Copenhagen Climate Conference

The consequences of climate change can be serious, but even more dangerous is the way we may react to the strain such change can impose on society. Climate change will not affect every geographic region equally; rather some areas will be hard hit, while others might escape the consequences or even benefit from these changes. If we look at prehistory and history since the last glaciation, environmental changes have resulted in hardship and sometimes mass migration of humans. Migrations lead to new settlements or even invasions into places already occupied by other ethnic groups. However, if due to the advent of changes in the environment, such migrations were to take place today, these huge population shifts could result in major international conflicts, potentially costing more human lives than the direct impact of a changing climate.

The current global economic downturn tells us what governments around the world might do when faced with a global challenge, which does not affect every country the same way. Governments have collaborated on a few things, such as interest rates. However, countries are also looking after their own interests and are, for example, imposing restrictions on imports, and taking other protective measures, which slow down global economic recovery. If a similar political logic was used to manage the effects of climate change, what could the scenario look like? Some countries will see a decreasing output of food and water, and respond by subsidizing technology that can boost the domestic production of these items, to avoid too large a dependence on imports. There will be an increased need for “disaster relief” in the aftermath of severe weather events and it is likely that spending on security will go up, to protect national interest, including securing or defending natural resources needed and defend against unwanted immigration. Increased taxes on environmental damaging activities might be used to fund these activities. At the same time additional investments will be needed to replace conventional with greener technologies. Decreasing revenue and increasing financial obligations will lead to economic problems, decreasing standard of living and ultimately deteriorating conditions in a number of countries. In other words, a recipe for hardship.

Now imagine that the current economic and political system had been created in a world with a different climate and no fossil fuels. Would it have made a difference? It might have resulted in differences in the distribution of human population and wealth, the location of political boundaries and the timing of historical events. But overall wealth and population might still have been fairly similar. Here are some of the reasons why:

  • The population that can be supported by the earth depends to a large degree on how well we cultivate and manage its resources. If the climate had been different we would have developed other techniques to handle the earth, which might have taken us just as far.
  • Historically, significant technological innovations have taken place in regions where adverse natural conditions existed and forced people to solve problems to better their living conditions, so it is not by default that a favorable climate equals prosperity.
  • Already in the 1800’s there were electricity generating wind mills and electric cars. Early on these technologies lost to fossil fuel based technologies because fossil fuels made growth faster through lower initial capital investments. However, fast growth typically results in more economic instabilities (bubble-burst cycles) along the way, while a slower economic growth eventually might reach the same level of prosperity.
  • Settlements would not have occurred in areas, which under the new climate conditions are at too high risk. The sprawl and suburban residential developments might have been built differently if inexpensive gasoline had not been available. But building in a different location is not necessarily a problem for the wealth or well being of humans.

So the issue might not be that we have to live with a different climate. The real problem is how we change infrastructure, technology and society to match the new living conditions. As the climate, the economy and everything else around us will continue to change, we as humans will need to become better at adapting.

Climate change is not like a war. War is destructive in the short term. On the other hand, climate change works on a longer time scale and we can innovate and adapt to cope with the new environment. With all the technology we have today it will be much easier for us to adapt to a changing environment than it was a few thousand years ago. And we can do it. Change often means the concurrent growth and decline of competing areas. It is hard to manage growth, but often even harder to manage decline. Which company happily acknowledges that their time has passed, and let its investors cash out as the company gradually vanish? Or which government administration shrinks itself as easily as it grew?

Some high-tech companies are faced with markets that change very quickly, so we can learn from that sector on how to manage change – also on a larger scale. A successful business needs to create value for their customers and appropriate part of that value as profits. In highly dynamic markets it is particularly important to excel at value creation as exemplified by frequent releases of new and better products. This contrasts to a static or fairly stable market where it is particularly important to appropriate value through market power and efficiencies, as exemplified by well established corporations relying on strong brand names and fine-tuned value chains.

If we learn from a high-tech business, what will make a society well suited for adaptation? Focus on value creation might help. Extensive collaboration and human interchanges across boundaries might help. Clear and simple regulations might help. Innovation, knowledge and education might help. And the combination of human skills with capital and natural resources might help. If we become really good at living in a dynamic world, then an economic, energy or climate crisis could turn into welcomed opportunities to make life even better, just like some businesses thrive on change in the market. But we should not underestimate the political, economic, organizational and mental efforts needed to change to a world that easily accepts change.

K. Tobias Winther, Ph.D., MBA

Note: Additional background for some of the views presented here can be found in the blog entry, which I posted in Nov. 2008: A Council For Climate Control?

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