A Local Problem or a Global Problem? The Monsoon Was Not Soon Enough.

India is now in the midst of its annual monsoon season. 80% of India’s rainfall occurs during this season and is critical to its agricultural system. However, in many places it started 3-4 weeks late.  Cumulative rainfall appears to be catching up, maybe now only 18-20% below normal in many places, 40% below normal in others. Daily rainfall is now running 50 to 80% above long term averages although June had the lowest cumulative rainfall in more than 80 years. In some spots, Uttar Pradesh (UP) being one, the lower rainfall is being characterized as producing “drought conditions.”  In a parochial sense, I care about UP.  Our company, DWP, sells solar systems to the farmers there (see on this blog, “600 Million Points of Light…”). A late start to the rain meant easier logistics selling in the area in June.  However, if this means lower plantings and shorter harvests—which it does—the farmers won’t have enough income to buy the systems later in the season. And, the price of certain foodstuffs will likely rise, further reducing spendable income. If this occurs countrywide—which is the case—it could mean demand for foodstuffs on the world market will rise as India tries to feed its people.

Maybe this is just one of those statistical events.  After all, the last four seasons have produced bumper crops in India. Or maybe, those climate change folks are right.  They have been saying that one manifestation of climate change could be changing weather patterns with shorter, but more intense “seasons.”  Some of them pointed to Katrina a few years back as an example of what could happen. Of course, that faded when the next year proved to be a mild hurricane season in the Atlantic/Gulf region. I will bet that some of them will point to this year’s monsoon season as supporting their case.  In any event, weather/climate will likely force India to add food shortages to its list of problems this year.

India is taking somewhat of a wait and see attitude on Climate Change—as are many people. If nothing else, India believes that the western world should not be asking it to reduce carbon emissions when the developed countries are the ones that have put most of the carbon into the system up to now. On one level India is right.  The western world needs to take some very aggressive steps to reduce its use of carbon. On another level, all the evidence says that India will likely suffer the most of any major country if global warming does occur—and there is some evidence that some of the effects of emissions are quite local.  In addition, moving countries toward energy independence and fueling (if you will pardon the expression) a new technological wave, it is possible that pro-active steps to reduce carbon emissions may actually save lives and add to economic growth. If I felt there was a significant risk to humanity from the carbon path we are on—and I do—and I could change my position geopolitically—which I also believe—I would be doing everything I possibly could as a country to be a major participant in this carbon reduction cycle. As I said in my first post on this blog, we may be 10 years away from a more universal recognition that we have a problem.  We are getting some early signals. How many do we need?

This entry was posted in Climate Change, India by Jack Rivkin. Bookmark the permalink.

About Jack Rivkin

Jack Rivkin retired in 2008 as EVP, CIO, Head of Private Asset Management of Neuberger Berman(NB) and from NB's Executive Management Committee. He was also on the Lehman(LB) Council on Climate Change(CC) and the NB CC Fund Advisory Board. He has been engaged with the United Nations and other entities on policy issues related to Private Capital and CC. He is an Associate Fellow of the Asia Society. He has continued on the NB Mutual Fund Board and with his CC responsibilities. He began his investment career in 68 as an analyst at Mitchell Hutchins(MH), and became Director of Research(DOR) there. After Paine Webber(PW) acquired MH, he served as DOR; CFO of PW; CEO of PWMH-the equity trading and investment arm of PW; Chmn of MH Asset Management and President of PW Capital. 87-92 he was DOR and, subsequently, Head of the Worldwide Equities Division of LB. 93-95, he served as a Vice Chairman and DOR at Smith Barney (now Citigroup). He was an EVP with Citigroup Investments 94-01, responsible for private equity investments. He was also an adjunct professor at Columbia University teaching a course in Security Analysis. He joined NB in 2002. He is the co-author of “Risk & Reward—Venture Capital and the Making of America’s Great Industries,” Random House, 1987. He is a regular guest on various media. He is the principal subject in a series of Harvard Business School cases describing his experience as DOR and Equity Head at LB. He has served as a director of a number of private companies and the NYSSA. He is currently a director of Idealab, Dale Carnegie, Operative, World Policy Institute and other private companies. He is a member of the Economic Club of NY, the Anglers Club, Theodore Gordon Fly Fishers, and a lifetime member of Trout Unlimited. He continues to be an active private equity investor when he isn’t fly fishing. Mr. Rivkin earned his Professional Engineering degree from the Colorado School of Mines and his MBA from the Harvard Business School

One thought on “A Local Problem or a Global Problem? The Monsoon Was Not Soon Enough.

  1. Jack,

    Talking about Global Warming, on Monday night we never got around to discussing your views on the cap and trade program. What do you think?

    Peter

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