10 Climate change and the global financial crisis
Stresses, synergies, and challenges for human security
Introduction
Climate change and globalization weave together the fates of individuals, households and communities across all regions of the globe. While both processes contribute to growing risks and increasing uncertainties, both also create new opportunities for transformative change. Researchers across the natural and social sciences have paid much attention to climate change and globalization as separate and distinct processes, and growing attention is now being been directed to the interactions between the processes (e.g., Liverman and Vilas, 2006; Leichenko and O’Brien, 2008; Keskitalo, 2008; Adger et al., 2009; Silva et al., 2009; Jeffers, 2013). Yet many questions remain regarding potential feedbacks between processes of globalization and climate change, adaptation to climate change under conditions of rapid socio-economic change, and resilience to the risks and uncertainties associated with both processes.
In this chapter, we build upon the “double exposure” framework developed by Leichenko and O’Brien (2008) to explore the connections and between climate change, globalization and human security. The double exposure framework represents a generalized approach for analysis of the interactions between global environmental and economic changes, paying particular attention to the ways that the two interacting processes spread risk and vulnerability over both space and time (Leichenko et al., 2010). As such, the framework contributes to broader efforts by social scientists to enhance understanding of factors influencing the vulnerability, resilience, and adaptive capacity of communities, regions, and socio-ecological systems to shocks and stresses associated with processes of global change (e.g., Turner et al., 2003; Eakin and Luers, 2006; Berkes, 2007; Nelson et al., 2007; Polsky et al., 2007; Acosta-Michlik et al., 2008; Eakin and Wehbe, 2009; Eriksen and Silva, 2009).
In the next part of the chapter, we present the basic elements of the double exposure framework and consider how the framework may be applied to assess interactions between the global financial crisis and climate change. Focusing on the 2007–2009 drought in California and the simultaneous collapse of the housing market in California’s Central Valley, we illustrate connections between the impacts and adaptation to climate change and the long term fall-out from the global financial crisis and subsequent economic slowdown. We show how globalization processes increased vulnerability of households, workers, and communities in the region to climate-related risks, while also influencing capacity to adapt. We conclude by arguing that the emergence of new types of intersections and interactions between globalization and climate change calls for new approaches to policy responses that take into consideration both processes.
The double exposure framework
The double exposure framework, as developed by Leichenko and O’Brien (2008) and summarized in Leichenko et al. (2010) provides a general approach for analysis of many types of interactions between environmental change and globalization. One important difference between the double exposure framework and other vulnerability approaches is that other frameworks do not typically take into account the full extent of the potential interactions between climate change and other global change processes, particularly concerning how the outcomes of multiple processes interact across space and over time. There is also relatively little recognition within other frameworks of how the two processes can together transform the context in which people and places experience and respond to changes of many types. Many vulnerability frameworks stress the importance of social, political, economic and environmental context for explaining both differential outcomes and vulnerabilities, yet the frameworks seldom recognize the extent to which the context itself is dynamic, dramatically changing as the result of both global environmental change and globalization. Within the double exposure framework, changing contextual conditions affect exposure and responses to future global change processes, resulting in new patterns of vulnerability and new challenges for social and ecological resilience (Leichenko et al., 2010).
The double exposure framework’s point of departure is that multiple global change processes are occurring both simultaneously and sequentially, creating either negative or positive outcomes for individuals, households, communities, and social groups. Within the framework, global environmental change and globalization manifest as either gradual or sudden changes (i.e., stressors or shocks) that have differential effects across a particular exposure frame. Depending on the focus of the research, an exposure frame might be a spatial, political or ecological region, an economic sector or a network of institutions. Exposure results in measurable outcomes, which may, in turn, affect the processes as well as the context in which future changes are experienced (Leichenko et al. 2010).
In each case, exposure to global change processes is influenced by the characteristics of the change (e.g., direction, rate, magnitude, intensity, and spatial extent) and by factors in the contextual environment (e.g., institutional, economic, social, political, biophysical, cultural and technological conditions). Responses, which may include actions taken either in anticipation of or following from exposure, are conditioned by factors in the contextual environment, as well as by the individual attributes of each affected actor (e.g., education, values, beliefs, cognition). Outcomes depend on both the degree of exposure to each global process and on the actions taken by the affected individuals or other actors (Leichenko et al., 2010).
Figure 10.1 provides a simple illustration of the main components of the double exposure framework. Processes of global environmental change and globalization are represented as partially overlapping triangles. These processes manifest in a specific contextual environment, portrayed as an oval. The extent or magnitude of exposure to the processes is depicted as the intersection between the triangles and the oval. An arrow leading from the contextual environment to a square representing outcomes symbolizes responses to the processes. Outcomes are depicted as separate from the contextual environment to emphasize that any outcome reflects measurable conditions at a specific point in time.
The framework incorporates dynamic linkages between the components. Processes may alter the contextual environment; responses may affect the processes; outcomes may affect responses, and so forth. Dynamics are also incorporated in the framework through recognition that processes and outcomes are often reflexive. Within the figure, the arrow leading from responses and outcomes back to the process triangles depicts these types of circular linkages, which are termed “feedbacks.” Although the figure focuses on a single exposure frame, it is important to note that outcomes and responses that occur within one exposure frame may have widespread influence on other exposure frames both across space and over time (Leichenko et al., 2010).
The double exposure framework articulates a number of potential pathways of interaction between the two processes (Leichenko and O’Brien, 2008). The pathway of outcome double exposure highlights overlapping impacts of both globalization and climate change on a particular exposure unit, whether it is a region, sector or social group, showing how the combined effects of both processes often exacerbate existing patterns of spatial and social inequality and vulnerability. This pathway identifies what may be referred to as “double winners” and “double losers.” The pathway of context double exposure shows how one process can influence the capacity to respond to shocks and stresses associated with the other process, often leading to negative outcomes. By incorporating the temporal dynamics of global change processes, context double exposure provides insights on how long-term resilience can be undermined by current changes to the contextual environment. The pathway of feedback double exposure demonstrates how the contextual changes, responses and outcomes associated with either or both processes may contribute to drivers of the processes, thereby perpetuating cycles of double exposure and posing challenges to long-term sustainability. By emphasizing the dynamic interactions between processes, responses and outcomes, the framework aims to elicit new insights and research questions, beyond those associated with separate framings of each global change process (Leichenko and O’Brien, 2008). As illustrated in the case example below, the double exposure framework can also provide insights on system-wide economic shocks and how interconnections between multiple processes spread and magnify risks and vulnerabilities (Leichenko et al., 2010).
The global financial crisis and climatic risk: California’s Central Valley
Numerous connections can be identified between the global financial crisis and climate change. For example, the globalization of finance contributed to increased availability of low-interest rate loans, which in turn helped spawn energy-intensive, automobile-oriented suburban developments throughout the world (Leichenko and Solecki, 2005). These new developments, which are often concentrated in environmentally sensitive, “amenity” landscapes, such as coastal zones, forested hill slopes, and exurban desert regions, not only contribute to increased greenhouse gas emissions, but also increase vulnerabilities to many types of extreme climatic events, including hurricanes, wildfires, and droughts. Although climate variability, in itself, is considered a “normal” risk, climate change is contributing to increased climate variability and more extreme events, including less predictability of weather, storms and floods, and droughts.
In this section, we illustrate how the double exposure framework can contribute to a better understanding of the complex inter-relationships between drought, the collapse of the housing market, and the fiscal crisis in the California. Drawing on the case of California’s Central Valley, this application of the double exposure framework demonstrates how interactions between economic and climatic change have exacerbated social vulnerabilities and undermined efforts to respond and adapt.
California is the largest food producer in the United States, supplying nearly half of the country’s fruits, nuts and vegetables. Yet this sector – itself a hallmark of the globalization of the agricultural sector – has long relied on cheap and flexible immigrant labor to produce specialty crops, contributing to persistent poverty in agricultural areas (Mitchell, 1996; Martin et al., 2006; Guthman, 2008). High-value agriculture in California also largely depends on irrigation, creating risks of salinization of soil and groundwater contamination and depletion (Schoups et al., 2005).
California’s agriculture is also highly vulnerable to drought (Roland-Holst and Kahrl, 2008). Between 2007 and 2009, a persistent drought devastated many agricultural communities throughout the state. Environmental policies aimed at the preservation of threatened species exacerbated conditions for farmers by reducing the export of water from the Delta region of California and limiting options for additional water allocations in response to the drought (Howitt et al., 2009). The drought contributed to lower profits, increased unemployment and rising food prices, with many of these adverse effects clustered in the Central Valley.
Under climate change, the agricultural sector in the Central Valley will have to adapt to new and more complex conditions (Roland-Holst and Kahrl, 2008). These conditions include reduced water availability in California and the adjoining U.S. Southwest region (e.g., from increased evapotranspiration rates, reduced rainfall, or changes in runoff from snowmelt), changes in temperature regimes, and more frequent outbreaks of pests and disease. Winter warming alone could dramatically reduce the area’s fruit and nut production. While California’s agriculture is often seen as having a high capacity to adapt to climate change through engineering and technology, this capacity comes at a significant environmental and economic cost, including costs associated with California’s groundwater storage and extensive water transfers among regions and users (Tanaka et al., 2006). As discussed by Moser (2009), there are also many barriers to adaptation in California beyond technological and financial constraints, including, for example, lack of institutional capacity and political cooperation among jurisdictions, and social and cultural values that emphasize private property and individual rights (Leichenko et al., 2010).
During the drought, Central Valley farmers responded to the lack of rain and to limited availability of other state or federal supplied water by fallowing fields and planting low-maintenance and low-labor crops (McKinley, 2009). As a stopgap measure to avoid agricultural catastrophe, the state’s governor ordered the release of 100,000 acre-feet of water to Central Valley farmers in July of 2009 from the State Water Project with the proviso that it be repaid by the end of November of that same year. This approach countered a “zero allocation” policy for farmers who purchase water from the Central Valley Project, a federally managed irrigation project.
Drought and climate change are not the only crises facing farmers in this region. Cutter and Finch (2008) highlight the Central Valley as one of the U.S. regions with the highest social vulnerability to all types of natural hazards. During the housing boom that ended in 2007, the region experienced some of the most rapid residential housing growth in the country. Real estate speculation had long been a key driver of California’s economic growth (Guthman, 2008), and investments in the Central Valley grew dramatically between the mid-1990s and the mid-2000s, such that the region bore the full brunt of the housing crisis that began in 2008. The median sales price of homes in the Central Valley plummeted, and there were thousands of foreclosures on the market. Several of the major cities in the Valley experienced some of the greatest housing price declines of any city in the United States, with losses in some cases exceeding 40 percent. The tax-assessed value of homes in the Valley declined by 11 percent during the first half of 2009 (Borenstein, 2009), and local housing markets were not expected to recover until foreclosures have been absorbed (Streitfeld, 2008). The collapse of the housing sector in the Central Valley, as well as other parts of the state, directly impacted credit markets and local economies. This made capital resources to respond more difficult to acquire. Collapse of the local housing market also devastated the tax revenues for municipalities, further restricting response capacity.
The already limited capacities of local governments were further hampered by a state budget resolution in the summer of 2009, which was built around the state borrowing money from localities with a process of paying back these funds as California’s economy improved. Moreover, the State of California had limited capacity to intervene in the Valley, both because it could not raise property taxes due to institutional and legal constraints and because there were few funds available for social services that might benefit vulnerable populations. The state had also instituted “new public management” approaches, commonly associated with neoliberalism and globalization, which entail devolution of resource management responsibilities to local levels (Christensen and Lægreid, 2001; Moser, 2009). In the case of drought management, devolution shifted some of the responsibility to the local level, even though the financial crisis meant that local institutions had limited capacity to manage regional water systems.
Pathways of double exposure
The three pathways of double exposure help to untangle this complex situation, and offer insights on response strategies that may alleviate long-term vulnerability to multiple stressors. For example, the pathway of outcome double exposure highlights the fact that households impacted by drought-related income and livelihood changes may also be subjected to instability and to a loss of shelter or equity linked to the housing and financial crises. Those individuals at the economic and employment margins are particularly vulnerable to the overlapping consequences of multiple crises. Within the Central Valley, this includes those working in industries directly linked to agriculture, such as field workers, processing handlers, food packers, truckers, as well as the local, small businesses that serve these various groups (Leichenko et al., 2010).
The pathway of context double exposure explores transformations in the contextual environment as the result of either or both processes of global change. This interaction between the two processes may sometimes create conditions that undermine adaptive capacity, thereby limiting future responses to one or both crises. In California, as in other parts of United States and throughout the world, the financial and economic crisis affected credit markets such that farmers were unable to borrow money from banks for investments in high value, climate risk-tolerant crops, or for more efficient water supply and irrigation systems. The financial crisis also undermined California’s efforts to implement measures to promote adaptation to climate change, many of which would require financial, technical and institutional resources that went beyond “normal” management and maintenance expenses (Moser, 2009). This was especially true in the case of water infrastructure, where adaptation might entail increasing the resilience of water supply systems to extreme climate events via costly new water collection and conveyance infrastructure, or through changes in allocation via new regulatory approaches, review of systems of legacy entitlement and public/private cost sharing (Roland-Holst and Kahrl, 2008).
The pathway of feedback double exposure draws attention to the ways that housing development and urbanization processes in the Central Valley interact with patterns of energy consumption. While suburban expansion has been an important driver of growth in greenhouse gas emissions, the continuing contraction of the housing sector amidst the financial crises and subsequent economic downturn present an opportunity to alter this trend. Such a response might include an emphasis on construction of green buildings, expansion of alternative energy production, and water conservation. In order to be effective and sustainable at the local level, however, such efforts must incorporate adaptation planning and attention to the social and institutional supports needed to ensure resilience to both climatic and economic shocks and stresses.
Conclusion
Globalization and climate changes are well underway and individuals, households, communities, sectors, and regions are confronted with impacts of both of these processes, whether it is through shifts in investments and sectoral upheavals, through more extreme weather events, or through some combination of both. The double exposure framework provides a way to move beyond descriptive statements about the scope of change, and to more fully analyze and explain how interactions between the processes together influence human security.
The particular case of the Central Valley reveals that efforts both to adapt to climate change and to mitigate its drivers need take into account interactions with other types of socially created risks. In addition to using regulations and incentives to manage global financial markets and to limit greenhouse gas emissions, there is a simultaneous need to address shifts in the underlying context that make people vulnerable to shocks, and to respond to uneven outcomes that contribute to increased inequality and future vulnerability. Careful analysis of interactions between processes, responses and the outcomes of multiple stressors is needed to ensure that policy solutions also respond to the local-level, human security challenges of global change.
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