by frog
Such is the very interesting article by Fred Pearce at the Guardian. (as yet not online) After stating that biofuels are only just beginning to contribute to the food crisis, he describes how water, which underpins all agriculture, is the truly scarce supply. Here are a few excerpts:
The great slow-burning, under-reported resource crisis of the 21st century is water.
Climate change, over-consumption and the criminally inefficient use of this most basic raw material are all to blame. I wrote a book three years ago called When The Rivers Run Dry – because many of the world’s biggest rivers are indeed running dry.We are using them to death. And with two-thirds of the water abstracted from nature round the world going to irrigate crops, water shortages equal food shortages.
Consider. The two underlying causes of the world food crisis are falling supplies and rising demand on the international market. Add in speculation, panic and hoarding and you have a perfect food storm.
Why falling supplies? Because of major droughts in Australia, one of the world’s big three suppliers, and Ukraine, another major exporter. Those droughts bite hard because both countries are already using their water reserves to the limit. Australia’s wheat exports are 60 per cent down; rice exports are 90 per cent down.
He goes on to say:
In recent years, much of the global food trade has become a proxy trade in water. Or rather, the water needed to grow the food. “Virtual water,” some economists call it.
The virtual water trade has kept the hungry in dry lands fed. But now that system is breaking down, because there are too many buyers and not enough sellers.
Till two years ago, the world’s biggest supplier of virtual water was Australia. It exported a staggering 70 cubic kilometres of water a year in the form of crops, mainly food. Drought has more than halved that figure. It may never recover.
Right now, we in Europe can get the food we need – at a price. But we are not immune. Britain imports large amounts of food. It works out at 40 cubic kilometres of virtual water a year, or more than twice the water we use annually within our own borders.
In Britain, we don’t often think about water shortages, except when there is a hosepipe ban. We should. Because even as it rains at home, the world water crisis is encroaching.
I dare say we are a net exporter of ‘virtual water’ and will likely continue to be so. But this does not mean that the crisis will not reach our shores through other means – such as financial or civil strife.
Published in Campaign | Economy, Work, & Welfare | Environment & Resource Management by frog on Thu, April 24th, 2008
Tags: crisis, fred pearce, Frog, frogblog, green, guardian, new zealand, party, resource, water
on the trolls and those who are unable to keep on topic
Just read an online article (http://www.spiegel.de/spiegel/0,1518,548456,00.html german sorry!) that points out that the curren food shortage might have more to do with speculation takings than anything else.
Could it be that we’re killing the world with our monetary greed? Aehm could it be that that was a pretty stupid question? It looks like we as small investors investing into bonds are contributing into huge conglomerates that then start to buy and sell food for profit. I’m definitely not talking about profit from growing/making food but profit by speculation.
If that is the case the food shortage has become a speculative necessity and driver for profit. Oops, that doesn’t seem right or ethical. Never mind the natural causes for food shortages mentioned above. They affect prices but they will get overemphasized as in the stock market by analysts and big investors out to make a killing.
Sorry to say it but it looks like its the “small man” driving this by supporting these instruments of the market. I think governments need to have a long hard think if we should not control or even close the commodity markets if food shortage and death have a positive effect on making profits. In no economy is the retention of life a factor for success so it won’t care if there’s less of it.
Please somebody stop this madness! And have a close look at your investments and vote appropriately in the next election!!
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“it looks like its the “small manâ€? driving this by supporting these instruments of the market.”
Not really, the complexity of financial markets makes it devillishly difficult figuring out where your money is evetually ending up.
It is crazy to let people speculate on futures, food or forex, as its unproductive use of capital and can seriously undermine actual productive business. But I don’t relish the chances of governments cracking down on it – if one government does so, the trade will move overseas, so you’d need a global agreement. I can’t really see the rich and powerful cracking down on the things that make them rich and powerful.
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Hi Oliver,
I concede that there is some truth in your accusation that speculators have some part to play in the current food crisis, but your call to shut dow the commodities markets and for governments to take over smacks of Soviet style central planning.
We all know the consequences of that, don’t we? Russian appartichiks performed so badly that they left the Soviet Union vulnerable to collapse during the 80’s, because it became the largest net importer of grains in the world despite having an amount of arable land rivalled only by the US, Canda, and Australia.
“Buy agriculture. Agriculture is one of the few places where you’re going to make a fortune in the next years,� Rogers said.�
http://www.cnbc.com/id/23588079/
Governments are particularly prone to the law of unintended consequences due to the sheer breadth of their powers and vulnerability to capture by special interest groups so it would be a mistake to put your faith in them to solve a crisis like this. I wonder whats going to happen to the world price of rice and grains now that Kazakhstan, Indonesia, Vietnam, and India have banned exports.
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Sam,
If there were no futures markets in agricultural commodities all the risk stemming from price fluctuations would be borne by farmers and its hard enough for them as it is without that extra burden. They do fulfill an important role in alleviating the worst consequences of capitalism’s flaws.
Its an imperfect solution, but unfortunately better than the alternative
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Not to mention climate change isn’t solely responsible for rivers drying, but the finger must be pointed at grandoise government funded, “eco friendly” dam projects, especially in Africa, Asia, and the Americas and all, because noone has imposed a cost on their use. Where are the Georgists when you need them?
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Here’s another article on the subject of water.
http://news.nationalgeographic.com/news/2003/06/0605_030605_watercrisi s.html
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@SleepyTreehugger:
Ok, maybe I don’t understand the food markets too well. I certainly didn’t want to go the red way! I just think we need to re-think how much speculation on the food market is good/bad and what we can do control the death by speculation pitfall. Maybe there’s some clever economist out there with a good idea…
@Sam:
I know that the connection in financial markets can be VERY indirect. But in some way the investor should be aware that investing and especially thoughtless investments sometimes come with severe by-products. If in any way possible and especially if given the option maybe the speculator should be aware of where his profit might come from.
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As usual, there is no single answer to a huge and complex problem. Individually, we can try to capture (rainwater tanks if you can), conserve (fix leaks, take short showers, turn taps off) and become involved in local body discussions on water issues.
Locally, learn what those issues are – many local bodies are privatising water supplies, thereby once again making life harder for the less well-off – and act on that information.
Nationally, water collection and preservation can be encouraged with education, support for water tank installation and so on.
Globally: that’s the hard one. You can see the commercial interests looking at how to ‘own’ and control water supplies just as they are doing with food (through ge). Those figures on how water is exported are scary – even worse for the dry countries who relied on ‘importing’ water as food. Just cutting off exports isn’t the answer, though it might provide some immediate (illusory) relief for India.
Much local control of land/water/food has been lost to those communities long ago. Many workers in third world countries work long hours for a pittance to grow export crops (coffee, sugar, tea, bananas) they could never afford to buy – bringing profits to the multinationals.
One small group that is making an effort to restore some autonomy to food growers is Fair Trade – seven million growers and workers across some 30 countries have been able to improve their living standards and the health of the land they work through their association with Fair Trade.
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