A Different Angle on Climate-Change Economics

I haven’t bought Rolling Stone magazine in lots of years, but I couldn’t resist the recent cover story: “Making ‘Exile’: Myth, Mayhem, and the Stones’ Gritty Masterpiece.” (And written by David Gates, no less!) I would never call Exile the “best” rock and roll record only because I hate “best” labels and lists: too subjective. It is, however, my favorite record, ever.
In the years during and after college, when one moves around with great regularity (not always on one’s own volition), my first act in any new apartment was to set up the stereo and drop the needle on “Rocks Off” or “Happy” or, if I was feeling reflective, “Shine a Light.” So yes, I’m happy about the new edition of Exile (re-mastered, with outtakes, etc.), happy it’s No. 1 on Amazon (511 reviews after one week!), and I gobbled up Gates’s article.
But the real bonus in Rolling Stone was an article by McKenzie Funk teased on the cover as “Capitalists of Chaos: Who’s Cashing in on Global Warming?” (The RS site is subscription-only, so no link here.) The article doesn’t quite deliver on that promise — remember, the people who write articles for newspapers and magazines aren’t the people who write the headlines, and the two sets of people may have different incentives — but it’s a fascinating portrait of a former Wall Street trader named Phil Heilberg who is buying up big chunks of African farmland. He is, according to Funk, “part of a growing wave of capitalists who are maneuvering to exploit the world’s looming food crisis.” He is betting that sometime soon, Malthus will finally be proved right:

“The world needs food. Thomas Malthus talked about the problem of finite land but infinite growth. He’s been wrong to date — we can use technology to push out more food. But what happens when technology isn’t coming fast enough? I think people will panic, especially those who have no land to grow on.”

Continuing explosive population growth is not a given. Still, you should go and read the entire article. Here are a few more important points:

The Arab-led government in Khartoum, where the two forks of the Nile meet, has reportedly turned over nearly 2 million acres to Saudi Arabia, Egypt, Jordan, Kuwait and the United Arab Emirates, hoping to make the northern region the breadbasket of the Arab world.

And:

The savviest corporate buyers see global warming as a double boon: In the short term, it’s a push factor, destroying agriculture in regions such as northern China and the American Southwest, which are becoming too dry to support crops, and causing food prices to spike. In the long term, it creates a pull: Higher-latitude countries like Ukraine, Russia, Romania, Kazakhstan and Canada are becoming more productive, not less, as the climate heats up. “You don’t need to be a rocket scientist to suggest that production belts in the Northern Hemisphere are shifting northwards,” says Carl Atkin, the head of agribusiness research at Bidwells, the British real estate behemoth. The firm’s consulting wing is helping financial clients make a major push into Eastern Europe.

People who view climate change primarily as a moral issue, or even a political one, may be reluctant to acknowledge that there are already a lot of people — or at least a few really rich and powerful ones — who see it as a business opportunity. As Funk writes:

In Atkin’s view, environmental factors [in Eastern Europe] — frigid winters and short growing seasons — have helped keep prices low there; a hectare of black earth in Romania is a fifth the price of a hectare in England. Overlay a climate-change map on the soil map, Atkin says, maybe add population data, and you could make a fortune.