Welcome To Dystopia!

I hope Jeremy Grantham, who runs GMO, "a global investment management firm committed to providing sophisticated clients with superior asset management solutions and services," will not mind that I've borrowed the title of his latest newsletter and reprinted the summary which appears on pages 1-4. The full letter is 22 pages long. Grantham's believes we are five years into a severe global crisis which will last for decades.

There are references to the year 2050 in Grantham's report, and that's where he and I diverge. I criticized political philosopher John Gray for largely ignoring (or understating) what the science is telling us about life in 2050 and beyond. I could level the same criticism at Grantham, but for now let's focus on the abiding food crisis. I'll save my remarks for the end.

Summary of the Summary

We are five years into a severe global food crisis that is very unlikely to go away. It will threaten poor countries with increased malnutrition and starvation and even collapse. Resource squabbles and waves of food-induced migration will threaten global stability and global growth.

This threat is badly underestimated by almost everybody and all institutions with the possible exception of some military establishments.

Summary

1.  Last year we reported the data that showed that we are 10 years into a paradigm shift or phase change from falling resource prices into quite rapidly rising real prices.

2.  It now appears that we are also about five years into a chronic global food crisis that is unlikely to fade for many decades, at least until the global population has considerably declined from its likely peak of over nine billion in 2050.

3.  The general assumption is that we need to increase food production by 60% to 100% by 2050 to feed at least a modest sufficiency of calories to all 9 billion+ people plus to deliver much more meat to the rapidly increasing middle classes of the developing world.

4.  It is also widely assumed that at least the lower end of this target will be achieved. I believe that this is substantially optimistic. At very best, if we reach that level we will not be able to hold it. Much more likely, we will not come close because there are too many factors that will make growth in food output increasingly difficult where it used to be easy:

• Grain productivity has fallen decade by decade since 1970 from 3.5% to 1.5%. Quite probably, the most efficient grain producers are approaching a “glass ceiling” where further increases in productivity per acre approach zero at the grain species’ limit (just as race horses do not run materially faster now than in the 1920s). Remarkably, investment in agricultural research has steadily fallen globally, as a percent of GDP.

• Water problems will increase to a point where gains from increased irrigation will be offset by the loss of underground water and the salination of the soil.

• Persistent bad farming practices perpetuate land degradation, which will continue to undermine our longterm sustainable productive capacity.

• Incremental returns from increasing fertilizer use will steadily decline on the margin for fertilizer use has increased five-fold in the last 50 years and the easy pickings are behind us.

• There will be increased weather instability, notably floods and droughts, but also steadily increasing heat. The last three years of global weather were so bad that to draw three such years randomly would have been a remote possibility. The climate is changing.

• The costs of fertilizer and fuel will rise rapidly.

5.  Even if we could produce enough food globally to feed everyone satisfactorily, the continued steady rise in the cost of inputs will mean increasing numbers will not be able to afford the food we produce. This is a key point that is often missed.

6.  On the positive side, scientists are now very optimistic that they will be able to engineer more efficient photosynthesizing “C4” genes (corn belongs to that family) into relatively inefficient but vital “C3” plants such as rice and wheat, in 20 to 30 years. If successful this would increase output up to 50% and would buy time for a less painful transition to a sustainable population.

7.  Many of these increasing difficulties were reflected in the original 2008 food crisis and the 2011 rebound. The last six weeks’ price rise is more threatening because it occurred despite very much larger plantings than were available in 2008. Global demand is now so high and rising so fast and reserves are so low that price sensitivity to weather setbacks has become extreme.

8.  It seems likely that several countries dependent on foreign grain imports have in fact never recovered from the 2008 shock. Countries like Egypt saw the percent of their consumer budget for food rise to 40%. At this level, social pressures may be at an extreme and probably have already contributed to the Arab Spring. Any price increases from here may cause social collapse and a wave of immigration on a scale never before
experienced in peacetime. Another doubling in grain prices would be catastrophic.

9.  Strong countermeasures to prevent a food crisis would be effective in curtailing the current crisis and preventing the development of a much greater crisis, but these measures will likely not be taken. This is because the price signals for the rich countries are too weak – they can afford the higher price – and there is inertia in all parts of the system. Also, the problems of malnutrition in distant countries are not generally felt as high-order priorities in the richer countries.

10.  If food pressures recur and are reinforced by fuel price increases, the risks of social collapse and global instability increase to a point where they probably become the major source of international confrontations. China is particularly concerned (even slightly desperate) about resource scarcity, especially food.

11.  The general public, the media, the financial markets, and governments badly underestimate these risks. Only the military of some countries, including the U.S. and the U.K., seem to appreciate them appropriately.

12.  Natural gas supply increases buy some time, mainly for the U.S., but seem more likely to create complacency and continued dependence on hydrocarbons. The energy situation is less pressing globally in the short term than is the food problem. Supplies are sufficient to cause merely a slow and erratic price increase. The main problem with oil is in its contribution to the food problem through higher farming costs and generally increasing cost pressures on poorer countries.

13.  In the longer term, in contrast, energy costs and absolute shortage in the case of oil form a serious problem second only to food shortages and will result in prices so high that they will impact global growth and even the viability of modern, rather fragile, economies.

14.  On paper, though, the energy problem can be relatively easily addressed through very large investments in renewables and smart grids. Those countries that do this will, in several decades, eventually emerge with large advantages in lower marginal costs and in energy security. Most countries including the U.S. will not muster the political will to overcome inertia, wishful thinking, and the enormous political power of the energy interests to embark on these expensive programs. They risk being left behind in competiveness.

15.  Availability of metals is, in contrast, a minor problem in the next few decades. The prices will steadily rise but the consequences will be less. In the long run though, metals are the most intractable problem. There is no brain-intensive solution as there is for agriculture (i.e., organic farming), nor is there any capital-intensive or technology-intensive solution as there is for energy. We will just slowly run out and prices will rise.

16.  The results of these problems will be felt mainly as price pressure in rich countries. The need to obtain adequate resources will squeeze national budgets, profit margins, and economic growth. For poor countries, though, it is literally a matter of survival.

17.  We are badly designed to deal with this problem: regrettably we are not the efficient species of investment theory, but ill-informed, manipulated, full of inertia, and corruptible. Only once in a blue moon – like World War II – do we perform anywhere near our theoretical capabilities and this time the enemy is amorphous and delivers its attack very, very slowly. But the stakes globally are very high indeed. We must try harder.

18.  The following comments on this topic are mine personally and reflect my Foundation’s portfolio...

I have left out the investment advice stuff.

Grantham's point #14 is the "technology will save us" clause with respect to energy. I disagree, and in any case, huge investments will not be made in "renewables and smart grids." The capitalistic , "free" market expansion of the 20th century has mostly run it course. The expansion will not continue in the 21st century, at least not for long.

Point #17 is the "crooked timber" clause. We are not the efficient species of economic theory. No kidding!  See my recent post The Crooked Timber of Humanity.

Only Point # 4(e) mentions the changing climate, although he does mention it a few times in his detailed text. DOTE readers will be interested in this quote.

As renewable projects for solar and wind go forward they should be accompanied by research and financial encouragement for other promising renewables. This would include converting algae and other vegetal matter into liquid fuels, perhaps research into Thorium-based nuclear, and possibly even fusion, for which the risks (of eventual failure) are high, but so are the returns – almost infinite supplies of incremental energy.

It is probably worth mentioning here that, courtesy of the second law of thermodynamics, you cannot indefinitely heat up the world. All heat must be dissipated through infrared radiation. This is why cities with more waste heat are warmer than the countryside. Given energy growth of just 2.3% a year, for 400 years, even if the supply is 100% renewable or fusion [to remove the need to consider the greenhouse effect], the planet’s temperature would reach the boiling point and only a few recently discovered organisms would be left...

In earlier pieces I tried to convey the sheer impossibility of any perpetual rate of steady growth in people or physical output: 1% compounded for 3000 years, I noted, would multiply people or possessions by seven trillion times the original number.

But for those with shorter horizons, the thermodynamic effect on its own, as we’ve seen, puts a quite separate ceiling of a mere 400 years’ growth in energy use at a modest 2.3% growth a year.

Throw in climate change effects and our species would be toast long before 400 years would pass if present trends continue.

We will be toast long before 400 years would pass? At a "modest" but unattainable growth rate of 2.3%/year in energy use? Well, yes, but I think we should deal with what's right in front us. I don't see the usefulness of quoting this theoretical ceiling 

How about 40 to 90 years? That's my own estimate. Privately, I tend to think about the future in 20-year increments. By 2030, at current consumption rates for food, crude oil, coal, etc., industrial civilizations are teetering on the edge of chaos, barely keeping things together. By 2050, human life is becoming untenable, and chaos rules the world. We might call the period 2030-2050 the Final Transition. By 2070, it's pretty much all over. A few decades either way simply do not matter.

Welcome to Dystopia! (Source)

Grantham continues—

We simply cannot have exponential growth on a finite planet, but no politicians (understandably) and almost no economists (almost unbelievably) will deal with this topic. The longer we delay in facing up to resource shortage, especially the need to go to renewables, the more severe the problem becomes.

For example, by the time hydrocarbon prices go “critical,” some countries may not have the capability — political, social, or economic — to meet the substantial investments required and they will be left more or less permanently floundering behind.

In the late 1930s, Churchill faced intractable unwillingness to deal with unpleasant news — German rearmament and hostile intentions — on the part of both politicians and the general public. Finally, as the problem became obvious even to the most block-headed, he could not resist a little “I told you so.” He said, “The era of procrastination, of half measures … of delays is coming to its close … In its place we are entering a period of consequences.”

This time we can already see the early consequences but we still delay.

When people do not pay sufficient attention to what the science says, they are not able to consider that science with the seriousness it deserves. From what I can gather, privately, many scientists in various fields of study are terrified about what future holds, especially if they have children or grandchildren. Leaving out large parts of Reality is a sophisticated form of denial by omission. I'm sorry to have to say that, but that's just the way it is. Ignorance is not an excuse. I'm not merely some mean, arrogant bully taking greatly respected observers like John Gray and Jeremy Grantham to task. If it appears that way, I apologize.

For example, look at the climate effects we're getting with the relatively little warming we've had so far, which is less than 1° centigrade. Now throw in an additional 2-3° centigrade (up to 5.4° fahrenheit) in average surface warming by (roughly) 2100, assuming some catastrophic non-linear environmental event does not occur. We're going to reach the 400 ppm "milestone" (CO₂ in the atmosphere) in a few years. We still depend on fossil fuels for about 80% of the energy we use globally, and climate change will negatively affect (and is already affecting) other sources (e.g. hydroelectric, nuclear) due to water problems. I think you get the idea.

If we take seriously what's happening in the Arctic and northern lattitudes generally, with the climate generally, in terrestrial ecosystems (e.g. destruction of rainforests), in the oceans, with crucial resources like crude oil, and so on, it becomes increasingly harder to believe that humanity will not be toast by the end of this century if we stay on our present course. You have to look at these trends altogether, taking the widest possible available view. Once you've done that, the unknowable future comes into clearer focus, again assuming that current trends continue. The Big Picture not a pretty picture.

To paraphrase Winston Churchill, the Era of Procrastination is ending, and the Age of Consequences has begun. The permanent food crisis Grantham talks about is one of those consequences.

Bonus Video — Timescale Matters, a short video from NOAA

 

Comments

[Gail]

The prospects are far more severe because Grantham (and most others who make predictions about the global food supply, prominent among them Lester Brown) don't take into account a threat to yield and quality on a par with extreme weather from climate change, which is tropospheric ozone. From a UNEP report (overly optimistic and out of date of course):

"Feeding a growing world population has become one of the major issues of our century and we cannot afford to lose millions of tons of crops each year because of air pollution. Present day global relative yield losses due to tropospheric ozone exposure range between 7-12 percent for wheat, 6-16 percent for soybean, 3-4 percent for rice, and 3-5 percent for maize."

As I point out in that particular blog post, although agricultural agencies around the world acknowledge the threat to annual crops from ozone, they won't even go near a much larger topic - what is the impact on biannual and perennial vegetation that is exposed to cumulative damage, year after year? What of crops like artichokes and raspberries and asparagus and rhubarb? Most importantly, what of trees that produce fruit and nuts?

There is also a tangential effect on the feed for livestock, which is rendered less nutritious.

I'm afraid that, since it appears we are going to do exactly nothing to reduce fuel emissions that lead to ozone, the persistent background level in the troposphere will continue its accelerating climb, with devastating consequences to our food supply and a concurrent acceleration in all the collapse issues associated with it.

More excerpts to the UNEP report here:

http://witsendnj.blogspot.com/2012/06/inferno-ignites.html

[John D]

I have to cut Grantham some slack as he is the only investment banker unafraid to tell hard truths, not keeping up the charade like most of his ilk.

My own opinion is that economic collapse will precede environmental and resource collapse. This would prevent the financing of miraculous technological solutions. Hard to tell how it will all tie together.

[Wheelerlucas]

Glad to to see you got around to reading Grantham. The post that that Gail linked to is a very important one, as is her general point about tropospheric ozone .

As far as the 400 years number I believe is strictly a theoretical number that has something to with the generation of waste heat as a result of thermodynamics. It really has nothing to do with the functioning of the biosphere per say.

First read it at: Do the Math Using physics and estimation to assess energy, growth, options—by Tom Murphy.

http://physics.ucsd.edu/do-the-math/2012/04/economist-meets-physicist/

Going to end again with a plug for Craig Dilworth's Vicious Circle Principle. Go to:

http://montreal.degrowth.org/downloads/papers/K074_Dilworth.pdf.

Have yet to find a better theoretical treatment of human behavior.

A hui hou ...

[Dave Cohen]

@Wheelerlucas--

Yes, you are right about that 400 years estimate. That does appear in Grantham's text, and is repeated by Tom Murphy.

But that theoretical ceiling, the boiling point, assuming that unattainable 2.3% growth rate in energy consumption, is simply absurd, and I do not see the usefulness in quoting it.

So I changed the text to be more in line with Grantham's point.

Regarding Dilworth, I recently purchased his magnum opus, took one look at the VCP, said to myself "well, yeah" and haven't picked it up since. I will get around to reading the parts I find useful and posting on it.

I've been meaning to get back to you about an earlier comment you made, but just hadn't done so yet. As you said, I work "bottom up" and Dilworth is a Big Theory guy.

best,

-- Dave

[Wheelerlucas]

I rejoice in your "well, yeah" response to Dilworth and look forward to any postings you choose to do on the good professor's magnum opus.

A bit of sharing if you do not mind. Remember those two archaeologists with their lolo {crazy} idea about how the Moai {statues} of Rapa nui {Easter Island} were "walked" into place?

Well a new NOVA episode about their theory, "The Mystery of Easter Island", will have its world premiere next month {Oct. 17th} at our international film festival. Discussion to follow screening. I expect the "discussion" to be particularly heavily stacked in favor of the film as it will part of the Pacific Islanders in Communications series. {http://www.piccom.org/}.

Doubt that comments suggesting the ancestors have not been slandered with be particularly welcome. But still plan to go.

A hui hou ...

[Martin]

Okay, you have one, detailed vivid view of the future - how about considering Robert Laughlin, a feted, tenured physicist at Stanford who, despite this ivory tower renown, wrote a remarkably accessible, well-written, idiosyncratic, yet seemingly ignored book called "Powering the Future" that goes deep into the science, economics, and energy demands of the present and two-centuries-hence future. He does not see human extinction as looming quite as quickly as you do, but he does foresee the race to get all that carbon into play, and is a much more worthy mind to grapple with than the usual pack.

[John Theodorou]

@ Martin

So the answer, according to this character,, is to destroy the last vestiges of the current wild world so as to save the mall strips, highways - the whole middle-class project in fact and for how long, exactly?

Pathetic.

[Martin]

No, that is not any kind of "answer." The question is where does humanity head with its social reality, and we can't assume that there will be some magical turn towards the avoidance of "fossil" fuels. You have never argued that to be the case, not should anyone be allowed to get away with arguing for some best-case scenario of degrowth or de-carbon without the evidence to prove humanity capable of such a "paradigm shift."
I take it you reject the notion of reading his book, since my short mention of it has given rise to your instant dismissal. Another perspective you might consider is Ozzie Zehner's "Green Illusions," but the title alone might have you reaching beyond "pathetic."

[John Theodorou]

@ Martin

Are we even talking about the same book? The author considers, like many light-green so-called "realists", sustainability as merely being the destruction of earth minus fossil fuel emissions - that's it. There is no acknowledgement of nature for its own sake.

[Martin]

@John
Which book, Robert ALughlin's "Powering the Future" or Ozzie Zehner's "Green Illusions"? Neither one is cavalier in any way about the destruction of nature, but that is our common history and our common future. Who would argue differently? Why even bring up such a discredited greenwash term as "sustainability"?