Ever since Nassim Taleb penned “The Black Swan: The Impact of the Highly Improbable,” it’s been fashionable to classify various catastrophes as ‘black swans.’ But most of the disasters now befalling the world are somewhere between probable and highly improbable. As some people have termed it, there are lot of “grey swans” out there, unlikely occurrences that are just likely enough that they should be anticipated.
Six months ago, for example, no one would have predicted that the Mississippi River would see record flooding in 2011 or that a tsunami would cause massive destruction in northern Japan, but it doesn’t take a Nostradamus to recognize that severe weather events are on the rise or that a growing number of people are living in disaster-prone areas.
Indeed, a confluence of events — including climate change, population growth, debt loads and the world ‘s rising demand for food, energy and water — are dramatically increasing the overall levels of risk in the world, and as a consequence, there are a lot more disasters just waiting to happen. And some of these ‘grey swans’ could have secondary impacts with severe and wide-ranging consequences.
Chief among these ‘grey swans’ are the kind of record floods occurring this year in Australia and North America and last year in South Asia, or the severe droughts that afflicted Northern Asia last year and which are now plaguing parts of Western Europe and the southern U.S. These disruptive weather events are contributing to a global food crisis that has drawn down stocks of wheat and corn to dangerous levels and boosted world food prices to record levels.
The World Bank and the FAO have been warning for months that the world is just one bad harvest away from a dramatic escalation of food prices, one that could produce massive hardship and civil disorder. The food crisis has already contributed to the political unrest that has swept North Africa and the Middle East.
It doesn’t take a lot of imagination to conjure up a scenario in which additional flooding or drought somewhere in the world contributes to a significant shortfall in world grain production and another dramatic bump up in food prices. It takes even less imagination to see how politically disruptive that might be.
Egypt, in particular, could face a major challenge. Because Egypt imports nearly half its food, it is extremely vulnerable to rising food prices, and since the food riots that helped to overthrow the Mubarak regime, Egypt’s foreign exchange reserves have declined dramatically. The loss of tourist revenue, combined with a growing loss of faith in Egypt’s economy, is making it harder and harder for Egypt’s government to feed its people.
Just about the time that Egypt is scheduled to hold new elections this fall, Egypt may be running out of the money it needs to import grain. If so, who will feed Egypt’s 80 million people? And where will the grain come from? A further drop in world grain reserves could set off a global scramble for food. If panic sets in, more nations will follow Russia’s lead and impose grain export bans, further shrinking the world’s grain market. China and other food importing nations will try to build up their food reserves to guard against potential shortfalls. In such a food-constrained world, who would feed Egypt or any other poor, food-dependent country?
If we’re lucky, we will muddle through 2011 without any further disruption to world food production. But with the world population expected to grow by another 2.3 billion over the next forty years, and the worst effects of climate change yet to come, the current food crisis could easily become a chronic food crisis, particularly if energy prices remain high, driving up the costs of fertilizer and transporting food.
There’s not much we can do in the short run to blunt rising food prices, but in the longer term there’s much we can do to close the food gap. It wouldn’t cost much to boost the availability of family planning services and information in developing countries, or to invest more in agricultural development and water conservation.
A severe and long lasting food crisis is no longer a remote possibility. A decade ago, when food production was still outpacing population growth, it was a ‘black swan.’ No longer. Today, it’s a ‘grey swan’ and a very big one at that. If we fail to take the steps needed to avoid it, shame on us.
Posted by Robert J. Walker, Executive Vice President
Reposted from HuffingtonPost.com