Deflating the world's bubble economy: "unless the damaging trends that have been set in motion are reversed quickly, we could see vast numbers of environmental refugees abandoning areas scarred by depleted aquifers and exhausted soils…." - Economics

THROUGHOUT HISTORY, humans have lived on the Earth's sustainable yield--the interest from its natural endowment. Now, however, we are consuming the endowment itself. In ecology, as in economics, we can consume principal along with interest in the short run, but, for the long term, that practice leads to bankruptcy. By satisfying our excessive demands through overconsumption of the Earth's natural assets, we are in effect creating a global bubble economy. Bubble economies are not new. American investors got an up-close view of this when the bubble in high-tech stocks burst in 2000, and the Nasdaq, an indicator of the value of these stocks, declined by some 75%. Japan had a similar experience in 1989 when its real estate bubble collapsed, depreciating assets by 60%, The Japanese economy has been reeling ever since.

These two events primarily affected those living in the U.S. and Japan, but the global bubble economy that is based on the overconsumption of the Earth's natural capital will affect the entire planet. The trouble is, since Sept. 11, 2001 political leaders, diplomats, and the media have been preoccupied with terrorism and, more recently, the conflict in Iraq. These certainly are matters of concern, but if they divert us from addressing the environmental trends that are undermining our future, Osama bin Laden and his followers will have achieved their goal of disrupting our way of life in a way they could not have imagined.

Of Hall the sectors affected by the bubble economy, food may be the most vulnerable. Today's farmers are dealing with major new challenges: their crops must endure the highest temperatures in 11,000 years as well as widespread aquifer depletion and the resulting loss of irrigation water unknown to previous generations. The average global temperature has risen in each of the last three decades. The 16 warmest years since record-keeping began in 1880 have occurred since 1980. With the three warmest years on record--1998, 2001, and 2002--coming in the last five years, crops are facing unprecedented heat stress. Higher temperatures reduce yields through their effect on photosynthesis, moisture balance, and fertilization. As the temperature rises above 34[degrees]C (94[degrees]F), evaporation increases and photosynthesis and fertilization are impeded. Scientists at the International Rice Research Institute in the Philippines and at the U.S. Department of Agriculture together have developed a rule of thumb that each 1[degree]C rise in temperature above the optimum during the growing season reduces grain yields by 10%.

Findings indicate that if the temperature reaches the lower end of the range projected by the Intergovernmental Panel on Climate Change, grain harvests in tropical regions could be reduced by an average of five percent by 2020 and 11% by 2050. At the upper end of the range, yields could drop 11% by 2020 and 46% by 2050. Avoiding these declines will be difficult unless scientists can develop crop strains that are not vulnerable to thermal stress.

The second challenge facing farmers--falling water tables--also is a recent phenomenon. Using traditional animal--or human-powered waterlifting devices, it was virtually impossible to exhaust aquifers. With the spread of powerful diesel and electric pumps during the last half-century, however, overuse has become commonplace. As the world demand for water has climbed, water tables have fallen in scores of countries, including China, India, and the U.S., which together produce nearly half of the world's grain. Many other nations are straining their water reserves, too, setting the stage for dramatic cutbacks in water resources. The more populous among these are Pakistan, Iran, and Mexico. Overpumping creates an illusion of food security, enabling farmers to support a growing population with a practice that virtually ensures an eventual decline in food production and skyrocketing prices.

Food is fast becoming a national security issue as growth in the world harvest slows and falling water tables and rising temperatures hint at upcoming shortages. More than 100 countries import wheat. Some 40 import rice. While a handful of nations are only marginally dependent on imports, many could not survive without them. Iran and Egypt, for example, rely on imports for 40% of their grain supply. Algeria, Japan, South Korea, and Taiwan each import 70% or more. For Israel and Yemen, over 90%. Six countries--the U.S., Canada, France, Australia, Argentina, and Thailand--supply 90% of grain exports. The U.S. alone controls close to half the planet's grain exports, a larger share than Saudi Arabia does of oil.

Thus far, the countries that import heavily are small and mid-sized. China, however, the most populous nation, soon is likely to turn to international markets in a major way. When the former Soviet Union unexpectedly moved in that direction in 1972 for roughly one-tenth of its grain supply following a weather-reduced harvest, wheat prices climbed from $1.90 to $4.89 a bushel. Bread prices soon rose, too. A politics of food scarcity emerged. Pressure from within grain-exporting countries to restrict exports in order to check the rise in domestic food prices was common.