Brazil Is the New America: How Brazil Offers Upward Mobility in a Collapsing World (32 page)

Satellite photos compared to those from 40 years ago show a huge new dust bowl crossing western China and western Mongolia. Wang Tao, a leading Chinese desert scholar, has estimated that each year, 1,400 square miles of former cropland in northern China turn to desert. Grain harvests in northern China and Mongolia have shrunk by half or more in the past 20 years.

The problem is not isolated to the Mongolian border region. In China's grain-growing plains, as well as in large parts of the grain-growing areas of India, there is not nearly enough natural rainfall for rechargeable aquifers. This means that irrigation-supported crop growth over the second half of the twentieth century has been fed by water pumped up from deep underground fossil aquifers in addition to water channeled from river systems.

In those areas of China without access to the river systems, irrigation water is pumped from underlying fossil aquifers filled over hundreds of millions of years. As these aquifers do not readily recharge when they are drained annually for irrigation, they rapidly run dry.

More than 70 percent of the world's population, including billions living in China and India, is being supported by crops irrigated from falling water tables. As a result, thousands of square miles of former cropland are turning to desert annually. In China, overpumping in the fossil aquifers in the north is rapidly turning into desert a region responsible for half of China's wheat production and more than one-third of its corn production.

In China as a whole, almost four-fifths of its total grain harvest comes from irrigated land. Symptomatic of the increasingly arid conditions is the drying up of multiple lakes in China. In western China, Quinhai Province, through which the main branch of the Yellow River flows, once had 4,077 freshwater lakes. But in the past two decades, more than 2,000 of those lakes there have disappeared. In Hebei Province, which surrounds Beijing, 969 of 1,052 freshwater lakes have vanished in the past 20 years.

According to
Issues Online in Science and Technology
:

Water tables are falling as aquifers are pumped at rates exceeding their ability to recharge. Even the water in deep-fossil aquifers, laid down millions of years ago and which can't be recharged, is being depleted. Nearly 90 percent of all fresh water used by humans goes for irrigation. According to the United Nations Food and Agriculture Organization (FAO), just 16 percent of the world's cropland is irrigated, but this 16 percent produces 36 percent of the global harvest.

The stripping of forest and grassland and the cultivation of sloping land have led to rapid runoff of rainwater that normally would help recharge near-surface aquifers. In many regions, inadequate drainage has increased the salt content of the soil, leading to a loss of productivity and sometimes abandonment of agriculture altogether. The once-fertile crescent of the Middle East is a striking example, and similar salinization is accelerating in the United States, China, and elsewhere. It is certainly possible and imperative to increase the efficiency of agricultural water use, but it is not clear whether this will fully compensate for water losses or increase yields of annual crops enough.

Dust bowls and desertification are serious in many parts of the world. Depletion of the fossil aquifer under the North China plain, for example, has led to huge dust storms that choke South Koreans every year.
1

Dust bowls and desertification are not just problems for South Korean air quality. Rapidly rising food prices pose a threat to stability in China, as elsewhere. Remember, per capita income in China is on par with Tunisia's. What appeared to be a stable dictatorship in Tunisia was overthrown early in 2011 when food prices surged. China has a long history of dynasties overturned during times of dearth.

The epigraph that starts this chapter, from Deuteronomy, suggests a link between rainfall and deficit spending. In the modern context, the imperative to deplete fossil aquifers when rainfall is inadequate closely parallels the political imperative to borrow in order to finance spending when tax revenues are inadequate. In both cases, the overriding importance of achieving near-term goals—in this case, greater prosperity for farmers as well as lower food prices—trumps the threat of long-term ruin.

Note that China is not the only country that is rapidly depleting its fossil aquifers. Shortages of water for irrigation are undermining the productivity of one-third of the world's cropland.

At least 18 countries now have food production bubbles based on the depletion of water from nonrechargeable fossil aquifers. Between 1968 and 1998, India's food production surged due to unsustainable pumping of groundwater aquifers. Experts estimate that over 15 percent of India's population is being fed wheat, rice, and barley irrigated with water pumped from fossil aquifers. In India's breadbasket—the regions of Punjab and Haryana—water tables are falling three feet a year. In the western Indian state of Gujarat the water table has fallen from 50 feet below the surface to 1,300 feet below the surface in 30 years.

The situation in the Midwest of the United States is not much better. As you'll remember if you read John Steinbeck's
The Grapes of Wrath
, large sections of the United States were transformed into a dust bowl due to inadequate rainfall during the Great Depression.

This problem was “solved” not by increased precipitation but by the development of more powerful diesel and electric pumps capable of mining water from the Ogallala fossil aquifers deep below the surface.

In the words of water alarmist Lester R. Brown,

. . .the world has a huge water deficit. Using data on overpumping for China, India, Saudi Arabia, North Africa, and the United States, Sandra Postel, author of
Pillar of Sand: Can the Irrigation Miracle Last?
, calculates the annual depletion of aquifers at 160 billion cubic meters or 160 billion tons. Using the rule of thumb that it takes 1,000 tons of water to produce 1 ton of grain, this 160-billion-ton water deficit is equal to 160 million tons of grain or one-half the U.S. grain harvest.
2

Unfortunately, current and looming water shortages are not a figment of Lester Brown's imagination. It is particularly notable that much of America's grain crop is irrigated with water mined from the Ogallala fossil aquifer. While Americans tend to take for granted the superiority of American farming, agricultural prosperity in the United States may prove to be as unsustainable as the federal deficit. As reported in the
New York Times
, “the [Ogallala] aquifer is dropping lower and lower, and some geologists fear it could dry up in as soon as 25 or 30 years. This is a major issue confronting not just those eight states but the entire country.”
3

According to United Nations estimates, the population of the world will expand to 9.1 billion by the year 2050. But long before that happens, a global shortage of fresh water is likely to push food prices to destabilizing heights.

While water is potentially one of the world's most valuable commodities, because of its importance in the cycle of life, water is not easily exported. For one thing, water is heavy. It is heavier than all but the heaviest grades of crude oil, (also known as bitumen), with an API gravity of less than 10.

Although fresh water is not suitable as a long-distance export, at least not directly, the virtual export of water is destined to be a major informing factor in the prosperity of Brazil. While the onrushing specter of water and food shortages threaten economic and political disruption in failing states across the globe, and even emerging market powerhouses India and China are threatened, one country stands alone as likely to benefit.

In 2010,
The Economist
detailed the advantages possessed by Brazil with renewable water as follows:

According to the UN's 2009 World Water Assessment Report, Brazil has more than 8,000 billion cubic kilometres of renewable water each year, easily more than any other country. Brazil alone. . . has as much renewable water as the whole of Asia. . . . And again, this is not mainly because of the Amazon. Piaui is one of the country's driest areas but still gets a third more water than America's corn belt. . . . Brazil has almost as much farmland with more than 975 millimeters of rain each year as the whole of Africa and more than a quarter of all such land in the world.
4

Speaking of the Amazon, more than 20 percent of the world's fresh water flows through the Amazon basin alone, about 133,000 cubic meters per second. And this is only the most spectacular part of the world's most dense hydrological system.

Brazil's embarrassment of riches where water is concerned was highlighted in August 2011 by a presentation at the International Congress of the Society Brasiliera Geophysical in Rio de Janeiro. Researchers described a heretofore unknown “underground river,” the Rio Hamza, that flows to the Atlantic Ocean four kilometers beneath the Amazon. Some scientists disputed that the Rio Hamza is actually a river rather than a porous aquifer through which a substantial volume of water is trickling. According to
Wired
(UK) “a flow rate calculated to be around 3,000 cubic metres per second—which is a mere three percent of the Amazon River itself. That's still plenty, though—more than 46 times the flow of the Thames.”
5

So while the aquifers supplying other important economies, including the United States, dwindle toward the vanishing point, Brazil has 8,000 cubic kilometers (or 1,919 cubic miles in the U.S. system of enumeration) of renewable water each year.

For one thing, it suggests that Brazil's recent prominence as a driver of world growth will continue. From 2007 through 2010, Brazil contributed 10.03 percent of total world market growth at current exchange rates—more than the United States, which added 8.2 percent (due mainly to exchange rate gains for the dollar)—and infinitely more than Europe, which subtracted 9.2 percent from the world growth. Together, China and Brazil contributed 43.4 percent of world growth from 2007 through 2010. Brazil's lavish natural endowment of fresh water, in combination with China's receding ability to feed itself, guarantees a deepening of the trade ties between the two countries.

As you look ahead to the middle of this century, Brazil is destined to increase its virtual exports of water in the form of grains and proteins. No other country has both in the freshwater and the spare farmland required to convert water into food at the scale that Brazil can. According to the UN's Food and Agricultural Organization (FAO) Brazil's total potential arable land is more than 400 million hectares, of which only about 50 million are currently in use.

This is incredibly bullish for investors in Brazilian government debt. The simple truth stated in the epigraph from Deuteronomy will be as valid in the future as it was when the Bible was written, “The Lord shall open unto thee his good treasure, the heaven to give the rain unto thy land in his season, and to bless all the work of thine hand: and thou shalt lend unto many nations, and thou shalt not borrow.” In an increasingly crowded, urbanized, and hungry world, Brazil's terms of trade are destined to improve dramatically. Almost uniquely among all the globe's economies, Brazil will have the capacity to export food at a scale capable of filling the deficits destined to emerge elsewhere.

The 2011 revolutions of the Arab Spring, in which four dictators whose regimes stretched back for decades were overthrown, underscores the imperative that politicians everywhere will feel to purchase Brazilian food at prices that would seem staggering in comparison to those of the old normal.

In that light, Brazil seems destined to become one of the globe's leading creditor countries, profiting from what appears to be inflation elsewhere and ultimately lending “unto many nations.” That should make longer-term, Brazilian government debt denominated in real, and currently paying 12.5 percent potentially one of the world's greatest investments.

A century ago, leading agronomists thought they had pinpointed the factors informing optimum conditions for farming. At that time and for generations afterward, there was a smug perception that success in agriculture was predicated upon a past history of glaciation. This, of course, implied that only countries with temperate climates could compete in farming.

A representative statement of this view was spelled out in 1914 by O. D. von Engeln, a professor of physical geography at Cornell. He wrote:

Pleistocene continental glaciation was a phenomenon centering essentially about in the North Atlantic Basin. Around the North Atlantic Basin are centered, also the leading nations of the modern world . . . it is sometimes suggested that the leadership of such nations is largely accruing from natural advantages they have derived from continental glaciation. Without question many of the natural resources of these nations are owing to the invasion of the ice.
6

von Engeln went on to spell out an elaborate argument supporting the view that success in farming was predicated upon exploiting glaciated rather than nonglaciated land. Part of this view was based upon analysis of the effect of ice sheets on the deposition of minerals in the soil. According to von Engeln, glaciation improved soil quality in most cases by crushing minerals and thoroughly mixing them to form a richer topsoil for growing crops. Drawing on U.S. data for the value of farmland in 1910, he showed that variations in value between and within states reflected patterns of glaciation.

For example, a map on page 249 of volume 46 of the
Bulletin of the American Geographical Society
shows the relative value of farmland by counties in Indiana, with land in the glaciated counties worth up to 10 times more than land in the more southerly, nonglaciated counties. Von Engeln spelled out his thesis according to the lights of the day: