarios, the world is less integrated and more regional, with mixed economic growth and slower, uneven development of new technologies. Given recent economic and political events, I’m increasingly siding with the A2 scenarios, so for simplicity, I’ll use that one in this post.

So, in our A2 scenario, we have the emergence of regional powers, the US, China, Russia, Brazil, Europe and perhaps India, with integration limited by political conflict over dwindling energy, water and food resources (see my series on the economic crises global warming is expected to unleash). In between these economic centers will be collapsing smaller economies as global warming begins to undermine the integrity of poor nations, similar to what has already happened in Somalia and Darfur.

An abbreviated chronology of climate events shaping our future history would include:

• 2030s Dust bowl-like collapse of the American Southwest due to persistent drought; weather-related disasters will up by 300%
• 2040s The world warms beyond the critical 2ºC “safe” limit; glacier-based water resources begin to fail in China and India; the Arctic Sea is now ice-free in the summer, reducing Earth’s albedo and exacerbating global warming
• 2060s Amazon rainforest begins to die, the soil-based carbon sink begins to collapse
• 2070s The world warms beyond 4ºC above pre-industrial levels, with the Arctic warming by 15ºC or more; The power of vegetative soil carbon sinks begin to weaken
• 2090s Annual precipitation decreased by 20% or more in key agricultural regions, and increases 20% or more in other areas
• 2100 The world approaches the 6ºC mark; 10-20 feet of sea level rise

In addition to the events listed above, are some that we cannot be so sure of, such as whether or not the warming will trigger other disasters or feedback loops, such as the melting of Greenland ice to such an extent that it dilutes the salt-driven Gulf Stream that keeps Europe and the Northeastern US warm; or acidification of the ocean, causing massive extinctions of the fish humans depend on for protein (20% of our protein comes from fish). Also, we do not know yet what affect the recently discovered methane leaks in the Arctic will mean for global warming, but it could make the above chronology look naively optimistic.

But what is clear is that our entire global order will not respond well to those changes that our models already forecast. As I argued in my economic series, the world economy will be sent into a downward spiral as we both reach the limits of our planet’s carrying capacity and reduce that carrying capacity through global warming even more. On the water issue alone, I worry that we are setting ourselves up for a regional nuclear war (such as between China and Russia, India and China or India and Pakistan) as chaos and desperation turn normal diplomatic protocol on its head. For those that doubt that people are willing to wage nuclear war over water, it is important to note that the standoff between India and Pakistan in Kashmir nearly turned into a nuclear war in 2001 (Pakistan considers Kashmir a strategic interest since it is the source of the bulk of that nation’s water).

We know that even a limited nuclear war, like that which India and Pakistan nearly waged would blast sufficient smoke and dust into the upper atmosphere that global crop production would crash. In their study of the after-effects of such a small nuclear exchange, Alan Robock of Rutgers University and Owen Brian Toon of the University of Colorado, found that 1 billion people would likely starve as this soot lingered in the upper atmosphere, reducing sunlight and even rainfall. Additionally, they determined that terrible damage would be done to the Earth’s ozone layer, causing long-term damage to plants, animals and people.

But even if wars over scarce water do not lead to nuclear war, a simple mapping of our above timeline to actual nations suggests a very destabilizing future ahead. First of all, populations will be on the move and in huge numbers. Extreme drought conditions in the Southwestern US, Mexico and Central America will mean that millions of people will be forced to find new places to live as they flee regional economic collapse. Americans already experienced such an internal dislocation during the Dust Bowl years of the 1930s, which led to widespread social unrest and injustices. Today, there is also tension with economic refugees from Latin America which have migrated into the US, often despite efforts to stop them.

Mass migration will not only be a problem in North America, but can also be expected in Europe, China, India, Brazil and throughout the Third World. In other words, the entire human diaspora will be on the march…or enlisted to resist that march.

And this at the very time that the world economy begins to suffer from the adverse affects of climate change. For more, see my series on this topic.

Assuming that humans can survive war, and economic collapse, what then? Moving beyond 2100, the IPCC tells us that sea-level rise will continue for 1,000 years no matter what we do, so the next millennium of human history will likely be shaped by ever-changing coastlines. This is important because one third of the people on Earth live within 50 miles of the sea. Moreover, we can expect changes to the weather to also continue for a thousand years. This is because it takes that long for warmer temperatures in the atmosphere to penetrate the deep ocean. And since those currents shape our weather patterns and regional climates, there is no telling what kind of planet we will have centuries from now.

We do know that the Arctic will warm far faster than the rest of the world, with a 15% or more increase in average temperature by 2090. It is also forecast that precipitation at the poles will skyrocket. In other words, the northern latitudes, and perhaps, someday Antarctica, will begin to show promise as new sites for human settlement. Of course, there are problems with the idea that humans might just transplant our civilization more or less intact to these places. One primary issue is that the closer one moves to the poles, the less solar radiation that falls on the land, impacting plant growth and thus hopes that we could grow as much food in, say, northern Canada as the United States currently does today.

Still, as the Arctic ice recedes, boomtowns will surely spring up. This is already happening in some places in Norway as investors and governments begin eying the implications of ice-free sea lanes in the Arctic Sea.

Yet, reconstituting a polar humanity is really an optimistic scenario. Before we lay down the foundations of a civilization that can live in a hot world, we must first pass through the fires of this century. By mid-century, we are expected to have 9 billion mouths to feed, with an unprecedented number of them expecting first-world helpings. If nothing else frightens you, it should be that image. The Earth is already overburdened, with agriculture falling short year after year to keep up with demand. Add to this picture a dislodged climate and you can see why an orderly move toward the poles may not happen. In brief, the Global Humanitarian Forum has estimated that a billion people will die this century as we overshoot the planet’s carrying capacity. And I would add, those billion people will not go quietly.

Indeed, as Jared Diamond has shown in his work on historical collapses, when faced with disaster, humans have often worked counter to their own long-term, collective interests. He offers many examples. As the climate shifted into a cooler period in Viking Greenland, the remaining Viking settlements that still clung on were eventually overrun by their starving neighbors, leading to a total collapse of that society. On Easter Island, the same civilization that had built the Moai statues slid into barbarism that resulted in the almost total extinction of the human population there. Rather than coalesce around survival strategies that could heal their depleted island ecosystem, warring tribes struggled for control of the last resources. The end result was a much reduced population living in caves, inheriting a treeless island with no memory of why the Moai were built in the first place.

And so, it is clearly difficult to forecast the long-term human tragectory. Not only is it difficult to calculate how we will react, but it is rather uncomfortable to even contemplate the likely scenario.

In an NSF press release, the warning is clear:

A section of the Arctic Ocean seafloor that holds vast stores of frozen methane is showing signs of instability and widespread venting of the powerful greenhouse gas, according to the findings of an international research team led by University of Alaska Fairbanks scientists Natalia Shakhova and Igor Semiletov.

The research results, published in the March 5 edition of the journal Science, show that the permafrost under the East Siberian Arctic Shelf, long thought to be an impermeable barrier sealing in methane, is perforated and is starting to leak large amounts of methane into the atmosphere. Release of even a fraction of the methane stored in the shelf could trigger abrupt climate warming.

Joe Romm of Climate Progress has excellent analysis of the report and how, when taken together with other research, threatens to elevate greenhouse gas levels to 1000 ppm (we are currently at 379 ppm with most scientists believing that 350 is the ceiling for what is safe).

But put bluntly, the destabilization of this methane sink would mean that the worst-case scenario is not something we should fear by mid-century, but much, much sooner. Meaning that, in this season of gridlock and delay, we are suddenly faced with a politically unrealistic task to act boldly and dramatically to stave off total disaster. And even if we could pull it off, I wonder if it isn’t too late anyway, for it is not clear if anything can be done to stop this release of powerful greenhouse gases.

Quite simply, this may be the discovery that James Lovelock has worried about for some time: that we might discover that the world has shifted irrecovably under our feet and the window to save civilization has closed forever.

Have a nice weekend.

(Facebook readers: please click here to view the video embedded in this post.)

This blog has intentionally steered away from the day-to-day controversies that bubble up in the climate change debate. This is not because that debate itself is unimportant in awakening the public and our leaders to the threat of global warming. It certainly is. But this blog has always concerned itself with the long view, rather than focusing on flavor of the month controversies.

However, watching public attitudes shift as they have over the past six months, I am reminded that human beings are not reliably logical. In fact, we sometimes respond with panic, mania and ignorance. And given that sad truth, the question then must be asked: How might these impulsive reactions play out in our epic struggle to save ourselves from climate-driven ruin? Such is a worthy topic for this blog.

This winter, as huge snowstorms smothered the US East Coast, the voices of climate change denialists gained resonance with the American public who voiced growing doubt that climate change was even happening. This despite decades of stories in our newspapers about the scientific consensus, new findings by researchers and steadily warming days in our hometowns. Given this, one might reasonably conclude that this consistent communication of the evidence from scientists to the public would have convinced almost everyone that climate change was a real threat beyond any doubt.

But it may be that there really is nothing reasonable about a population under threat. Considering this, we should entertain the idea that frightened populations can be unwilling to face reality, at least temporarily. And so, as we allow doubt to delay timely action, it could very well be that the psychology of fear is paralyzing us right at the moment that action is most needed.

Lately, I’ve been wrapping up my reading of Collapse by Jered Diamond, a book that examines why some historical and contemporary societies make choices that are detrimental to their survival. Among the parade of failed societies he presents are the collapsed civilizations of Easter Island, the Greenland Norse and the Maya, among many others. And behind these failures, he posits four broad reasons why they made the decisions that led to their demise:

1. An inability to anticipate a problem before it arrives
2. An inability to perceive a problem as it is happening
3. A failure to respond after recognizing the problem
4. A failure of an attempted solution of a problem

To me, I see much of Diamond’s framework for failure at work today. But I would like to emphasize the role of the psychology of fear in aggravating the failure to respond after a problem is recognized.

Obviously fear is a potent force to move a population. Fear was an effective catalyst to gain public acceptance of extraordinary powers granted to the executive branch of the US government after the September 11th terrorist attacks. Fear changed entire industries in the 1990s when the ozone hole was recognized for what it was. And sometimes, as many critics of this blog have noted, fear can lead to cynicism and nihilism, that can wreck hopes for change.

But fear can also incite guilt, anger and denial. And, I would argue, that these three emotions are particularly strong signals moving through the public this winter. In fact, as I alluded above, it has been the success of the messaging from climate scientists over the past five years and the build-up to Copenhagen that elicited these fearful, illogical emotions in the first place.

To begin, let’s consider the fear itself. Over the past two decades, climate change has been a periodic annoyance that has threatened our natural optimism for the future, our hopes for our families and our desire to enjoy a trouble-free life. But during the last ten years, the changes that were once only forecasts in newspapers have begun to take on an unsettling reality. Repeatedly, we experience record summer temperatures. Winters come later and are more mild. We find that flowers bloom in our neighborhoods earlier and earlier. And, more and more disasters seem to be occurring with greater frequency, whether they are fires in California, swarms of tornadoes in the US Heartland, or massive Hurricanes in the American South. And all the while, even worse predictions from the same scientists that predicted these now-visible early warning signs reach our ears on a regular basis.

The takeaway here is that the obviousness of climate change has reached a fever pitch.

Enter guilt. As people have had to accept that climate change science is sound and that we really do need to make changes, people naturally begin to examine their own lives. They start to ask: What is my carbon footprint? Do I drive too much? Buy too much? Eat too much? Live too large?

For some, these questions lead to honest self-assessments. Some even begin to make real changes to their lives. They buy efficient light bulbs and canvas shopping bags. They start walking more, eating less meat, burn fewer logs in their fireplace and wear sweaters indoors. Some may even opt to not have children, or opt for adoption instead. And some may become politically active.

For others, however, the fear of climate change and the questions about themselves it provokes leads to anger. This kind of reaction was showcased in the recent documentary No Impact Man, in which a young family in Manhattan experiments for a year with a zero-emission lifestyle. During that year, their story was picked up by national media and broadcast on the husband’s blog, allowing the public to give feedback. But rather than voice words of encouragement or curiosity, much of the public commentary was characterized by scorn and even hatred. The family, of course, was completely shocked by this reaction. And I admit that I too was dumbfounded by it, but upon reflection, it makes perfect sense. Most people worry about global warming, even if subconsciously, and the guilt they feel for their own role in the crisis, manifests as resentment toward anyone that reminds them that they are not doing anything about it.

So, we have a build-up of fear over recent years which leads to guilt across the population, leading in some cases to hostility and resentment.

And into this emotional conundrum materialize two events that offer frightened, guilty and/or angry people an emotional vacation from reality: A trumped-up email scandal dubbed Climategate and a set of huge snow storms on the East Coast. For deniers, these two events provide an opportunity to rescue themselves from the painful thoughts and self-inquiry climate change evokes in them. Quickly, they latch onto denialist rhetoric about sunspots and Medieval ice ages, allowing themselves a respite from logic. It is denial in all it’s Freudian splendor.

Never mind that 2009 was one of the warmest years on record. Never mind that January was the warmest January on record. Never mind that Australia just witnessed a major dust bowl event. Never mind that larger storms and more precipitation (including snow) are exactly what climate science tells us we can expect in the future. Never mind all the data that continues to stream in proving that things are worse than we previously thought.

Never mind all that. This is a season for unreasonable, entitled rebellion against bad news and personal responsibility—a midlife crisis of the soul. Unfortunately, there are consequences to our actions. And the longer we fail to recognize that, the worse those consequences will be.

We have been playing this game of denial for too many years already so that the future is already packed with consequences. But going forward, we will have ample opportunity for more denialist flareups to delay timely action.

There will likely be more cyclical cold years ahead that are the last vestiges of the winters that we used to experience every year. There will likely be enormous winter storms like the Snowmageddon of 2010, driven by increasingly common El Niños and increased moisture in our warming air. And there could even be longer-lived events that fool us into the absolute denialists’ wet-dream, where melting Arctic ice dilutes the saltiness of the North Atlantic, thus shutting down the Gulf Stream which keeps the Northeastern US and Europe warmer than their latitude would otherwise allow. In that scenario, which even the US military has planned for, summer as we know it would not return for many years in those parts of the world. You could imagine the scornful howls that would emanate from some corners as starving refugees from Europe—that bastion of climate change believers—flee to the United States from their frosty cafes and plazas.

At each opportunity the denialists will be there, growing more shrill and panicked the closer we come to catastrophe. They will rant and complain. They will obstruct action. And they may very well doom us all.

The so-called Great Recession that has dogged the world for the past two years has reminded us just how quickly our well-laid plans can be turned upside down when economic forces turn ugly. Suddenly, our jobs are at risk, our homes threatened and our retirement savings halved. For millions of families in the United States, the financial crisis has been a personal disaster. But on the national level, it may have changed the direction of our country forever, undermining centers of power, redirecting wealth and apparently altering savings rates of that once eternally-unphased animal, the American consumer. Globally, as a result of the Great Recession, the United States is now so indebted to foreign powers that it wields considerably less power. In sum, the party is over.

Yet, compared to what lays ahead, the Great Recession will a mere blip on the economic juggernaut that will eventually lead over the cliff of climate change. Indeed, what is forecast is something even worse than the Great Depression of the 1930s, which had an even greater impact on world history than our current plight.

Consider the trajectory that the Great Depression put the world on after the financial collapse of 1929. In Europe, deleterious economic straights radicalized large numbers of its population, contributing to Fascist take-overs in Germany, Italy and Spain. In turn, this radicalization led to world war and the institutionalized genocide of millions. The British Empire which had straddled the world for centuries was by 1949, spent by the war, unstable and falling away forever. And whereas the communist state of the Soviet Union had been an anomaly in world politics before 1929, its revolution spread to encompass most of the Eurasian landmass, from Berlin to Beijing in just two decades. And as for the United States, that once isolationist and pacifist nation emerged transformed as an interventionist-militarist, super power that would use nuclear weapons against its enemies.

In an alternate reality, where the financial and political leaders of the 1920s could foresee the long-term changes that the Great Depression would bring, those leaders might attempt to lay plans to avoid such earth-shaking events. But of course, how could they foresee any of it? They were blind just as most were in the mid 2000s.

Today, however, we do have such foresight into the threats posed by the Greatest Depression ever known. Climate models are telling us loud and clear that we are altering the world upon which our financial stability is built on. We have leading economists like Nicholas Stern calculating the costs. We have testimonies and forecasts from experts in the oil industry, hydrology, agriculture and insurance, all warning that we are fast approaching the worst crisis in economic history.

Collectively, they warn that sometime before the middle of this century, climate change will catch up to the economy, undermining the very foundations of our economic system, right down to our ability to provide enough water, food and safety for ourselves. The shock to the world economy cannot be understated, for billions of lives will be at risk.

And like the radical changes that have come with all other major economic crises, the repercussions we might expect from a climate-driven economic crisis will be equal in proportion to the power that only mother nature can deliver. What is being imagined, then, is more than just an economic disaster, it is a tsunami that will drown the world.

On the ground, the pressure will likely build in the background as a confluence of crises force fuel, food and water prices upwards for several years, putting a drag on the overall economy. In Part I of this series, I began by discussing the underlying issue of Peak Oil and how we will someday have to cope with that on top of the problems posed by climate change. In developed nations, Peak Oil will mean that more and more disposable income will go toward the rising costs of goods produced with oil…essentially everything plastic, everything made with machinery and all products that are shipped over any distance. In turn, less of this disposable income will go into purchasing goods produced in developing countries, where local incomes are already inadequate to provide basics like food and clean water. In 2007, we saw how the impact of rising fuel costs can lead to riots and instability in developing countries. Take that story and let it play out for decades and you will approach the seriousness of the Peak Oil problem alone.

Overlaying the problems associated with Peak Oil, climate change is forecast to adversely affect some of the most basic aspects of our economy such as those associated with food production and access to water. Rising sea levels, disappearing glaciers, stronger storms and shifting rain patterns and temperatures will impact the economy in increasingly debilitating ways. Large swaths of necessary grain-growing regions will disappear under the sea (Lester Brown, 2008). Farms will need to be relocated to cooler climates (Stephan Faris, 2009). Age-old water resources for billions of people will disappear (Lester Brown, 2008).

Meanwhile, on top of all this, the financial world be sputtering as the insurance industry first begins to suffer ruinous losses from mounting storm and flood damage and then totally collapses, bringing down financial centers around the globe (Andrew Dlugolecki, 2009; Evans, 2006).

The order in which these problems manifest is impossible to know with any precision. But they are all but inevitable absent the kind of dramatic action that the public and its leaders are apparently not yet ready to support. But by not acting, not only are the direct consequences of these changes a real threat, but so are all the indirect, and often more profound and longer-lived consequences, like those spurred by the Great Depression: Social upheaval, revolution and war.

Recently, there was growing hope that the world was finally beginning to take seriously the threats posed by climate change outlined in this series. The great powers in North America, Europe and Asia were all signaling that they were finally ready to get to work. But then, late last year, as the climate summit in Copenhagen drew closer, posturing by various powers, such as China and many developing countries, along with delaying tactics in the US Senate began undermining confidence that even a weak agreement could be reached. In the end, the Americans proposed inadequate solutions and the Chinese chose to snub President Obama and point fingers. And in that moment of petty gamesmanship, the world took one more step into a nightmare century of economic ruin.

Once again, the worst case scenario became the likely scenario.

The insurance industry is the largest industry in the world, earning revenues of $4.3 trillion in 2008. It’s size is testament to its importance to a stable business environment. Essentially, economic growth is impossible without some mechanism to smooth out the dips in the road and insurance provides that mechanism.

But as the world has warmed incrementally over the past half-century, the insurance industry has begun to witness growing losses as storm frequency and power have increased, portending a future where insurance services may no longer be affordable, leaving businesses exposed to ruinous losses.

The threat posed by climate change for the insurance industry was summed up in a 2009 paper, The Climate Change Challenge, by Andrew Dlugolecki of the Geneva Association, an insurance industry think tank:

Climate change brings several dangers to insurers. Firstly, it increases the risk of extreme events in an insidious way by generating conditions that are more conducive to their appearance. Next, it increases the possibility that the severity of such events will reach unmanageable levels. Thirdly, it creates the possibility of widespread social and economic stresses which would undermine insurability.

But these dangers are hardly just dangers of the future. They have already impacted the bottom-line of the insurance industry. Evan Mills of the Lawrence Berkeley National Laboratory, another insurance industry expert, has warned as much (Evans, 2005):

Global weather-related losses in recent years have been trending upward much faster than population, inflation, or insurance penetration, and faster than non–weather-related events. By some estimates, losses have increased by a factor of 2, after accounting for these factors plus increased density of insured values. The Association of British Insurers states that changes in weather could already be driving UK property losses up 2 to 4% per year owing to increasing extreme weather events. Specific event types have increased far more quickly than the averages. For example, damages from U.S. storms grew 60-fold to US$6 billion/year between the 1950s and the 1990s.

An analysis by the reinsurer Munich Re concurs. In the 1950s, there were fewer than 200 weather-related disasters in the world and their costs to the industry were negligible. By the 1990s, however, that number had ballooned to over 1,600. And by 2004, the costs to the industry mushroomed to $340 billion.

Then Hurricane Katrina smashed into the Gulf Coast of the United States in 2005, driving costs to an all-time high.

Though no single weather event can be directly attributed to climate change, the forecasts do see Katrina-like events increasing in number as the world warms. This is because warmer temperatures add energy to the atmosphere, which in turn, will lead to an increase in the power and likelihood of catastrophic weather events, like Katrina. The Global Humanitarian Forum has calculated that storm disasters will be three times as common in 2030 as they were between 1978-2007. And Dlugolecki notes, disasters once classified as once in ten-year events are now once in three-year events. Once in one hundred-year events are now occurring every 12.5 years. And once in a thousand-year events are now once in 83-year events.

That last number should give us all pause. Traditionally, these kinds of once in a millennia, super-catastrophes were so rare that they did not factor into insurance planning, but now such costs must be anticipated and planned for. To put this into perspective, the Geneva Association has warned its members that they should plan for an especially bad “peak” year sometime before 2040, where losses will reach $1 trillion.

But it gets worse. If current trends hold up, by the year 2065 losses will equal global GDP (Flannery, 2006). And these are just the storm-related costs.

Aside from just more numerous and more powerful storms, climate change is also expected to introduce other hazards that will add to insurance losses. These range from increases in disease to increases in pests, but also losses caused by political instability and climate crisis-spawned litigation. But the list of contributing impacts is too long to discuss in detail here. The point is that the insurance industry will be under assault from many different directions, until, its services are too costly for the economy to bear.

Given its size alone, the failure of the insurance industry would be a powerful blow to the economy. But the industry is actually deeply integrated into the financial system, so that when an insurer fails, there can be dire repercussions across the financial system. The recent experience of insurance giant AIG’s troubles, which nearly brought down the global economy, make this point clear.

Indeed, we may witness a series of AIGs down the road. This is because as climate change drives up losses, and many insurers begin to fail, they will turn to liquidating assets, usually blocks of securities, in order to cover those losses. This kind of response was well documented in the 1990s when European insurers sold off assets in order to cover extraordinary losses after severe wind storms hit the Continent.

This kind of asset dumping is bad enough for the stock market in any given year. But imagine that the trend of ever-increasing losses continues and the number of loss years rises. Suddenly, it is easy to see how the failure of the insurance industry can take down the entire financial world. And based on what we can see in the trendlines, we may see such an insurance industry collapse before 2040, resulting in an economic meltdown immediately afterward.

That is, if the confluence of commercial catastrophes highlighted in the previous weeks’ posts do not conspire to undermine the economy much earlier. For if we add in those variables of shortages of oil, water and food to the crisis of insurance, we see that disaster for the world financial system may come far sooner than 2040.

Such will be the topic in next week’s blog.

Unlike the past century, which witnessed a Green Revolution, the 21st Century is likely to see a Green Reversal that will amount to the worst kind of economic crisis imaginable: one so bad that starvation will be its most visible manifestation.

This Green Reversal will arise from a number of issues, including rising temperatures, rising sea levels and oil and water scarcity.

Temperature Rise

Rising temperatures will impact agricultural productivity everywhere. In the United States, for example, warmer and drier conditions in California, which produces half of the nation’s fruits, nuts and vegetables, will result in less productive agriculture for the state, impacting the agricultural market of the whole country, and the world.

Journalist Stephan Faris has written about how climate change is already affecting wine production, demonstrating that warmer temperatures have actually produced better wine in France due to the favorable interplay of temperature and moisture of a warmer France. But improvements in flavor are eventually lost when the air becomes too warm.

Returning to California, for that state’s wine region, global warming means that as the climate warms during this century, the best wine lands will shift north and to higher altitudes. This will ultimately lead to costs to the wine industry, which will have to move its vineyards every few decades. In addition, a warmer world will mean bearing other costs as well, such as the costs of fighting local water wars, lobbying new political constituencies and other associated costs. In the end, all of this will mean higher costs for wine.

Unfortunately, such market dynamics will not be exclusive to luxuries like wine. Temperature rises will affect crops across the planet, from California rice to Iowa corn, from Australian wheat to Brazilian sugarcane.

But the costs caused by warming air will not be the only issue facing world agriculture.

Sea Level Rise

Later in the century, as the oceans begin to swell, even more productive farmland will be lost. In a worst case scenario, sea level could rise by as much as six feet, which would devastate the dozens of deltas around the world where food is grown. But even if half this much increase in sea level were realized, the world’s number two rice exporter, Vietnam, could see 50% of it’s rice paddies disappear (Lester Brown, 2008). Similarly, under this moderate forecast, Bangladesh would also see half its rice productivity lost along with that in most other Asian deltas.

In other words, the world is slated to lose crucial swaths of productive land that it has depended on to feed its growing population. And as the land shrinks, the cost pressure on those populations will grow.

Peak Oil

As mentioned in Part 1 of this series, food costs are also linked to oil and the oil is running out. The machinery used to produce food relies on oil as does the transport used to bring it to where people live. Additionally, food production is also reliant on fertilizers which are made from natural gas, another limited resource which cannot be so easily imported when domestic supplies are depleted.

Everything But the Kitchen Sink

Another set of cost pressures on crops will be three intertwined factors: overpopulation, water scarcity and rising competition for food from emerging markets. And taken together, these three forces will perhaps have the most dramatic affect on the global agricultural market.

As mentioned in Part 2, in Asia alone, glaciers supply the water required for over 1 billion people. Furthermore, additional numbers of people rely on unsustainable pumping of water from the ground. In China and India, 300 million people rely on over-pumping of ground water, the equivalent of the entire population of the United States, another country that over-pumps its water for food (Lester Brown, 2008). As the glaciers shrink and the aquifers run dry, the impact on food will be enormous.

To emphasize this point, take the example of the world’s three largest wheat producers: China, India and the United States. China is the world’s biggest producer of wheat, with India being number two (Lester Brown, 2008). Moreover, China and India dominate the world’s rice harvest. But when water pressures begin to undermine the harvests of China and India, their enormous populations will do what they have already done with soy beans: they will buy on the international market. And when they do that, prices will skyrocket.

An interesting competition will then begin in earnest over America’s grain supply. Certainly, this will lead to protectionist reactions in US politics. But what really will the American government be able to do? After all, China will continue to be America’s biggest creditor for decades to come and will therefore have enormous leverage over Washington. There is no way of knowing the precise outcome, but when the water begins to dry up and the competition for grain heats up, it may be the moment where the world finds out just who the true 21st Century super power really is.

And this is just the story among the three biggest grain producers. This kind of competition for food will be global, with populations in the oil rich Middle East and nuclear-armed Pakistan also expected to be at risk.

What is being forecast, then, is a catastrophe in the making that will affect every person in every country. No longer will hunger and food scarcity afflict only the poor nations. This will be the topic of conversation at every dinner table from New York to New Delhi, from London to Lombok. And that conversation will be both pressing, frightened…and too late.

Some hope that advances in genetic science will allow us to engineer crops that can produce grains and vegetables in the harsh environments forecast for the future, allowing humanity to adjust effectively to the shifting climate. Undoubtedly, there is some hope in this, but so far their impact has not kept up with the demands of world population.

Indeed, the trend lines are not pointing in the right direction. In the 1990s, world hunger bottomed out at 825 million people but by 2008, it was back up to 925 million. Last year, it went over a billion, with forecasts pointing to ever higher numbers ahead.

It seems, frankly, that a second green revolution may not materialize in a timely manner or with sufficient scope to meet the multiple challenges of rising temperatures, shrinking cultivatable land, oil and water scarcity and simple population growth. Instead, the likely scenario is looking much more like the Mother of All Economic Crises.

Most of the Developed World has happily taken water for granted since at least the Dust Bowl of the 1930s, when poor water management wrecked the American prairie and scattered the region’s population to every corner of the United States. Sadly, we are about to relive that unhappy period on a global scale.

Much of the world’s present water woes are due not so much to climate change as to poor water policies.  Agricultural Economist Lester Brown of the Earth Policy Institute noted in a November 9, 2009 presentation to the World Affairs Council that water tables are falling in nations that contain half the world’s population. These countries include, China, India and the United States.

One of the causes is over-pumping of water from underground aquifers, in which more water is extracted than is replenished. This practice is especially acute in nations in the Middle East, but also among some nuclear powers. In India, for example, 175 million people (15% of the population) depend on over-pumping. In China, another 130 million people depend on over-pumping. In Saudi Arabia, over-pumping has now decimated that nations’ fossil aquifers so much that it has been forced into winding down its domestic wheat production. By 2016, no grain will be produced in Saudi Arabia and it will be dependent on imports.

This linkage of water to food is important and I will return to it in next week’s post. But as Lester Brown informs us, each of us drinks only 4 liters of water per day, but the food we eat requires 2,000 liters per day. As he puts it: “We eat a lot of water.”

But how does climate change fit into this picture? The good news is that as the atmosphere warms, the moisture content it holds will increase, leading to more rain (Flannery. 2005). Unfortunately, according to the IPCC, this precipitation will fall unevenly and in places that our current farming infrastructure cannot take advantage of, for example in Siberia, Antarctica and northern Canada. This shift in rainfall, will also mean flooding in those areas that do get rain and permanent droughts in areas that do not.

One place expected to see a dramatic loss of rainfall is Brazil, which could mean not only a catastrophic release of the Amazon’s carbon into the atmosphere as the rain forest dies, but also intense pressure on the Brazilian population. In fact, some scientists, like British climatologist Richard Betts, predict that the Amazon will begin to turn to desert beginning in 2050.

But changes in rain patterns are only a part of the 21st Century water story. It is the loss of glacial runoff where the more immediate danger lies. Across the world, glaciers are melting and many will disappear in just a few decades. One of the largest collections of glaciers is in the Himalayan and Hindu-Kush mountains, in Central Asia. This system of glaciers constitutes the largest mass of frozen water on the planet after that of the poles and it has played a historic role in nurturing human civilization. Indeed, it can be argued that the runoff from these glaciers were responsible for at least two of humanity’s longest-lived cultures: those of China and India. And yet, within as little as thirty years, these glaciers will be all but gone.

The number of people that depend directly on the waters that flow from the Himalayan and Hindu-Kush glaciers has been estimated at over 1 billion people. But economically, the loss of this reliable and very ancient water supply will be extremely destabilizing for the global economy since it will force billions of Indians and Chinese to import food they once grew themselves, driving up food costs for everyone. This topic will be covered in more detail in next week’s post, but it warrants focus here since the whole issue originates with water.

Similar, albeit less dramatic, changes to water supply are already underway in many places in the world. Since the late 1990s, the American Southwest and Australia have been experiencing what many believe is the beginning of a long-term and permanent drought caused by climate change. (For more on Nevada, see Katrina of the Mojave: A Family’s Story).  In both these cases, the economic perils of such water loss for the people living there will likely be making headlines over the next twenty years as populations and farms struggle and eventually have to move elsewhere. Already, in 2009, the world witnessed the spectacle of Australian cityscapes turned orange by the soils lifted from parched farms.

No matter if it is flooding or drought, though, there will be costs to the world economy. In places all over the world, centuries of investments based on historic water patterns will become obsolete, with entire cities, farming regions and irrigation systems being abandoned and new ones needing to be built.

But, of course, just as the hydrology of 2010 will be irrevocably changed by 2050, so will that of 2110, and 2150. And those changes will keep coming for centuries, even if we stopped emitting all greenhouse gases today. The lesson here is that any adaptations to the water conditions of the future will only be temporary, meaning that the costs to keep populations supplied with water will become a long-term challenge for generations to come.

We must, therefore, recall the warning of Lester Brown, who reminds us of the linkage between water resources and food, a subject this blog will examine in next week’s post.

It should be emphasized that when we consider the effects of climate change, the overall economic outlook is very, very grim. In fact, the very basis of our current industrial economy will be tested, not only because of climate change, but also because the global economy has been consuming resources in unsustainable ways for decades and we are fast approaching a day of reckoning. This is true with oil, food and water especially.

Optimists like Thomas L. Friedman are betting that international agreements on climate change and/or market forces will actually lead to economic growth in the Green Tech sector, spurring a remarkable century of high profits, innovation and sustainable growth. But according to Nicholas Stern of the London School of Economics, growth itself is problematic. Stern’s view is that rich nations, at the very least, will have to tamp down on economic growth by 2030 if we are to keep the planet safe for human civilization. But even if we do not do this on our own, the physical limits of our planet may do it for us.

So, while the 20th Century might have been characterized by the likes of Neil Armstrong and Charles Lindbergh, the 21st Century will likely be one more accommodating to the ideas of Thomas Robert Malthus. This simple fact will be at the root of the historic economic contraction that will remake and resize the economy over the course of the 21st Century. And as the economy shrinks, so will human population.

Over the coming weeks, I will explore the specific problems facing the economy in an age of a warming planet with posts on:

• Water
• Agriculture
• The Insurance Industry
• And finally, the Financial Markets and Trade

This week, though, I will examine one of the key economic trends that, while not related to climate change, will underlie the economic story of the 21st Century: The end of cheap oil.

Off to a Poor Start: The 21st Century Oil Shock

While oil supply is not related to climate change directly, it is nonetheless going to dominate the headlines and play a negative role in economic activity for the next few decades.

Oil is a finite resource and by definition, shortages are inevitable. In the parlance of the oil industry, Peak Oil is a moment when the productivity of an individual oil well reaches its maximum, after which productivity drops exponentially. Over time, the term has also been applied to national oil resources and even to global supply. For example, the United States reached Peak Oil in the late 1960s. But unlike regional or national peaks, global Peak Oil will mean that productivity will fall planet-wide and cause an unavoidable and constant rise in the price of oil.

Debate has raged over the timing of global Peak Oil, but most agree that it has either already occurred or will occur within the next 10-15 years. Whatever the case, by 2100, the world will likely have passed Peak Oil and the consequences will be part of the historical record.

What consequences? Firstly, because oil plays such a central role in the economy, higher oil prices will naturally slow economic growth as more and more corporate profit and household income must go toward paying higher fuel bills. But oil prices will also affect most other goods, since everything from food to plastics requires oil in their production and transport.

Some like James Howard Kunstler have written that Peak Oil, will usher in a new era of austerity and force an unprecedented economic and demographic shift as suburbs crash, cities starve, energy-intensive industries go extinct and international trade becomes untenable. In short, after Peak Oil, the whole world order will change forever.

It will take decades to switch from oil to some other energy source, if we can at all. If we choose wisely and opt for sustainable energy sources, the World Bank, puts the net cost of this conversion to around 2% of global GDP by 2050, which is just less the loss of GDP experienced from 2007 to 2008 in the economic crisis, but spread out over decades. If we choose unwisely, and turn to coal and natural gas, or war for the few remaining oil fields in the Middle East, we will only subject ourselves to even greater costs.

As with climate change, addressing Peak Oil sooner rather than later will mitigate the costs to the economy. But as we are only making small steps in this direction, it is unlikely much of the economy will be prepared for the spike in prices that will ensue when Peak Oil is reached, if it has not already been reached. Indeed, at least one economic analyst, Jeff Rubin, Chief Economist at CIBC World Markets, has blamed the current economic crisis, not on a real estate bubble, but on Peak Oil.

Whatever the case, our dwindling supply of oil will cost us one way or another. But there are other threats that we must add to the list of economic problems the human race will face this century which are largely driven by climate change.

The next one I will examine will be that other liquid gold: Water. Stay tuned.

If an accord is not reached at this summit, [Obama] remarked, “we will be back having the same stale arguments month after month, year after year, perhaps decade after decade—all while the danger of climate change grows until it is irreversible.”

Obama’s Copenhagen Speech: The Collapse of a Deal? | Mother Jones