The Earth Fights Back

Thomas Malthus (1798) asserted that once population reached its tipping point, such that it exceeded Earth's capacity, certain 'checks' would come into play. These 'checks' included 'positive checks'; natures way of returning to a point at which it can cope, through disasters such as war, disease and famine. Everyone has by now heard about climate change causing rising sea levels and increasing severity and frequency of floods. However, climate change is also thought to have led to an increase of magnitude and frequency of weather related disasters, as shown by The Economist (2012) graph below:

In 2011, Smith asserted that 2010 was the wettest and hottest year recorded since records began in 1880. In the US and Europe, seasonal records were broken by snowstorms. The following US summer of 2011 saw a hot and dry summer, leading to a record-breaking number of wildfires.

Figure 1

What does this mean for the economy? It means increased investment in adaptation to such weather events. In the wake of many weather related disasters, there is often damage to various buildings and infrastructure. To increase our capacity to cope with an increasing frequency and magnitude of natural disasters, governments need to invest in innovation into building robust and stable frameworks for infrastructures and buildings. If they don’t, they construction sector may transform into the re-construction sector. In Figure 1, Ward and Ranger (2010) show the trend in global economic losses for weather related losses between 1980 and 2009, peaking in 2005.

Figure 2

Ernst & Young (2015) state that in 2014, 980 natural catastrophes worldwide resulted in insurance claims of over US$31 billion. They also suggest hurricane winds have the potential to increase by 5% over the next 20 years, which could lead to an increase of up to 40% in property insurance losses. Furthermore, in Figure 2, Swiss Re (2015) show that globally, a significant proportion of countries have experienced growth in real premiums

It come as no surprise that extreme weather events compounded with exponential population growth, has put a real strain on both water and food security. This has led to food and water scarcity in some regions. For example, NASA shows that the Aral Sea has experienced a surface area decline of about 75% and a volume decline of about 90% since 1977:

Naturally, this puts stress on regions that use the Aral Sea. However, the UN distribution map (Figure 3) shows that globally, freshwater availability is unevenly distributed.

Figure 3

Therefore, countries can share water resources, but of course, for a price. The Global Water Intelligence’s 2010 report asserted that approximately US$571 billion dollars needs to be spent annually to meet rising demand (Jowit, 2010). This may lead to development and innovations in the water industry to distribute water more equally. Here, Dalin et al (2011) show that virtual water flows have continued to increase over the past 20 years:


Every aspect of climate change, combatting it and mitigation against its effects, seem to have various affects on different markets. So what next? I’ve spoken about economic markets emerging to accommodate our appetites sustainably, however, I’ve not spoken about changing our appetites to accommodate our surroundings. What about changing ourselves? That's not a question that crosses many of our minds, but if we did this to our Earth, surely we have some responsibility to correct ourselves. Perhaps the ultimate solution lies in stopping in our tracks and taking a good look in the mirror. As a species, we are so used to changing everything around us for our needs and our desires; what would happen to the economy if we completely transformed our materialistic and exploitative hunger? This is what next post will focus on. Stay tuned!