Hate to Say I Told You So..

I wrote a lot in past months about how the reality or accuracy of human-caused climate change is irrelevant.  Many in the environmental community and otherwise hopped on the global warming bandwagon, hoping that it would be the spark that finally ignited an environmental movement in the mainstream.  Unfortunately, in doing so they placed all their eggs in one basket, and not even one that was worth betting on.  Worse, by pushing for change on only one front, skeptics needed to merely dismantle a single piece of the science to discredit the entire movement and the people involved in it.  In the end, it all came down to a few emails between colleagues.

As far as building a movement is concerned, climate change was always going to be plagued by the reality that the science was not 100%.  As close to a consensus as it was, it was still disputable, and difficult to use as a platform for overhauling our entire way of living.  This is in contrast to related issues like species extinction and resource depletion, which I laid out in July.  These are issues which are well documented, indisputable, and are are more threatening than climate change (if anything), and yet they are generally ignored by the public and media.  Had Al Gore given a slideshow on peak oil, perhaps we would be in a different position today.

Amazingly, amidst the leaked emails, almost nothing has changed, and yet everything has.  The science behind climate change itself is still very much intact, but this will certainly mark a shift in public perception and support.  So what do we do now?  We can decide that climate change is the hill we are willing to die on, or switch gears and try to deal with one of the real problems (as opposed to the symptom).  Unfortunately, in either scenario, the green movement has taken a huge blow to its credibility, so any route will now be an uphill climb.

Waiting to see how it all plays out...

How Crude!!

I wrote in July about how I feel the environmental agenda has been hijacked by debate over climate change, and would like to weigh in again on that topic.  Specifically, I want to explore in some depth the economic implications of resource scarcity.

Here is the issue:  It is near impossible to determine what the true effects of peak oil will be.  Peak oil doesn't just mean paying $2.00/litre at the pump.  The globalized economy we live in is saturated with cheap oil.  In fact, it cannot survive without it.  Former CIBC Chief Economist Jeff Rubin discusses this issue in his book "Why Your World is About to Get a Whole Lot Smaller".  Expensive oil means it will no longer be profitable to use cheap labour abroad, as the cost of transportation will outweigh the savings.  Just Imagine Wal-Mart without products from China.

There is an interesting historical comparison that arises if you are reading Malcolm Gladwell's "Outliers" along with Rubin.  Gladwell discusses early on how some of the wealthiest people in history were Americans in the late 19th Century.  Unlike the rest of the list, many of these people were from modest backgrounds, but rose to extraordinary wealth regardless.  The difference?  They were alive during a major shift in the American economy.  Prior to the Civil War, slaves had been a major tool in securing profits in various industries.  Their economy was built on an assumption of low input costs, the same as our current system depends on oil.

What Gladwell teaches is that the extraordinary wealth accumulated by Americans during this period was a result of these people embracing and pioneering the new economy, built on industry, transportation, and mass production.  Instead of slave owners, they were oil barons and railroad tycoons.

The lesson to be learned is that once in a while, we are dealt a new deck of cards and the game changes completely.  Those that are successful are those that recognize the limitations, but also the opportunities of the new world.  By focusing on climate change, we have become distracted by the symptom, rather than the true problems.  People fail to be motivated to change because we believe that we can simply eschew the problem by feigning ignorance; that it will pass, and we can proceed with business as usual.  What is not realized by so many is that our environmental problems don't mean and end to prosperity, but potential for a new prosperity.  All we have to do is embrace it.

Where's the Beef?

Paula Alvarado recently posted a study on Treehugger, concluding that Brazillians take global warming more seriously than Americans and many EU countries as well.  Alvarado uses the study to hail South America's progressive views on the environment, as opposed to many Northern countries that are dragging their feet.  However, it is difficult to extract any real conclusions from the study, as Brazil is a major environmental offender, ESPECIALLY regarding climate change.

It is now a well known fact among the environmental-minded that Brazil's enormous growing cattle industry comes at the expense of the extraordinarily biodiverse Amazon rainforest.  In order to create grazing space for cattle, enormous sections of rainforest are being plowed and burned.  This means in addition to the extremely carbon-intense practice of raising cattle (methane), more carbon is being released from the clearing of the forest (plus the future carbon that will no longer be absorbed).  Many companies have pulled their support from Brazillian cattle, including Wal-Mart and Timberland, recognizing the absolute unsustainability of the practice.

So, what does this all mean?  On one hand, the Brazillian people say they care about climate change and are willing to make sacrifices to that end, but their country as a whole is acting quite differently.  It remains to be seen whether there is a disconnect between government and citizens, ignorance, or perhaps it's all just hot air...

The War on Warm

They're here.  They're loud.  They're climate change deniers, and they aren't going away.

Alex Higgins has written in the Huffington Post that even some media sources are getting in on the act, despite all evidence to the contrary.  Higgins hilariously describes the process:

"1. Global Warming Denier makes claim

2. Claim is comprehensively, indisputably debunked

3. Claim is withdrawn, while Denier publicly continues to assert they are the new Galileo and their critics are religious fanatics with no regard for facts 

4. New Global Warming Denier makes exactly the same claim as if previous debate never happened"

Although I wholeheartedly agree with Higgins' assessment, I believe that even he misses the point.  You will never be able to quash claims that deny history or science, so long as someone stands to profit from it.  Evolution is still disputed in certain circles, and even the Holocaust has its deniers.  Those who deny global warming provide themselves an easy excuse not to take action on our quickly fading environment.  However, what nobody seems willing to admit is that in the grander scheme of things, the legitimacy of human-caused global warming as a theory is irrelevant.  We are facing multiple issues that are as serious (if not more so) than global warming which are not only indisputable but have not been seriously dealt with.

Let's take a look at some of the issues that have been put on the backburner while argiuing about global warming:

1. Species extinction- not new, indisputable, and a serious threat to the survival of millions of species, including ourselves.  Keep an eye in particular on sharks and bees, on whom entire ecosystems depend.

2. Resource depletion- according to the world's leading geologists, peak oil will likely happen in the next 10 years, if it has not occurred already.  Results include prices hitting the roof on oil and everything that requires it for transportation, manufacturing, or as an ingredient.  Global economic collapse that will dwarf the current recession, and little that we will be able to do about it once it has started.

3. Population control- arguably the greatest threat to the environment.  Humans have by far exceeded their carrying capacity on Earth and have created unsustainable strain on their surroundings.  Other scary results include the potential for worldwide viral pandemics.

4. Global Water Shortages- the next big issue.  Over a billion people currently depend on the Himalayas for water, and like other glaciers, the mountains are losing their permanent ice.

Enough with the partisan bickering.  Let's deal with this thing while we still can.

The Paradoxically Myopic Economist

It is common in the discourses of mainstream media, and even more so on Bay Street, to talk about economic stability as if it were the be-all-and-end-all of societal harmony and human existence.  Time after time, social and environmental "threats" are dismissed in terms of lost dollars or jobs in our economy.  To be fair, employment is extremely important, and people will almost always act in their own best interests, which in our 21st Century world means gaining financial security for our families above nearly all else.  However, also in this complex 21st Century world, we face challenges that should be trumping economic strength, and yet are not.  The environment, more than anything right now, is such an issue.

Of course, I am not suggesting that we all burn our possessions and live in mud huts to save the Earth, far from it.  However, we seem unwilling as a population to make even small compromises in our already vast and (frankly) excessive wealth to make the necessary progress in climate change and pollution to save the Earth and potentially countless human lives.  This was demonstrated clearly through Canadians' outright rejection of the carbon tax proposed by the Liberals, as well as countless other individual excesses which we seem unwilling to give up (have you seen how many people are still driving alone on the DVP? Jeebus!).  Perhaps it is lack of education on the real effects of climate change, or maybe it is apathy, or even nihilism, but in any case, the necessary reaction (although substantial from some) is still generally lacking.  The question I pose to all you economists then is, When the glaciers melt and polar icecaps sink into the sea, major seaside cities are underwater and millions are displaced, when famine is widespread and unquenchable drought is as common in summer as smog warnings in Toronto, does anybody care what our GDP is? Will we be paying attention to how much the TSX fell today? What about minimum wage?

Aside from whether you think this is mere alarmism or not (trust me, none of this is out of reach, and maybe not even far away) the point is that eocnomists (and by that I mean anyone who uses the economy like a punchline, yes you Mr Harper) have tended to view movements like environmentalism as special interests who will myopically sacrifice jobs and economic value, when truly, without REAL action on climate change and pollution in the coming future, we may face a world where economies are either irrelevant or even non-existent, and when jobs are a luxury rather than the norm.  Perhaps it's time for a new type of economic thought.