Cash Chronicles is posting a bit later this week because I am in the midst of my annual retreat with my family in the mountains. It’s also a rare resort that has little outside communication. There is no TV, internet or phone and the only wifi is available around the main boathouse so you will forgive me if my last few posts lack the links, pictures and charts that I normally include. I also am suffering from some sort of stye or infection in my left eye which reduces me to squinting through my writing much of this post.

This location had offered a bit of a respite from the obvious effects of climate change, probably only because I come here in the summer but year is the first year I have really felt the effects of climate change here and it is quite jarring.

The Adirondack mountains of New York and their counterparts to the east in Vermont are accustomed to short cool summers and long cold winters. Summer days can even be quite cool if there is rain or the odd cold front moves through.

Night time is when the difference with lower elevations really stands out. We normally stay in a summer cottage that is only for seasonal use but it is equipped with a fireplace and heavier blankets for the nights when the temperature dips down. In the morning a “fire boy” comes into each cabin and starts a fire before dawn so that each family has a warm (natural) fire to wake up to. Yet on this trip I experienced something here I hadn’t before, the nights were unusually warm. There is no air conditioning here, it was never necessary, but now a few nights were somewhat uncomfortable, even the fire in the morning seemed excessive and we spent little time around the fire this trip due to the temperature already being somewhat elevated.

Whether we like to admit it or not, the world is already changing in ways that are some what out of our control. Many studies theorize that even if all greenhouse gas emissions were to stop today we would still experience a multi century period of warming due to what has already been put into the atmosphere. While limiting the bad effects, which is what the Paris Climate Accords are attempting to achieve, we still will have to deal with the effects of a warming arctic, rising seas levels and different weather patterns.

Rising sea levels bring obvious problems, just refer to the sea wall discussion that is currently being debated in Miami Beach or the small island nations in the pacific that may soon disappear. Yet there are also opportunities for some geographies which were often referred to by climate villains like the Koch brothers.

Climate Change Beneficiaries

These include a northwest passage that could cut the time and cost of shipping between Asia, Europe and North America as well as a greening of formerly inhospitable territory. This territory, most of which lies within the Northern Hemisphere, was mostly unsustainable for agriculture in the past but recently has been harvested more and more to the benefit of the places that already control this territory.

Being no farmer myself, I have to take The Economist at their word when they describe the different crops in order of how able they are in descending order to stand up to harsher climates. These include:

Oats

Barley

Wheat

Peas

Canola

Soya

Corn

Since 2015 Russia has become the world’s largest producer of wheat, chiefly because of higher temperatures. In addition to this, Russia has started leasing land to the Chinese, Koreans and Japanese in Siberia for soya production. Russia is keen to exploit global warming which will enhance its strategic position in the world. Everything from wheat and soya production to potentially creating a deep water port which its navy has craved since the times of Peter the Great, will help to grow its influence.

Canada and to some extent the US, will also be net gainers from warming. Investors such as Bonnefield Financial, featured in The Economist article are buying up land in places such as Manitoba and leasing it to farmers in the hopes that currently farmed land will allow more lucrative crops to be grown (along with higher rents) and land that was previously boreal forest can now be farmed.

The question this produces is whether these actions will further accelerate climate change. The potential answer is not as straightforward as it seems. The forests absorb more light and snow covered fields reflect more light back into space lower temperatures everything else equal, yet plowing these fields could potentially release gasses like methane which further add to global warming.

The Losers

Another uncomfortable truth is that the countries benefitting are those that are either rich or already have an agricultural industry that can largely feed its own citizens with much left over for export. The losers will be a number of warmer climate countries which also have to deal with changing weather patterns that could devastate those unlucky enough to be in a location where the rain patterns change dramatically.

This raises the question of whether those countries that benefit from climate change have a duty to those adversely impacted by it to share their gains with those less fortunate. However the deck seems stacked against the losers not only in regards to food but also for inputs that will go into achieving the goals of the Paris Accords.

As I have noted before, the greening of investing and policy doesn’t necessarily mean a 1 for 1 greening of the earth. The commodities required for the greens revolution and the Paris Accords will require a massive amount of investment in commodities which itself would produce even more greenhouse gases and upend local environments where they are mined. Rich countries will gobble up many of the commodities needed for things like electric vehicles and solar panels while poorer countries will be catching up in areas such as basic access electricity, which 940 million people currently lack. China has grabbed headlines in much of the emerging world, especially in places like Africa where the country is making an unabashed long term play for commodities to supply its citizens. It seems good and agriculture is also a part of that strategy, although until now that has gone on less notes in the mainstream press.

In 1980 a biology professor and a business professor named Simon and Ehrlich respectively made a now famous bet that 5 commodity prices would not rise due to scarcity over the next 10 years. The biologist was convinced that the exploding population would overwhelm the demand for these commodities and prices would shoot up. The business professor understood the incentives higher prices would produce which would spur investment in the search for these commodities which would then drive down the prices again. The now famous Simon-Ehrlich Wager shows that even with an increasing population and limited resources, people can still eat and for that matter thrive. Despite the studies that say global warming will bring down food output, they may underestimate humankind’s ability to adapt and change. The question going forward which will remain a challenge will be which countries will be affected the most. Given that scientists are still debating how hot the world will get, predicting changing weather patterns may be anyone’s guess. The new farming frontier will offer opportunities and big challenges for the future.

The information provided by www.cashchronicles.com is for informational purposes only. It should not be considered legal or financial advice. You should consult with an attorney or other professional to determine what may be best for your individual needs. www.cashchronicles.com does not make any guarantee or other promise as to any results that may be obtained from using our content. No one should make any tax or investment decision without first consulting his or her own financial advisor or accountant and conducting his or her own research and due diligence. To the maximum extent permitted by law, www.cashchronicles.com disclaims any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses. Content contained on or made available through the website is not intended to and does not constitute legal advice or investment advice and no attorney-client relationship is formed. Your use of the information on the website or materials linked from the Web is at your own risk.