This is a guest post by Peter Salonius, a Canadian soil microbiologist.

According to Peter, humanity has probably been in overshoot of the Earth’s carrying capacity since it abandoned hunter gathering in favor of crop cultivation (~ 8,000 BCE). The problem is that soil needs tightly woven natural ecosystems to properly recycle nutrients and prevent soil erosion. Earth’s inhabitants have devised a whole series of approaches to increase the amount of food that can produced, starting first with hand-cultivation and culminating in the last century with the widespread use of fossil fuels. These approaches strip the soil of its nutrients and cause soil erosion. Even Permaculture cannot be expected to overcome these problems. Eventually, to reach sustainability, the world will need to reduce its population to that of the hunter-gathers, and go back to living on the resources the natural ecosystems can produce.

Peter’s paper begins below the fold.
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Part 1: Life Before Agriculture

The major departure for humans as just another member of the global animal species assemblage came when fire was first used about 400,000 years ago by Homo erectus (Price 1995). The dynamic cyclical stability of complex systems has been shown for most animal populations, except top predators, to depend on predation to dampen overshoot and runaway consumption dynamics of prey species (Rooney et al. 2006). The ability to control and use fire removed the influence of wild animal predators as moderators of human numbers. The use of fire made possible the colonization of cold lands at high latitudes where fuel for heating shelters was available in some form such as animal oil, dried dung and wood. Even though their shelters became more complex and elaborate, they were, for the most part, temporary encampments whose main structural components could be transported across the landscape so as to benefit from variable food availability as the seasons changed.

The bulk of human history has been that of a culture of hunter gathers or foragers. They did not plant crops or modify ecosystem dynamics in any significant manner as they were passively dependent on what the local environment had to offer. They did however domesticate dogs as early as 100,000 BCE (Vila et al. 1997); these animals were useful as hunting aids, guardians, and occasionally as food during times of scarcity. Hunter gatherers maintained social organization and interdependence, and prevented the loss of food to spoilage by sharing the harvest among community members. These people lived in harmony with their supporting ecosystems and their ability to unsustainably stress and damage their environment was limited by the fact that if their numbers exceeded the carrying capacity of the complex, self-managing, species diverse, resilient terrestrial and aquatic ecosystems from which they gained their sustenance, then hunger and lower fertility exercised negative feedback controls on further expansion.

They used culturally mediated behavior like extended suckling, abortifacients and infanticide to keep their numbers far below carrying capacity, and to avoid Malthusian constraints like starvation (Read and LeBlanc 2003). Warfare between groups competing for the same resources, before the evolution of states, also appears have been a significant constraint on the growth of human numbers (Keeley 1996).

Part 2: The Evolution of Agriculture

The development of agriculture is of great interest to us because it produces most of our food and it was a prerequisite for the tremendous growth of human numbers, and also for the various complex societies that have evolved since this new culture began (Diamond 2002).

After the advent of agriculture, mortality rates, caused by conflict, decreased somewhat as local raiding by chiefdoms evolved into long-distance territorial conquest by states (Spencer 2003). These cultural and conflict behaviors that limited human population growth served to maintain balance between humans and other species during most of the historical record. Read and Leblanc (2003) suggest that humans, in areas of low resource density, tend to maintain generally stable populations, while high resource density, such as that produced by agriculture, decreases the spacing of births more rapidly than the increase in resource density, which results in repeating cycles of carrying capacity overshoot and population collapse.

Nomads and Pastoralists

The earliest movement from strict hunter gathering toward agriculture came when people noticed the changes in ecosystems that they burned to move game animals to places where they could be more easily killed; sometimes the post-fire vegetation consisted of an increase in the numbers of plants used as food, such as berries and bulbs and also vegetation assemblages, like the sparse oak parkland of the U.S. Pacific Northwest that produced acorns for both human food and for the deer that they hunted (Angier 1974; Oregon State University 2003), while in other areas grasslands were periodically burned to encourage the growth of tender vegetation that was attractive to game animals.

Even though some hunter gatherer/ foragers did modify the vegetation or successional state of vegetation assemblages in specific areas with fire, these areas seldom were productive enough to support year round occupancy. Thus began the first steps of humans as a ‘patch-disturbance‘ species (Rees 2002), whose expansion would ultimately extend to and modify almost all of the ecosystems on the planet.

Movement toward actual cultivation agriculture began with the domestication of cereal grains at a time when postglacial climate warming was interrupted by climate reversal, even before the beginning of the consistently warm conditions of the Holocene (Hillman et al. 2001). Diamond (2002) shows that plant and animal domestication first occurred in areas where the most valuable and easiest species to cultivate were native. These species were later moved to new and more productive areas by the migratory expansion of their cultivators who overran resident hunter gatherers. As people worked with and cultured wild species, the process of genetic selection began to produce more easily managed individuals with modified behavior. Diamond (1997; 2002) outlines characteristics of wild animals dealing with diet, growth rate, captive breeding, disposition, and social structure that make individual species either candidates for domestication or that make domestication very difficult.

Nomads, inhabiting grassland / prairie ecosystems, who had relied on hunting herds of herbivores, learned enough about the habits of these species to begin the process of controlling some of them. The resulting pastoral herding culture of such animals as camels, goats, sheep, cattle, yaks, alpacas and reindeer made locating meat much less chancy, and allowed the further developing use of secondary products from living animals such as blood and milk. This very early form of species domestication without cultivation provides considerable independence in the face of environmental fluctuations because herds are moved to different areas as the seasons change and during periods of drought. These people developed a culture that moved to adapt to the environment as opposed to forcing changes on the environment to accommodate a particular food production culture, even though they did burn land to rejuvenate pasture and prevent forest growth from encroaching onto grasslands.

Pastoralists, like hunter-gatherers maintained close social organization and interdependence, and they prevented the loss of food to spoilage by sharing the harvest among community members. Hunter gathering, foraging and pastoral lifestyles are often thought of as precarious and requiring very hard work, while both archaeological evidence and the health of the few groups that have not yet been displaced by farming suggests that they lived quite long and much easier lives with better health and diets than the first people who practiced cultivation agriculture in the same localities (Diamond 1987).

Pastoralists were subject to the same constraints as hunter gatherers; their ability to unsustainably stress and damage their environment was limited by the fact that if their numbers exceeded the carrying capacity of the complex, self-managing, species diverse, resilient terrestrial ecosystems from which they gained their sustenance, then hunger and lower fertility exercised negative feedback controls on further expansion. There have only been a few groups that have been able to maintain the hunter gatherer life style even as they have been displaced and forced onto marginal land by agriculturalists. Pastoralists may continue to thrive into the modern era because the semi-arid lands they utilize are usually inappropriate for cultivation agriculture.

Of interest is the move back to nomadic pastoralism in some of the Central Asian republics that has followed the demise of the money economy after the collapse of the Soviet Union during the 1990s. Modern grass-fed cattle and sheep ranching, although not a subsistence culture, has a lot of similarities to pastoralism except that it is carried on in a grander scale to produce commodities for markets.

Beginnings of Cultivation Agriculture

The evolution of agriculture appears to have been an accidental, ‘hit-and-miss’ development that almost certainly sprang, not from necessity (Diamond 2002), but from the propensity of humans to experiment. Selective harvest and replanting of specific races of food plants took place at an accelerating pace as the hostile and unpredictable climate at the end of the Pleistocene gave way to warmer and more predictable conditions (Richerson et al. 2001). Although some authors suggest that the growth of human populations during the last 10,000 years has resulted in pressure to produce more food to feed them (Boserup 2005), most see the increased food production by cultivation agriculture as the driver of population growth (Abernethy 2002; Hopfenberg and Pimentel 2001; Hopfenberg 2008).

Cultivation agriculture usually began with shifting or ‘slash and burn’ techniques that utilized the accumulated nutrients, built up under native forest or grassland, and also those nutrients in the ash resulting from burning native vegetation. Reasonable productivity for cultivated plants lasts for only a few years on upland soils under shifting cultivation. Permanent agricultural cultivation appears to have been possible in river valleys that were fertilized annually by new soil carried by floodwaters. When soil nutrients are depleted on upland soils, it is necessary to move to a new patch of native vegetation cover and repeat the ‘slash and burn’ process. After the abandonment of temporary fields, a considerable period of native vegetation regrowth is necessary before soil nutrient levels are again built up to the point where another short cycle of cropping and nutrient depletion is profitable. On better soils in tropical climates the period of early successional woody vegetation growth may only need to be a few years before the next cultivation cycle, because temperature-driven soil weathering rates are very high in these areas.

Shifting cultivation is usually labor-intensive and the small plots involved do not produce enough to support humans and horses, oxen or other draft animals that could assist with tillage. Year round multi-cropping in tropical climates on erosion prone slopes such as areas of the Philippines sometimes involved as many as 40 different crop species on the same field so that there was always enough plant cover to break the force of the rain and minimize erosion. Shifting cultivation is only viable if the population remains low enough that the next cycle of temporary cultivation is not required until native forest or grassland regeneration on abandoned fields has rebuilt the supply of nitrogen (by biological fixation) and levels of plant available phosphorus, potassium, calcium, magnesium and micronutrients (by soil weathering).

At the time of European contact in eastern North America, from mid continent and southward, much of the low altitude land had already been submitted to enough Amerindian shifting agriculture that the settlers discovered a landscape mosaic of cleared gardens, abandoned clearings returning to forest vegetation and maturing forest that was ready for yet another cycle of clearing, burning and temporary cultivation (Williams, 2006). European settlers, whose rapidly moving diseases had already decimated the Amerindians, were able to start farming on cleared land that had been prepared by the former residents.

Amerindians did utilize the nitrogen fixation capabilities of leguminous beans in mixtures with squash, corn and various other crops, and they did augment depleting soil nutrients with the placement of fish in planting spots. However at the time of European contact, Amerindian population dynamics were probably already on the same ‘increase and collapse’ trajectory as those of other populations, whose numbers increase to exceed carrying capacity as food production is increased by the adoption of cultivation agriculture (Costanza et al. 2005). Rees (2002-03) states, as did Malthus (1826), that unless there are constraints on animal (including human) expansion, all populations grow to the point that they destroy some critical resource and then they collapse.

Intensive cultivation agriculture provides adequate food to allow the growth of large scale, populous societies living in settlements with permanent dwellings that are near enough to the food growing areas to facilitate their management and that allow for the storage of food from season to season. The transition from the passive dependence on existing complex self-managing ecosystems by mobile hunter gatherers gave way to the greater control of food sources provided by cultivation agriculture on land in specific localities with radically altered ecology. Its practitioners were tied to the land, and they were vulnerable to environmental vagaries that could produce local crop failures.

Diamond (1997) suggests that the development of plant cultivation agriculture was a ‘trap’ that precipitated massive changes in the way we feed ourselves and in the social organization that is a natural product of land ownership and control of stored foodstuffs. The thinking with regard to this ‘trap’ is that, as populations rise to utilize the increased food supplied by cultivation agriculture, it is very difficult to revert to less productive food producing systems without incurring hardship and starvation.

The egalitarian food-sharing social organization systems of hunter-gatherers, pastoralists and shifting agriculturists, based on kinship, gave way to the class stratification of societies that rely on intensive cultivation agriculture. The stratum of society that controls the means of food production, and the land required for it, develops a hierarchy of property owners and leaders who are rich enough to thrive during periods of severe food shortages, while the less powerful, who are employed by them, suffer famine much more directly.

Eventually this social stratification and evolution of complex labor division proceeds to the point where merchants, craftsmen, military, clergy, bureaucrats, politicians and royalty occupy urban areas where food from the countryside is used, but not produced. A rich and politically powerful stratum develops absolute property rights that are accumulated as wealth and transferred to its descendants; this stratum, often doing very little labor, becomes more numerous and difficult to support as the ratio of elites to producers increases (Costanza et al 2005).

As economic class distinctions developed, the social changes usually included a decline in the status of women who were more equal partners in subsistence societies. While close to 100% of the people in foraging and hunter gatherer societies were involved directly in producing food, less than 60% of the population in non industrial agricultural societies may participate directly. In contrast, industrial, modern, mechanized agriculture that depends on non renewable fossil-fuelled machinery usually employs less than 5% of the population directly in food production.

The migration of foragers and hunter gathers to colder northern climates, the shift to more intensive food production systems that included increased densities of people living in the confines of enclosed permanent structures, the further migration of people into Asia, and the modern evolution of urban living conditions have all been accompanied by genetic changes in humans. The most well known of these changes are the adaptive development of resistance to “crowd diseases” spread from domesticated animals (Diamond 2002), food tolerances, the various blood groups we see in human populations, as well as the selection for lighter skin colors that has allowed people living in northern climates to use limited sunlight to accomplish the metabolic transformations of chemical precursors into Vitamin D (D’Adamo and Whitney 1996).

The transition to large-scale intensive cultivation agriculture in permanent fields often involved complex water management (irrigated rice) and the use of large animals such as horses, water buffalo and oxen to pull plows which turn up buried soil nutrients into the planting layer and aid in controlling weeds. Even though intensive cultivation agriculture did produce more food than subsistence food production on a specific area, severe local food shortages were not eliminated by the development of these techniques. Famine was caused by cyclic drought, climate cooling episodes and the natural propensity of humans to increase population numbers to meet then surpass any elevation of carrying capacity during benign conditions (Hopfenberg 2003).

Societies grew and prospered until soils were exhausted or as long as there was new land to cultivate, but they declined when they ran out of fertile soil options (Montgomery 2007). Temporary overshoot of carrying capacity has caused human numbers to fall back precipitously with some regularity throughout history (Stanton 2003), while less regular complete collapses of societies have been the norm since the advent of agriculture (Costanza et al. 2005).

Cultivation agriculture has resulted in a tremendous depletion of both soil mass by erosion ( Montgomery 2007; Sundquist 2007) and plant nutrients in soil (Williams 2006; Salonius 2007). Plant nutrients are lost because of bare soil cultivation and the lack of the very efficient recycling that is a characteristic of diverse, deep rooted, nutrient-conservative forest and grassland / prairie ecosystems. Nutrient replacement with fertilizers is the process that allowed intensive cultivation agriculture to continue after all of the arable soils on the planet had been occupied.

The Agricultural Revolution and Beyond

The Agricultural Revolution was the first of several food production improvements that took place after 1700. Soils, whose plant nutrients would normally be depleted after a period of cultivation, were augmented in the earliest stages of intensive agricultural development by forest leaves, animal manures, wood ash, fish, seaweed, mud from tidal zones, and pulverized bones. As a complex transportation industry began to develop based on coal and then petroleum for railways and ocean going ships, long distance transport of guano, Chilean nitrate, limestone, potash salts and rock phosphate allowed depleted soils to produce enough crops for domestic use and export. The absolute necessity for including legume crops in crop rotations was circumvented after the Haber- Bosch process began producing ammonia using methane and atmospheric nitrogen 1913 (Vance 2001).

Science-based management of soil nutrients and fertilizer materials became necessary as crop fertilization had to become increasingly efficient. The guiding principle for crop fertilization was Liebig’s Law of the Minimum that states that only by increasing the supply of the scarcest or most limiting soil nutrient would crop growth be improved. Later the emphasis shifted from crop fertilization to nutrient management planning which attempted to assess soil nutrients that would be released into solution during growth, the acidity of the soil as it effects plant nutrient availability, the nutrients contributed by manure applications and nitrogen fixing plants, and the possibility of environmental (especially to water) damage by nutrients that are not used by the existing crop or that are not held in the soil until the next crop begins to grow.

The next major increase in food production occurred as the Industrial Revolution began. Energy for manufacturing farm implements was first obtained from falling water. With the invention of the steam engine, energy from burning wood supplied power for the manufacture of farm machinery such as plows, mowers, diggers and threshers. The motive power to operate this machinery was provided by draft animals. Later these machines were pulled and operated by power obtained from internal combustion engines that slowly reduced reliance on draft animals such as oxen and horses, whose feed formerly came from the same arable land that grows food crops for people. Thus the Fossil Fuel Revolution began.

Since 1750 human society has increasingly augmented the solar energy that it relied on exclusively for most of its history with a progression of temporary supplies of non-renewable geological energy sources (coal, petroleum, natural gas and fissionable uranium). The profligate consumption of these energy subsidies has allowed tremendous increases in agricultural production and the global trading that removes the necessity for food to be produced in the region where it is to be consumed.

Thomas Malthus (1826) predicted that agricultural production increases would not be able to meet the requirements of a steadily growing human population. However he was not aware that the depletion of soils by the agriculture, that was feeding less than one billion humans in the 1700s, was already unsustainable in the long term. Malthus could not have conceived of the temporary increase of carrying capacity and food production that would be made possible by the use of non-renewable fossil and nuclear fuels during period after his death. The abandonment of the effective controls on human birth rates, exercised by pre-agricultural societies, and the decrease in mortality by warfare that followed the evolution of states have allowed the exponential expansion of human numbers to be fuelled by increased availability of food.

Human populations had grown very slowly until the advent of agriculture. Population grew rapidly in the context of both increased food security and the wealth that agricultural productivity created until the middle 1800s. During the latter part of this period, as soil productivity became seriously diminished by cultivation agriculture, and a scarcity of forest land that could be cleared for farming developed, migration to new lands such as North America and Australia was used to decrease the pressure on existing land. These new areas presented migrants with fertile land so that soil-depleting agriculture could continue (Manning 2004; Williams 2006).

This migration and exploitation of new lands continued the accelerating population expansion that increased agricultural food production makes possible. The historically unprecedented rapid exponential population explosion after 1800 was driven by the increased productivity that was made possible by the labor saving machinery of the Industrial Revolution in concert with the increasing access to cheap and abundant geological energy that characterized the Fossil Fuel Revolution.

Part 3: Our Current Agricultural Situation

The Green Revolution produced the last major improvement in food production during the latter decades of the twentieth century as new crop varieties were created by plant breeders. These new varieties depended on large inputs of fossil-fuel dependent fertilizers, irrigation, insecticides and herbicides. William Paddock (1970) warned, at the time of the beginning of the Green Revolution, that the increased agricultural productivity would simply produce more malnourished poor people if curbs were not applied to the increase in human numbers that would result from increased food availability. Global population growth since the beginning of the Green Revolution has borne out the futility of increasing food availability in the absence of measures to control human fertility (Diamond 2002).

Some forms of modern industrial agriculture, combined with the transportation necessary to ship food produced, use more than 10 calories of fossil fuel to deliver one calorie of food to the market (Younquist 1997). Montgomery (2007) states that before 1950, most increases in food production were the result of increased land under cultivation and better husbandry, but recently most of the increases have been the result of mechanization and escalating fertilizer use. Albert Bartlett (1978) has said, “Modern agriculture is the use of land to convert petroleum into food.”
Salonius (2005) summarized evidence for the necessity that modern civilization must face the prospect of decreasing access to the cheap and abundant exhaustible geological energy that has served agriculture so effectively during the recent past. The cost of this energy is poised to increase and that eventually fossil fuel and fissionable nuclear energy will become economically unavailable.

The looming scarcity of fossil fuel resources will create great difficulty in continuing to supply fertilizer nitrogen for agriculture by the Haber-Bosch process. Inexpensive rock phosphate supplies are forecast to become depleted in as little as 60 years (Vance 2001). Dery and Anderson(2007) demonstrate peaking phosphorus production from several sources including the United States that follow the same trajectory as the Hubbert Peak for petroleum; these authors suggest that world rock phosphate production is already in decline and that future agricultural production will depend upon diligent phosphorus recycling.

North America has the largest reserves of potassium in the world that can be manufactured into fertilizer materials. Concerns about the stability of limited supplies as well as the increasing costs of transport, that are driven by petroleum scarcity, produced rapid escalation in the price of potassium fertilizer during the early years of the twenty-first century.

As fertilizer supplies and long distance transport are expected to dwindle in concert with fossil-fuel depletion during the twenty-first century, organic agricultural techniques are expected to replace the industrial agriculture that has been powered by fossil fuels and nourished by chemical fertilizers. The International Fertilizer Industry suggests that organic agriculture is only capable of producing one quarter of the protein produced when large amounts of inorganic nitrogen fertilizers are employed (www.fertilizer.org/ifa/sustainability.asp); however, Pimentel et al. (2005) have shown that weathering rates appear to be able to meet plant demand for nutrients when organic agriculture relies on nitrogen fixing by legumes on some soils.

Sustainability issues are becoming increasingly apparent to systems analysts who have begun to understand the dilemma faced by human populations that have overshot the carrying capacity of the ecosystems they rely on for the production of food and fiber. This understanding usually encompasses the looming current depletion of non-renewable fossil and nuclear energy subsidies, however more basic depletions are becoming recognized as having been sidestepped for the last 10,000 years.

The global human family has become dependent upon the enhanced food production made possible by temporary supplies of non-renewable geologically stored fossil and nuclear energy. The energy market, upon which present affluence levels are based, is a global one, and the availability of geological energy supplies cannot be maintained. As access to the energy upon which complex industrial societies are dependent becomes more expensive and less available during the twenty-first century, human population numbers will have to be brought into balance with the sustainable productivity levels of the local ecosystems upon which they rely for their sustenance.

The ecological deficits, that humans have sidestepped by migration to new lands, mining soil mass (erosion) and soil nutrients (leaching), and access to one-time supplies of exhaustible energy, will have to be squarely faced as the level of affluence diminishes. Food production per capita must fall as horses and oxen must again be fed from crop land and as access to fossil fuel dependent fertilizers diminishes.

Part 4: Intensive Crop Cultures Are Unsustainable

A growing number of commentators, such as Alan Weisman (2007), have begun to suggest that a world with fewer people would be far better placed to deal with climate change and the exhaustion of the dirty fuels of the industrial past. Many appear to think that high technologies such as nuclear energy and yet another agricultural revolution, this one supplying Genetically Modified crops, in combination with curbs on population growth, would begin to dampen the environmental disruption caused by human society that is becoming increasingly obvious. However the problem is even more serious than that visualized by these thoughtful individuals who are convinced that the neoclassical economic model of open-ended expansion and so-called ‘sustainable growth’ is a recipe for disaster.

William Rees (1992) originated the idea of the Ecological Footprint to measure the amount of land that people with different lifestyles both occupied and drew on for their sustenance. Wackernagel and Rees (1997) further developed this concept, calculating how many Earths would be required if all of the people on the planet lived at particular levels of consumption; they appear to believe that the human family overshot global carrying capacity sometime in the twentieth century. Regardless of the timing, we know we are in serious overshoot and that the total human footprint (whatever enormity it is) must get smaller.

As we run up against all of the renewable and nonrenewable resource depletions (oil, soil, phosphorus, minerals etc.) that will characterize the foreseeable future, we require an entire rethink as to how we do business, because the human enterprise has been living on borrowed time and resources for millennia. It is quite conceivable that most intensive crop culture is unsustainable and that it has been unsustainable since cultivation agriculture began.

It is reasonable to suggest that we begin unsustainable resource depletion (overshoot) as soon as we use (and become dependent upon) the first unit of any non-renewable resource or renewable resource used unsustainably whose further use becomes essential to the functioning of society. Each of the following has facilitated an increase in food availability and thus an increase in the human numbers that must continue to be fed whether the resources become depleted or not: the first tonne of coal, the first litre of oil, the first kilogram of fissionable uranium, the first barrel of fossil water for irrigation that exceeds the recharge rate of the aquifer being tapped, and the first hectare of formerly nutrient conservative native forest or grassland/prairie plowed.

The last item in the list, plowing of virgin ecosystems for cultivation agriculture, sets in motion unsustainable renewable resource depletion (excessive erosion and leaching/export of plant nutrients from arable soils, and more recently the excessive leaching and nutrient depletion that is associated with harvesting of nutrient-rich forest biomass) that has been looming over us, unseen, for 10,000 years (Salonius 2007). Some estimates suggest that nearly one-third of the arable soils on Earth have already been lost to erosion since cultivation began and recent moves to rely on agricultural crops as a source of biofuels (ethanol) are seen by some as trading a system based on mining oil for one based on mining soil (Montgomery 2007). We can expect that the unsustainable exploitation of soil will become increasingly apparent as the depletion of petroleum begins to affect the production of foodstuffs by unsustainable farming, and the production of fiber produced by unsustainable forestry upon which most of us are dependent.

Humanity has probably been in overshoot of the Earth’s carrying capacity since it abandoned hunter gathering in favor of crop cultivation (~ 8,000 BCE) and it has been running up its ecological debt since that time.

Part 5: The Future of Food Production

In the context of depleting reserves of the fossil fuels that have supplied modern agriculture with motive power, machinery, fertilizers, insecticides and herbicides, it is expected that the way food is produced will have to change as the twenty-first century unfolds. ‘Permaculture’ (Mollison and Holmgren 1979), and other modifications of agricultural practice that seek self sufficiency, such as those put forward by proponents like the Post Carbon Institute’s Relocalization program (www.postcarbon.org) include local food and biofuel systems, revitalization of local industry, and community cooperation.

These are good first steps that recognize global trade will wane as fossil fuel depletion gains momentum. They are also an attempt to wean people off the industrial food production that treats soil as a medium for fertilizer-dependent hydroponic agriculture, and simply a substrate to stand plants up in. These people are interested in popularizing organic agriculture, minimum tillage or no-till methods, solar powered tractors etc. that will make local economies less reliant on imported materials. However these alterations follow the cultivation agriculture model as a food production system, as they must in the short term.

All cultivation agriculture depends on the replacement of complex, species diverse, self-managing, nutrient conservative, deep rooted, natural grassland/prairie and forest ecosystems with monocultures or ‘near monocultures’ of food crop plants that rely on intensive management. The simple shallow rooting habit of food crops and the requirement for bare soil cultivation produces soil erosion and plant nutrient loss far above the levels that can be replaced by microbial nitrogen fixation, and the weathering of minerals (rocks and course fragments) into active soils and plant-available nutrients such as potassium, phosphorus, calcium, and magnesium on most of the soils on the planet.

Under natural grassland/prairie and forest ecosystems, erosion rates of soil mass are minimal, and the diverse and deep structure of the below-ground rooting community, with its microbial associates, makes the escape of plant nutrients entrained in downward-moving drainage (leaching) water to the ocean very difficult. Our ultimate goal, as we attempt to achieve a sustainable human culture on Earth, must be to move toward the sustainable exploitation of natural grassland/prairie and forest ecosystems at rates that do not cause the loss of physical soil mass or plant nutrient capital any faster than they can be replaced by biological and weathering processes.

Obviously, as we move back toward a solar-energy dependent economy based on self-managing natural ecosystems, we will no longer be able to run the massive ecological deficits that temporary fossil and nuclear fuel availability have allowed. Just as obviously the solar-energy dependent economy will not support the human numbers that have been able to exponentially increase slowly as a result of agricultural mining of soil mass and nutrient stores since ~8,000 BCE, and rapidly because of the availability of non renewable fossil and nuclear energy subsidies since 1750.

In order to lower the human population to levels supportable by sustainable exploitation of natural grassland/prairie and forest ecosystems we must begin to allow these ecosystems to reestablish on lands that have historically been devoted to intensive cultivation during our 10,000 year agricultural past. The best suggestion so far to produce Rapid Population Decline (RPD) is for the collective global human family to adopt a One Child Per Family (OCPF) ‘modus operandi/philosophy’. Even with general acceptance of RPD and OCPF, the human population decrease that is necessary to achieve a sustainable solar energy-dependent culture, will take several centuries. Governments, as they become convinced that RPD is necessary, may choose monetary incentives, tax breaks and/or penalties to achieve general acceptance of OCPF or some other RPD program.

Part 6: Moving Beyond (Back From) Cultivation Agriculture

There are areas of the planet with such low rainfall as to preclude the growth of forest vegetation where a return to pastoral herding, with low stocking levels, will allow the reinvasion of native prairie vegetation. As we move toward the abandonment of unsustainable agricultural practices, it would be advisable to shift away from the cultivation of grains and forages that require bare ground cultivation on these lands.

As human numbers are contracting/shrinking under a OCPF/RPD or some other numbers reduction methodology, the extant population will insist on being properly nourished. The only way enough food can be produced for them is by cultivation agriculture that will further deplete most of the arable soils on the planet. During the centuries of transition, as we move toward a solar-dependent culture that again sustainably exploits natural grassland/prairie and forest ecosystems, we should be exercising as responsible agriculture as is possible on the shrinking arable land base where it is still practiced. During this transition, the growing amount of land that is abandoned will revert toward natural grassland/prairie and forest ecosystems very rapidly after we cease cultivating it (Weisman 2007).

Balancing of human numbers with the productivity of their supporting local ecosystems may be accomplished by planed attrition, much lower birth rates and the economic dislocations and hardships that a retreat from classical economic growth will incur, or the balancing of human numbers may be accomplished by a catastrophic collapse imposed by natural resource scarcity. The species with the large brain must make the choice between economic hardship and catastrophic collapse.

Cultivation agriculture must be relied upon for the bulk of the food required to support global humanity until we have reduced our numbers to a level that can be sustained by regulated exploitation/harvesting activities that fall within the
(now better understood) capacity of ecosystems to maintain diversity, to form soil and to replace soluble plant nutrients lost by harvesting or leaching.

The attractive aspect of moving toward sustainable co-existence with self-managing ecosystems is that the hit-and-miss process of evolution has already established how to make them work. Our responsibility (after our numbers have fallen to sustainable levels) will be to learn to live within the regeneration capacity of these restored ecosystems. The penalty for exceeding their regeneration capacity will be hunger and privation, as it was for our hunter gatherer, forager and pastoral ancestors.

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We all know that the United States is an importer of petroleum products. The United States is also an exporter of petroleum products, primarily to Mexico and Canada. Both of these countries send us crude oil, and we export refined products back to them. We often hear that Canada and Mexico are our largest sources of petroleum product imports, but is this really true if we net out exports? Canada remains number 1 when we net out exports, but Mexico drops to fifth place in 2008. (Mexico drops to third place in 2008, without netting out exports, because of its declining volume.)

Figure 1: US Net Imports of crude oil and petroleum products, based on EIA data. 2008 is July 2008 YTD value.
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The graph in Figure 1 is sort of “messy” with so many lines in it. If we look at US net imports from Mexico alone, this is the pattern we see.

Figure 2: US Imports Net Imports of crude oil and products from Mexico, based on EIA data. 2008 is July 2008 YTD value.

We can see from this the rapid decline in imports from Mexico (exports from Mexico’s perspective) that we have been hearing about. The 2008 value is the actual calculated value of 898,000 barrels per day through July (1,302,000 imports minus 405,000 exports), rather than a projected value at year end. If production continues to drop, it is likely to be lower at the end of the year than through July.

Looking back at Figure 1, there are several things that are interesting:

1. Net imports from Canada haven’t been rising very quickly. Net imports for 2008 YTD are in fact down about 2.5% from the 2007 value.

2. In order, our largest sources of net imports in 2008 are Canada, Saudi Arabia, Venezuela, Nigeria, Mexico, Iraq and Algeria.

3. Except for Canada and Mexico, all of the countries on the list are members of OPEC.

Looking at the EIA data underlying the graph, the next two smaller countries in terms of net imports are Angola and Russia. Clearly a substantial majority of our net imports come from OPEC or Russia. At one time, we were importing oil from Norway and Great Britain, but this is rapidly declining with the decline of oil from the North Sea.

Figure 3 shows a graph of total US oil and petroleum product imports, both on an “imports not considering exports” basis, and on a net imports basis.

Figure 3: US Imports of crude oil and petroleum products, gross and net of exports, based on EIA data. 2008 is July 2008 YTD value.

We have been exporting more refined products in recent years, with the big recipients being Mexico and Canada. For all countries combined, this is the EIA graph of US petroleum products exports.

Figure 4: EIA Graph showing US exports of petroleum products.

Our biggest exports to Canada in 2007 were residual fuel oil, 32,000 bpd; crude oil, 27,000 bpd; and coke, 23,000 bpd. To Mexico, our biggest exports in 2007 were gasoline, 101,000 bpd; coke, 47,000 bpd; and distillate, 34,000 bpd. Of these, residual fuel oil and coke are byproducts that we have an excess amount of. Coke is used as a substitute for coal.

Clearly, exports have been growing rapidly. A few years ago, one could make the argument that exports were immaterial, and could be ignored. It seems to me that one needs to consider the combination of imports and exports in analyses today.

Robert Rapier wrote related post in April 2008 called US Oil and Gasoline Import Statistics.

Today is World Food Day. To celebrate the day, we are publishing an excerpt from Arron Newton’s and Sharon Astyk’s forthcoming book, A Nation of Farmers. We are publishing two sections from this book:

• Industrial Agriculture: Stealing from the Future

• Organic Agriculture Can Feed the World Better

The book is being published by New Society Publishers, and is expected to appear in the Spring of 2009. The excerpt begins below the fold.
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Industrial Agriculture: Stealing from the Future

Whenever people say, “We mustn’t be sentimental,” you can take it they are about to do something cruel. And if they add, “We must be realistic,” they mean they are going to make money out of it. —Brigid Brophy

The price of industrial agriculture is uncalculated quantities of food that future generations will not have to eat. How is this so? Well, for example, though cities grew up in good spots for trade, they also by necessity grew in areas surrounded by fertile, productive agricultural land that could support large populations. The displacement of large populations of agrarian people into cities has meant that all over the world, more and more land is transformed into city and suburb, paved over and no longer producing.

As the ability of soils to hold water decreases because of erosion and climate change, arable land becomes desert. As soils are depleted of nutrients and the price of natural-gas-based nitrogen fertilizers rises, untold people will find the cost of growing their own food in their depleted environment prohibitive. We are seeing this already.

As artificial fertilizers produce nitrous oxide and feedlot meat production warms the planet with methane, millions risk losing the sources of water that allow them to grow food. As we deplete aquifers by growing inappropriate crops in regions that cannot sustain them over the long term, we risk future hunger.

That said, however, we should not underestimate the resilience and power of local, indigenous, sustainable agriculture. For example, in Bringing the Food Economy Home, Helena Norberg-Hodge, Todd Merrifield and Steven Gorelick cite several World Bank and FAO papers that indicate that as recently as the mid-1990s, 2 billion people—35 percent of the world’s population—were being fed by traditional agriculture with minimal or no fossil fuel inputs.¹

Often these farmers do so on marginal land, because the best agricultural land in the Global South has been turned to non-food or luxury food items. Shrimp farms displace rice farms in coastal India; coffee displaces small polyculture farms or food providing forests in Latin America and Africa; flowers displace food in much of Latin America and Asia; cotton to feed our endless appetite for cheap clothing displaces food in many nations. It will be a non-trivial problem to return this land to sustainable food production, but it is possible.

These statistics, along with the others here should at least raise some significant questions in those who believe we know what the earth’s proper carrying capacity is. That does not make the issue of population irrelevant, but it does mean we may have time and choices that we did not know we had. And if 2 billion people can feed themselves on the poorest available land organically and with minimal inputs, how many could do it if sustainable agriculture received the same supports commercial agriculture now does?

Vandana Shiva describes (and we will quote this at some length, because it is very important) what the Green Revolution has done in the third world, but it is important to remember that the loss of calories that occurred there also happened to us. For us, the cost came in the form of our loss of nutrition. That is, though we had more calories than we needed, we replaced nutritious foods with non-nutritious ones, to our detriment. For the poor of the world, it came as a significant loss of food value, as well as nutrition.

Industrial agriculture has not produced more food. It has destroyed diverse sources of food, and it has stolen food from other species to bring larger quantities of specific commodities to the market, using huge quantities of fossil fuels and water and toxic chemicals in the process.

It is often said that the so-called miracle varieties of the Green Revolution in modern industrial agriculture prevented famine because they had higher yields. However, these higher yields disappear in the context of total yields of crops on farms.

Green Revolution varieties produced more grain by diverting production away from straw. This “partitioning” was achieved through dwarfing the plants, which also enabled them to withstand high doses of chemical fertilizer. However, less straw means less fodder for cattle and less organic matter for the soil to feed the millions of soil organisms that make and rejuvenate soil.

The higher yields of wheat or maize were thus achieved by stealing food from farm animals and soil organisms. Since cattle and earthworms are our partners in food production, stealing food from them makes it impossible to maintain food production over time, and means that the partial yield increases were not sustainable. The increase of yields in wheat and maize under industrial agriculture were also achieved at the cost of yields of other foods a small farm provides. Beans, legumes, fruits and vegetables all disappeared both from farms and from the calculus of yields. More grain from two or three commodities arrived on national and international markets, but less food was eaten by farm families in the Third World.

The gain in “yields” of industrially produced crops is thus based on a theft of food from other species and the rural poor in the Third World. That is why, as more grain is produced and traded globally, more people go hungry in the Third World. Global Markets record more commodities for trading because food has been stolen from nature and the poor.²

This may be the most important point we can make—drawing down future food, and starving our children and grandchildren should not be an option in an agricultural system. High yields for us now and hunger for them later is not a viable choice in a growing world—period.

There is, in truth, no way to be certain what we gained and what we lost in the Green Revolution. What is virtually certain is that its gains were overstated, and that allocation of resources, whether from future generations or from poor to rich were inequitable. When someone makes the statement that grain yields rose by so much, that looks impressive. But the practical realities of that are very different. We have to ask whether those yield increases actually made it from field to the mouths of the hungry, and whether it was possible to duplicate them through any other method.

Organic Agriculture Can Feed the World Better

It’s really very simple, Governor. When people are hungry they die. So spare me your politics and tell me what you need and how you’re going to get it to these people. —Bob Geldof

To discover whether we can feed the world, first we need to ask whether increased yields have actually meant more available food and nutrition. In fact, this question has been answered—even the World Bank admitted in 1986 that more food does not mean less hunger. Access to food is the primary issue—if it were not, the US would have no hungry people instead of 35 million food-insecure people. Food access is the most important issue in feeding the world, as economist Amartya Sen, among other people, has discussed at length. In Donald Freebairn’s analysis of more than 300 research reports on Green Revolution results, he found that 80 percent of them showed that inequity increased with the adoption of Green Revolution techniques.³

If the Green Revolution had responded to real material shortages of food worldwide, the environmental costs might be worth it. But it did not. As Freebairn documents, the food supply was sufficient to feed the world’s population in 1950, just as it is now. Claims that Norman Borlaug and the Green Revolution saved “a billion lives” are almost certainly wildly overstated—there was sufficient food to go around before the Green Revolution, had equitable distribution been in place, just as there is now. In fact some analysts have suggested, whether rightly or wrongly, that population growth itself is a product of that growth. (That last is a subject we’ll return to shortly.)

And, as we’ve noted, industrial agriculture actually undermines our ability to continue to feed the world, by contaminating soil, increasing global warming, depleting water stocks and promoting erosion.

Dissecting figures about hunger in World Hunger: 12 Myths, Lappé, Collins, et al. note that though figures at first seem to suggest that the Green Revolution made real gains in hunger reduction because total food available between 1970 and 1990 rose by 11 percent and the estimated number of hungry people fell from 942 million to 786 million, this is not really true. If you take China out of this discussion, the figures look very different. Removing China from the equation, the number of hungry people in the developing world rose from 536 to 597 million. And,

In South America, while food supplies rose almost 8 percent, the number of hungry people also went up, by 19 percent.… In South Asia there was 9 percent more food per person by 1990, but there were also 9 percent more hungry people. The remarkable difference in China, where the number of hungry dropped from 406 million to 189 million almost begs the question: which has been more effective at reducing hunger, the Green Revolution or the Chinese Revolution?⁴

This suggests that first of all, though absolute food availability is relevant, it is not as relevant as distribution and economic justice. And because China was a comparatively late adopter of Green Revolution seeds and techniques, it also suggests that the Green Revolution itself may be less important than improved agricultural techniques that apply just as much to organic agriculture as to chemical agriculture.

It is commonplace to assume that organic agriculture yields less than conventional agriculture and that we would have to endure enormous losses in yield were we to give up chemical inputs. The yield increases of the Green Revolution are commonly articulated in isolation, without discussion of comparisons with organic yields. To determine how important the Green Revolution was, then, we need to go through the outputs of the Green Revolution and ask whether increased agricultural yields depend upon Green Revolution techniques. If, for example, agricultural yields depended on mechanization, we would expect mechanized agriculture to consistently out-yield hand labor. If they depend upon chemical inputs, we would expect organic agriculture to be heavily out-yielded by conventional industrial agriculture. And if they depend on plant breeding, we would expect older varieties to be out-yielded by newer ones.

Are these things true? Well, not in absolute terms. That is, small farms, which generally speaking use much less mechanization, fewer inputs and are more likely to use older plant varieties and save seed than large ones, actually are more productive per acre in total output than large farms. At the extreme ends of this, we can see this disparity in Ecology Action’s biointensive gardening methods, which offer yields per acre much, much higher than industrial agriculture can achieve—without fossil fuel inputs, using open-pollinated seeds.

But on a larger scale this is true as well. In Deep Economy, Bill McKibben argues that the 2002 Agricultural Census confirms this greater productivity of small farms using more hand labor—small farms produce more food per acre by every measure, whether calories, tons or dollars.⁵ What mechanization does do is reduce the amount of human labor required. However, in a world with 6.6 billion humans and growing, human labor is a widely available resource.

It is also true that organic agriculture as a whole can consistently match yields with conventional agriculture, suggesting that we do not depend on artificial fertilizers or pesticides. In a 2007 paper, “Organic Agriculture and the Global Food Supply,” the authors demonstrated that organic methods would offer a substantial net increase in yields in the Global South, while continuing comparable yields in the Global North. In a world-wide organic only policy “farms could produce between 2,641 and 4,381 calories per person per day compared to the current world equivalent of 2,786 calories per person per day.”

In other studies, agronomist Jules Pretty studied 200 sustainable agricultural projects in 52 countries and observed that, per hectare, sustainable practices led to a 93 percent average increase in food production. Grain yields, as discussed in his volume Agri-Culture, had average yield increase of 73 percent over studies including 4.5 million farmers.⁶

The Rodale Institute has been running test plots of conventionally farmed corn and soybean rotations (the practice of most Midwestern farms) against organically grown plots, where soil is maintained wholly by cover crops, and another where a fodder crop is grown and fed to cows whose manures are returned to the soil. The difference in total yields between the three plots is less than 1 percent. And during drought years, the organic plots dramatically out-yielded conventional ones because of higher organic matter in the soil. The cover-crop-fed plots produced twice as many soybeans as the conventionally farmed ones.⁷

As we go into increasingly difficult times, one of the great strengths of organic agriculture is its resilience in the face of less-than-optimal conditions; when fertilizer prices spike, in drought or flooding years, organics can continue to produce successfully. In times of stress, organic agriculture tends to out-yield conventional—and what is coming is many more stressful years.⁸

Even the much touted problem of lowered yields as fields stripped by conventional agriculture are converted to organics can be overcome, as a German study found. Making the first crop a nitrogen-fixing legume can prevent an initial drop in yield.⁹

Moreover, most of those assuming that industrial agriculture must “feed the world” are assuming that a few grain exporting nations—the US, Canada, Brazil—must feed the poor world. But yields could be doubled in poor nations. Not with commercial fertilizers, already out of the reach of many poor farmers, but organic cover crops, composting and new techniques could have dramatic results in enabling poorer nations to feed themselves and also in creating an agriculture of richer soil, higher in humus, that can withstand difficult weather. For example, in Benin in the 1990s, the government experimented with subsidizing seed for cover cropping, and found that eroding soils could be repaired with a comparatively small investment in velvet beans, which also reduced weeding. Maize production tripled, without the importation of expensive commercial fertilizers.¹⁰

So although, seen in isolation, the Green Revolution did increase yield of grain, organic and sustainable agriculture have kept pace and in some cases exceeded the results of Green Revolution techniques. We need not depend on chemical agriculture, mechanization or any other fossil (or eventually renewable) fueled technology to feed ourselves.

Notes

¹Helena Norberg-Hodge, Steven Merrifield and Todd Gorelick], p. 4.
²Vandana Shiva, Stolen Harvest: The Hijacking of the Global Food Supply, South End Press, 2000, pp. 12–13.
³Donald Freebairn, “Did the Green Revolution Concentrate Incomes? A Quantitative Study of Research Reports,” World Development, 23, No2, 1995, [page number].
⁴Lappé, et al., p. 61.
⁵McKibben, p. 67.
⁶Jules Pretty, Agri-Culture: Reconnecting People, Land, and Nature, Earthscan Publications, 2002, [p. ??].
⁷Donella Meadows, “Our Food, Our Future,” Organic Gardening, Vol. 47 No. 5 September/October 2000, p. 54.
⁸Ibid., p. 55.
⁹Ibid., p. 56.
¹⁰Ibid., p. 54.

It is not a coincidence that just as we are hitting peak oil, world monetary systems seem to be edging toward collapse. Monetary systems are debt based, and depend on growth to continue. Resources are finite, and we are reaching limitations on them. Many of us have predicted that monetary systems may collapse, either as we approach peak oil, or shortly after peak oil. I have talked about the connection between peak oil and monetary system collapse in a number of posts. In this post, I reprint relevant sections from one of my earliest TOD posts, written in April 2007.
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Back on April 30, 2007, Prof. Goose posted an article I had written called Our World Is Finite: Is This a Problem? as a guest post. In that article, I talked about the fact that we are reaching limitations on resources of many kinds, and that whenever we try to overcome one kind of resource limitation with a substitute, such as corn ethanol for gasoline, we run into other resource limitations. This is a where I saw things going, back in that early post.

By the way, I do not claim originality in predicting the connection between peak oil and collapse of the monetary system. Collin Campbell also predicted such a collapse as early as 2006. This video by Collin Campbell is from October 2007.

This is the section from my April 2007 post dealing with monetary collapse, and also the conclusion section from the same post:

What if we don’t find technological solutions?

We can’t know for sure what will happen, but these are some hypotheses:

1. Initially, higher prices for energy and food items and a major recession.

If the supply of oil lags behind demand, we can expect rising prices for oil and gasoline and possibly other types of energy. Prices for food may also rise, because oil is used in the production and transportation of food. Recession is likely to follow, because people will cut down on their purchases of discretionary items, so as to be able to afford the necessities. Layoffs will follow. People laid off will find it difficult to pay mortgages and other debt, so banks and other creditors will find themselves in increasing financial difficulty.

2. Longer term, a decline in economic activity.

With fewer resources, economic activity is likely to decline. We will need to find replacements for many products in a relatively short time frame — heating fuel, transportation fuel, plastics, synthetic fabrics, fertilizer (currently made from natural gas), and asphalt, among other things. Living standards are likely to drop, because we don’t have infinite resources for replacing all the things that are declining in availability.

A graphic representation of how this might happen is shown in Figure 3. Real gross domestic product (GDP) gives a measure of how much goods and services the United States is producing in a year, in constant (year 2000) dollars. The “Fitted” line in Figure 3 shows the expected growth in real GDP, if growth continues as in the past. Scenarios 1 and 2 show two examples of how limitations on oil and natural gas might impact future real GDP. Scenario 1 shows a fairly rapid decline, starting very soon. Scenario 2 shows a slower decline, starting in 2020. If the downturn is still several years away, we have longer to plan, and a better chance that the decline will be more gradual.

3. Transportation difficulties and electrical outages.

Since transportation generally uses petroleum products for fuel, a reduction in the amount of oil available is likely to cause transportation difficulties. These difficulties may extend to all forms of transportation–automobile, trucks, airplanes, boats, and railroads, to the extent that fuel is unavailable due to shortages, cost, or rationing.

If natural gas supplies decline, electrical outages are likely, especially during high-use times of the year. Electrical outages may also result from interruption of transportation of other fuel, such as coal, to power plants, because of petrolum shortages. Outages may be one time events, or may be planned outages at certain times of the day, to compensate for an inadeqacy in the fuel supply.

4. Possible collapse of the monetary system.

This is perhaps the biggest single issue, and the most difficult to understand.

There is a huge amount of debt in the world today. When loans were made, the expectation of the lenders was that the economy would continue to grow as in the past–that is like the “Fitted” line in Figure 3 above. If this continued growth occurred, people, on average, would be a little better off financially when the time came to pay off their loans than they were when the loans were taken out, so they would have a reasonable chance of paying off the loans with interest. Corporations would continue to grow, and because of this continued growth, most would be able to pay off their debt with interest.

What happens if a scenario like that shown as Scenario 1 or Scenario 2 on Figure 3 occurs? When it comes time to repay the loans, people and corporations will be on average, worse off, rather than better off, than when they took them out. It is likely that many people will be unemployed, and cannot pay back their debt. Companies manufacturing goods that are no longer in demand are likely to be bankrupt, and thus will be unable to repay their debt. Organizations holding this debt, such as banks, insurance companies, and pension funds will find themselves in financial difficulty, because of the many defaults on the loans that are the assets of these organizations.

Two possible outcomes of widespread defaults come to mind. One is that there is so much debt that cannot be repaid that banks, insurance companies, and in fact the whole monetary system fails. The other alternative is that the government guarantees all the debt, so that the institutions do not fail. The latter approach would likely lead to hyper-inflation.

In either event, people and businesses would lose their savings, because money either wouid either be no longer available (first approach), or would be worth very little due to inflation (second approach). In either event, foreign countries would be unlikely to accept our currency in trade. Simple transactions, such as purchasing food or paying an employee, would become very difficult. Eventually, some approach would likely be found to circumvent these difficulties–perhaps a more barter-based approach–but this would be a huge change from our current system.

5. Failure of economic assumptions to hold.

We have been raised in a world where supply and demand are generally in balance. An increase in demand results in a greater price, which in turn leads to a greater supply. If the particular item isn’t available, substitution is generally available.

Once we reach geological limits, these basic principles seem much less likely to hold. An increase in energy demand isn’t likely to translate into greater supply. Distribution of the limited available supply seems likely to reflect considerations other than price, such as rationing and long-term alliances. There may also be military conflict over available supplies.

6. Changed emphasis to more local production.

Two factors are likely to encourage local production and discourage international trade. One is the higher cost and/or unavailability of fuels used for transportation. The other is difficulty with the monetary system–either hyper-inflation or complete failure of the system. If there are monetary system problems, other countries are likely to want actual goods in trade, rather than IOUs or money. This requirement is likely to greatly reduce the amount of trade with foreign countries.

Food production is likely to be more localized, since this insures a continuous supply, and reduces the amount of fuel needed for transportation. If there are problems with shortages, people may choose to have gardens, so as to grow a few of the foods they need themselves.

7. Reduced emphasis on debt.

Once it is clear that future production is likely to be less than current production, as in either Scenario 1 or Scenario 2 of Figure 3, it will be very difficult to find any lender willing to provide long term loans, since if the loan is paid back at all, it is likely to be paid back in money that is worth very much less than it was at the time the loan was taken out.

If governments still have debt at this point, they will find it difficult to sell new bonds to replace the ones that mature. Businesses desiring to build new plants may find it necessary to accumulate resources for new plants in advance of their construction. Mortgages may not be available for prospective home owners, either.

8. Reduced emphasis on insurance and pensions.

If there are difficulties with the monetary system, insurance companies and pension plans will be among the hardest hit, since thy take in funds and invest them, and pay benefits later.

It is possible that a limited form of Social Security coverage may continue, but this is by no means certain. If a high level of inflation occurs (see point 4 above), benefits that have been promised to date will be worth very little. If a new monetary system is in place, it will be up to the government at that time to determine the level of benefits. Because total goods and services will be lower in the future (Figure 3 above), benefits to retirees will almost certainly be lower as well.

9. More people will perform manual labor.

As the amount of oil and natural gas becomes less available, more work will need to be done by hand, since the fuels to run machines will be less available. In order to encourage people to take jobs involving manual labor, manual labor will pay better in relationship to desk jobs. Because food is such ain important commodity, farming may be particularly highly valued, and may pay especially well.

10. Resource wars and migration conflicts.

If there is is an inadequate amount of a resource (water, oil, natural gas, or food), countries may fight over the limited supplies that are available. Conflicts are likely to spring up regarding areas where resources are plentiful.

Alternatively, people may choose to migrate from an area if resources become less abundant–for example, migration may occur if water supplies dry up, or if land is flooded due to global warming, or if declining oil supplies limit transportation. Receiving areas may not welcome the newcomers, leading to more conflict.

11. Changes in family relationships.

Families are likely to see more of each other, because of reduced transportation availability. Families may work more closely together, tending gardens and running small family businesses. Co-operation may be more highly valued by society. Divorce rates may decline.

12. Eventual population decline.

The food supply produced in the world today is many times greater than the food supply 100 years ago, before oil and natural gas were used in tilling crops, pumping water for irrigation, making fertilizer and pesticides, and transporting food to market. As oil and natural gas become less available, the food supply is likely to decline. Eventually, world population is also likely to decline, reflecting the lower food supply.

Conclusion

We cannot know exactly what the future will hold, if technology is not able to overcome the many issues associated with a finite world, including declining oil and natural gas supply, decreasing fresh water supply, and climate change. Whatever changes occur are likely to differ from location to location, as the world activity becomes more localized.

We tend to think of governments as fairly stable, but these too may change. Countries may subdivide into smaller units. Some have even suggested that groups of states may break away from the United States.

Educational institutions will most likely change. Fewer students will probably attend colleges and universities, and the subjects of interest will likely change. The sciences and agriculture or permaculture are likely to be topics of interest. More students may want to live on campus, if transportation is a problem. Adult education may become more important, as people seek to develop skills for a changing world.

Businesses will also change. Local businesses will become more important, while multinational companies recede in importance. Manufacturing will become less important, and recycling will become more important. Providing necessities will get top priority, while nice-to-have items will not sell well. Barter, or a new monetary system that substitutes for barter, may be the way business is done.

People may choose to live closer to work, or may work at home, so as to minimize costs associated with commuting. Some people may choose to live with relatives or friends, so as to save on utility costs. Eventually, many homes in undesirable locations may be left empty, and the parts of these unoccupied homes that can be used elsewhere will be recycled.

The next 50 years will certainly be interesting ones. Perhaps, with technological advances, some of the potential problems can be avoided. But we will need to work hard, starting now, to develop ways to work around the problems which seem to be ahead.

What videos have you seen that you think others might be interested in? Here are a few I found:

From Peak Moment Television, this is Matt Simmons’ 26 minute talk at the ASPO convention called, “Oil and Gas–The Next Meltdown:”

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This is a 4:28 video I found of Julian Darley of the Post Carbon Institute talking about what Michigan should do about preparing for peak oil. It was an impromptu interview, done at the time of the ASPO conference.

This is a 6:20 video of Matt Simmons talking about what Michigan should do to prepare for peak oil. This was also an impromptu interview, done at the ASPO conference in Sacramento.

This is a video called “Oil Outlooks Clouds Russia’s Economic Future” from www.russiatoday.com, talking about peak oil and peak gas. I couldn’t find a way to embed it, but this is a link.

You may remember that I visited the Brutus oil platform in last November, and wrote a post about my trip. Another woman on the same trip, Margot Gerritsen, put together a 17 minute video documenting the trip. This is a link to her video.

In the comments, let us know if you have found other videos or radio programs that might be of interest to TOD readers. Also, if you have comments on the videos, feel free to share them.

This is a slightly abridged version of an actual letter from a reader and my answer, regarding a change in career in the light of peak oil. What would you have said? This reader was not from the US. How would advice differ for different parts of the world?

Dear Gail:

I read some of your posts on The Oil Drum, and I wanted to ask you a question. Taking into consideration peak oil, what careers are likely to be better places in the years ahead?

(continued under the fold)
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For example, given the current financial meltdown, it seems the Financial Sector is looking like a terrible place to be, never mind what might happen if oil production starts to decline. I just read that Kenneth Rogoff, Economics Professor at Harvard and former Chief Economist at the International Monetary Fund, has joined the chorus:

The worst is yet to come in the U.S. The financial sector needs to shrink; I don’t think simply having a couple of medium-sized banks and a couple of small banks going under is going to do the job.

I am still in my 20s, currently working as a math teacher, but am planning on going back to school. I have considered engineering, but that can be very energy-dependent. Until recently, I was aiming to position myself for a career in finance – I don’t think that will be a good long term move anymore. But I’m a bit in the dark about what is a good move. I’d imagine health care and education would be “safer”…not that I necessarily want to be in those sectors, to be honest.

Anyway, I was just hoping you could give me your opinion as to what sectors of the economy you reckon are going to be better positioned once world oil production starts declining?

Sincerely,

A Reader

Hi Reader,

You ask a good question. I would agree that the financial sector is a terrible career choice. The question is what is better.

The big question is how far society drops, and how quickly.

I think electricity is one of the critical things needed to keep society going. The electrical utility area has not hired in a very long time. I have read that even now, the US electrical industry is trying to outsource as much as they can to India–wonderful! Nevertheless, I think that in the years ahead, there have to be jobs in electrical related fields, if society keeps going at all in the way we are now headed.

My view is that long term, the future of electricity is going to be more local. We are going to have an increasingly difficult time keeping up infrastructure for transporting electricity long distances. Also, many of the newer sources of electricity are smaller and more local. I was reading a book recently called “Perfect Power” by Robert Galvin and Kurt Yeager. They argue that there are great improvements in efficiency that could be made at the local level (for example, universities, big manufacturers, and big office buildings). If some electricity could be generated locally and effective storage devices were available, this local generation could help take the stress off the grid. There would be less need to build large new power plants and add transmission lines. It seems like it will be only a matter of time until local groups are permitted to make their own electricity and add the excess to the grid. Allowing local electricity might permit more co-generation (combined heat and power) as well.

I think the other area with a real need is something related to agriculture / biology. What plants will grow without too much support in each area of the country? What approaches can be used to keep pests away that require relatively little technology? What kind of crop rotation would work well? If water is in short supply in a particular area, what techniques can be made to make it go farther (more drought resistant crops, low tech devices for irrigation. The advantage of an agriculture-related field is that you might learn some things helpful for your own family’s needs.

I would stay away from health care, at least as taught in universities. I think there are way too many people in healthcare right now. We are not going to be able to afford the huge amount we are spending on it today. If everything becomes more local, healthcare will have a hard time adapting. There are a lot of techniques my father learned when he went to medical school in the early 1940s that might be helpful in an energy-constrained world (for example, diagnostic techniques that don’t depend on laboratory tests, and setting bones by “feel”), but these aren’t taught any more. After medical school, he learned hypnosis, and used it when stitching up wounds and in helping women with child birth. Health care now is all pill dispensing and surgery, and this won’t work long-term.

I think education will be scaled back a lot too. A lot of the stuff being taught today really won’t be very relevant in the future. If there is growth, it will be in the practical subjects in high school.

Hope these thoughts help.

Sincerely,

Gail

This is a guest post by James Ward. James has a background in science and engineering and is ASPO-Adelaide coordinator for ASPO-Australia. This post appeared previously on Energy Bulletin.

Abstract

By fitting a bell curve to historical phosphate production data, the best fit is obtained by assuming an ultimate recoverable resource of approximately 9 billion tonnes (of which about 6.3 billion tonnes have already been mined). This yields a peak in around 1990. Of course, the USGS claims an ultimate recoverable resource of some 24.3 billion tonnes (i.e. 18 billion remaining); however using this value yields a bell curve that is an inferior match to the historical data. A hypothesis is thus presented whereby phosphorus is considered in two broad forms: “easy” which is able to be mined quickly, but already peaked in 1990, and “hard” which has large remaining reserves and is yet to peak, but cannot be mined as quickly. (In reality there are probably many different forms ranging from very easy to very hard.) Just as with oil, estimates that lump all types of reserve in together will yield a theoretical peak that is high and distant, however the true system may involve periods of decline after exhausting easy-to-get reserves before other supplies come online to replace them. Ultimately we must develop a recyclable phosphorus supply if humans are to continue living on this planet.

Introduction

Phosphorus is absolutely essential to plant, animal and human life. Since the Green Revolution the global human food supply has grown to depend on high-yield agriculture using artificial phosphorus fertilizers. These are derived from finite, exhaustible reserves of guano (bird and animal droppings) and phosphate rock. For those of us who care whether our children will have food to eat, world phosphorus production is literally a life-or-death issue. White & Cordell have already made an excellent start at addressing this critical issue by applying Hubbert-type bell curves to gain insights into “Peak Phosphorus”. Their analysis assumes a known Ultimate Recoverable Resource (denoted RURR), and uses this value to constrain the set of bell curves being fitted to the data.
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Calculations

If we assume a remaining resource of 18 billion tonnes of phosphate rock (in line with the stated USGS reserve estimate), and add to this the 6.3 billion tonnes that have already been mined, RURR is 24.3 billion tonnes[*]. Assuming cumulative production Q at time t conforms to the following basic relationship:

where a and k are positive constants, and are the fitting parameters.

It follows that the rate of production P is defined as the derivative

which is a symmetrical bell-curve, underneath which the area is equal to RURR. Figure 1 shows the annual and cumulative production predicted using this theory, based on RURR = 24.3 billion tonnes.

Figure 1

This is, for all intents and purposes, the result of White & Cordell’s model, however they use it to urge planning for a low-phosphorus future. However, recent experience of the Peak Oil and Climate Change debates demonstrates the reluctance among politicians, industry, and community to accept a need to plan for even imminent crises. Urging action on a resource peak as far away as 2033 would most likely elicit zero response. White & Cordell’s critical message could easily disappear over the planning horizon set by myopic governments. A far more urgent message is needed since the phosphate supply situation is almost certainly more pressing than suggested by White and Cordell’s prediction of a 2033 peak at production levels approximately 50% higher than today. This is shown by the compelling predictions obtained when one uses the historical performance of the system (world phosphate mining) to predict future behaviour rather than forcing the behaviour to accommodate the URR estimates of the USGS.

Statistically, the predicted curve for P matches historical production with a coefficient of determination (R2) of 0.882. For Q, the R2 term is 0.911. Visually, it appears that the model could be improved since neither the annual nor cumulative production curves provide a match to historical data. The high production peak of 220 million tonnes per annum in 2033 is therefore questionable.

By allowing the phosphate reserve to be adjusted down from the USGS estimate, we can obtain a better fit to the historical data set, for both annual and cumulative production. Figure 2 shows the curves obtained by assuming an ultimate reserve of 9 billion tonnes (including the 6.3 billion already consumed – i.e. only 2.7 billion remaining).

Figure 2

What we see in Figure 2 can only be described as a perfect match for the cumulative production history, and a very good match to the historical annual production figures, including the downturn of the 1990s. The goodness-of-fit is reflected in the R2 values, which are 0.973 and 0.999 for P and Q respectively.

The critical outcome of this analysis is that it suggests the 1990 downturn is a final peak, with no recovery. That indeed presents an urgent message for governments to act on securing renewable, recyclable phosphorus supplies and transitioning towards more appropriate (less wasteful) agricultural methods.

While it may be somewhat overzealous to suggest that the USGS estimate of remaining reserves should be brought down from 18 billion tonnes to a figure as low as 2.7 billion tonnes, it is compelling to see that this figure results in such a good fit to the historical data. This at least suggests that the USGS reserves should be called into question.

Perhaps the best way to frame the debate from here is to suggest that, like oil, the world has been endowed with a given quantity of “easy” phosphorus (e.g. rich island guano deposits in places like Nauru) that can be – and have been – mined quite rapidly, as well as a larger endowment of lower-grade phosphate rock. While the easy phosphate has passed its peak, the low-grade phosphate should be considered separately. Figure 3 shows an example forecast where the total area under both curves (equal to RURR) is 24.3 billion tonnes, but the “easy” phosphorus (purple) is 9 billion tonnes as in Figure 2. Assuming the production history is mostly related to easy phosphorus, the fitting parameters (a and k) for the “hard” phosphorus cannot be established. Therefore, the height and timing of the secondary peak are unpredictable.

Figure 3

Like unconventional oil, the reserves may be big, and given the crucial role of phosphorus in the world food supply, we can expect heroic efforts to bring new supplies online from low-grade sources. However, several significant questions remain:

How quickly can “unconventional” low-grade phosphate supplies be brought online to replace dwindling conventional supplies, and how will we grow food in the interim?

What is the environmental cost (e.g. waste rock, greenhouse emissions, landscape degradation, heavy metal contamination) of mining low-grade phosphate?

How economic will it be to continue mining low-grade phosphate rock as energy costs rise, and how high must the price of fertilizer be to sustain this?

What will we eat when the low-grade phosphate rock runs out?

This last question is really the main subject of White & Cordell’s website, where they are urgently recommending the rapid, widespread uptake of phosphorus recycling to prevent catastrophic starvation due to exhausting our finite fertilizer sources. Unlike oil (which is simply burnt), we have the opportunity to recover phosphorus by closing loops in our food-nutrient cycle. Furthermore, if we fail to learn how to recycle phosphorus, we will find agriculture disappearing – and us with it.

References:

White & Cordell (2008) Peak Phosphorus – the sequel to Peak Oil
http://phosphorusfutures.net/index.php?option=com_content&task=view&id=1…

Historical data obtained from USGS minerals fact sheets:
http://minerals.usgs.gov/ds/2005/140/

[*] White & Cordell used tonnes of elemental phosphorus, not total phosphate rock, so their reserve and production figures were smaller than those used here; however, we are essentially talking about the same thing.

Related Post:

The Oil Drum reprinted an earlier Energy Bulletin post called Peak Phosphorous, written by Patrick Déry and Bart Anderson.

We in the United States live in a country with a strong tradition of private ownership of companies. In recent days, we have seen changes that border on nationalization:

• The support given to JP Morgan Chase in its purchase of Bear Stearns

• The bailout of Fannie Mae and Freddie Mac

• The take-over of AIG, providing a $85 billion loan in exchange for 80% of the company

• Extension of FDIC guarantees to money market accounts

• The Fed’s purchase of commercial paper, to support that market

• Most recently–the Fed’s decision to start lending directly to corporations

How much more of this can we expect to see in the days ahead? What indirect impacts will this have on American businesses? Where does all of this end?

The purpose of this post is to offer readers a chance to talk about where they see this issue going. Below the fold, I offer a few thoughts on what areas arguably need federal support, and a few implications if the country moves toward more nationalization of companies.
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Organizations possibly needing more federal support

Bankrupt large banks (or even small banks)

FDIC insurance is only $250,000 per account, dropping to $100,000 an account January 1, 2010. This limit is fine for personal accounts, but it is not nearly enough for companies (or governmental organizations) with thousands of employees. These companies spend more than $250,000 for payroll each pay period. They are also likely to need accounts with very large balances in order to issue checks to vendors. If the banks that handle these accounts are allowed to go bankrupt, the corporations with these accounts might lose a large amount of money, and would have difficulty with future payroll checks and checks to vendors. While some businesses could split their accounts among banks, this becomes difficult if dozens of banks are needed for ordinary transactions.

Federal Deposit Insurance Corporation (FDIC)

The FDIC guarantees bank deposits, now up to $250,000 per account, but does not have much to in actual funds to back up this guarantee (something like $45 billion). The usual method of obtaining additional funding is by charging higher insurance premiums to banks for the coverage. In the recent past, these fees have only amounted, in total, to a few billion dollars per year. It is doubtful that the fees can be raised to a high enough level that they will pay all of the losses occurring–without bankrupting additional banks.

Pension Benefit Guarantee Corporation (PBGC)

The PBGC is similar to the FDIC, except that it guarantees the payment of pension plans. It has exactly the same problem in terms of funding that FDIC has–the methodology works fine for an occasional bankruptcy, but not if there are multiple pension plans failing at the same time, because they hold securities that no longer have value, or because they are invested in the stock market, and the stock market has not increased as much as planned.

Insurance Companies

Insurance companies are not the first to be affected by problems with investments, but as more companies and governments default on their bonds, they are likely to be affected as well. Insurance companies are covered by state guarantee funds in the case of insolvency, but the coverage offered by the funds has many exclusions and low limits. These funds are assessment plans that collect funds from solvent insurers to pay for those that are insolvent. This approach works well for an occasional bankruptcy, but not if there are multiple large insurance company failures.

Oil and Gas Companies

Oil and gas companies are frequent targets for government takeovers for a number of reasons. For one thing, governments see them as a possible source of extra revenue. Also, if rationing is necessary, it may be easier for rationing to be carried out according to governmental plans, if a company is under government supervision. Another issue is price subsidies; the prices charged by oil companies may be perceived to be too high for consumers. Another consideration may be declining production. If the government is in charge, there can be no question whether the amount of exploration and drilling is adequate.

Parts of the Electric Utility Industry

We know that the grid has been neglected for years. No one has clear responsibility for maintaining and upgrading it, so this is a logical area for governmental support. Also, if there are bankruptcies of companies necessary to electricity transmission over the grid, the federal government may want to intervene to prevent service interruptions. Another area where government support may be needed is in the funding of new nuclear plants, if these are added.

Railroad Tracks

If we want to upgrade our railroad system, some might argue that the best way would be to have the federal government take responsibility for maintaining and upgrading the railroad tracks, similar to the way it maintains the interstate road system.

Airline Industry

If airline service to smaller cities disappears, so will the prospects for new industries for these cities. Some are likely to argue that the airlines need support to maintain service to smaller airports (or to stay in business at all).

Auto Manufacturers

If General Motors and Ford go bankrupt, should the government just stand by?

Housing Problems

A federal program to assist in homeownership, and help stop falling prices, has been proposed.

New manufacturing

We have off-shored a huge amount of manufacturing. If we want to bring some of this manufacturing back on-shore and financing is still very tight, it may be necessary for the federal government to provide support to the new manufacturers.

State and local governments

I understand that California is now looking for loans. In the months ahead, there will no doubt be many others. I don’t think state and local governments can be nationalized, but they can come to depend on assistance from the federal government.

Risks

Need for ongoing infusion of funds The reason all of these organizations (except the oil and gas companies) need help is because they are short of funds. If they were short of funds before the first infusion of funds, they are likely to still be short of funds later, especially if the current financial problems are not just the result of a cyclic downturn. It seems likely the downturn will last, because the total amount of debt outstanding is unreasonable relative to the amount of underlying resource. In addition, oil and other energy prices are now higher, because of oil shortages. The higher energy prices make debt more difficult to pay back, and are likely to limit future growth.

Government as poor business manager Governments have a reputation for hiring people who are not necessarily competent, and keeping more people on the staff than necessary. Some have suggested that with the government involved and shortages of some goods, bribery may be more of an issue.

Sudden devaluation of the dollar With the government trying to take on all kinds of additional responsibilities, it is not clear where all of the additional funding will come from. At some point, faith in the dollar is likely to evaporate.

This is an allegory explaining some of the monetary issues associated with the current financial crisis. It was written by Jason Bradford. Jason was an academic biologist who “retired” at a young age to become a community organizer and learn how to farm with peak oil in mind. He also hosts a biweekly radio show on public radio called The Reality Report.

I have never been a huge follower of Star Trek, but when thinking about the financial beast thrashing about the Borg comes to mind.

Fig. 1. A very scary looking Borg.

The Borg is a hive-like hybrid swarm of humanoid species, turned partially robotic. They are distinctly goal oriented towards “assimilation” of all other humanoids and press themselves relentlessly with the creepy mantra “Resistance is futile.”

The money system is eerily Borg-like. Because it structurally requires growth, it works relentlessly to assimilate all forms of capital. The natural consequence is that everything must be for sale. Values of freedom, independence, self-reliance, and even conservation are subservient to the goal of growth—which is really just growth of the financial Borg, not human welfare or the security of a habitable planet.
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How the Money System Depends on Growth

Modern money is not based on any physical assets or intrinsic value. Instead it is called a “fiat currency,” which in Latin means, “let it be done.” The government, or law, decrees that the face value of money is what it is. Money is created through forms of credit and debt, i.e., when banks make loans and debtors accept them, the money instantly exists. Only a fiat system can allow this form of money creation.

Money is used as a claim on real things, like labor and material goods. The money system is supposed to be regulated, usually via central bank interest rate policies, to make sure that what money can purchase, or what value it holds, doesn’t change too rapidly. When money changes in value quickly it is difficult to plan, and a panic may even occur that could collapse the system.

A collapse can happen, for example, when too many people try to collect their bank deposits at once. Banks don’t keep all the money given to them by depositors, only some portion of it. This is called “fractional reserve banking.” Banks have to constantly manage their reserves, which means juggling how much money they lend out, how much is coming in from new deposits, and how many of their loans are being repaid. If a bank is having trouble with cash flow and can’t keep up its reserves internally, it can borrow money from other banks that have more than they need at the moment. If too many banks are having trouble, the Federal Reserve (in the U.S.) can step in and lend.

The money system needs to grow because money is lent into existence with interest. All borrowers need to come up with principal plus interest. The interest portion of the money supply needs to be created in the future or too many borrowers will default. How is more money created in the future? Through more debt!

Debt and money supply will necessarily rise exponentially until they collapse. And collapse is inevitable because money is still a claim on real, tangible things, like labor and resources, which in the real world are finite.¹

Real World Growth Can’t Keep Up with Money

A human being eats and grows, and produces wastes in the process. The energy and mineral resources of an animal are called food. If someone doesn’t get enough food and they are a child, they fail to grow. As an adult they may lose weight or starve. It is also important that a person doesn’t grow too fast, and at some point stops altogether or health will decline—possibly leading to death.

Fig. 2. In the real world, getting too big has consequences and can lead to loss of performance and breakdown.

The economy does something similar by consuming resources and causing pollution. The energy inputs of our economy are called gasoline, natural gas, hydroelectricity, etc. Other resources our economy claims include mineral ores, forests, and, as I explain further below…people! And just as a human should stop growth due to physical constraints, an economy can become too large relative to the support structure of the ecosystems around it. Many old civilizations ended up in the archeological trash heap because they over taxed agricultural soils and deforested too extensively.

What is happening in the financial world is that the claims the money system is making on debt holders are greater than their ability to pay. Most of the blame right now is being placed on a bubble in lending to purchase homes. But is the sub prime mortgage fiasco the only explanation for money troubles?

I don’t think so. What we are seeing reflects a general insolvency of the global financial system. Part of the problem is that investors, business people and governments didn’t foresee that crude oil production would flatten in 2005 and prices would go from $10 per barrel in 1998 to $100 per barrel in 2008. Or that China and India would consume so much so fast that nearly all forms of commodities would rise in parallel with oil prices.

When credit is extended over a long time horizon, as in a home mortgage, the underlying assumption is that the future will be akin to the past. Inflation will be relatively modest and incomes will keep up so that a steady flow of cash can go back to banks and keep up their reserve balances. Obviously this hasn’t occurred: prices rose faster than incomes and the ability to repay debts faltered.

As an example, I learned at the 2008 ASPO-USA conference that the airline industry was given credit to buy planes and enlarge airports with the expectation that crude oil wouldn’t be higher than $30 per barrel. When banks see that many of the loans they previously extended can’t be repaid in full, they become less able to loan out more funds in order to preserve cash reserves. Bankers are currently asking the governments (in the U.S. and elsewhere) to remove many of the bad loans from their books so they can become less stingy extending credit. In the short term this could help banks and borrowers create more money. But this move would do nothing to change the underlying dynamics of the situation, only move the debt plus interest obligations elsewhere, such as to taxpayers.

What Changes Hath the Borg Wrought?

The financial Borg isn’t as creepy looking as in Star Trek, and that’s why we have trouble seeing it. Instead, money works through slow, steady pressure that manifests itself in Borg-like assimilation over time.

Think of America circa 1950, where mom stayed home and cooked and cleaned and everyone watched each other’s kids. Now we have fast food and cleaning services and professional child care and all adults join the labor pool to pay money for what they once did themselves. Mom and Dad are now Borgs.

Imagine small, mostly self-sufficient farmers. They live on inherited land and have little need to buy anything, including food. Now put in place trade policies and land reforms that lead to consolidated land holdings and encourage migration to cities where factories reside. These once largely self-sufficient people now need to rent their shelter and buy their food. The world’s poor workers are now Borgs.²

The financial Borg does two things to grow. It promotes increasing consumption by those it has already assimilated, which results in further ecological debt, and it assimilates those on the margin and gives them prosthetic appendages to yield ever more of the species Homo colossus W. Catton.³

Fig. 3. Guns and iPods on the margins of the Borg’s territory.⁴

What Next?

The United States (and likely other nations with negative trade balances and large foreign held debts) is in a Catch 22 situation. Flows of credit are so crucial for the daily functioning of our economy that it looks as though these will be preserved at all cost. Practically, this means Federal Reserve regulated interest rates will be kept low in the short term to encourage banks to make loans. It also looks as though “a higher power” is going to try to lift the bad loans off some bank balance sheets. This may lower bank-to-bank lending rates which are currently very high. The medium term risk (within a year) of low interest rates is a rapid collapse of the value of the dollar.

Remember that when something is in greater supply, its value declines. Because low interest rates and huge government bailout schemes place more dollars into circulation, the owners of dollars could panic over concerns about the value of their holdings. But the U.S. is desperately dependent upon foreign creditors. In order to attract foreign creditors into the U.S. market with a weaker dollar, U.S. Treasury bill rates would need to be raised, which would then lead to an increase in interest rates. Because imports of foreign resources are also crucial to the U.S. economy, a weaker dollar will make these more expensive. The overall impact is therefore even higher inflation, perhaps hyperinflation, while the economy actually contracts.⁵

It is difficult in a panicky time to step back and ask questions about the greater purpose of what we are doing. One of the problems I have is balancing my current anxiety over the unraveling of systems that I depend on, with the knowledge that these systems are highly misguided and need radical change. As a people, we have become very poor at distinguishing between productive and unproductive debts. Not all debts are bad. We probably need to have lines of credit in order to install renewable energy systems, build low energy transportation systems, and develop local food systems. But too much of our debt does not generate future revenues and is simply wasteful, such as the military and much of the travel industry. And much of our debt is incurred building “assets” that will be seen as liabilities once oil declines and the oceans rise, such as NAFTA superhighways or sea-level ports for trade with Asia. My bigger worry is that current leadership will do anything to prop up what exists, such as feeble U.S. car manufacturers, rather than demand a shift in priorities.

Fig. 4. Ever larger quantities of debt are now being required to produce the same amount of GDP.⁶

Our Borg-like monetary system is showing us how poorly it serves our needs. What it needs is growth—growth as measured in the “formal economy” in the form of monetary units, which is recorded in the ledger books of banks, businesses and governments. Because this formal economy is structurally dependent upon growth, it has worked to incorporate more and more of the “informal economy,” meaning the work done without monetary reward. Growth in the formal economy does not necessarily lead to our prosperity, and as the formal economy declines we will be back to more of the informal economy. There will likely be much fear and real pain in the short run, but in the long run a stronger informal economy and reprioritization of investments is what we need. And in typical human fashion, it looks like it takes a catastrophe for us to pay close enough attention to see something other than what we want to see.

Notes
¹Good on-line material that covers these points in greater detail can be found in Chris Martenson’s Crash Course and associated materials. See: http://www.chrismartenson.com/
²Thanks to Sharon Astyk for describing this: http://sharonastyk.com/2008/09/25/peeling-the-onion-whats-behind-the-fin…
³ I am using the scientific notation for naming species, i.e., Genus species Author, and the colorful terms of William Catton. See: http://dieoff.org/page81.htm
⁴Find image here: http://whatsinmyipod.blogspot.com/2008/01/african-jazz-n-jive-authentic-…
⁵I am only discussing one possible dynamic to illustrate the systemic risk and feedbacks. If the money supply can’t be expanded fast enough, prices fall and cash is hoarded, which is deflation. Financial system catastrophe can go either way.
⁶ Source of chart: http://yellowroad.wallstreetexaminer.com/blogs/files/2008/06/img0009_209…. For a very nice U.S. only chart see: http://www.buchananfs.com/files/23843/Total%20Cdt%20Mkt%20Dt%20thru%2020…

There have been a number of previous articles that have featured either Jason’s writings or his radio interviews. This is a link to some of them.

Before we leave the topic of the ASPO-USA Conference in Sacramento, I wanted to make sure a few things didn’t get missed. The big one was that The Oil Drum was one of the recipients of the M. King Hubbert Award, for Excellence in Energy Education. The other recipient of the award was Global Public Media.

In this post, I include Dr. Kyle Saunder’s (Prof. Goose’s) acceptance speech. I also show photos of TOD participants and give brief summaries and links to the presentations TOD folks gave.

Dr. Kyle Saunders, preparing to give acceptance speech for TOD’s M. King Hubbert Award
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This is Kyle’s acceptance speech:

This is quite an honor.

First, a round of applause to you Steve and the many folks at ASPO who have worked so hard to make this wonderful event happen.

We accept the M. King Hubbert Award for our contributors, our readers, and the peak oil community who continue to engage in the ongoing battle for the attention of the American, and world, public.

We accept this award for the peak oil community writ large, on behalf of ASPO-USA, Energy Bulletin, Global Public Media, peakoil.com, and the many other leaders of this movement who are with us at this esteemed meeting, all fighting the good fight in different ways, all thinking hard about the complicated uncertainties we will have to face in our energy future.

When we started The Oil Drum over three years ago, David Summers, the venerable Heading Out on TOD, and I wanted to learn more about that energy future. We had no idea on what kind of an adventure our research and learning would take us.

That journey has led us to explore myriad interrelationships between so many different topics and disciplines that the energy topic touches, it just boggles the mind when you take a step back; the journey and the problems we face continue to humble us to a point beyond anything we have ever encountered due to their daunting gravity and complexity.

The attitude we try to promote at TOD is clinical and empirical with a graceful amount of concern for humanity thrown in for flavor. It is academic, it is educated, it is critical. And it is certainly not for everyone.

We chose as our mode of discussion a website–though web-based, public, empirically-driven discussions and substantive, logical comments, and while not perfect–and not easy without the commitment of many good people–it has rewarded many with insight and the comfort of community while dealing with a topic that gives many fear, uncertainty, and doubt.

In that spirit, our mission remains simple: educate, educate, educate. We wanted to create a space that would help educate people about the many complicated narratives of energy, even as we learned some of them ourselves, with the idea that the more informed and diverse dialogues we could have about those problems–as well as the many proposed solutions to those problems, the better off we would be as a society.

Every single person we educate about our energy situation is another person who has the choice to a) learn more, b) prepare according to their own perceptions, and c) educate others.

Through that educational mission, we continue to search for and find courageous people to confront and discuss hard issues, do our best to raise the perpetually low level of national discourse, and promote action now, rather than when our normal steep-discount-rated lives would normally react. As Bob Hirsch has pointed out, and as the “black swan” unfolding on Wall Street is evidence of, time is a commodity we are also short of.

We have had the opportunity to work with some of the brightest, most wonderful people I have ever had the opportunity of meeting, and I would like to introduce them to you, please stand as I call you–I would ask that you please hold your applause until the end. David Summers, our co-founder, who I already introduced, Gail Tverberg, you know her as Gail the Actuary, has also stepped into a greater role in the site of late in addition to her strong analyses. Robert Rapier, with his incisive insights into ethanol, biofuels, and energy writ large, Jeff Vail with his educational discourses on the complex geopolitical lay of the land, Brian Maschhoff, his google-earth analyses of Saudi Arabia are quite wonderful, and our most recent addition Chuck Watson, whose models of hurricane damage have informed so many of late.

In addition, there are many others who could not be here, who play important roles in what we do, and they also deserve much laud. I hope you will give all of them a round of applause and appreciation.

To close, we think King Hubbert would know what we mean when we say that we accept this award in the spirit of research, in the spirit of education, in the spirit of community, and the spirit of brotherhood,all of which can give us courage to face the many uncertainties of our energy future. Thank you.

Most of the talks we gave were on Sunday afternoon. The 1:30 pm session was moderated by Heading Out. The talks were as follows:

Gail Tverberg, also known as Gail the Actuary, gave a talk entitled Peak Oil and the Economy. In my talk, I said that while we can start with a worldwide model of the expected impact of peak oil on GDP, this is not the whole story. Different countries are in different positions (US vs. Saudi Arabia vs China). Also, the current debt situation is likely to affect the outcome. I gave several implications, including that we may see a debt implosion and a falling standard of living.

Chuck Watson gave a talk entitled Forecasting Natural Hazard Risks to Oil and Gas Infrasturcture. He talked about the modeling techniques he uses. He also mentioned that the National Hurricane Center never wants to be too low in its forecasts, because it is concerned that people may not evacuate if they fell the risk is not great enough. His forecasts tend to be more realistic. He mentioned that there is strong evidence that climate is changing. He believes we are already past the tipping point, and the likely outcome is global cooling.

Dr. David Summers, also known as Heading Out, gave a talk entitled The Other Resource Lack: Time and Technology. He mentioned that historical oil depletion rates of about 4% a year were based on vertical wells and the proportion of oil contact that was lost each year as the water level rose. With horizontal wells, there is no reason to expect the depletion rate will be similar. Horizontal wells are placed so as to minimize water contact until it gets to the very top. When the water does meet the horizontal well, production drops very quickly. Thus, he feels that depletion rates can be expected to increase significantly, when water levels start reaching some of the horizontal wells.

The 3:30pm session was moderated by Dr. Kyle Saunders, also known as Prof. Goose. Kyle didn’t give a talk himself, but participated in answering audience questions.

There were three talks at 3:30pm:

Jeff Vail gave a talk entitled The Geopolitics of Energy: A System’s Thinking Approach in 10 Slides. Jeff talked about some of the issues he has already talked about on TOD, as well as some issues we are likely to hear more about in the future. He included such items as “Market Driven Conservation and Efficiency Increase Inelasticity” and “‘Solving Symptoms’ leads to alternative negative outcomes”. This is the whack-a-mole problem.

Robert Rapier gave a talk entitled The Energy Information Providers: EIA, IEA, and CERA. In it, he talked about the strengths and weaknesses of the information provided by each of these organizations. For each of these organizations, the big weakness has been in the area of forecasts of future supply. One concern is that governments and businesses make decisions using these poor forecasts.

Brian Maschhoff, known on TOD as “Joules Burn”, gave a talk entitled Saudi Aramco and the Art of Oil Field Maintenance. He talked about the fact that we hear a lot about what Saudi Arabia is doing with respect to developing new sources of production, but we hear virtually nothing about what they are doing to keep exiting fields, like Ghawar, producing. He showed Google Images indicating that Saudi Arabia is running out of new places to add infill wells in some locations, such as North Ghawar. This will eventually mean a decline in production.

The only one of us from TOD to give a talk at the plenary session was Robert Rapier. (Nate Hagens was scheduled to give a talk as well, but was unable to come because of health issues.) Robert’s talk was entitled Biofuels: Facts and Fallacies.

Robert talked about many of the biofuel issues that he has mentioned on TOD. He talked about where politicians fail (misleading the public; changing energy policy every year; and picking winners) and why they fail (lack of knowledge; fear of being voted out of office; and conviction that they are right). My favorite slide in Robert’s presentation was the one which showed what kind of bridge fuel corn ethanol is.