Sunday, February 28, 2010

An uneven collapse (Hint: It's already happening)

When we think of collapse, we often think of a building or bridge or other structure suddenly giving way. We have a tendency to take this physical model of collapse and translate it into the social and political world.

Thus, when Joseph Tainter or Jared Diamond write of societal collapse, we are inclined to think of a relatively rapid process that acts equally across an entire area and even perhaps across the entire globe. But I believe that the collapse of the globalized society we now inhabit will be exceedingly uneven geographically and one that is spread over many years. And, I believe that that collapse has already started to appear in places which might be considered the periphery of our global system.

My index of collapse in this case will be reasonably objective: When population in a country or region declines persistently and the main cause is not a voluntary decline in birth rates, but a persistent rise in death rates, then collapse has been confirmed. Notice I didn't say "collapse has begun" for the engines of collapse are set in motion long before such demographic proof shows up.

Exhibit number one is Russia which has had a persistently declining population since 1991 when population was close to 149 million versus just under 142 million today. A broad range of factors are said to explain this decline. But despite the slight uptick in population this year, few experts expect the trend to be reversed. Russia may be a foretaste of how such a decline might be experienced elsewhere in the world once it arrives.

The reason the Russians have a head start is that their fall from Joseph Tainter's perilous tightrope of complexity began in 1991 with the dissolution of the Soviet Union, an event that continues to rain its cataclysmic consequences down on the Russian Federation and all the former Soviet republics that are now independent countries.

One key element has been the collapse of the public health system in Russia. AIDS is racing through the population and tuberculosis has resurrected as a major killer. Certainly, the famously low Russian birth rate has something to do with the decline in population. But that rate was already low before the Soviet Union collapsed. It has declined since then as the life chances that Russians perceive for themselves and their children continue to darken. Death rates meanwhile have shot through the roof, up 40 percent since 1992.

Surely, a country as rich in natural resources as Russia should be able to turn things around, especially since a strong central government (some say too strong) has been re-established under the leadership of Vladimir Putin. But such has not been the case. And, the Russian example shows that once collapse begins it tends to be self-reinforcing. More deaths and fewer births now lead to more deaths and fewer births in the future as the cohort of women able to reproduce shrinks and as the capability of the country to respond to the crisis shrinks with the declining population. And, remember, this is all happening in a country in which health care is provided to all people by the state and which has had one of the best educational systems in the world, at least until now. And, it's happening inside the world's leading exporter of oil, revenues from which have been swelling state coffers in recent years.

Perhaps you will say that Russia's situation is unique. But other parts of the former Soviet empire are also experiencing significant population declines. Ukraine suffers from similarly high death rates due to AIDS, alcoholism and smoking. Many parts of the former Soviet Union and the Eastern Bloc are facing both declining births and rising death rates, the latter a sign that public health systems are inadequate to handle the problems they face. (See several of them in this table.)

But these countries have had histories of low birth rates. What about countries with historically high birth rates? There too we find a cluster of countries in southern Africa that are suffering heavily from an out-of-control AIDS epidemic. South Africa, Lesotho and Namibia appear to be on a trajectory toward population decline despite their high birth rates as their death rates spiral upward.

This cannot simply be put down to AIDS. There are AIDS sufferers in many countries. But wealthy countries such as the United States have spent considerable resources to keep a lid on AIDS infections. In some of those countries AIDS has even become a managed chronic condition rather than an automatic death sentence.

Resources, financial and otherwise, then must be the key. In a world of shrinking resources, especially shrinking energy resources, we will have less wealth to spend on the multiple threats to our complex global society such as climate change, epidemics and depletion of fisheries, forests, water, soil and minerals.

The first stage of collapse, Dmitri Orlov tells us, is financial collapse. We have just witnessed the most colossal financial collapse since the Great Depression. And, despite protestations to the contrary, we are following very closely the script of the last depression. (Both then and now markets rose about 60 percent from the bottom of the crash and experts everywhere were claiming that the worst was over.) The financial collapse is followed by a commercial collapse, i.e. an economic collapse in which businesses continue to fail and unemployment continues to rise.

These collapses cut revenues to local, state and central governments and force cuts in services that are critical to the health and nutrition of the population. It will likely be a long time before the average American or average Western European enjoys the same health as the average Russian or South African does today. But the wheels are in motion to undermine the very supports critical to public health even in wealthy societies. And, if economic stagnation or decline persists, the decline in income and employment among the middle and lower classes will inevitably lead to inferior diets and health care. Already many people in the United States are about to lose their unemployment benefits and many others who have reached time limits for public assistance must now sell their food stamps to pay their bills.

Today, the world's wealthy countries still enjoy several advantages in the collapse game. Many have large tracts of excellent and highly productive farmland. Some like the United States, Canada and Australia have extensive energy and mineral resources left. Circumstances that force wealthy countries back on their own resources would be traumatic, but not as traumatic as what's in store for many of the world's poor countries, the resources of which have been transferred over many years at bargain prices to the wealthy countries. Those countries poor in resources and lacking well-developed public health and other administrative systems will certainly collapse first.

Now, collapse doesn't mean annihilation. In Tainter's view it means returning to a less complex society. Complex, large-scale systems would be abandoned because they are no longer effective in the face of new realities. It would be wise to begin building the replacements for those systems before they collapse. To a certain extent the local food movement is doing just that. But to build a truly resilient society there are so many other areas that require our attention--health care, education, manufacturing, transportation, communication, and the arts to name a few. And, even though those of us in wealthy countries will have some extra time to prepare, we will be doing so against a backdrop of increasing chaos and decline which will be made all the worse by the failure of governing elites to correctly diagnose our situation.

Thursday, February 25, 2010

Do Texas and the North Sea foretell the future of oil production?

My latest column on Scitizen entitled "Do Texas and the North Sea Foretell the Future of Oil Production?" has now been posted. Here is the teaser:

Oil supply optimists claim that new technology combined with private development of the world's remaining oil resources--most of which are now under the control of government-owned companies--would vastly increase global oil production and put off any decline for decades. Texas oilman Jeffrey Brown isn't buying it, and he cites the history of oil production in Texas and the North Sea to explain why....Read more

Sunday, February 21, 2010

Peak demand: The cornucopians reach for a fig leaf

The world's oil supply optimists must feel as if they are in that dream that so many of us have had about arriving at work in our underwear. Oops! What do I do now to save face?

Over the past decade oil optimists repeatedly forecast a glut in oil supplies that kept failing to materialize. Now, they are reaching for a fig leaf hoping no one will remember their consistently errant predictions. That fig leaf is the idea that we have reached peak demand, and that that's the reason we have not seen oil production rise in the past several years.

Strangely, they made no mention of this theory in 2005, 2006, 2007 or 2008 as prices skyrocketed. It was only after the market crashed and a deep worldwide recession ensued--something which would be expected to curtail oil demand--that they formulated the peak demand thesis.

Archcornucopian Daniel Yergin, who kept calling for mushrooming oil supplies throughout the last decade, now tells us that flat production is really the consequence of peak oil demand. Developed nations will from this day forward require no greater quantities of oil. He does acknowledge that demand may grow in China in the years to come. His firm, Cambridge Energy Research Associates (CERA), is on record suggesting that oil production capacity will likely grow 25 percent from now through 2030. But the forecast is later hedged with this statement:

“So much will happen between now and 2030 to affect demand—from changes in the automobile engine and the electric battery to changes in demographics and values,” says [CERA senior director Peter] Jackson. “Peak demand may ultimately prove to be the main driver of long-term supply.”

The International Energy Agency (IEA) has also jumped on the peak demand bandwagon. Fatih Birol, chief economist for the IEA, told Reuters, "When we look at the OECD countries--the U.S., Europe and Japan--I think the level of demand that we have seen in 2006 and 2007, we will never see again." To be fair Birol has been sounding the alarm about oil dependence and suggesting that the world "leave oil before it leaves us." And, he has indicated that peak might come as early as 2020. Perhaps Birol is hedging his bets even further sensing that production may rise little if any from here.

A recent entrant into the peak demand sweepstakes is Saudi Arabia. Always publicly confident about its ability to produce vastly more oil for decades to come, it is noteworthy that the desert kingdom is now announcing that peak demand may be here. This comes not too long after the country announced plans to use carbon dioxide injection in the world's most prolific oilfield, Ghawar. The Saudis insist they are doing this as a public service to help spread the technology of carbon sequestration. But this type of injection is only used in fields that are in decline and for which other methods such as waterflooding are no longer sufficient to maintain production. If world demand can be said to have peaked, then perhaps the Saudis will have a perpetual excuse for why they aren't producing more oil--not because they can't, but because the world doesn't demand it.

One has only to make a superficial analysis of such claims to see that they amount to nothing more than sleight of hand. First, every economist knows that supply and demand are always equal and that it is price that makes them so. Ergo, technically speaking if demand has peaked so has supply. It is a tacit admission that peak oil is upon us.

Now, if what these people mean is that oil supply capacity could grow, but won't because we won't need it, then one must ask the complicated question of why people won't need it. Is it because the economy has been so decimated by a debt-fueled crash aggravated by high oil and other resource prices that it cannot grow? Is it simply because people across the globe on average don't feel that they need to use more oil despite the fact that population continues to grow?

Some claim that energy efficiency and the growing production of alternative fuels will depress oil demand. But no one was saying this before the crash. Why has it suddenly become relevant? Did we just discover energy efficiency and alternative fuels?

It is a truism that no one knows whether the world has reached peak oil or will reach it soon. We'll only know many years after it occurs. But the rush to announce that peak demand has arrived seems to be nothing more than an attempt to put a happy face on peak oil.

No matter what the reason, if world oil production has peaked, we are all in serious trouble. Peak means decline won't be very far away. Peak means economic recovery, let alone robust growth, may be all but impossible. Of course, we could try to run the world economy on other fuels such as natural gas and coal. But we have not prepared our infrastructure to do so, and such preparations are measured in decades, not years. Besides, there are serious questions about the longevity of these fuels as well, especially if we vastly ramp up their consumption.

The announcement of peak demand then is really designed to allow all those who made faulty oil production forecasts to keep selling their sunny optimism about future energy supplies while covering their asses for when the verdict on peak finally comes in. What the purveyors of the peak demand thesis really need to do is find some clothes to put on over their dream-time underwear and get to work figuring out where they went wrong in their analyses of oil supplies.

Sunday, February 14, 2010

Climate change deniers and our human nature

Anyone who has been following the news on climate change recently already knows about the release of hacked emails of British climate scientists. The emails were used by so-called skeptics--most of whom get their funding from fossil fuel interests--to claim that there was something rotten in climate science. As far as I can tell, there isn't much to the so-called skeptics' claims about the emails. But even if their claims were to involve legitimate questions about some aspects of climate science, this would be nothing new.

That's because there is nothing that is absolutely settled in science. It is a process of ongoing inquiry fostered by disagreements between researchers of good faith who try to resolve their differences by looking for more conclusive evidence. It is important to note that so far fossil fuel companies and their supporters have yet to fund truly independent scientific inquiry into climate change. That's because they do not want truly independent inquiry since they would not be able to control the outcome. So, they are not part of the search for the truth since they offer no original physical observations or measurements to further our understanding of climate. But, then it is far easier to throw darts at others from a safe distance than engage in genuine scientific inquiry.

(The one time the fossil fuel interests did try to have some scientific rigor infused into their thinking, they didn't like the results. A primer on climate science prepared in 1995 by the industry-funded Global Climate Coalition's Science and Technical Advisory Committee confirmed key elements of the findings of the Intergovernmental Panel on Climate Change. The primer was never released and only surfaced a decade later, several years after the coalition had disbanded. You can read it here.)

The reason such sloppy critiques of climate science have gained so much traction with the public has less to do with their scientific logic--which is almost nonexistent--and more to do with human psychology. Humans tend to be heavily influenced by recent events and by their social milieu. For example, they tend to give more credence to something they heard last week at a party with friends than something published in a scientific journal last year even if it was given broad media play. Hence the effect on the public mind of the not-so-coincidental release of the above mentioned hacked emails right before the Copenhagen climate summit--and the ongoing viral campaign on the Internet, perfect for getting people to transmit disinformation person to person: "I read on the net that..."

Humans also tend to take their cues from their immediate surroundings. That's no surprise. It's really cold and snowy this winter here in the northern United States, ergo some people conclude that global warming must not be that big a deal. Yes, it's absolutely dry as a bone in Australia where it is currently summer and a severe drought has been in progress for years with devastating results. But if you don't live in Australia, you don't think about it much even if you hear something about it on the news.

Finally, humans greatly discount possible future events. This is an understandable evolutionary feature. Humans evolved to concentrate on their current surroundings, not some hypothetical future. They seek their food, status, safety and other satisfactions in the here and now. Is there really any time other than now if you are dealing with your immediate needs?

Climate denial public relations pros know all this about humans, and they count on it to make their strategies successful.

Despite all this it is a testament to humans as planning animals that most people in the world continue to believe that climate change is an important issue that needs to be addressed. But, this may not be enough. It is in the nature of humans to pay attention to the most vocal elements of society, and the so-called skeptics are quite vocal. They are constantly squawking to the media and obtaining coverage (unwarranted, in my view, since they offer mostly misinformation).

But, the fossil fuel interests do not need to defeat climate change regulations. They only need to delay or dilute them in order to achieve their goals. Delay gives those interests one more day, one more week, one more year, maybe even one more decade to sell their in-ground inventories of fossil fuels in an unrestricted manner. Every moment's delay means more money. And, diluting the regulations when they eventually arrive means opportunities for loopholes and even sanctioned delays that will allow them to continue to evade responsibility for their role in climate change.

The members of the climate change denial club are against efforts to control emissions not only because of the threat to profits, but also because they believe that climate change legislation will mean greater government intrusion into their lives. Ironically, when the crises associated with climate change emerge--declines in water and food supplies, mass migrations from areas affected negatively by climate change, threats to coastal areas due to rising seas--we will almost certainly see government intervention in ways that are far more intrusive than those needed to prevent these crises in the first place.

Sunday, February 07, 2010

Characterizing the incalculable

It would be nice to be certain about the future. But, absent time travel, no one can be certain about anything that hasn't happened yet. So, as a substitute many specialists build models in disciplines as disparate as finance and physics to guess what the future might look like given certain assumptions.

In physics the models we have for describing the universe and its properties can be remarkably predictive if they only require input based on the laws of physics. But we have considerably more trouble describing the social world of humans and the interactions of human society with nature. This is because we don't have laws of human behavior that can be nailed down in the same precise, repeatable way that laws of physics can.

The upshot is that we can calculate the probability of a comet hitting a planet with some precision. But we cannot calculate the probability of the stock market going up or down in the next five years. Nor can we calculate the probability of any particular outcome of climate change because what we humans do in the future is such an important factor in determining that outcome. The modeling of climate is also problematic because the climate system itself--even absent any human interference--is so complex that we do not fully understand it.

A rule of thumb then might be that the more complex the system, the less likely it is we will be able to model its actions with precision. And, the greater the number of humans involved in affecting that system and the deeper that involvement, the more difficult it becomes to design precise models of the system. In general, the reliability of a model decreases as the complexity of the system it is modeling increases.

What are we left with then? Shall we simply give up and say that much of what we would like to model cannot be modeled? I would counsel against this view. The reason many people tell us not to trust models is that they are mistaken about the purpose of modeling. It is not, as many believe, done in order to predict the future. Rather, most modeling is done in the spirit of scenario planning. What if global temperatures rise by 4 degrees C by 2100? What might that imply for other Earth systems and for the human-built environment? What if temperatures rise by only 1.5 degrees C? What level of preparedness might that imply? What if temperatures plunge in the Northern Hemisphere as a result of the breakdown of the thermohaline current? (For a look at a sampling of temperature scenarios based on various climate models, click here. Note especially the large error bars beside the graphs implying large uncertainties.)

But what likelihood might we assign to any of these scenarios? It is simply impossible to assign a clear, calculable probability to any of them. The best we can do is to characterize the incalculable. We cannot know the precise odds of any climate scenario. But, by knowing the range of presumed outcomes, we can start to characterize the effects and therefore gauge the probable severity of any particular outcome.

Let's review for a moment the three conditions under which we actually make decisions in our daily life. First, we can say with certainty who the current president of the United States is. We might misspeak or simply get the answer wrong, but the data is available and incontrovertible. We are thus making a decision under certainty. The answer is certain whether we know the correct answer or not.

Second, if I flip a coin, there is a 50 percent chance that it will come up heads. I can calculate this because I know in advance that there are only two possible outcomes to this action. I cannot know for certain what the outcome of any one coin toss will be. But I can know with certainty what the possible outcomes are. In this situation, I am making a decision under risk. And, I can calculate precisely what the risks are.

Third, we can describe such decisions as investing in a particular stock, taking a particular job, and marrying a person whom we are dating as decisions made under uncertainty. We cannot possibly discover all the information needed to know the trajectory of our stock pick, the degree of success or failure we might meet in our job, or the state of our possible marriage to a current love interest 10 years hence. And, it turns out that policies in response to climate change also fall under this third category. For decisions made under this category we simply cannot gather all the necessary evidence to calculate even the probability of a particular outcome as we could with the coin toss. This is partly because many of the variables would have to come from the future and partly because these situations are so complex that many of the existing variables are hidden from us. (The foregoing discussion on types of decision making is based on a paper by Nassim Nicholas Taleb and Avital Pilpel entitled "On the Unfortunate Problem of the Nonobservability of the Probability Distribution.")

Future oil supplies also fall under this third category of decision making. The Oil Drum provides periodic updates on various scenarios for future oil output including an analysis of which liquid fuels are included in which forecasts. The variables are much like those involving climate modeling. Some of the current data is unknown. Future human actions with regard to oil consumption, oil exploration and oil production cannot be known with certainty. Oil is found underground and therefore must be measured indirectly. Again, we are faced with making decisions under uncertainty with respect to oil supply.

So, given the wide range of oil production forecasts, which are we to believe? Some forecasts posit a business-as-usual scenario through the next couple of decades. Others assume a rather rapid drop-off of available petroleum in the near future. We can assign neither scenario a calculable probability. But we can once again characterize the possible outcomes. The business-as-usual scenario requires little in the way of changes in public policy or personal behavior. The rapid drop-off scenario suggests an emergency that will require heroic measures to navigate.

Now, which of these characterizations for future oil supplies or climate change should we act upon? First, we need to understand that for all scenarios generated under category number three, the further we go into the future, the more important the range of results becomes rather than the actual forecast. In other words, what are the extremes that we believe are possible? To provide some perspective on how we might proceed, ask yourself this question. If you were told that the trans-Atlantic flight you were about to board only crashes 5 percent of the time, would you still board that plane? My guess is that you would change your reservations. Even with a 95 percent chance of surviving the flight, you would find the risk of death too high.

Now if you were to assume that the worst case scenarios for climate change or future oil production have only a 5 percent chance of occurring, would that suggest to you that we need to make some vigorous preparations in order to mitigate or avoid altogether those scenarios? Keeping in mind that we can't actually calculate such a probability, this illustration shows how sensitive humans are even to low probability events if the outcomes are severe enough.

My own answer to the question, as you might expect, is a resounding "yes." But then I believe that the chances of the worst happening might actually be a significant multiple of 5 percent in both cases.