Global warming will drive vast, unpredictable shift in natural wealth
Many studies have shown that critical natural resources, including fish stocks, are moving poleward as the planet warms. A new Yale-led study suggests that these biophysical changes are also reallocating global wealth in unpredictable, and potentially destabilizing, ways.
On its surface, these biophysical movements will shift resources from communities and nations closer to the equator into places closer to the poles. In many cases this would seem to exacerbate inequalities between richer and poorer communities.
But writing in the journal Nature Climate Change, the researchers suggest that the impacts on net global wealth may not be that straightforward. In fact, they make the case that changes are more likely than not to produce an overall net loss in global wealth.
The reason, says lead author Eli Fenichel, is the inevitable and unpredictable price impacts in places where the quantities of fish stocks increase depending on the quality of its resource management, existing institutions, and fishing regulations.
"People are mostly focused on the physical reallocation of these assets, but I don't think we've really started thinking enough about how climate change can reallocate wealth and influence the prices of those assets," said Fenichel, an assistant professor at the Yale School of Forestry & Environmental Studies. "We think these price impacts can be really, really important."
"We don't know how this will unfold, but we do know there will be price effects. It's just Economics 101 — prices reflect quantity and scarcity and natural capital is hard for people to move," he said. "It's as inevitable as the movement of these fish species."
These impacts on the value of natural capital highlight the need for coherent climate policies that integrate biophysical and social measurements, the authors say.
The study was conducted by researchers at Yale, Rutgers, Princeton, and Arizona State universities.
The paper illustrates how the inclusive wealth framework advocated by UNEP and the World Bank makes it possible to measure the shift in the amounts and distribution of wealth as a consequence of climate change, when coupled with approaches to value natural capital developed by Fenichel and others. As an example, the researchers used fish migration data collected by Malin Pinsky, an assistant professor at Rutgers and co-author of the study.
"We tend to think of climate change as just a problem of physics and biology," Pinsky said. "But people react to climate change as well, and at the moment we don't have a good understanding for the impacts of human behavior on natural resources affected by climate change."
To illustrate their case, the authors model potential outcomes in two fictitious fishing communities (Northport and Southport) in the face of climate-driven shifts in fish populations. Southport's fish stocks decline as the climate changes while Northport's stock increases; it's a scenario that reflects changes anticipated in areas such as the mid-Atlantic and the waters off New England in the eastern U.S.
According to their analysis, if fish quantities increase in a northern community, for instance, it will likely cause a devaluation of that resource locally, particularly if that community isn't equipped to manage the resource efficiently. "If the northern community isn't a particularly good steward or manager, they're going to place a low value on that windfall they just inherited," Fenichel said. "So the aggregate could go down."
"To be clear, the 'gainers' here are clearly better off," he said. "They're just not more better off than the losers are worse off. The losers are losing much more than the gainers are gaining. And when that happens, it's not an efficient reallocation of wealth."
The analysis suggests that policy discussions around climate change should address how the physical changes will affect wealth reallocation, rather than allowing nature to redistribute this wealth in an unpredictable, "willy-nilly" manner.
"It also points to a greater need for the physical sciences and social sciences to be done in a coordinated fashion," Fenichel said. "As much as scientists are doing lots of wonderful multidisciplinary research, I don't know that we're necessarily collecting the kinds of data, in a coordinated fashion, that will inform the emerging metrics of sustainability."
The project is one of several being conducted as part of a $1.4 million grant from the National Science Foundation.