FSE director Rosamond L. Naylor and deputy director Walter P. Falcon discuss the food crisis in a lead article in the September/October 2008 issue of Boston Review.

During the eighteen months after January 2007, cereal prices doubled, setting off a world food crisis. In the United States, rising food prices have been a pocketbook annoyance. Most Americans can opt to buy lower-priced sources of calories and proteins and eat out less frequently. But for nearly half of the world’s population—the 2.5 billion people who live on less than $2 per day—rising costs mean fewer meals, smaller portions, stunted children, and higher infant mortality rates. The price explosion has produced, in short, a crisis of food security, defined by the Food and Agriculture Organization (FAO) as the physical and economic access to the food necessary for a healthy and productive life. And it has meant a sharp setback to decades-long efforts to reduce poverty in poor countries.

What we are witnessing is not a natural disaster—a silent tsunami or a perfect storm. . . . [The food crisis] is a man-made catastrophe, and as such must be fixed by people.
-Robert Zoellick, The World Bank (July 1, 2008)

The current situation is quite unlike the food crises of 1966 and 1973. It is not the result of a significant drop in food supply caused by bad weather, pests, or policy changes in the former Soviet Union. Rather, it is fundamentally a demand-driven story of “success.” Rising incomes, especially in China, India, Indonesia, and Brazil, have increased demand for diversified diets that include more meat and vegetable oils. Against this background of growing income and demand, increased global consumption of biofuels and the American and European quest for energy self-sufficiency have added further strains to the agricultural system. At the same time, neglected investments in productivity-improving agricultural technology—along with a weak U.S. dollar, excessive speculation, and misguided government policies in both developed and developing countries—have exacerbated the situation. Climate change also looms ominously over the entire global food system.

In short, an array of agricultural, economic, and political connections among commodities and across nations are now working together to the detriment of the world’s food-insecure people.

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Cereals form the core of the global food system. In 2007 the world produced a record 2,100 million metric tons of grain. Most of these cereals were consumed in the countries in which they were produced. Some 260 million metric tons, or about 15 percent of production, were traded internationally. Food aid was about 6 million metric tons, about 0.3 percent of production. Although only 15 percent of production is traded in global markets, conditions in those markets have a large direct and indirect impact on cereal prices and demand in every country.

A world with oil at $125 per barrel, gasoline at $4 per gallon, and corn at $6 per bushel seemed unthinkable five years ago.

World grain production was exceptionally strong in 2007, and had actually grown in five of the eight years prior to 2007. Despite this success, demand exceeded supply in six of those years. This excess demand was met by drawing down global reserves. When, in 2007, the reserve-to-usage ratio dropped to a near-historic low, buyers and sellers reacted in ways that rapidly pushed up prices. Nonetheless, the current crisis of food security is not a result of some absolute shortage of basic staples. If all the cereals grown in 2007 had magically been spread equally among earth’s 6.6 billion persons and used directly as food, there would have been no crisis. Cereals alone could have supplied everyone with the required amounts of calories and proteins, with about 30 percent left over. (Children would have also needed some concentrated calories and proteins, because of the bulkiness of cereals and their inability to consume sufficient quantities of them.)

Of course, food is not distributed evenly across the globe. Average income levels as well as income inequalities vary by country and are major determinants of access to food. And because cereals and oilseeds can be used in multiple ways, not only for food, competition for these commodities spans many different firms and households. These pressures on supply and price are powerfully exemplified by the case of corn, whose price dramatically affects the broader structure of global food markets.

Corn is quintessentially American. It is the country’s largest crop in terms of area: in 2007, 94 million acres produced a record 330 million metric tons of grain. How is it possible that a record U.S. corn crop was centrally involved with the current high food prices? The answer lies mostly in corn’s versatility. It provides about half of the 18 million metric tons of sweeteners that Americans consume annually, much of it in the ninety-six gallons of beer and soda they drink per capita. Some 46 percent of the crop went to feed livestock to produce the 270 pounds of pork, poultry, and beef the average American consumed in 2007, and about 19 percent went for exports. Ethanol, which had taken only a tiny fraction of corn output a few years earlier, took a full 25 percent.

A world with oil at $125 per barrel, gasoline at $4 per gallon, and corn at $6 per bushel (fifty-six pounds) seemed unthinkable five years ago. A new constellation of market forces has drastically altered price levels and the correlations among them. In particular, the enormous growth in the use of corn for fuel now links corn and gasoline prices in profoundly important ways.

The current corn-petroleum price connections in the United States arguably can be traced to the 2005 environmental regulations to eliminate methyl tertiary butyl ether (MTBE) as a gasoline additive because of environmental and health risks. Corn-based ethanol has since become the preferred additive, offering the same octane ratings and beneficial properties as MTBE. Ethanol is typically used in the form of a 10/90 mixture with gasoline, and consumers pay for this ethanol as they fill their cars with fuel at the pump. As gas prices rise, so does the potential value of corn ethanol. Most of the ethanol now produced—some 6.5 billion gallons from the 139 plants in operation in 2007—was used as an oxygenate for the 142 billion gallons of fuel used by Americans last year.

China imported an incredible 34 million metric tons of soybeans for its pigs, poultry, and farmed-fish sectors and also its expanding urban population.

The sudden burst in demand explains the rapid increase in the portion of the corn crop being used for fuel. That demand might be expected to level off, as the market for additives will largely be supplied by 2009. But the United States is now poised on the brink of a second phase of ethanol use.

Ethanol can also be used in place of gasoline, even though it provides only about two-thirds the energy of gasoline on a volume basis. In other words, rational consumers would pay about 65 percent of the price of gasoline for their ethanol, since their cars would go about 65 percent as far on a tank of fuel. Because ethanol must be shipped and stored separately, only with substantial new infrastructure could ethanol be a large-scale choice for fuel. And cars would require so-called “flex” technology to use fuel containing high percentages of ethanol.

Whether more than 25 percent of the corn crop is used for fuel in the future is critically dependent on the price of oil and also on the politics of biofuels. The latter include mandatory minimum levels of ethanol production and the explicit and implicit subsidies contained in various pieces of agricultural and energy legislation. Senators McCain and Obama both expressed strong support for ethanol in the politically important Iowa caucuses.

The ethanol-production mandate for 2008 is 9 billion gallons. That number will grow to 15 billion gallons in 2015 and 36 billion (total renewables) in 2022. Rescinding these increased mandates would likely stabilize demand for corn-based ethanol. (High enough oil prices, coupled with low enough corn prices could, of course, make ethanol economical even at 65 percent of the efficiency of gasoline.) But if the higher mandates are indeed imposed, then an increasing portion of the U.S. corn crop will be fed to cars, rather than to animals or people. Consumers of corn tortillas in poor countries will find themselves increasingly in competition with S.U.V. owners in rich countries. At the margins that matter, corn prices would be linked to gasoline prices, and the entire price structure for cereals would adjust accordingly.

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In addition to mandates, current legislation also provides for credits (subsidy) of $0.51 per gallon to blenders and a $0.54 per gallon tax on imported ethanol plus a 2.5 percent additional duty on its value. Thus, in the United States, the economics of ethanol are fundamentally linked to specific legislative provisions. And what Congress has given, Congress can also take away.

Whether the mandates should be waived, the tariff on imported ethanol dropped, and the blender credits modified are all matters of intense debate. Corn farmers and investors in some 200 bio-refineries (on-line or under construction) are pushing for higher mandates; others believe that corn-based ethanol, however well-intended, is the wrong way to promote U.S. energy independence because of ethanol’s effect on food prices. The stakes are huge. The United States is by far the largest corn exporter in the world. Further reductions in exports resulting from greater ethanol use would greatly amplify price instability in corn and other global food markets.

Many technical experts have argued that corn is not the appropriatecommodity for use in biofuels. However, industrial-scale production from sources other than corn (and sugar) is as yet unproven. Although the chemistry for alternative feedstocks has been developed, credit-worthy business plans, including supply chains, have not. Proponents of other crops tend to overlook the extensive experience the corn industry has had with enzyme technologies that derive from its twenty-five-year history making corn sweeteners. As a consequence, and for better or worse, larger biofuel mandates mean a corn-dominated ethanol industry for at least the next five years, accompanied by the inevitable price pressures on food.

Very poor consumers in low-income countries rarely consume meat of any sort, and for them [cereal] cutbacks may be an encouraging sign: their best hope is more grain available on world markets.

An additional oil-corn connection is also important for farmers. The high oil prices that help drive the demand for biofuels also raise the energy costs of growing corn. Corn prices that have risen from less than $3 per bushel in 2005 to over $7 per bushel in 2008 have been a boon to farmers. Yet farmers (sometimes on their way to the bank!) are quick to point out that high oil prices are strongly and negatively affecting their businesses. Iowa State University maintains farm records that indicate the total cost for growing an acre of corn was $450 in 2005. By 2008, these costs had risen to more than $600 per acre. Seed and chemical costs have accelerated sharply and now constitute some 45 percent of total costs, including land-rental charges. Nonetheless, with rising yields and corn prices that have more than doubled, corn-based farm enterprises seem clearly better off in 2008 than in 2005.

Ethanol, then, is the beginning of the corn story, but far from the end of it. Corn’s other linkages to soybeans, wheat, and meat illustrate why it is the keystone in the food system. Midwestern farmers produced the record corn crop in 2007 in anticipation of high prices. But the focus on corn implied a series of acreage decisions that reverberated around the world. The more than 15-million-acre increase in corn planting came mainly at the expense of soybeans, which saw a decline of twelve million acres, or 16 percent of total soybean acreage. The United States consequently played a reduced role as a soybean exporter. Brazil, another major exporter, picked up some of the slack. Nonetheless the world’s production of soybeans declined in 2007 while three of the four largest countries in the world—China, India, and Indonesia—registered very strong economic growth. China imported an incredible 34 million metric tons of soybeans (45 percent of total world trade), which it used to produce soybean meal for some of its 600 million pigs and its large and rapidly growing poultry and farmed-fish sectors and also vegetable oil for its expanding urban population. In India and Indonesia, oilseed demand was driven less by livestock-feed requirements and much more by human demand for vegetable oils. India, for example, is one of the world’s largest users and importers of cooking oils.

The tightened supply of vegetable oils and the accelerated Asian demand for oilseed crops—soybeans, rapeseed, and palm oil—explain some of the price increases. For example, during the period July 2006 to June 2008, oil palm prices tripled. But as with corn, the use of oilseed crops in the production of fuel—about 7 percent of global vegetable oil production went to biodiesel—was another significant factor. Most of the latter was driven by biodiesel policies in Europe, using rapeseed (canola) as the main feedstock.

Prospects for lowered vegetable oil prices in the short run, like those for corn, are not obvious. U.S. farmers rebalanced their plantings in 2008, in part because of a late spring and in part because soybean prices had risen to $13 per bushel, making it again an economically attractive crop for farmers. Brazil continues to expand soybean acreage in several states as well, but, interestingly, the most likely sources of greatly increased vegetable oil supplies will come from Indonesia and Malaysia. Palm oil has long been among the cheapest sources of vegetable oil, and Indonesia has been planning a major expansion of area devoted to oil palm production. This expansion is complicated, however, by the potentially high environmental costs of clearing tropical forests, and because palm trees take up to three years before they yield economical harvests. Indonesia had originally planned the oil-palm expansion for biodiesel production for European and domestic fleets; however, the food value of vegetable oils has been so high that it does not pay to make biodiesel. So the expansion goes forward, but with food in mind more than fuel. As a consequence, supply/demand balances for oil palm may change appreciably in five years, although it is not at all clear that near-term supplies of vegetable oil can be accelerated very much.

In addition to fuel and oils, wheat prices, which went off the charts in 2008, are closely tied to the corn economy. Corn and wheat are both used by the animal-feed industry, and, in some years, one quarter of the wheat crop is fed directly to animals. As the cost of using corn for feed rose in 2007, producers of livestock products looked to other grains. Since the feed value of wheat is slightly higher than that of corn, it is not surprising that their prices initially moved in tandem as livestock producers moved among markets to find the cheapest rations for their animals.

The wheat market has several distinguishing features. For example, soft wheat is used primarily for pastries (and feed), whereas hard wheat is preferred for bread. In the United States, the market for hard-red spring wheat was especially volatile. Prices doubled between February 2007 and February 2008, although new supplies from this year’s harvest have begun to ease prices.

Wheat contributes less than 10 percent of the cost of a typical loaf of bread in the United States. Nevertheless, its sharp price increase triggered broad increases in the prices of baked goods to cover the rising costs of raw materials, packaging, and distribution. For poor consumers in developing countries who get many of their calories from wheat products, the rising prices of bread, wheat tortillas, chapatis, and naan had immediate and profound nutritional consequences.

Two other disruptive forces were at work on the wheat crop overseas. The continuing drought in Australia, a major wheat-exporting country, was one of the few instances of supply failure in 2007. Exports from Australia fell by half, and since Australia traditionally supplies about 15 percent of global wheat exports, the drop added to rising bread prices around the world.

Second, one of the most ominous issues for the longer-run is the outbreak of a new wheat rust, Ug99. As the name suggests, this rust was discovered in Uganda in 1999, and its spores then spread by wind into North Africa and the Middle East. The rust has serious consequences for wheat yields. While actual losses to date have been rather small, future losses could be immense. Virtually none of the world’s wheat varieties are resistant to the rust. Especially worrisome is its spread into South Asia where tens of millions of poor people depend directly on wheat for the bulk of their calories. The perception of a Ug99 threat has already had significant food-policy consequences in India (a point we return to later).

Finally, livestock products are part of this story about connections among commodities. In part, they help to push prices up. The growing pork sector in China, for example, exerted substantial upward pressures on world soybean markets. Most livestock producers in the United States and Europe, however, struggled to accommodate high-priced corn and other feeds. (One important exception took the form of distillers grains, a co-product of ethanol production. This residual is high in protein, and, if hauled in “wet” form directly from plants to dairies and feedlots, it provides cost advantages significant enough to transform feed rations, and potentially, to alter the geography of beef feedlots in the United States.)

In developed nations such as the United States, shrinking margins on livestock production are creating cutbacks. For example cattle have long gestation and maturation periods, and many cowherds are now being culled. Available meat on the market will increase in the short run, but a smaller supply of meat will eventually push prices up. Such price hikes will be felt mainly by middle- to upper-income households. Very poor consumers in low-income countries rarely consume meat of any sort, and for them the cutbacks may be an encouraging sign: their best hope is more grain available on world markets, rather than used as livestock feed or fuel in rich countries.

Governments that cannot provide their constituents food at affordable prices are often overthrown.

Much more could (and should) be said about individual commodities and about how recent macroeconomic trends have influenced the structures of markets. The expanded role of large hedge funds in commodity markets has increased price volatility for agricultural goods such as corn and wheat. For example, the number of corn contracts traded on the Chicago exchange has grown from 1 million in January 2002 to nearly 6 million in January 2008, leading some observers to conclude that there has been excessive financial speculation in these markets. The dollar has also depreciated rapidly during the past several years, virtually mirroring the rise in the price of oil. The dollar/euro price ratio is now only about 55 percent of what it was in 2000. If all commodity prices were quoted in euros, the price rises we have witnessed over the last two years would have been less steep. This obvious but important point underscores the central role that exchange rates play in both the world-food and oil economies.

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The story thus far has focused on commodities and their market connections. But food is much more than an economic commodity. It is also a political commodity and the foundation for human survival. Governments that cannot provide their constituents food at affordable prices are often overthrown. And for those that remain in power during times of high prices, particularly in poor countries, the challenge of feeding a growing hungry population looms. Food riots, politics, and new policies have all been on the forefront of the current crisis. As of April 2008, eighteen countries had reported food riots, from Bangladesh to Egypt, Haiti to Mexico, Uzbekistan to Senegal. About the same number of countries, including India, Argentina, and Vietnam, erected trade barriers on food to protect their domestic constituents.

Governments have reacted to the crisis in different ways, and these policy responses can have far-reaching effects in the world food economy. India, in particular, played a pivotal role in shaping the current crisis when its national food authority placed restrictions on staple cereal exports in October 2007. Higher prices in the international wheat market, coupled with the escalating threat of Ug99 and poor weather conditions within India’s main cereal producing regions, triggered the new policy. Faced with less domestic wheat for public distribution and costly wheat imports, the government moved to guarantee supplies of its other main staple crop, rice, for its constituency. Bans were placed on exports of non-basmati varieties of rice, wheat, and wheat flour, and wheat imports were restricted for disease control. The move was geared in part to electoral politics—the upcoming 2009 elections—yet it had echoes, linking rice to the seemingly disconnected biofuels sector in the global commodity market.

Rice has historically carried great political weight in Asia. Unlike wheat and corn, which are much more freely traded in international markets, rice is consumed largely in countries where it is produced, and is exchanged to a great extent through government-to-government contracts. Although private sector investment and trade have expanded in recent decades, rice trade accounts for only 6 to 7 percent of total production, and Asian governments continue to keep a close eye on prices and availability for the sake of political stability.

Given India’s role as the world’s second largest rice exporter—in recent years supplying about five million metric tons or one-sixth of the world market—its export ban sent a shock to the system. The international rice price immediately jumped from about $300 to $400 per ton for standard grade rice and continued to soar to unprecedented levels as other countries reacted to the change. Shortly after India placed restrictions on rice exports, Vietnam, China, Cambodia, Indonesia, and Egypt followed suit. Meanwhile the Philippines—the world’s largest importer of rice—began to place open tenders in the world market (bids for imports at any price) in April 2008 in a desperate act to secure adequate stocks of rice for its citizens. At this point, the price of rice rose to $850 per ton, and soon surpassed $1,000 per ton in May with additional tenders. But still the Philippines struggled to secure sufficient rice at even this high price.

Other countries fared even worse. Bangladesh suffered a major tropical storm in November 2007 that killed 3,400 people, left millions homeless, and demolished large tracts of agricultural land. The country lacked the financial reserves needed to import rice, even though India made an exception to sell limited quantities of non-basmati rice at $650 per ton. Similarly, Sub-Saharan African countries, which import on average 40 percent of their rice consumption (in southern African countries the number is as high as 80 percent), had no access to their usual supplies of Indian rice, and could neither find nor afford other sources of rice in the market. Reduced cereal imports triggered price increases in regionally grown crops such as millet and sorghum. Although farmers who produce a surplus of those crops have benefited, the poorest households that consume more than they produce have had to go with less, and have no doubt suffered increased malnutrition.

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We are only beginning to understand the toll of price increases on the world’s least developed and low-income food-deficit countries, many of which are in Sub-Saharan Africa. The Food and Agriculture Organization estimates that the 2008 food-import bill for these countries will rise up to 40 percent above 2007 costs, after rising 30 and 37 percent, respectively, the previous two years. The cost of annual food imports for these regions is now four times what it was at the beginning of the decade, even though import volumes have declined. The World Bank predicts that with these rising costs, declining imports, and increasing domestic prices of agricultural commodities, millions of people will fall quickly into chronic hunger.

Cameroon has experienced some of the worst strife as a result of high consumer prices. Roughly 1,600 protesters were arrested and 200 were sentenced in the first few weeks after riots broke out in February 2008. In an attempt to extend his quarter-century run in office, President Paul Biya’s government not only clamped down on riots but also cut import duties and pledged to increase agricultural investments and public-sector wages.

In Argentina, a different form of food riot broke out against the newly elected President Cristina Fernandez de Kirchner when she raised export taxes on soybeans and implemented new taxes on wheat and other farm exports in order to hold domestic food prices down. Four months of nationwide protests by farm groups eventually persuaded the government to revoke these tax increases in mid-July, but political tension remains.

Governments thus walk a thin line between consumer- and producer-oriented incentives. Export restrictions in times of high world prices may help consumers, but they prevent agricultural producers from realizing economic gains. Interventions of this sort may help in the short-term, but they are extremely hard to retract. For example, many Asian countries implemented trade restrictions on rice in the mid-1970s in response to high prices, short supplies, and political unrest, and these policies remained in effect for over two decades. It is clear that policies designed to stabilize domestic prices often destabilize international ones. And advocating international cooperation as a solution is naïve, as evidenced by the repeated (and recent) failure of World Trade Organization negotiations over the topic of coordinated agricultural policies.

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The international community is addressing the mounting crisis in different ways. The United Nations World Food Program (WFP) received $2.6 billion in contributions for the first six months of 2008—almost as much as it received for the full year in 2007, but still below the amount needed to feed the growing number of starving people worldwide. Food aid deliveries in 2007 fell to their lowest levels since 1961, and the outlook for 2008 remains sobering.

The United States has earmarked about $2 billion for food aid through its Public Law 480 program, more than any other country. However, only about 40 percent of this amount is spent on food; the rest goes to transportation and administration to meet Congressional mandates that U.S.-produced commodities committed as aid must be shipped to their destinations on U.S.-flagged vessels. With energy prices soaring, the cost of shipping food aid over long distances has increased by more than 50 percent during the past year, and the actual amount of food aid has decreased. An increasingly embarrassing cycle has evolved whereby U.S. food aid is reduced when costs are high and food is most needed by the poor (see U.S. Food Aid Shipments and Grain Prices, 1980-2007).

The food system is indeed global, yet the principal actors are national governments, not international agencies. The latter can help with solutions, but fundamental improvements require more enlightened national policies.

Canada and the European Union, meanwhile, have followed the WFP strategy by providing food aid in the form of cash to relief agencies in needy countries. The agencies then purchase supplies regionally, a practice that reduces transportation costs and boosts local agricultural markets. A proposal to endorse this strategy in the United States fell flat in the Congress and was countered in the Senate by a bill that would spend $60 million over four years to study the idea.

Food assistance, however, is a band-aid, not a cure, especially because it may provide major disincentives for agricultural development in poor regions. Ironically, the United States, the largest donor of food aid, is one of the smallest donors (relative to GDP) of international development aid. Agricultural development has been largely eliminated from the agenda of the U.S. Agency for International Development in recent decades and the agency has lost most of its agricultural expertise. (When polled, Americans believe that up to one-quarter of the U.S. federal budget is spent on foreign aid, when in fact the share is less than 1 percent. If voters had the numbers in better perspective, perhaps they would push for an increase in assistance.)

Over the longer run, only sustained growth in agricultural productivity can reduce the vulnerability of all countries to the chaos created by food crises. This conclusion is especially true for poor countries where over half of the workforce derive their principal income from agriculture, and the farm sector accounts for a sizeable share of GDP. But even rich countries such as the United States require continued investments in agricultural productivity—a point made clear by the fact that a large share of the corn crop now goes to fuel American gas tanks. Unfortunately, growth in public-sector investments in agricultural productivity research has slowed in many countries, rich and poor, although China, India, and Brazil have been clear exceptions. Private-sector agricultural investments have been more robust but have been focused mainly in rich countries and have resulted in the proliferation of biotechnology patents that have kept innovation largely out of public hands. The gap between the “haves” and “have-nots” of agricultural research is thus widening.

This pattern of agricultural investments is a key culprit in the current crisis, and it will continue to create serious problems for consumers worldwide if crop-based biofuel use expands further. Globally, agricultural productivity growth (2 percent per year from 1980-2004) is barely outpacing population growth (1.6 percent per annum). And even this minimal progress has not been evenly spread. Asia, and in particular China, has dominated the positive trend, while Sub-Saharan Africa has faltered with its grain yield at one-quarter that of East Asia’s 1.6 tons per acre. (The industrialized world produced 2.4 tons per acre in 2004). Fortunately, bilateral donors are now taking an increasing interest in Sub-Saharan Africa, as are several important private foundations (a point discussed more thoroughly in the May / June 2008 issue of Boston Review).

The World Bank is in a position to reinvigorate agricultural development, both financially and symbolically. What is it currently doing to help? Fortunately, Robert Zoellick is providing international leadership on global agriculture that has long been overdue at the Bank. Allocations for agricultural development are now up; for example, the Bank has pledged to double agricultural lending in Africa from $400 million to $800 million in 2009. Yet the steady decline in the Bank’s investments in agricultural research and development, cuts in its technical staff on agricultural development, and reductions in overall allocations to agriculture (from about 25 percent of total Bank lending in the mid-1980s to 10 percent in 2000) have done little to bolster infrastructure and agricultural capacity in the countries worst hit by the crisis. The non-trivial issues of corruption and poor governance in several African countries are partially to blame for this decline: Bank leaders have argued for funding cuts on the grounds that money given directly to governments for agricultural development never reaches targeted projects. But the Bank’s leadership (prior to Paul Wolfowitz and now Zoellick) also lacked vision regarding the importance of agricultural development. The World Bank does not stand alone in this neglect; for example, the Asian Development Bank recently decided to omit agriculture from its lending portfolio. It is time for the international community of aid institutions and national governments to change direction on this issue.

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It is one thing to commit to the new forms of food aid and additional investments in crop productivity needed to work through the current food crisis. It is quite another to plan for what will be needed to keep the world out of a perpetual food crisis in the face of global climate change. With increasing temperatures, rising sea levels, changing precipitation patterns, new pest and pathogen pressures, and reduced soil moisture in many regions, the impact on the agricultural sector is likely to be especially severe. How can the international community grapple with the present challenges in the world food economy and still keep agricultural productivity ahead of a changing climate?

Predicting climate conditions decades in advance involves many uncertainties. Nonetheless, some twenty global climate models (also known as general circulation models) considered by the Intergovernmental Panel on Climate Change broadly agree on three points. First, all regions will become warmer. The marginal change in temperature will be greater at higher latitudes, although tropical regions are likely to be more sensitive to projected temperature changes because they have experienced less variation in the past. Second, soil moisture is expected to decline with higher temperatures and increased rates of evapotranspiration in many sub-tropical areas. These factors will lead to sustained drought conditions in some areas and flooding in others where rainfall intensity increases but soil moisture decreases. And third, sea levels will rise globally with thermal expansion of the oceans and glacial melt, with especially devastating consequences for small island states and for low-lying and highly populated regions.

Large areas of Bangladesh already flood on an annual basis and are likely to be submerged completely in the future. Moreover, the rapid melting of the Himalayan glaciers, which regulate the perennial flow in large rivers such as the Indus, Ganges, Brahmaputra, and Mekong, is expected to cause these river systems to experience shorter and more intense seasonal flow and more flooding, thus affecting large tracts of agricultural land.

Increased temperature and drought will pose large risks to food insecure populations, particularly in Sub-Saharan Africa and South Asia. Research at the University of Washington and Stanford University predicts that average growing season temperatures throughout the tropics and sub-tropics will rise above the bounds of historical extremes by the end of the century. Yield losses are expected be as high as 30-50 percent for corn in southern Africa if major adaptation measures are not pursued. Africa as a whole is particularly vulnerable to climate change since over half of the economic activity in most of the continent’s poorest countries is derived from agriculture, and over 90 percent of the farming is on rain-fed lands.

Given the inevitable changes in climate over the coming decades, what forms of adaptation are needed, and how can the international community help?

One strategy is based on developing new crop varieties resistant to climate-induced stresses (heat, drought, new pests and pathogens). Introducing these climate-tolerant traits in crops will require continued collection, evaluation, deployment, and conservation of diverse crop genetic material, because the diversity of genetic resources is the building block for crop breeding. In the absence of such efforts, even temperate agricultural systems will suffer yield losses with large increases in seasonal temperature.

Misguided domestic policies [in the U.S. and abroad] are also driving the crisis.

Additional adaptation strategies include investments in irrigation and transportation infrastructure and the design of climate information and insurance networks for farmers. The creation of non-farm employment will also help reduce climate change impacts in cases like the Sahel (the northern section of Africa below the Sahara desert and above the tropical zone) where agriculture may simply be unviable in the future.

All of these strategies involve large-scale investments in “public goods” that the private sector cannot be expected to fill. The U.S. government, for one, needs to recognize the global consequences of climate change and contribute to such public investments. Other governing bodies (e.g., those of Canada, the European Union, and East Asian countries) and international development organizations also need to play a greater role. Promoting pro-poor investments in agricultural productivity research and implementation—not allowing such investments to fall off the agenda—is the key to food security in the face of climate change. The future will look very much like a continuation of the current crisis—or indeed much worse—without such investments.

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The complexity of the food crisis across commodities, space, and time makes it difficult to give a precise statement of causes. That said, the direct and indirect effects of increased ethanol production in response to rising oil prices seem to have pushed an already tight food system (with weak investment in innovation) over the edge. The U.S. Department of Agriculture’s assessment that biofuels were 3 percent of the problem completely lacks credibility, and the International Food Policy Research Center’s estimate of 30 percent may also be too low. What happens to future corn and vegetable oil prices, and therefore to the entire structure of food prices, is dependent primarily on the price of oil and on whether the new biofuel mandates for ethanol in the United States and biodiesel in Europe are imposed or rescinded.

The price of oil, in particular, is a fundamental factor in the overall equation. In a world of $50-per-barrel oil, growth in biofuels would have been more limited, with a much smaller spillover onto food prices. But the links that have emerged between agricultural and energy sectors will shape future investments and the well-being of farmers and consumers worldwide.

Misguided domestic policies serving particular groups of constituents in a wide range of countries are also driving the crisis. Export bans on food in response to populist pressures are likely to yield small and short-lived gains, while producing large and long-term damage to low-income consumers in other countries. The food system is indeed global, yet the principal actors are national governments, not international agencies. The latter can help with solutions, but fundamental improvements require more enlightened national policies.

As Zoellick’s passage at the beginning of this essay implies, much of the current crisis could have been avoided and can be fixed over time. Individuals, national governments, and international institutions took agriculture for granted for twenty years, and their neglect has now caught up with the world. Fortunately, high food prices and the resulting political upheaval have induced national governments and such international institutions as the World Bank to pledge greater investments in agricultural development. Unfortunately, these pledges only came as a response to widespread malnutrition among the world’s poorest households.

In response to rising demand and higher prices, some new sources of supply are emerging, including soybean expansion in Brazil and oil palm expansion in Indonesia. However, the environmental impacts of such expansion, particularly when it involves clearing tropical rainforests, are potentially serious. Similarly, efforts to increase crop yields in existing agricultural areas are leading to greater fertilizer inputs and losses to the surrounding environment. The trade-offs between agricultural productivity and environmental sustainability, particularly in an era of climate change, appear to be more extreme than ever before.

The current food crisis has different origins than previous global food crises, and will require different solutions. It also differs from famines in isolated geographic areas for which food aid and other palliatives can provide quick fixes. The present situation is instead reflected in higher infant mortality and poverty rates over a much wider geography. Given the underlying pressures of growing population, increasing global incomes, and the search for oil substitutes, leaders in both the public and private sectors in developed and developing nations need to be serious about expanded agricultural investments and improved food policies. Otherwise, the current situation will only get worse, especially for the 40 percent of the world’s population that is already living so close to the edge.

One of Stanford's many remarkable attractions is the Rodin sculpture garden. And perhaps the most extraordinary Rodin sculpture is his Gates of Hell, inspired by Dante’s “Inferno.” In his Divine Comedy, Dante tells us that the inscription over the Gates of Hell is “abandon all hope, ye who enter here.”

For hundreds of millions of people, that sad admonition belongs over their workplace. Abandon all hope … and not only your hope. Abandon your health and your right to associate; and don’t expect to be paid much.

That problem — the terrible unfairness of so many people having to sacrifice so much simply to make a living — provides the focus for the Just Supply Chains project of the Program on Global Justice (PGJ). Because of resistance to such working conditions, and pressure from movements against sweatshops, many companies have adopted codes of conduct for themselves and their suppliers over the past decade. But studies of these “private voluntary codes” have generated considerable skepticism about their effectiveness in improving compensation, working conditions, and rights of association. The aim of the project is to explore how codes and monitoring for compliance might be improved and also to consider some alternatives to private voluntary codes for regulating global labor markets.

PGJ has held two meetings, with participation from academics (from Stanford and elsewhere), NGOs (Fair Labor Association, Ethical Trading Initiative, Workers Rights Consortium), companies (Ford, Nike, Gap, Coca-Cola, Apple, HP, and Costco), and unions (including the International Textile, Garment and Leather Workers’ Federation). Through wide-ranging discussions, participants identified a set of research topics: whether consumers are willing to pay more for goods produced under decent conditions, whether there is a “business case” for improved labor standards, what the effects on labor standards will be of current reorganizations of supply chains in response to growing transportation costs, and how national labor-inspection systems might work better under conditions of globalized production. The next step is to establish working groups, combining academics and practitioners, to refine these topics and start to answer open questions about how to promote more decent working conditions in global supply chains.

In addition to the Just Supply Chains project, PGJ has been working to launch some other interdisciplinary, policy-oriented research initiatives. Along with colleagues in the School of Earth Sciences, the Interdisciplinary Program on Environment and Resources, FSI’s Center on Food Security and the Environment (FSE), the Ethics Center, and the Woods Institute, PGJ is a partner in an NSF proposal aimed at establishing a training program for graduate students in social sciences and climate science on the differential vulnerability of human-environment systems to climate change, the ethical implications of such differential vulnerability, and the role of institutions in shaping the adaptive capacity of communities.

PGJ is also working on a project on Liberation Technology, bringing together social scientists with researchers in applied technology interested in economically, socially, and politically constructive uses of new information technologies (to enable producers to learn more about markets, citizens to monitor elections and hold officials accountable, and public service providers to identify where those services are most needed). Finally, the Program on Global Justice is launching a Human Rights project, with support from the Presidential Fund for Innovation in International Studies, for historical and comparative research on the roles of political mobilization and legal protections in securing human rights.

The recent run-up in global food prices is wreaking well-documented havoc throughout the developing world. As prices for major food staples have doubled or tripled over the past 12–18 months, food riots have broken out in more than a dozen countries, and the president of the World Bank has suggested that the rise in food prices will push 100 million people below the poverty line, undoing decades of economic growth almost overnight. FSE’s Peter Timmer calculates that high rice prices alone could cause the premature death of 10 million people in Asia. It is difficult to imagine an issue of more pressing global importance today.

Ongoing FSE research is focusing on which agricultural adaptations should be prioritized, for what crops, and in what locations.Getting prices down out of the stratosphere of course involves understanding what got them there in the first place. And while there is much disagreement over the primacy of different factors, most analysis seems to agree on three important contributors. The first is the recent expansion of biofuels production in the United States and the European Union, which has diverted corn and other grains from traditional feed and food markets into the production of fuel. Turning grain into fuel has been made increasingly profitable by the high and rising price of oil — the second factor in rising food prices — which, in addition to increasing demand for petroleum alternatives, has raised the production costs of farmers, raising transport costs and increasing the price of farm inputs like diesel and fertilizer. Finally, the agricultural and trade policies of various governments around the world have added to the problem, particularly as the nervous governments of a few key Asian rice exporters have attempted to stabilize domestic food supplies by restricting exports, helping send rice prices through the roof.

As these factors have come together in recent months, underwritten by longer-run trends of rising incomes and food demand in the developing world, many analysts have reached for the appealing metaphor of the “perfect storm,” invoking a situation in which everything that could have gone wrong did. But are things really as bad as they might have been?

Perhaps not. The recent spike in food prices saw only a half-hearted contribution from one of the main culprits in past short-run price swings: weather. A bad weather year that harms production in important producing regions often sends prices soaring. One of the best examples is an extreme el Nino event of the sort that occurs roughly once a decade, during which drought cripples rice production throughout much of Southeast Asia. Earlier work by FSE researchers showed that global rice prices can rise 50 percent or more as a result of extreme el Nino events.

The recent food price spikes were certainly not without influence from the weather. For instance, the much-cited long-run drought in Australia — traditionally a large wheat exporter — certainly has put upward pressure on global wheat prices, and there were modest weather-related declines in yield in other parts of the world (such as Russia and Ukraine). On the whole, however, supply disruptions over the past few years have been minor, and favorable weather is expected to result in record harvests for many large food- and feedproducing nations in coming months. But agricultural markets have hardly responded to this good news and prices remain at or near all time highs.

What then might a perfect storm actually look like? Add the effects of climate change to the current mix of biofuels, high oil prices, and trade restrictions, and the recent rise in food prices could be a small measure of things to come. Research is expanding rapidly in the field of climate change impacts, and researchers at FSE are at the forefront of understanding the implications of climate change for humanity’s ability to feed itself. The conventional wisdom has long been that a modest amount of climate change could actually be beneficial for global agriculture, with warming temperatures perhaps lengthening the growing season and expanding the areas in which we can grow crops. But recent work by researchers at FSE and others suggests that climate change could hurt agriculture immediately and, in some places, severely.

The rise in food prices will push 100 million people below the poverty line, undoing decades of economic growth almost overnight. High rice prices alone could cause the premature death of 10 million people in Asia.In a paper published in the January issue of the journal Science, an FSE research team led by David Lobell examined the likely effects of climate change on agriculture throughout the developing world. Combining data from a suite of climate models that simulate future changes in rainfall and precipitation with a host of historical data on climate and agricultural production, Lobell and colleagues found that by 2030 the production of staple crops in some of the poorest parts of sub- Saharan Africa could decline by 30 percent or more in the absence of adaptation, with somewhat smaller declines predicted for much of South and Southeast Asia. Production declines of this magnitude represent monumental declines in welfare for some of the poorest people on earth, the same populations currently being buffeted by high food prices.

Unfortunately, new evidence also questions the ability of higher latitude countries such as the United States to cover the production shortfalls in the developing world. Again contrary to perceived wisdom, this new work shows that climate change could immediately harm agriculture in this country and other large exporting regions, further constraining global supply. Such a climate-induced supply shock, in the context of the recent developments on the demand side for food, could give us a true perfect storm for high food prices. Recent price spikes might only pale in comparison.

Given the imminence and magnitude of the production decline possible and the attendant possibilities for rising food prices and hunger throughout the developing world, FSE researchers are turning from predicting impacts to assessing adaptation options. In particular, ongoing research is focusing on which agricultural adaptations should be prioritized, for what crops, and in what locations. To that end, FSE researchers recently received a $350,000 grant from the Rockefeller Foundation — one of the most important funders of agricultural research — to help the foundation prioritize agricultural investments in sub-Saharan Africa in the face of climate change. With the potentially severe impacts of climate change already on our doorstep, there is little time to lose.

This past autumn, the Freeman Spogli Institute ( FSI ) in conjunction with the Woods Institute for the Environment launched a program on Food Security and the Environment (FSE) to address the deficit in academia and, on a larger scale, the global dialogue surrounding the critical issues of food security, poverty, and environmental degradation.

“Hunger is the silent killer and moral outrage of our time; however, there are few university programs in the United States designed to study and solve the problem of global food insecurity,” states program director Rosamond L. Naylor. “FSE’s dual affiliation with FSI and Stanford’s new Woods Institute for the Environment position it well to make significant steps in this area.”

Through a focused research portfolio and an interdisciplinary team of scholars led by Naylor and Center for Environmental Science and Policy (CESP) co-director Walter P. Falcon, FSE aims to design new approaches to solve these persistent problems, expand higher education on food security and the environment at Stanford, and provide direct policy outreach.

Productive food systems and their environmental consequences form the core of the program. Fundamentally, the FSE program seeks to understand the food security issues that are of paramount interest to poor countries, the food diversification challenges that are a focus of middle-income nations, and the food safety and subsidy concerns prominent in richer nations.

CHRONIC HUNGER IN A TIME OF PROSPERITY

Although the world’s supply of basic foods has doubled over the past century, roughly 850 million people (12 percent of the world’s population) suffer from chronic hunger. Food insecurity deaths during the past 20 years outnumber war deaths by a factor of at least 5 to 1. Food insecurity is particularly widespread in agricultural regions where resource scarcity and environmental degradation constrain productivity and income growth.

FSE is currently assessing the impacts of climate variability on food security in Asian rice economies. This ongoing project combines the expertise of atmospheric scientists, agricultural economists, and policy analysts to understand and mitigate the adverse effects of El Niño-related climate variability on rice production and food security. As a consequence of Falcon and Naylor’s long-standing roles as policy advisors in Indonesia, models developed through this project have already been embedded into analytical units within Indonesia’s Ministries of Agriculture, Planning, and Finance. “With such forecasts in hand, the relevant government agencies are much better equipped to mitigate the negative consequences of El Niño events on incomes and food security in the Indonesian countryside,” explain Falcon and Naylor.

FOOD DIVERSIFICATION AND INTENSIFICATION

With rapid income growth, urbanization, and population growth in developing economies, priorities shift from food security to the diversification of agricultural production and consumption. “Meat production is projected to double by 2020,” states Harold Mooney, CESP senior fellow and an author of the Millennium Ecosystem Assessment. As a result, land once used to provide grains for humans now provides feed for hogs and poultry.

These trends will have major consequences for the global environment—affecting the quality of the atmosphere, water, and soil due to nutrient overloads; impacting marine fisheries both locally and globally through fish meal use; and threatening human health, as, for example, through excessive use of antibiotics.

An FSE project is analyzing the impact of intensive livestock production and assessing the environmental effects to gain a better understanding of the true costs of this resource-intensive system. A product of this work recently appeared as a Policy Forum piece in the December 9, 2005, issue of Science titled "Losing the Links Between Livestock and Land."

Factors contributing to the global growth of livestock systems, lead author Naylor notes, are declining feed-grain prices, relatively inexpensive transportation costs, and trade liberalization. “But many of the true costs remain largely unaccounted for,” she says, including destruction of forests and grasslands to provide farmland for feed crops destined not for humans but for livestock; utilization of large quantities of freshwater; and nitrogen losses from croplands and animal manure.

Naylor and her research team are seeking better ways to track all costs of livestock production, especially hidden costs of ecosystem degradation and destruction. “What is needed is a re-coupling of crop and livestock systems,” Naylor says, “if not physically, then through pricing and other policy mechanisms that reflect social costs of resource use and ecological abuse.” Such policies “should not significantly compromise the improving diets of developing countries, nor should they prohibit trade,” Naylor adds. Instead, they should “focus on regulatory and incentive-based tools to encourage livestock and feed producers to internalize pollution costs, minimize nutrient run-off, and pay the true price of water.”

LOOKING AHEAD

The future of the program on Food Security and the Environment looks bright and expansive. Building on existing research at Stanford, researchers are identifying avenues in the world’s least developed countries to enhance orphan crop production— crops with little international trade and investment, but high local value for food and nutrition security. This work seeks to identify advanced genetic and genomic strategies, and natural resource management initiatives, to improve orphan crop yields, enhance crop diversity, and increase rural incomes through orphan crop production.

Another priority research area is development of biofuels. As countries seek energy self-reliance and look for alternatives to food and feed subsidies under World Trade Organization (WTO) rules, the conversion of corn, sugar, and soybeans to ethanol and other energy sources becomes more attractive. New extraction methods are making the technology more efficient, and high crude oil prices are fundamentally changing the economics of biomass energy conversion. A large switch by key export food and feed suppliers, such as the United States and Brazil, to biofuels could fundamentally alter export prices, and hence the world food and feed situation. A team of FSE researchers will assess the true costs of these conversions.

The FSE program recently received a grant through the Presidential Fund for Innovation in International Studies to initiate new research activities. One project links ongoing research at Stanford on the environmental and resource costs of industrial livestock production and trade to assess the extent of Brazil’s rainforest destruction for soybean production. “Tens of millions of hectares of native grassland and rainforest are currently being cleared for soybean production to supply the global industrial livestock sector,” says Naylor. An interdisciplinary team will examine strategies to achieve an appropriate balance between agricultural commodity trade, production practices, and conservation in Brazil’s rainforest states.

“I’m extremely pleased to see the rapid growth of FSE and am encouraged by the recent support provided through the new Presidential Fund,” states Naylor. “It enables the program to engage faculty members from economics, political science, biology, civil and environmental engineering, earth sciences, and medicine—as well as graduate students throughout the university—in a set of collaborative research activities that could significantly improve human well-being and the quality of the environment.”

This past autumn the Freeman Spogli Institute for International Studies (FSI) in conjunction with the Woods Institute for the Environment launched a program on Food Security and the Environment (FSE) to address the deficit in academia and, on a larger scale, the global dialogue surrounding the critical issues of food security, poverty, and environmental degradation.

"Hunger is the silent killer and moral outrage of our time; however, there are few university programs in the United States designed to study and solve the problem of global food insecurity," states program director Rosamond L. Naylor. "FSE's dual affiliation with FSI and the new Stanford Institute for the Environment position it well to make significant steps in this area."

Through a focused research portfolio and an interdisciplinary team of scholars led by Naylor and CESP (Center for Environmental Science and Policy) co-director Walter P. Falcon, FSE aims to design new approaches to solve these persistent and under-prioritized problems, expand higher education on food security and the environment at Stanford, and provide direct policy outreach.

Productive food systems and their environmental consequences are at the core of the program. While many of these systems are global in character, but they are influenced significantly by differing food objectives, income level, and instruments among nations. The program thus seeks to understand the food security issues that are of paramount interest to poor countries, the food diversification challenges that are a focus of middle-income nations, and the food safety and subsidy concerns prominent in richer nations.

Chronic hunger in a time of prosperity

Although the world's supply of basic foods has doubled over the past century, roughly 850 million people (12 percent of the world's population) suffer from chronic hunger. Food insecurity deaths during the past 20 years outnumber war deaths by a factor of at least 5 to 1. Food insecurity is particularly widespread in agricultural regions where resource scarcity and environmental degradation constrain productivity and income growth.

FSE is currently assessing the impacts of climate variability on food security in Asian rice economies. This ongoing project combines the expertise of atmospheric scientists, agricultural economists, and policy analysts to understand and mitigate the adverse effects of El Niño-related climate variability on rice production and food security under current and future global warming conditions. As a consequence of Falcon and Naylor's long-standing roles as policy advisors in Indonesia, models developed through this project have already been embedded into analytical units within Indonesia's Ministry of Agriculture, the Planning Ministry, and the Ministry of Finance.

"With such forecasts in hand, the relevant government agencies are much better equipped to mitigate the negative consequences of El Niño events on incomes and food security in the Indonesian countryside," explain Falcon and Naylor.

Food diversification and intensification

With rapid income growth, urbanization, and population growth in developing economies, priorities shift from food security to the diversification of agricultural production and consumption. "Meat production is projected to double by 2020" states Harold A. Mooney, CESP senior fellow and an author of the Millennium Ecosystem Assessment. "In China alone, meat consumption has more than doubled in the past generation." As a result, land once used to provide grains for humans now provides feed for hogs and poultry.

These trends will have major consequences on the global environment-affecting the quality of the atmosphere, water, and soil due to nutrient overloads; impacting marine fisheries both locally and globally through fish meal use; and threatening human health, as, for example, through excessive use of antibiotics.

An FSE project is looking at these trends as it relates to intensive livestock production and assessing the environmental impacts to gain a better understanding of the true costs of this resource-intensive system. A product of this work recently appeared as a Policy Forum piece in the December 9, 2005, issue of Science titled "Losing the Links Between Livestock and Land".

Numerous factors have contributed to the global growth of livestock systems, lead author Naylor notes, including declining feed-grain prices, relatively inexpensive transportation costs, and trade liberalization. "But many of the true costs remain largely unaccounted for," she says. Those costs include destruction of forests and grasslands to provide farmland for corn, soybeans, and other feed crops destined not directly for humans but for livestock; utilization of large quantities of freshwater; and nitrogen losses from croplands and animal manure.

Naylor and her research team are seeking better ways to track all costs of livestock production, especially the hidden ones related to ecosystem degradation and destruction. "What is needed is a re-coupling of crop and livestock systems," Naylor says. "If not physically, then through pricing and other policy mechanisms that reflect social costs of resource use and ecological abuse."

Such policies "should not significantly compromise the improving diets of developing countries, nor should they prohibit trade," Naylor adds. Instead, they should "focus on regulatory and incentive-based tools to encourage livestock and feed producers to internalize pollution costs, minimize nutrient run-off, and pay the true price of water."

Looking ahead

The future of the program on Food Security and the Environment looks bright, busy, and expansive. While a varied portfolio of projects is in line for the upcoming year, a strong emphasis remains in the area of food security. Building on existing research at Stanford, researchers are identifying avenues for enhancing orphan crop production in the world's least developed countries-crops with little international trade and investment, but with high local value in terms of food and nutrition security. The work seeks to identify advanced genetic and genomic strategies, along with natural resource management strategies, to improve orphan crop yields and stability, enhance crop diversity, and increase rural incomes through orphan crop production.

Another priority area of research centers on the development of biofuels. Biofuels are becoming increasingly a part of the policy set for world food and agriculture. As countries such as the United States seek energy self-reliance and look for alternatives to food and feed subsidies under WTO (World Trade Organization) rules, the conversion of corn, sugar, and soybeans to ethanol and other energy sources becomes more attractive. New extraction methods are making the technology more efficient, and crude oil prices at $60 per barrel are fundamentally changing the economics of biomass energy conversion. A large switch by key export food and feed suppliers, such as the United States and Brazil, to biofuels could fundamentally alter export prices, and hence the world food and feed situation. A team of FSE researchers will assess the true costs of these conversions.

The FSE program recently received a grant through the Presidential Fund for Innovation in International Studies to initiate new interdisciplinary research activities. One such project links ongoing research at Stanford on the environmental and resource costs of industrial livestock production and trade to assess the extent and rate of Brazil's rainforest destruction for soybean production. "Tens of millions of hectares of native grassland and rainforest are currently being cleared for soybean production to supply the global industrial livestock sector," says Naylor. A significant share of Brazil's soybeans is being shipped to China, where rapid income growth is fueling tremendous increases in meat consumption."

A team of remote-sensing experts, ecologists, agronomists, and economists will be looking at the ecological effects on the landscape through biogeochemical changes and biodiversity loss, the impacts of land clearing on the regional hydrologic cycle and climate change, the economic patterns of trade, and the role of policies to achieve an appropriate balance between agricultural commodity trade, production practices, and conservation in Brazil's rainforest states.

"I'm extremely pleased to see the rapid growth of FSE and am encouraged by the recent support provided through the Presidential Fund for Innovation in International Studies," states Naylor. "It enables the program to engage faculty members from economics, political science, biology, civil and environmental engineering, earth sciences, and medicine-as well as graduate students throughout the university-in a set of collaborative research activities that could significantly improve human well-being and the quality of the environment."

I begin with a proposition. There are a great many pressing problems in the world. There is population growth and economic development, with attending pressures on resources - including food and that other essential, water. There is a continuing global security crisis, augmented by the rise in terrorism. There is the chronically inequitable distribution in resources between the rich nations of the North and the poor nations of the South. And there is the steadily growing body of evidence for a major reorganization of the global climate regime.

My proposition is that the last of these is the most serious threat - not only because it will profoundly affect the lives of our children and our grandchildren in a direct way, but also because it will interact powerfully with every single one of the other problems I have listed.

Let me begin with the science underlying climate change. Last week I helped organize a symposium and briefing session on climate science for press, policy-makers, and the public, supported by the Hewlett Foundation and with co-sponsorship from the Conference Board. We had ten of the most distinguished climate scientists in the United States, led off by Sherry Rowland, the Nobel Laureate in Chemistry. The purpose was to make a careful assessment of the science - what we know for sure, what we think likely, and what are interesting but unproven possibilities.

So here is a short summary of what we know. General Circulation Models - climate models that take into account variations in the sun's energy, volcanic activity, and other natural phenomena - explained fluctuations in average global temperature very well over most of the past thousand years. But for the past hundred years, these same models faithfully reproduce global temperature history ONLY if they include the greenhouse gases - carbon dioxide, methane, and chlorofluorocarbons - that are by-products of human economic activity. That is why the average temperature of the globe has risen by about one degree F, and the sea level has risen by between 10 and 20 cm., in the last century. The primary causative agent is carbon dioxide, which in preindustrial times was about 280 ppm/v and has now reached 380ppm/v. It is rising continually as the activities that produce it are proceeding on a business as usual basis. That is because the failure of the Kyoto protocol - a failure both because its targets were inadequate, and also because they were unattainable by many of the participating nations - has left us without any basis for meeting the goals of the 1992 Framework Convention on Climate Change. Just to remind us, the US is a signatory and a party to that agreement, under which we are committed to limit atmospheric concentrations of greenhouse gases to avoid "dangerous anthropogenic interference with the climate system."

Why, a dozen years later, is there some doubt about the dangers of this interference? The C02 we add to the atmosphere will stay there; its average residence time is a century. There is no disagreement about whether average global temperature will rise; it will. The scientific debate is about how much. For the future we depend again on the General Circulation Models. It's reassuring that when applied to past climates in "back-casting" efforts, like the example I gave a moment ago, these actually predict climate history so accurately. Perhaps more interesting, they regularly somewhat underestimate the magnitude of the real climate changes - that is, Nature regularly turns out to be harsher than the models suggest. Projecting the models into the future, the Intergovernmental Panel on Climate Change, and an evaluation by the National Academies prepared at President Bush's request, estimate that by the end of this century, the increase in average global temperature will be between 1.4 and 5.8 degrees Centigrade.

Why such a range? These models, like most, contain some uncertainties. Some of these are scientific: how increased cloud cover might affect the outcome, since clouds can either cool the climate by reflecting sunlight from above, or warm it by trapping heat that is leaving from below; how changes in the earth's albedo due to melting ice might accelerate heating, and so on. Aerosols produced by volcanic eruptions have a cooling effect, as the eruption of Mt. Pinatubo did in giving us two unusually cool years in the early 90's. Other uncertainties are economic and social: we don't know how national policies and international agreements will serve to restrain the amount of greenhouse gases we are adding.

These uncertainties - about half due to the models themselves, and the rest to social and economic unknowns -- have provided arguments for those who prefer to postpone economically difficult approaches for controlling greenhouse gas emissions. But it is important that even at the very lowest estimates, there will be substantial changes in the nature of human life on the only planet we currently occupy. The rather modest impacts of the past century have already produced profound changes in regional climate dynamics. Substantial ice-sheet melting and retreat is taking place both in the Arctic and in the West Antarctic ice sheet. In the Arctic, where climate warming has been extreme, sea ice is sharply diminished and rivers become ice-free much earlier. Low latitude mountain glaciers are shrinking; the famous snow-capped summit of Kilimanjaro will be bare within fifteen years, converting hundreds of old African safari shots into historic treasures.

Biological cycles are experiencing the effects of warming, with upward extensions of the range of Alpine flora and advances in the time of flowering or breeding by an average of 5 days per decade. The models have all also predicted more frequent and severe weather events, and we have had heat waves in the upper Midwest and Paris, accelerated beach erosion on coasts all over the world, and disastrous floods and landslides in Central America.

That is now, but of course we are more interested in the future. What the models tell us unambiguously is that the climate system is headed for further disruption. The standard scenario foresees a steady, ramp-like increase in average global temperature, with a concomitant rise in sea level, but records of past climate tell us that it is riddled with abrupt changes - something that the models fail to predict well. A possible alternative involves a change in major ocean circulation patterns - especially in the North Atlantic, where a clockwise gyre brings warm equatorial water up via the Gulf Stream. As it flows Northward and then crosses Eastward, it is cooled by the atmosphere, becomes more saline through evaporation, and then sinks to return as a cold deep current. If large discharges of fresh meltwater or rain made this water less dense, it could fail to sink and thus disrupt the entire cycle.

A fictionalized version of such a scenario appears in the disaster film "The Day After Tomorrow," which you should see only for amusement. Beyond that silliness lies a real prospect that a gradual change in average global temperature could intercept the threshold for some non-linear, dynamic process, triggering abrupt changes in either direction. Of course there is uncertainty: we are engaged in a large-scale, uncontrolled experiment on the only planet we have.

Let's consider some collateral impacts. A group of us at Stanford was asked by the Carnegie Commission on Preventing Deadly Conflict to look - among other things -- at ways in which environmental change might alter the circumstances under which human populations might be placed. Climate change was an important variable. One example we looked at was the impact of sea level rise, along with storm surges from extreme weather events, on the Ganges-Brahmaputra delta. Flood disasters already occur there regularly. 15 million people live within 2 meter above sea level, and are vulnerable to abrupt displacement. We know they will have to go somewhere; in the past they have fled in much smaller numbers to Bengal. The security problems arising from a massive influx of a traditionally hostile population, combined with an almost certain high level of cholera infection, are not difficult to imagine.

Water is a desperately important resource in most parts of the world, and drought is often followed by famine or emigration. Here in the US, warmer winters threaten mountain snowpacks and will soon demand the revision of interstate and international water allocation agreements. Maritime rivers are already undertaking management steps to deal with saline intrusions due to sea level rise or storm surges. In Great Britain, the barrier that protects London from occasional flooding of the Thames estuary is now being used six times a year compared to less than once a year in the 1980's.

Agriculture, of course, is the most essential of human activities. The regional distribution of global warming impacts may be at least temporarily kind to temperate-zone food production. But the models all predict an increased incidence of mid-continent droughts as climate change progresses, and we know that the American Midwest has in the past experienced droughts both deeper and longer than the one in the 30's that led to the Dust Bowl migrations. Irrigation is an answer to drought, but in the six High Plains states, dryland wheat production depends upon the Ogallala Aquifer, a buried ice-age storage well that is being so rapidly depleted that it is already unusable in its southern portion. And in the tropics, where people are poorest and capacity to adapt is minimal, the consequences of even modest warming will be far more serious.

Infectious diseases are spread by vectors, like the Anopheles malaria mosquito, that have their own patterns of reproduction, movement, and climate sensitivity. In parts of Africa where vertical topography dominates, warmer and rainier seasons cause malaria incidence to rise in higher-altitude locations. In a warmer and wetter world, more of the same can be expected.

So climate change is not an isolated problem. Instead, it is likely to interact with most of the other problems humans face all over the world. Thus I hope that this meeting will help encourage us to prepare a sound portfolio of risk-reducing measures. These will not, I must tell you, bring us out of the woods. Our destiny is partly built in -- to the heat that is already locked into our oceans, to the greenhouse gases that are already in our atmosphere and will increase by another 50% or more no matter what we do, and to the justified economic appetites of the developing world. What we will be talking about, it should be clear, are ways of limiting the damage to manageable levels, NOT preserving the status quo. We lost that years ago.

So the contemporary policy challenge amounts to a bet about risk: are the consequences of business as usual likely to entail costs greater than those of beginning to mitigate those consequences now? Other nations - the UK, several EU countries, and Japan - are making substantial commitments. Some industries - British Petroleum, Royal Dutch Shell, and Swiss Re, for example - have undertaken steps of their own. The insurance burden from the exploding rates of coastal erosion and storm damage has pushed the insurance industry to lead. If companies fail to participate in emissions reduction and join with others to resist such measures, questions are already being raised. If you believe so strongly that climate change is a myth, Swiss Re might say, then surely you won't mind a climate-related events exclusion from your Directors and Officers insurance policy.

But we can't count on voluntary actions, and the United States so far has only announced a long-range research program that, although it looks reasonable, makes NO current commitments to mitigate our contribution, about a quarter of the world's, to the global warming problem. We must have a more aggressive national policy to purchase insurance against this risk.

It will not be cheap. We have old, coal-fired power plants in this country; it may take subsidies to replace them with modern, less carbon-intensive facilities that run on natural gas. States like mine are already driving the transportation sector to ultra-low emission, and that may move the domestic industry in a positive direction. Some of us will have to give up our reflex opposition to nuclear power and begin comparing its risks realistically against those of global climate change. Although the room for alternative energy sources (photovoltaic, wind, geothermal) is limited, these options need encouragement. Energy conservation measures have, at several times in the past, turned economic predictions on their head by their success, and the right incentives could yield real benefits there.

The portfolio I have just described is needed, but will not be enough. We know that market-based mechanisms for emissions control can work, because they did in the 1990 Clean Air Act Amendments that limited SO2 emissions. The bill proposed by Senators McCain and Lieberman would mandate a cap-and-trade program for controlling carbon dioxide emissions. Similar systems are being considered by regional assemblages of states in the Northwest and the Northeast, and that may encourage the development of a national system - which could then build trading relationships with other nations that are moving toward similar regimes. A case for this approach is elegantly made in the Council on Foreign Relations Policy Initiative on Climate Change, by my colleague David Victor.

The United States is in a position of natural leadership here. It is the most powerful nation - and the world's leading producer of greenhouse gases. Plainly it is in its own national interest, in multiple ways, to reduce its consumption of fossil fuels. To see it failing in this most vital, globally sensitive matter is a national embarrassment.