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Biophysical economics: The Mississippi Delta as a lens for global issues

Mississippi Delta in September 2009.




U.S. Geological Survey


Torbjorn Tornqvist

With a global economic slowdown and growing environmental concerns, it is worthwhile to take a look at the future and think about how we can better manage development relative to society, natural ecosystems, climate and energy. These global issues can be viewed through the lens of the Mississippi Delta.

The Mississippi Delta is one of the largest contiguous coastal ecosystems in North America and has enormous ecological and economic importance. The delta sustains the largest fishery by weight in the United States; the river supports one of the largest concentrations of port activity in the world; and a significant portion of the United States’ energy is produced in the region. But it is no secret that the ecosystem is in trouble. About one-quarter of the wetlands in the delta was lost during the 20th century, primarily as a result of human activities, and recent projections, such as those by Michael Blum and Harry Roberts of Louisiana State University, indicate that most of the remaining wetlands will disappear in this century if we continue current patterns of management.

Since hurricanes Katrina and Rita devastated the region in 2005, there has been a lot of talk about coastal restoration and protection. But unless we take into account how the natural ecosystem is changing and how our decisions about issues pertaining to energy, climate change and economics will continue to affect the natural system, we are not going to find a sustainable solution to the delta’s challenges — or any of our environmental challenges, for that matter.

The Delta

There are a multitude of serious issues related to Mississippi Delta restoration and protection.

Under natural conditions, the Mississippi Delta was an open, free-flowing system. The river made dramatic changes in its course every 500 to 1,000 years. Even when the majority of the flow was in a particular channel, many older channels, both large and small, still distributed water broadly over the delta plain. In the spring, the river overflowed, either washing over its banks or discharging via crevasses — places where overbank flooding had enough scour capacity to erode permanent or semi-permanent breaks in the banks that lasted for tens of years. These crevasses transported hundreds of thousands of cubic feet of water per second and occurred frequently, every few years or so. The sediment these waters carried built up the ecosystems of southern Louisiana over hundreds to thousands of years and provided the milieu for both oil and gas formation long ago and rich fisheries today.

However, over the past hundred years, we have increasingly attempted to bend the river to our immediate needs, re-engineering the system to our own plans through the extensive use of fossil fuels. This has been mainly through the establishment of continuous levees that do not allow the river to flow into adjacent wetlands, but also through extensive dredging for transport and oil production. The result is that the delta has been starved of sediments, which instead end up being dumped directly into the deep Gulf of Mexico.

Several attempts to re-feed sediments to the delta are under way, but even the most ambitious restoration plan does not come close to equaling the river input the delta plain experienced under natural conditions. This means that much of the delta will disappear this century regardless of what we do. So we must come up with a better solution: One solution may be to work with nature instead of against it and to enhance the beneficial interactions between nature and human civilization — what are called ecosystem services.

Ecosystem Services

The biosphere, the interconnected web of life that covers Earth’s surface, is made up of various ecosystems, including forests, grasslands, estuaries, high mountain meadows, arctic tundra, deserts, oceans and deltas like the Mississippi. Many human-dominated ecosystems such as agriculture and cities are also included in the biosphere.

The work that nature does to support the human economy is often called ecosystem services. Such services include rainfall and the water cycle, clean freshwater, fertile soils, pest regulation, wildlife, food production and climate regulation.

Ecosystem services have a high economic value that can transcend any estimated price tag. Studies have shown that the total value of ecosystem services at a global level is tens of trillions of dollars annually and likely exceeds the value of economic activity measured by money. Ecosystem services in rich, productive ecosystems like the Mississippi Delta have the highest value — in fact, the delta’s services are worth billions of dollars per year. Natural ecosystems also contribute to spiritual well-being. Studies show, for example, that children who have regular contact with nature have lower levels of hyperactivity and attention deficit disorder.

For most of humans’ tenure on Earth, we have had a minimal impact on Earth as a whole. Things changed some 10,000 years ago when we began to manipulate ecosystem services on a local level through agriculture. By the 20th century, humans had begun affecting the biosphere at a global level. Humans dominate approximately two-thirds of the land area of Earth and divert, directly or indirectly, between 40 and 50 percent of Earth’s primary production to our own ends. From overfishing to overfertilizing to introducing invasive species, the ecological footprint of humans has surpassed the carrying capacity of the biosphere. These impacts have reduced the ability of the biosphere to provide ecosystem services and will likely make further growth and sustainable management of ecosystems more difficult.

We have survived for millennia without modern industrial technological society, but without the natural world, we cannot survive.

Future Challenges: Climate Change

There is a strong consensus in the scientific community that Earth’s climate is changing, that these changes are, in large part, most likely a consequence of human activity, and that they will have a dramatic impact on society — especially coastal areas. Human development, driven largely by the burning of fossil fuels, is responsible for the near doubling of carbon dioxide concentrations in the atmosphere during the last two centuries. Further warming projected over the next century will cause additional problems, including higher temperatures, more and stronger storms, changes in precipitation patterns and accelerated sea-level rise.

Rising sea levels will affect coastal areas all over the world. Every coastal city has large areas that are only one to two meters above sea level. But the effects will be felt most dramatically in broad, low-lying coastal areas such as the Mississippi Delta where the land is subsiding. The sinking of the land increases the rate of relative sea-level rise — the sum of the average global sea-level rise and subsidence — which in the delta is much greater than the global average. For example, the average rate of sea-level rise was about 2 millimeters per year in the 20th century. By contrast, in the Mississippi Delta, the rate of relative sea-level rise was as high as 1 centimeter per year in the 20th century. In much of the Mississippi Delta, by the end of the 21st century, relative sea-level rise may approach two meters.

Projected changes in tropical storm systems, which are expected to increase in frequency, duration and strength, are likely to threaten coastal ecosystems and human activities there. Tropical storms mainly affect coastal areas from the outer tropics to the lower temperate zone. But increased warming may result in storms moving more frequently to higher latitudes such as New York and New England. Any development plans have to take these climate implications into account.

Future Challenges: Energy

Energy scarcity will certainly become an increasingly important factor affecting society. “Peak oil” — the point in time when world oil production reaches its highest level and then declines forever — has gone from a rather esoteric discussion among a small group of petroleum geologists and environmentalists to being front-page news. The production of conventional oil peaked in the United States in 1970, and production has declined most years since. Global production of oil stopped increasing in 2005 and began to decline sharply in July 2008. Production of oil and related liquids has fallen by nearly 5 percent in the past year. Although some of this is due to the global economic crisis, much of this decline is attributable to the collapse of production from the very largest oilfields such as the Mexican field Cantarell in the Gulf of Mexico. The only thing that has kept the price of oil relatively low over the past year is the fact that our global economies have been declining at about the rate of our largest oilfields.

Globally, oil consumption began to surpass new additions to reserves almost three decades ago. The main reason is that we have not been finding new, very large oilfields since the 1970s, and these fields are overwhelmingly important to total production. Today, the world is using about four barrels of oil for each barrel discovered — we are emptying the giant reserves discovered decades ago to supply the world’s growing thirst for oil. Clearly, this is an unsustainable situation.

An important factor that affects any consideration of energy use is energy return on investment (EROI). EROI is the ratio of the energy that is produced to all the energy used to discover and produce that energy. This ratio is very important as it determines the surplus energy that is available to run the rest of the economy. In 1930, the EROI of conventional oil production in the United States was at least 100:1, but over the intervening decades, it fell to between 15:1 and 10:1 for producing fields. Thus, it now costs more to find and produce oil than it used to. The EROIs for nonconventional sources of oil, such as oil shale and oil sands and most renewables, are far less than 10:1. If the EROI for our most important fuels continues to decline, there will be large social implications, such as having less disposable income available.

Renewables will clearly play a role in providing energy in the future, but there is simply no mix of renewables that can provide fuel with both a high EROI and in the quantity we need to offset the decline in oil discovery and production. Even if there is a substitute, there is no indication that we could bring it online at the rate necessary to compensate for the projected fall in oil supplies.

Moreover, there is much sloppy thinking about the potential for renewables to replace oil. Ethanol is an example. We cannot physically grow enough corn to make ethanol replace oil. In addition, the energy costs of producing ethanol are very large. These include not only the energy to drive tractors and harvesters, but also the energy required to make fertilizers and pesticides. It is questionable if EROI for ethanol from corn is much greater than 1.5:1, which is very unfavorable compared to most fossil fuels and probably in no way a net contribution to the nation’s energy needs. Thus, ethanol and other biofuels will never make the United States or Europe oil-independent.

Many people hold onto the promise that technological innovation will allow us to find oil indefinitely into the future. Certainly modern technical innovations can make a difference in the degree to which we find oil in the future. All too often, those who enthuse over technology forget that we have been scouring the surface (and depths) of the planet looking for oil for a century, and the declining EROI analyses suggest that depletion is trumping technological advances and oil will become scarce and expensive: There is no replacement that can be supplied at a level to meet current — much less projected — demand.

What does this mean for coastal development and specifically the Mississippi Delta? Even if by some miracle peak oil could be pushed forward by one to three decades, the issue is moot. The planning horizon for coastal protection and restoration is 50 to 100 years — thus peak oil will occur rather early in the process. Energy scarcity will certainly affect how the coast is managed because the traditional procedures of human management — dredging, maintaining levees and so on — are very energy-intensive. As a result, it will become increasingly difficult to continue this process.

For the Mississippi Delta, much of what is being proposed for restoration and protection — building and maintaining huge flood-protection systems, restoring barrier islands and marshes by pumping sediments for long distances — is also enormously energy-intensive. For example, a large dredge used to dig up and pump slurried sediments to build marshes and barrier islands uses about $100,000 worth of diesel fuel per day. And that is just the cost of fuel in today’s prices. The only type of restoration strategy that has relatively low long-term maintenance and energy costs is the reintroduction of river water to the large wetland areas by controlled diversions.

As this energy crisis grows, the only real answer is that we will have to become much more efficient in the way we manage our resources and our coasts so that we will use less energy.

The Economics Issue: Free Market Versus Biophysical Economics

A major impediment to convincing society that sustainable ecosystem management is important to the human economy is neoclassical economics — free market economics. Free market economics has become the dominant social and economic paradigm for the developed world’s economies. The problem is that free market economics has little ability to take into account critical long-term issues such as oil depletion, climate change and loss of biodiversity. It is largely disconnected from the biophysical reality upon which economics must be based.

For us, the issue is not simply that economists do not recognize that there are externalities not captured by the market. The problem is that conventional economics has little formal way to incorporate these externalities without, for example, public pressure. Yet often the information or the political structure to deal with these issues is simply not there or is deliberately downplayed or undermined by political actors. In addition, many of these issues are cryptic and gradual, and people are not aware of the losses that are taking place or do not understand how to relate them to economic activity. For example, in the delta region, when flood-control levees were constructed along the river and large-scale oil development was undertaken in southern Louisiana more than a half-century ago, people paid very little attention to the marshes that were destroyed because they were perceived as having little value.

Now we know that those marshes are worth thousands of dollars an acre in term of fish production, waste processing and hurricane protection, for example, although we still have no way of knowing for sure how their value enters into routine market transactions. Thus, we are attempting to develop a new approach to economics called “biophysical economics” that starts with the importance of natural resources. But it will be a long time before such a view becomes dominant, if ever.

Under the model of biophysical economics, reducing energy use and sustaining rich ecosystems and biodiversity are considered central to the health of our economy — they are not externalities. But a discussion of these issues is generally unheard of in economists’ and even most ecologists’ discussions because over the last few decades of energy abundance, the concept of limits has disappeared from economic thinking. In addition, because limits are intrinsic to ecology, there will certainly be conflicts with the ideas of the lack of absolute scarcity and infinite substitutability that are central to free market economics.

The rationale used almost universally to advocate free market economics is “efficiency” — the concept that unrestricted market forces will seek the lowest prices and the net effect will be the lowest possible prices. It is rather amazing to see this argument trotted out repeatedly with so little understanding or testing of the concept, and with the definition of efficiency constantly transmogrified into whatever suits the writer’s preconceptions or politics.

We and our colleagues likewise have found that when efficiency is measured by commonly accepted scientific and engineering formulas — physical output over physical input, with output sometimes measured with a monetary proxy — that there is little or no evidence that free markets do indeed increase efficiency. For example, when we examined some 130 countries, we found that efficiency is declining in agriculture and in economies in general in most developing countries, even when free market economic policies had been implemented. Likewise, the solution of most free market economics-guided development schemes — that more growth will solve all problems — has rarely worked in the past and has even less chance of doing so in the future due to the progressive exhaustion of cheap oil complicated by climate change.

Take, for example, the free market principles of the “Chicago Boys” — a group of economists in Chile who, in the 1970s when Chile was spiraling downward economically, advised General Pinochet to employ a set of free market economics-based policies that initially appeared successful by curbing inflation and turning Chile into the first nearly first-world nation in Latin America. These policies were implemented, however by very severe over-exploitation of forests, fish and, many would say, workers. Although such policies were implemented in many Latin American countries in recent decades, they are now almost universally rejected by contemporary thinkers because they are widely viewed as mostly helping the wealthy at the expense of the poor and the middle class, and because their track record for resolving the long-term economic problems of South American countries has been spotty at best.

Moving Forward

In constructing the future of economic analysis, we have to take more into account than just the free market principles that have tended to guide us so far. We are attempting to construct economics on a new biophysical base, but it is a daunting challenge — attempting to reconstruct how we approach an entire field!

In the end, it is going to take either government regulation or a popular movement based on changing societal values to fundamentally change the mechanism that our economies use to begin to account for ecosystem services. It’s not going to be easy, but to truly develop sustainably, it’s necessary.

Whether we’re talking about the Mississippi Delta region or the planet as a whole, it is important that instead of taking the free market economics approach, we take a more holistic approach that includes ecosystem services and all the critical environmental and resource factors, including the implications of climate change, energy reserves, costs, societal issues, biodiversity and so on. Lessons learned in the Mississippi Delta, both good and bad, will inform the wider world — but only time will tell if the delta provided a good example.

John W. Day, Charles A.S. Hall and Alejandro Yez-Arancibia
Tuesday, November 24, 2009 - 09:10