Interviews: "As the World Warms"
Gregg Easterbrook talks about his cover story, "Global Warming: Who Loses—and Who Wins?," and the unexpected by-products of climate change.
"A 401(k) for a Warming World"
Climate change could have a broad impact on industrial sectors, and thus help or hurt your stock investments and retirement funds. What types of equity might you want to favor or avoid?
Coastal cities inundated, farming regions parched, ocean currents disrupted, tropical diseases spreading, glaciers melting—an artificial greenhouse effect could generate countless tribulations.
If Earth’s climate changes meaningfully—and the National Academy of Sciences, previously skeptical, said in 2005 that signs of climate change have become significant—there could be broad-based disruption of the global economy unparalleled by any event other than World War II.
Economic change means winners as well as losers. Huge sums will be made and lost if the global climate changes. Everyone wonders what warming might do to the environment—but what might it do to the global distribution of money and power?
Whether mainly natural or mainly artificial, climate change could bring different regions of the world tremendous benefits as well as drastic problems. The world had been mostly warming for thousands of years before the industrial era began, and that warming has been indisputably favorable to the spread of civilization. The trouble is that the world’s economic geography is today organized according to a climate that has largely prevailed since the Middle Ages—runaway climate change would force big changes in the physical ordering of society. In the past, small climate changes have had substantial impact on agriculture, trade routes, and the types of products and commodities that sell. Larger climate shifts have catalyzed the rise and fall of whole societies. The Mayan Empire, for instance, did not disappear “mysteriously”; it likely fell into decline owing to decades of drought that ruined its agricultural base and deprived its cities of drinking water. On the other side of the coin, Europe’s Medieval Warm Period, which lasted from around 1000 to 1400, was essential to the rise of Spain, France, and England: Those clement centuries allowed the expansion of farm production, population, cities, and universities, which in turn set the stage for the Industrial Revolution. Unless greenhouse-effect theory is completely wrong—and science increasingly supports the idea that it is right—21st-century climate change means that sweeping social and economic changes are in the works.
To date the greenhouse-effect debate has been largely carried out in abstractions—arguments about the distant past (what do those 100,000-year-old ice cores in Greenland really tell us about ancient temperatures, anyway?) coupled to computer-model conjecture regarding the 22nd century, with the occasional Hollywood disaster movie thrown in. Soon, both abstraction and postapocalyptic fantasy could be pushed aside by the economic and political realities of a warming world. If the global climate continues changing, many people and nations will find themselves in possession of land and resources of rising value, while others will suffer dire losses—and these winners and losers could start appearing faster than you might imagine. Add artificially triggered climate change to the volatility already initiated by globalization, and the next few decades may see previously unthinkable levels of economic upheaval, in which fortunes are won and lost based as much on the physical climate as on the business climate.
It may sound odd to ask of global warming, What’s in it for me? But the question is neither crass nor tongue-in-cheek. The ways in which climate change could skew the world’s distribution of wealth should help us appreciate just how profoundly an artificial greenhouse effect might shake our lives. Moreover, some of the lasting effects of climate change are likely to come not so much from the warming itself but from how we react to it: If the world warms appreciably, men and women will not sit by idly, eating bonbons and reading weather reports; there will be instead what economists call “adaptive response,” most likely a great deal of it. Some aspects of this response may inflame tensions between those who are winning and those who are losing. How people, the global economy, and the international power structure adapt to climate change may influence how we live for generations. If the world warms, who will win? Who will lose? And what’s in it for you?
Real estate might be expected to appreciate steadily in value during the 21st century, given that both the global population and global prosperity are rising. The supply of land is fixed, and if there’s a fixed supply of something but a growing demand, appreciation should be automatic. That’s unless climate change increases the supply of land by warming currently frosty areas while throwing the amount of desirable land into tremendous flux. My hometown of Buffalo, New York, for example, is today so déclassé that some of its stately Beaux-Arts homes, built during the Gilded Age and overlooking a park designed by Frederick Law Olmsted, sell for about the price of one-bedroom condos in Boston or San Francisco. If a warming world makes the area less cold and snowy, Buffalo might become one of the country’s desirable addresses.
At the same time, Arizona and Nevada, blazing growth markets today, might become unbearably hot and see their real-estate markets crash. If the oceans rise, Florida’s rapid growth could be, well, swamped by an increase in its perilously high groundwater table. Houston could decline, made insufferable by worsened summertime humidity, while the splendid, rustic Laurentide Mountains region north of Montreal, if warmed up a bit, might transmogrify into the new Poconos.
These are just a few of many possible examples. Climate change could upset the applecarts of real-estate values all over the world, with low-latitude properties tanking while high latitudes become the Sun Belt of the mid-21st century.
Local changes in housing demand are only small beer. To consider the big picture, examine a Mercator projection of our planet, and observe how the Earth’s landmasses spread from the equator to the poles. Assume global warming is reasonably uniform. (Some computer models suggest that warming will vary widely by region; for the purposes of this article, suffice it to say that all predictions regarding an artificial greenhouse effect are extremely uncertain.) The equatorial and low-latitude areas of the world presumably will become hotter and less desirable as places of habitation, plus less valuable in economic terms; with a few exceptions, these areas are home to developing nations where living standards are already low.
So where is the high-latitude landmass that might grow more valuable in a warming world? By accident of geography, except for Antarctica nearly all such land is in the Northern Hemisphere, whose continents are broad west-to-east. Only a relatively small portion of South America, which narrows as one travels south, is high latitude, and none of Africa or Australia is. (Cape Town is roughly the same distance from the equator as Cape Hatteras; Melbourne is about the same distance from the equator as Manhattan.) More specifically, nearly all the added land-value benefits of a warming world might accrue to Alaska, Canada, Greenland, Russia, and Scandinavia.