Food Production Hits the Boundary

by Victor Anderson, Senior Policy Officer, Green Economy, WWF-UK

Food prices are rising again, principally because of drought. Having to pay out more for food reduces people’s living standards, simply because there is less left over for other purposes – and for some people it makes the difference between having just enough to eat and starvation. Since climate change makes droughts more frequent, it is directly contributing to food shortages.

The ‘doughnut’ picture – the need to keep within environmental limits but at the same time move or keep people out of poverty – makes it look like there’s a tension here that is difficult to reconcile. Often that is the case – but not always. In the case of rising food prices driven by climate change, the human and ecological arguments go together: if we can stop climate change, we will take away a major cause of starvation.

Despite the world’s complexities, there is one chain of cause and effect that is now increasingly standing out very clearly, as a central thread for understanding what is happening in the world. It goes as follows: excess carbon emissions – changes in the atmosphere – changes in the climate – more droughts and floods – lower crop yields – higher food prices – many people find it difficult to feed themselves – and then the political consequences.

Many political analysts believe the Arab Spring was set off by food price rises. High food prices have set off riots, for example in Haiti and Bangladesh in 2007/8, and in some cases the overthrow of governments, such as arguably Egypt. They are a major cause of political instability, because people take action out of desperation. The time-lag, because the effects of food shortages take time to have their full effect, means that the droughts of 2012 indicate political crises in 2013.

This summer has seen drought in the USA, Russia, and Australia. There have been hurricanes, flooding, and forest fires. Of course there is always variability in the weather: the point is simply that we are on a long-term trajectory of increased instability, and that means a long-term trajectory of rising food prices.

One consequence is increased speculation in food commodities and the land to grow them, because there are profits to be made out of this situation by traders and investors. This has led to calls for the speculators to be restrained – fair enough, but we are fooling ourselves if we believe that speculation is the main cause of price rises. There is an underlying problem about supply and demand: demand is partly a matter of population growth, and partly a matter of more people wanting to eat more meat; whilst on the supply side, oil prices, land use change, and climate have become crucial.

Oxfam has just brought out a report looking at the serious consequences of climate change for key crops and their prices in 2030: Extreme Weather, Extreme Prices – The Cost of Feeding a Warming World.

Within the UK, the Chancellor’s Autumn Statement last year reported errors in forecasting the rate of inflation, resulting in problems for forecasts about economic growth, unemployment, and tax revenues. The Summary at the start of the Treasury’s Autumn Statement document listed as the first point about what caused these mistakes: “higher than expected inflation, driven by a sharp increase in global commodity prices — the Office for Budget Responsibility (OBR) consider this to be the main reason the economy has grown more slowly than expected since the June Budget 2010”.

Why was inflation “higher than expected”? To a large extent it’s because the Treasury and the OBR (which advises them) don’t have the impacts of climate change factored into their economic models. Yet “commodity prices” principally means the prices of oil, metals, and food – and food prices are driven largely by changing climatic conditions.

Economic models are not going to be much use in a climate change future. Increasingly what are needed are economic/ecological models, based on understanding economy and ecology as a single system: natural science and social science together. Neither makes much sense of this situation on its own.

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