California Climate, Iben Browning and the Business of Weather

Southern California lashed once more by rain, slides

The tail end of a storm that dumped rain on Southern California for nearly a week gave the region one final lashing on Wednesday, burying houses and cars in mud, washing hillsides onto highways, flooding urban streets, threatening dozens of canyon homes and spreading filthy water that prompted the closure of 12 miles of beaches. – Los Angeles Times, December 2010.

“The weather in California has been ‘abnormal’ for most of this century. It will begin returning to the ‘normal’ weather of the 19th century. You can expect colder and wetter winters and hotter and dryer summers.” — Iben Browning, c. 1975.

In the early days of my analytical career in the ‘70’s, I was fortunate to be a part of Mitchell Hutchins, a research boutique that ultimately was merged into PaineWebber.  Among the many assets of Mitchell Hutchins was its consulting program with the likes of Otto Eckstein, Bill Moyers, Henry Kissinger, David Broder and others spending time internally with us and with our clients.  One of those “others” was Iben Browning, who originally was hired by our food analyst, Roger Spencer, to do short term and seasonal weather forecasting, in order to help us predict soft commodity prices. While Iben’s work turned out to be quite useful on the short-term weather front, he was a man of many talents. His PhD was in zoology. He wrote several books, had over 60 patents, was a test pilot, spent some time with the DOD on geopolitical strategy related to weather patterns and the ability to influence same, and developed a keen interest in long term weather forecasting and climate change. He was an engaging speaker and quickly became a regular with our investing clients as much in demand as some of those with significantly higher profiles.  He ultimately developed some fame as a forecaster of earthquakes and volcanic activity based on changing gravitational pulls on the earth from the alignment of other celestial bodies.  Unfortunately, a rather precise but unfulfilled prediction of a quake in the Mississippi Valley in late 1990, which generated enormous media attention, turned fame to infamy.  He died of a heart attack 7 months later in his home in Tijera, New Mexico; a home rumored to be a house trailer (safer than a real house,  in his view, when an earthquake hits) on rather barren land that he ultimately expected to become arable and fertile as weather patterns shifted over the next century. As with many involved in forecasting, one is only as good as one’s last prediction. Iben does not get much credit for a long history of fairly accurate forecasts done with flair and more data than “An Inconvenient Truth.”  He is remembered for the “New Madrid” quake prediction which even became a country and western song. You can view several renditions on You Tube, if you choose: http://www.youtube.com/watch?v=C5QCeSS03RE&feature=related.

Iben used to start every presentation with a standard punch line: “The next Ice Age will occur in about 10,000 years.  Those people who say it begins in 2000 years are just trying to scare you.”  His other perennial statement was the one that started this post and to me of most interest. At the time I did not totally understand his logic. It consisted of looking at historical weather patterns as reflected in tree rings and other data points, an expected reversal of the pattern of emissions–particularly in Southern California, sunspots and a warming of the east-west currents in the Pacific. In retrospect, the changing weather patterns in California may reflect a combination of increased CO2 emissions globally, producing generally more extreme weather patterns, combined with a more localized moderation in emissions which has eliminated some of the heat trap effects as California has benefited from national improvements in emission controls combined with even more stringent efforts within the state. In other words, the combination of the effect of global emissions on weather patterns with relative improvements locally may be returning California weather to its 19th century patterns with more seasonal extremes from today’s changes in climate: colder and wetter winters and hotter and dryer summers. At the moment, Browning’s predictions seem to be on point.  It’s all relative, though. I am not suggesting that coastal Californians need to move—yet. Nor should they reverse their efforts to slow emissions.  It may just be another interesting phenomenon of the Climate Change we are experiencing, or another Iben Browning prediction that will ultimately prove to be wrong. I would bet on the former.

This also brings us somewhat full circle to the value of understanding weather as a part of one’s investment decisions. As we have become a more global economy where supply  of soft commodities, or lack thereof, in one part of the world affects worldwide prices, the ability to predict positive or negative weather patterns can be quite important to investment and business decisions. I think this is being magnified by the more extreme variations in weather patterns that can come out of these early stages of Climate Change. I would only expect these patterns to become even more extreme as temperatures continue to rise.  Corporations involved in the agricultural industries have always paid attention to the weather. Investors, as evidenced by Iben Browning’s popularity, have as well. Today, those making the most use of weather forecasting would appear to be a number of hedge funds with the ability to place bets using a wide variety of instruments, where value is affected by a change in the monsoon season in India or extended drought in the Sacramento Valley. As these extreme weather events become more frequent the Iben Brownings of today’s world may become more prominent features in both the investment community and the media. Climate Change will continue to produce a new class of celebrities some of whom will stay with us for a long while.

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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

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