The world is at war. The climate crisis is an epidemic of economic enormities. A crisis that now — in this post-truth, polarised and populist world — still divides opinion and is driving economic upheaval to an extent not seen for nearly a century.
While we have droughts in Europe and North America, we see devastation wrought by flooding across much of Pakistan. Alongside this, the distinct possibilities of runaway inflation and economic stagnation brought about by resource scarcity and socio-economic protectionism, is creating a poisonous concoction that could lead the globe to a deadly reset on several fronts.
In a world where economic and physical wars are adding fuel to already raging fires, the security of our energy, food and water has never been at greater risk. Two of these areas are now leading to inflationary pressure and leading central banks have taken significant measures to try to bring it back in line.
These measures bring home the impact of climate change on our daily lives.
The UK has already seen inflation reach more than 9% in the last quarter of 2022, with forecasts from Citibank recently predicting the Consumer Price Index will hit 18% in the first quarter of 2021, with the Retail Price Index set to reach 21%.
The US, not far behind, at least has something of a functioning government and President Biden’s latest piece of legislation, the Inflation Reduction Act — which was a feat in itself to get passed — looks like it will help to get on top of inflation and bring it down in the short-term.
These upward inflationary pressures are being driven mostly by increased energy and food costs and while some of that is a fallout from Covid-19, it is undeniable that the warning signs of the impact of climate change on rising prices has been largely ignored for far too long.
Food security
The dangers posed to food security by climate change have been apparent for years. Even before the pandemic and economic protectionism made matters worse, the UN’s Intergovernmental Panel on Climate Change made it clear that the impact would be negative and unpredictable but also inequitably distributed globally.
Maize and wheat yields had already taken a hit worldwide before the war in Ukraine drove down global stock levels.
As per the UN’s Academic Impact (UNAI) 'Food Security and Climate Change' series, with nearly 950 million metric tonnes of maize and nearly 700 million metric tonnes of wheat consumed globally every year, wheat consumption alone represents over 20% of the world’s calories and protein.
The loss of suitable cropland due to climate change is expected to lead to significant deterioration of these two key crops, alongside other impacts, including the abiotic stresses caused by the unpredictability of heat and weather patterns and water supply and the biotic stresses of changes in insect life.
Expected declines in South America of 9-19% of maize production by 2050 are eclipsed by an expected decline of 33% in countries like Tanzania. The predicted drop in wheat production is even more severe with forecasts of between 44% and 49% in regions such as South Asia.
Of course, this is somewhat eclipsed by the fact that both Ukraine and Russia play such a pivotal role in the provision of critical food stocks globally. They account for 30% of the world’s wheat, 60% of the world’s sunflower oil and roughly one-fifth of the world’s maize, according to the "Global Impact of war in Ukraine on food, energy and finance systems”, published in April of last year by the United Nations.
The decline of fertiliser supplies from these two nations — combined with searing heatwaves and low rainfall caused by climate change — has meant a significant hit for harvests across the EU and US, following poor yield in Brazil earlier this year.
Such a drop in supply yields inevitable inflationary consequences. While the UN’s Food and Agriculture Organization’s Food Price Index continues to drop, it remains 7.9% above its value a year ago. It also masks food inflation rates seen by many of the poorest countries around the world.
At the top of that list, Zimbabwe, Lebanon and Venezuela are among 36 countries with reported food inflation rates of over 20%, alongside Cyprus, Argentina and Hungary. The EU was averaging 12.8% in July also, while the UN has recently reported a “bleak economic outlook posing serious strains for global food security.”
That leads to the second inevitable impact on supply, and the need to maintain sufficient sustenance to stave off malnutrition in many countries.
In the words of the World Bank’s August 2022 Food Security Update: “Record high food prices have triggered a global crisis that will drive millions more into extreme poverty, magnifying hunger and malnutrition, while threatening to erase hard-won gains in development.”
