For the best part of four decades, economists have assured us that “the market” will find the best solution to climate change. As our environment shifted, humans would simply tailor their activities accordingly. If southern Europe becomes afflicted by drought, that is not a problem – we will simply locate all of our solar energy generation there. If Britain and Scandinavia experience more floods, they can benefit from more hydroelectric plants. If we lose some tropical regions to advancing desserts, we will simply grow our food and forests in northern latitudes as they are liberated from permafrost. As French vines shrivel; southern England can emerge as the new wine-making and olive growing region.
This was nonsense, of course. Over the same four decades, western states deliberately engaged in a drive for “efficiency” on a global scale. This trend has now created a global economy that is increasingly brittle and fragile. This is because the drive for efficiency creates complexity. As Eric Roston at Bloomberg notes:
“Manufacturing these days involves facilities in multiple countries, each of which has a sequential role in taking raw materials a step closer to being finished products. Imported materials may remain unfinished, even after they’re exported to the next station on the international assembly line. This “vertical specialization,” it turns out, may have a blind spot when it comes to climate change, according to new research from the Potsdam Institute for Climate Impact Research. Manufacturing is only as strong as the weakest, or in this case hottest, link in the supply chain.”
The modern global economy is only possible because of the development of the computers and GPS systems that allow a planetary-scale just-in-time conveyor belt of goods and raw materials around the planet. But while the consuming regions of the world (Japan, Europe and the USA) have been largely immune to the early impacts of climate change, the same is not true for those regions of the planet that produce the raw materials at the base of the economic pyramid.
The Potsdam study looked solely at the impact of excess heat on labour productivity:
“The economic loss from 300 Indian heatwave deaths in April however is listed as “unknown.” That may not be the case for long, as such deaths are the latest canary in the coal mine—or any mine, rainforest, or valley across the Earth’s hot middle, where the building blocks of the developed economies are gouged out of the ground.”
But more frequent and dangerous heatwaves are far from the only climate-related threat to the global economy. Increasing storms, floods, droughts and wildfires each gradually erode production at the base of the economy. Most worrying of all is the projected sea level rise that will engulf most of the world’s cities during the twenty-first century – a process that is already visible today, and that may be accelerating.
We might conclude from this that while economists and politicians have got away with fooling all of the people all of the time; they are in for a much harder struggle trying to fool Mother Nature.