If we’re lucky, 2010 could be a lousy year. If we’re unlucky, 2010 could be a disastrous year, worse than 2008, because there are potential nasty surprises lurking out there. Such surprises could precipitate another, even worse financial crisis, and dump us into a global depression, instead of the recession from which we are now emerging. I’m going to deal with the issue of the nasty surprises in a later blog, so just for the moment, I’m going to assume that none of them will happen, and the economic future will unfold about as it looks now. And, although I’m looking out to the year 2020, I’m going to start by looking at 2010 on its own before moving beyond there.

The Prospects for 2010

America is out of its recession, but I would hesitate to call what we have now a recovery. It’s true, U.S. GDP grew by a reported 3.5% in the third quarter of 2009, but that was, in many ways, misleading. In the first place, it was heavily influenced by government stimulus, especially the “cash for clunkers” program. Since government stimulus will be tapering off in 2010, and the car incentives are finished, this source of economic strength will be missing. But even more revealing, barely was the ink dry on the reports of 3.5% GDP growth when they were revised downwards to 2.8% – an unusually large and rapid downward revision.

To see what’s ahead for the U.S. economy, let’s start with public sentiment. One of my favorite indicators of economic strength is the frequency with which the word “recession” appears in the mainstream media (“MSM”). This indicator has been known and used for decades, but before the Internet, you had to be in the MSM to have the ability to perform this count. In 1995, I realized that I could do it myself using Googles’ news website, and since September of 1995, I’ve done just that every week, and then graphed the results. Here’s how this graph looks today (the X-axis has been inverted since “recession” is inherently a negative idea):

© Copyright, Richard Worzel, December 2009.

One of the interesting things about this indicator is the date when it said we felt the best about the world, which was July 30th, 2007. This was just five months before the indicator dropped suddenly at the beginning of 2008, indicating that concerns were rising. This subsided in the Spring of 2008, but then collapsed in earnest in October of last year – a trough from which we haven’t yet recovered. Clearly, we were all feeling fat, dumb, and happy in mid-2007, without realizing how bad the underlying fundamentals were. And the most important lesson to draw from this is that sentiment indicators are not good predictors of problems, only feelings.

Yet sentiment is important. It embodies what economists call the “animal spirits” of an economy, being the courage to go out and do things, like take risks to make and spend money, and the willingness to trust that the other side of a transaction can and will fulfill their part of an agreement. Without these feelings of courage and trust, people hunker down in a hole, don’t spend money, and the economy’s heartbeat stops, which pretty much describes what happened last year.

Now, looking at the chart again, we can see that although our “animal spirits” have recovered from the depths, we are nowhere near where we were at the beginning of 2008. We’ve climbed back, but seem stuck halfway – and that’s a pretty fair estimate of what I expect for 2010. The economy will grow – but slowly. Unemployment will stop exploding, but employment will be painfully slow in coming back. Indeed, employment typically is slow to return at the beginning of a recovery because business owners are still wary of potential problems, and because they can increase working hours, through additional shifts and overtime, without hiring additional staff. This increases productivity and profits without increasing risks – a good bet in perilous times, but tough on those out of work. So, the prospects for America’s economy in 2010 are weak, at best.

Despite this, the outlook for inflation is dismayingly bad. I consider the price of oil to be the bellwether of rising prices, because of its pivotal position in the global economy. The price of a barrel of oil dropped from $147 to $30, and has bounced back to over $70. Now, it’s true that $30 a barrel was clearly an overreaction by a market that was wondering if the world was coming to an end, but you still have to ask why it would bounce back so far and so fast. The answer, as it often is in this day and age is simple: China, India, Brazil, and the other Rapidly Developing Countries (RDC’s). They barely went into recession, or merely experienced growth slowdowns, which were over relatively quickly. As their economies bounced back, their thirst for oil began growing again. And when the developed country economies begin growing again, all of the bottlenecks that caused the price of oil to spurt upwards in 2006 & 2007 will come into play again, and the price of oil will, once again, spurt upwards, stoking the next inflation cycle. And because of the growing relative importance of the RDC’s in the global economy, we will all experience more inflation much earlier than we would normally expect in this economic cycle.

This same combination of RDC growth and developed world recovery will play out again and again beyond oil. Food will be one of the next places it will happen, followed by other commodities and resources. The net result is that we will start hearing about an indicator that went out of fashion in the 1980s: the “Misery Index.” The Misery Index is the unemployment rate plus the inflation rate, and reached an annual high of 20.76% in 1980[1]. For comparison, it reached a modern low in 1998 at 6.05%, and its post-World War II low was in 1953, when it was 3.74% If America’s unemployment rate sticks somewhere around 10%, which I expect it will, and inflation reaches 5%, which it might despite the weak U.S. economy, then the Misery Index will reach 15% – a level not seen since 1982 when Ronald Reagan was president. All of which is why I say that if we’re lucky, 2010 will be a lousy year.

Canada’s 2010 – Canada will have an uneven year, which is to say that some parts of Canada will do quite well, while others will continue to suffer. Most of the suffering will be done in Central Canada – Ontario & Quebec – because of their reliance on manufacturing, especially in cars, their overwhelming ties to the United States, and the strength of the Canadian dollar. All of these mean that the two former powerhouses of the Canadian confederation will now lag most of the rest of the country in recovery. Indeed, if the loonie continues to strengthen against the greenback, Central Canada could have an even worse year than the United States.

Meanwhile, those provinces that supply natural resources, particularly Alberta and Saskatchewan, and to a lesser extent B.C. and Newfoundland, will do much better. With oil strengthening, and food following, the two Prairie provinces will build on their previous strengths and outperform the rest of Canada, as well as the United States, and their strength could continue to boost the price of the loonie. The resource provinces will also increase their trade with the developing countries of the world, notably China. Indeed, I would suspect that we will see a return of corporate takeovers of Canadian resource companies that could cause the Toronto Stock Exchange to outperform most developed world counterparts in 2010.

All of this will add political friction between the new “have” and “have-not” provinces that will make life testy and interesting in Parliament in Ottawa.

RDCs – Meanwhile, the RDCs, again lead by China and India, but also including Brazil and to a lesser extent Mexico, Malaysia, and Indonesia, are bouncing back from a fairly traditional inventory-led recession or growth slowdown.

There is more to RDC growth than China. Everyone has heard of India, and India will continue to try to accelerate its growth. However, watch Brazil as well, which is becoming the next powerhouse after having settled its long-standing problems of political and economic stability. We will be hearing more and more about the giant emerging in South America.

China’s ambitions – One particularly important issue for the future is China’s pegging of its currency to the U.S. dollar, which means that it has effectively executed a competitive devaluation against the Euro, Yen, and other currencies while maintaining its undervalued status against the greenback. This will cause the U.S. trade deficit to continue to run unsustainably high, and will inflict even more damage on other developed country economies. This is not the behavior of a player concerned about its image in the world, or even in its own long-term enlightened self-interest, but it does accord with my beliefs about what motivates China.

I believe that China has two primary objectives that trump all other concerns; one immediate, and the other long-term. The immediate one is the Chin’s leaders are desperate need to keep economic growth high in order to keep employment growing. If they aren’t able to achieve at least 8% growth in real GDP per year, then by their own reckoning, unemployment will rise, and with it, social and political unrest. And, from what I’ve seen, China’s leaders are more concerned about hanging on to their political power – which means political stability – than anything else. The welfare of its trading partners pales into insignificance in comparison to this critical domestic need, especially when you consider that in 2007 – the last year of strong global growth – China experienced a reported (but unverified) 10,000 spontaneous demonstrations about economic and living conditions around the country. The Red Army may be large, and it may be strong, but it can’t be everywhere, so political instability scares China’s leaders like nothing else. Accordingly, if China’s economy needs exports for strong growth, then it will contrive to have exports at any cost, especially if someone else pays that cost. China is not the first country, or the only country to play the trade game entirely selfishly. Indeed, you could say they’ve stolen Japan’s playbook from the post-war era. But China is playing it very well, if cheating for narrow self-interest is your yardstick.

The second motivation is long-term: China wants to dominate the world, replacing America as the only superpower. This again is supposition on my part, but is, I think, pretty obvious. And if they want to supplant the U.S. as the only global superpower, than inflicting economic damage on your principal geopolitical competitors is not a bad long-term strategy, even if it costs you something in lost trade along the way. It reduces the amount of money your competitor has for military and diplomatic strength. It focuses their attention on domestic issues. And it creates friction between domestic political parties. All of these are helpful to a China that is eyeing the top spot, and would prefer to get there without military conflict.

Beyond 2010

If we assume, once again, that none of the terrible “what-if” scenarios happen, then what happens after 2010?

America’s economy will continue to recover, but more slowly than desirable, and more slowly than in earlier recessions. This was not a typical recession, but was precipitated by too much debt accumulated by consumers, state governments, and, ultimately, the U.S. federal government. It takes time to pay off debts and recover spending power after the excesses of the last 25 years, which is why this recovery will be so anemic. Moreover, with so much of the U.S. housing market still under water, with mortgages bigger than current property values, it will take a long time for home owners and mortgage lenders alike to recover from the scars. This means that 2011 and 2012 are likely to continue to be less than robust.

Beyond 2012, I expect that the U.S. economy, pulled along by the global economy, the Rapidly Developing Economies, and American ingenuity and grit, will begin to pick up speed. And unless some additional shocks or surprises occur, I would expect the economy to continue to grow, and prosperity to return, through the balance of the 2010′s. It will also be accompanied by persistent high inflation – perhaps not high by 1970s standards, but higher than we’ve been used to in the past 20 years or more. This may make it tempting, beyond 2012, for central banks, lead by the U.S. Federal Reserve Bank, to put on the brakes, raising interest rates significantly in order to slow inflation. However, higher interest rates will actually have relatively little effect, because this bout of inflation will be driven primarily by bottlenecks and shortages, particularly in oil production and food, as mentioned earlier. This is going to pose a real quandary for central banks: How can they temper inflation when it’s mostly caused by too little supply rather than by too much money? The only way to lower inflation in that kind of environment is to lower economic growth – and that won’t be very appealing to any central government after years of soft growth.

All told, then, this is going to be a fragile decade for America and her mature trading partners, and the potential for bad things to happen will remain high for quite some time.

RDC’s – The RDCs will continue to grow rapidly, boosting each other’s growth, and gradually pulling the rest of the global economy with them. They will be the principal drivers of the global economy this time around, not the U.S. The bigger question, and one worth watching carefully, is whether their consumers begin to increase their consumption, taking the place of consumption-happy Americans. And how the RDCs deal with the challenges of rising, and persistent, inflation will also tell a great deal about how mature their governments and central banks are.

Canada – Canada’s economy will continue to be uneven, with Ontario and Quebec lagging behind, and the resource economies moving forward with the prices of their resources. However, both Ontario and Quebec are committing significant resources to capture some of the new industrial strength of the green economy. This, along with the slowly improving automotive market, will gradually allow Central Canada to begin strengthening with the advent of the ‘teens of this decade. Meanwhile, low interest rates, kept in place to stimulate economic growth, may produce a bubble in real estate prices in Canada, especially in the major cities, that may threaten Canada’s stability. It would be ironic, indeed, if Canada dodged the bullet that knocked off the American economy in the financial crisis of 2008, only to get hit by it in the next economic cycle. And yet, that is, implicitly, what Mark Carney, the Governor of the Bank of Canada, has been warning for some time. As well, the leading edge of Canada’s baby boom will be entering their 70s by 2020, and that will lead to lower economic growth, and shortages of skilled labor in many areas of the economy. The next 10 years will be a decade of real potential combined with real challenges for Canada.

Europe – In theory, Europe should be the strongest region of economic growth in the developed world. Yet, it is going to struggle at least as much as America, if for different reasons. Britain’s housing market and mortgage market went through pretty much the same wringer as America, and it’s government ran persistent deficits through the fat years that leave it without much ammunition to face the challenges ahead. China has instituted what amounts to a competitive devaluation by pegging its currency to the U.S. dollar, which has been persistently weak compared to the Euro, and will make it harder for Europe to compete with China in world markets. But the clincher really is that Europe is old, and the labor forces of its member countries offer either no-growth or are shrinking. Since, simplistically, GDP growth is composed of labor force growth plus productivity growth, this means the either Europe must massively improve its productivity, or it is going to see its economic growth stagnate, and its share of global output shrink throughout the next 10 years.

Ten years seems like an eternity if you’re talking about technology, but is almost nothing if you’re talking about the Earth’s environment, which tends to shift at the pace of geological changes. Yet, the next 10 years should refute that idea. I expect we will see measurable shifts in climate that will effectively end any serious debate over climate change. Despite this, there will still be extremists on both sides of the debate shooting at each other – and anyone else who happens to get into their line of fire.

That being said, how do I expect things to change over the next 10 years? Let me tackle this from the bottom up:

• Climate change, not global warming – Climate change deniers tend to persist in talking about “global warming” because they can then claim any variation from a straight-up progression in temperature as proof that global warming ain’t happening. There is a clearly identified increase in average global temperature based on things like tree rings, ice cores, and other indirect temperature indicators that predate record keeping, and, coupled with human observation within the last two centuries, leads to the clear conclusion that temperature change been accelerating over the past century.[1] (And for completeness, let me add a reference to climateaudit.org, run by one of the principal warming debunkers, Canadian Stephen McIntyre, who was one of two people who analyzed the “hockey stick” curve of global temperature increases.)

However, a general trend in rising temperatures doesn’t mean that temperatures will rise all the time, or in every location. The Earth’s climate is an incredibly complex system with all kinds of positive and negative feedback mechanisms, and such a simplistic, straight-line pattern is unlikely in the extreme.

Moreover, the geologic record indicates quite strongly that a relatively small average increase in global temperature tends to translate into much more pronounced changes in specific locations.[2] This is clearly happening today in the arctic regions, where glaciers and ice caps are melting. However, even here, climate change is what’s going on, not uniform global warming. In the Antarctic, for example, temperatures seem to be rising around the continent’s coasts, but falling near the South Pole.

Source: NASA, Earth Observatory website, April 27, 2006.

Meanwhile, the knock-on or domino effects may be even more important. The melting of the North Polar ice cap, and the glaciers in Greenland may be interfering with the Gulf Stream in the Northern Atlantic, which would affect the climate in northern Europe much more dramatically than, say, North America. On all counts, we will know much more within 10 years, but what is clear at this point is that climate is changing, and in ways that will almost certainly catch us by surprise.

• Climate is chaotic – Chaos theory is a branch of mathematics, and a chaotic system is one where the changes of the next time period are dependent on the changes of this time period. Hence, small differences at the beginning can produce dramatic differences over time. As a result, chaotic systems are fundamentally unpredictable, because small errors in observation, or small amounts of missing information lead to small differences from observed or predicted results that get magnified over time.

Climate, like weather, is a chaotic system. This means that it is fundamentally unpredictable. Indeed, one scientist, Dr. George Kukla, a retired professor at Columbia University and research scientist at the Lamont-Doherty Earth Institute, believes that most ice ages are preceded by global warming, and that we may, in fact, be heading for the next ice age rather than run-away warming.[3]

But the key issue relating to the politics of climate change is not whether we will experience torrid heat or the next ice age, but that we truly do not know what will happen next. This brings us to the central issue relating to the current debate: climate models.

• Climate models – Most people who work on, or comment on, climate change talk about the consequences of climate change to come through the balance of this century and beyond, predictions that cover a span of about 90 years or more. This completely flies in the face of my assertion that climate is fundamentally unpredictable. So, am I just wrong, or is there something else going on?

Well, if you look closely at these predictions of the effects of climate change, what the prognosticators are actually saying is, “Our climate models say that…”. Climatologists and others concerned about climate change create complex and intricate models of the way the Earth’s climate works, and then feed in various assumptions of what might happen to arrive at their conclusions. And they clearly know much more about climate than I do, and are far more familiar with the way their models work than I am. The difference is that I’ve seen this movie before – twice – and I know how it comes out.

In the 1970s, economists believed that they knew how the economy worked. They, too, build detailed and intricate models of the system they were studying, in this case the economy, and their models gave rise to the field of econometrics. One of my economics professors in university, Dr. Rudi Dornbusch, who later became an advisor to the IMF and the Federal Reserve Bank, and an informal advisor to President Ronald Reagan, confidently told me once that with their models, economists would be able to engineer recessions and inflation out of existence. He told me this in 1972 – right at the beginning of the biggest bout of inflation, and one of the worst recessions in the post-war period. And econometric models still are of limited utility, almost 40 years later.

Likewise, in the investment industry, there are always people claiming that their models have figured out the investment markets, and they will be able to make a fortune from them. The last group who said this precipitated the financial crisis of 2008 with their risk management models.

The problem lies in our incomplete understanding of complex systems, and the necessarily crude nature of the models we create. A model is a vastly simplified mathematical representation of a real world system. Climate models are no different from the economy or the investment markets except that climate is far more complex than they are. All predictive models are based on (a) what we know about such systems, (which is always a fraction of what there is to know), and (b) the past, usually the recent past. And they can often be quite useful – but only for short periods, and only when nothing dramatic happens. Typically these kinds of predictive models run on the rocks when something happens that the modelers had not foreseen, or goes beyond the boundaries of the recent experience programmed into the models.

The end result is that I do not believe any of the predictions, especially long-term predictions, from anyone’s climate models. I do believe these models are incredibly valuable to scientific research, because they impose a mental discipline, and force researchers to answer questions and develop new insights as to how the Earth’s climate operates. They may also be useful in warning of possible futures, or scenarios that might lead to disaster. But the Earth is both too vast, and too complex for any human model to capture and predict climate with any sort of certainty over extended periods of time. This is not to say that I believe we shouldn’t do anything. It’s only that I have zero confidence in anybody’s long-term forecasts of climate. And I believe that relying entirely on such models, as most commentators seem to be doing, is both misleading and dangerous.

But this isn’t just my opinion. Here’s a comment by a well-known scientist and environmental commentator:

“The uncertainty in predicting the long-term effects of this excess of greenhouse gases merely reflects our state of scientific ignorance. If we know so little about what affects weather and climate that it’s hard to predict weather accurately from day to day, how can we anticipate climate change from year to year? … The fact is that we don’t know what will happen. By tweaking parameters and factors in complex computer models of the upper atmosphere, we can get predictions ranging from an impending Ice Age to catastrophic heating.” [4]

And the name of the commentator? Dr. David Suzuki, a high-profile advocate of aggressive action to stem carbon emissions. He is also a geneticist, and not a climatologist, which does not take away from his comment on the unreliability of climate models. They are a thin reed on which to base multi-billion dollar policies.

• Climate as religion – The “debate” on climate change has comes to resemble the “debate” on abortion: the two sides are so polarized, and so entrenched in their positions that true discussion and dispassionate consideration of evidence has become virtually impossible. True believers believe that anyone who disagrees with them in any way is a heretic,should be burned at the stake, and have their carbon returned to the biosphere – or at least banned from any discussion on climate change, and what to do about it. And true deniers believe that anyone who gives any credence to any consideration that humanity needs to change its ways for its own good are the dupes of New Age lamb-chops with mush (or something less savory) for brains.

Moreover, when movements with this kind of public-steamroller concensus emerge, they tend to take on a life of their own. Scientists that offer views that seem to conflict with the idea of human-caused climate change can’t get their papers published in technical journals, because their peers all agree that they can’t possibly be right because they are obviously wrong (a logical tautology). Governments only provide funding for scientists who conduct “worthwhile” research, which means research that promises to support the current orthodoxy.  And scientists who go to private industry to get funding because they can’t get government funding are automatically labeled as industry shills, and dismissed. As a result, any scientist that wants to get funding and be published has to embrace anthropomorphic climate change as an established fact, and any scientist who disagrees tends not to be heard. This has happened repeatedly in the history of science; it’s nothing new, and it is the result of scientists’ own humanity. But it doesn’t lead to vigorous, objective debate. Instead, it leads to group-think, which is pretty much where we are today.

• What we don’t know – We’re pretty certain that the Earth is warming, on average. We’re also pretty certain, but cannot prove, that humanity is at least contributing to climate change, in particular through carbon emissions. Many in the field of climate change would also like to say that humanity is the primary cause, but, as I read it, there’s little real evidence to support or deny this.

More importantly, chaotic systems tend to remain in periods of stable equilibrium for long periods, then undergo rapid changes to a new equilibrium, which in this case would be a rapid transition to a markedly different climate for most of the world. But there are two aspects of this we don’t know. First, we don’t know how climate will change. Everyone’s betting that it will be a warmer climate, but the history of the Earth demonstrates that this isn’t always the case. In some cases, global warming is thought to have triggered a new ice age, and in a relatively short period of perhaps 30-50 years. And second, we don’t know whether changing our behavior will stop climate from changing. If we reduced our carbon emissions to zero – if we stopped emitting at all (which is clearly impossible) – it might not stop climate change from happening, now that we may have shifted the Earth’s climate from it’s old equilibrium. Or the most extreme doom-sayers may be right, and there is no time to waste. We may be on the edge of triggering a move to a new climate equilibrium, and must take extreme actions to back away from the cliff-edge. We don’t know.

What we do know is that extreme efforts have a real cost, and real consequences which we can know and can quantify. We also know that if we go about reducing emissions in inefficient ways, we can cause quite a lot of harm, including the deaths of a great number of people through starvation. The key, then, is to take aggressive action, but equally importantly, to do so in the most effective, and least costly manner possible.

• A “no tears” approach – I was concerned about the emergence of today’s group-think in climate change in 1993, when I was doing research for a book, Facing the Future. I interviewed Professor R.E. Munn of the University of Toronto’s Institute for Environmental Studies on these issues. Professor Munn, too, was concerned about group think, and had already discussed the issue previously in a publication: “The emergence of McLuhan’s ‘Global Village’ has resulted in the phenomena of ‘Trial by Television,’ in which the opinions of millions of persons are shaped by inadequate and often incorrect reporting of environmental issues.”[5] How much more blinkered is “Trial by Internet,” where you can choose to look only at one side of an argument, with the result that you aren’t even aware of the counter-arguments.

When I interviewed Dr. Munn, we talked about many issues relating to climate change. Then he offered me what I thought was a brilliant solution to the whole issue, which he called the “no tears” approach.

The basic idea is that we don’t actually know what will happen to the Earth’s climate, and we aren’t entirely sure the extent to which humanity’s activity is to blame, yet we also know the potential costs of doing nothing are enormous. Therefore, we should adopt policies that combat, say, carbon emissions by increasing efficiency. This makes reducing carbon profitable – and the profit motive is self-sustaining. Accordingly, organizations can do the right thing, in environmental terms, by doing the intelligent thing by maximizing their profits through working hard on increasing their efficiency. Indeed, I tell my corporate clients that any time you throw something away, whether it’s carbon, water, a cardboard box, or heat, you are throwing away profits that you haven’t figured out how to capture. And since the profit motive is self-sustaining, by encouraging this approach, perhaps by offering tax credits for research into increasing efficiency, you create a virtuous cycle that needs no regulation or policing because it’s not coercive.

I find this a much more likely approach than the burden our economies with extra layers of regulation, and punitive costs for non-productive activities. And if enough producers do this, even knuckle-draggers will have to follow suit, or they will find themselves facing competitors that have lower cost structures.

• Climate change and carbon are not the only issues – The Earth’s ecology is incredibly complex, interlinked, and the balance between forces is delicate. As a result, there are other issues beyond carbon emissions which will come to prominence over the next 10 years. I’m sure there are ones that will, in retrospect, seem obvious that I will miss, but here are some that I believe will come to prominence:

1) Heat emissions – Everyone’s talking about carbon emissions, but the amount of heat that humanity releases may become an important aspect of the climate change debate. Aside from anything else, greenhouse gases plus heat emissions will warm the globe faster than greenhouse gases alone. Think of a glass greenhouse with a heating system. And reducing heat emissions is a much tougher proposition than reducing carbon emissions since virtually all human activity produces heat as a by-product.

2) Weather pattern shifts – It’s not just warming that’s the issue, it’s the entirety of weather patterns. North America, for instance, may well experience both hotter, drier summers and colder, snowier winters because of climate change. As well, we may well experience stronger, and more destructive storms, from thunderstorms, to tornados, to hurricanes. Moreover, changes in rainfall patterns will cause floods in some places, and drought in others. And if droughts occur in major agricultural areas, such as the American Midwest and the Canadian Prairies, it could trigger problems with food production, and lead to soaring food prices, and starvation for hundreds of millions of people.

3) Water shortages – This is the biggest sleeper for the next 10 years, as well as a slam-dunk certainty. Water shortages are going to be global, and will exacerbate existing political conflicts, including the Palestinian – Israeli conflict, and the political friction between America and Canada. Water is one of those areas where people tend to emote rather than think, and when you’re thirsty, you almost don’t care about anything else. Therefore water shortages, which will go hand-in-hand with food shortages, are a potential powder keg in geopolitics, as well as in environmental issues. We are already seeing shortages and droughts in many parts of the world, and they are all going to get worse. Buy water stocks (the tradable kinds), and think carefully about where you live.

4) Population growth – Ironically, we can see the finish line, being the time when the Earth’s population stops growing, levels off, and then starts shrinking. Depending on what assumptions you make, this will happen sometime in the third quarter of this century, and the Earth’s peak population will be somewhere around 9.5 billion. This is happening because as global populations move towards urban centers, and as more and more countries develop a middle class, birth rates are dropping virtually everywhere. The net result is that the rate of growth in human population continues to fall (which means the number of people is still growing, but progressively more slowly).

However, adding almost another 3 billion people to global population over the next 60 years or so means another 3 billion mouths to feed, provide drinking water for, and who will want to drive cars, use electricity, and warm or cool their houses – all of which will add to the environmental burden humanity places on the Earth. This will be mentioned more and more frequently over the next decade, along with invocations of the name of Thomas Malthus. Of all the factors affecting the environment, this is perhaps the most important since it is human population that is the root cause of the environmental depredations we are discussing today.

• The bottom line to 2020 – So, bottom line, what do I expect over the next 10 years? Well, despite my contention that climate is unpredictable, I expect that we will see a continuation of the general warming cycle the Earth has experienced since around 1770, leading to significant warming in some locations, and significant changes in weather patterns in most locations. Rhetoric about reducing carbon emissions will continue to rise, but if there is agreement on what humanity, collectively, will do about it, it will only be later in the decade when we face the growing evidence of climate change. Meanwhile, I expect there will be lots of politically-expedient, and largely inefficient agreements and policies that miss the mark, such as the cap-and-trade bill that the U.S. Congress is diddling with, which actually benefits the worst polluters most. A carbon tax is by far the most efficient means of tackling carbon emissions, but also the least popular, and hence the least likely. And there will continue to be refuseniks who are intellectually dishonest (as opposed to deniers, who may honestly hold a divergent point of view). Such refuseniks will mostly be found among those who profit from the old ways, such as jurisdictions like Venezuela and Alberta, who produce petroleum from heavy oil and tar sands, and have a very strong motivation to continue to do so.

But cutting carbon emissions will not be enough, and we will hear more about other environmental issues, such as heat and water vapor emissions. (Water vapor is the supreme greenhouse gas, far more potent than carbon or even methane, but is hardly ever discussed because there’s so much of it already in the atmosphere.) And the professional environmental doom-sayers will have a field day. They make their living by pronouncing doom at every opportunity, and have a vested interest in continuing to do so, which will further bias the discussion, and hide important developments, both positive and negative. And they risk exhausting the public on the issue. You can cry wolf only so long, and then people turn to the sports pages (or sports websites, as it were). If that happens, then we may turn away from critical action just when it becomes most evident it is needed.

Someone once defined a futurist as someone who had “strong opinions, weakly held.” This means that you need to have an opinion, but you also need to be willing to change it if the evidence shows you are wrong. I have changed my opinion about climate change significantly over the past 20 years, and expect to continue to do so as more evidence comes to light, but I don’t see much of this happening with many others in this “debate.” I also expect I will be roundly castigated for not being a right-thinking individual, and probably by both true believers and adamant deniers. But I’m not interested in right-thinking; I’m only interested in clear thinking. “My commitment is to truth,” said Ghandi, ”not to consistency.”

[2] Shindell, Drew T., et al, “Solar Forcing of Regional Climate Change During the Maunder Minimum”, Science 7 December 2001 294: 2149-2152.

[3] Sternlof, Kurt, “Scientist Refutes Notion of Recent Climate as “Uniquely Benign” – Sees Evidence of Approaching Ice Age Despite Global Warming,” Columbia University Earth Institute website, http://www.earthinstitute.columbia.edu/news/story0_1.html

[4] Suzuki, David, “Why We Must Act on Global Warming,” Toronto Star, March 26, 1994.

[5] R.E. Munn, “Environmental Prospects for the Next Century: Implications for Long-term Policy and Research Strategies.” International Institute for Applied Systems Analysis, Austria, 1987.