The Money of Global Warming: Q&A with McKenzie Funk

Modern Farmer: You said that you didn’t really set out to write a book about climate change. How did this book about climate change come about?

McKenzie Funk: It came about with an assignment for Harper’s magazine that sent me to the Arctic. I did it just as a magazine segment. I mostly thought it was weird that Canada was sending out its military to defend the Northwest passage from invaders, especially American invaders. I knew it was about climate change at that point because the magazine said it was. But I didn’t have any perspective on the bigger picture. I thought climate change was a little of a boring topic to cover because it was, in my mind and so many people’s minds, connected to political fights on whether or not it was real. It really opened my eyes to this fact that climate change would be something strategic. The impacts themselves were beginning to be felt and people were reacting. That was beginning to happen here in the Arctic, then it was beginning to happen all over the world. I don’t think I fully understood how human it was, how fun it could it be, in a good stories kinda sense.

MF: What are some of the good stories you found, how are people attempting to get rich off climate change?

Funk: I split my reporting into three areas of climatic change. The melting of the ice in the Arctic and the ice on top of Greenland, then I looked at droughts and then superstorms and rising water in general. Basically all these things are stories about water. In every way imaginable, related to these water stories and climate change, people are trying to make money. In the Arctic, a lot of it’s about oil and mineral resources that’s revealed as the ice is pulled back. In places where there is more drought, more wildfires, and those, people trying to buy out water rights and buying out farmland. The last part of the book is how people are dealing with it, that can be everything from architects wanting to build floating cities to genetically modifying the mosquitoes and plants to deal with the spread of tropical diseases.

MF: In one of the chapters you accompany a New York City investor to South Sudan to buy farmland.

Funk: I’d seen stories about people getting farmland by buying abroad. The farmland grab came after the global food crisis, where Australia cut off its rice exports and there were riots in places like Bangladesh and Egypt. After that happened, prices went through the roof, and the investors were everywhere in Africa, and in places like Brazil, Cambodia, Ukraine just trying to buy farmland. It’s the ultimate act, because everyone’s always going to have to buy food.

My entry to the story was when I finally found an investor who was happy to have the attention. He had partnered with the son of a feared general in South Sudan. Together they had a plan to lease 400,000 hectares of farmland, that’s a little bigger than Delaware, and then tried to get another 400,000 hectares, that’s almost a million hectares. I met him and we went to Juba, the capital of South Sudan, and had a lot of meetings with people. We sat around in hotels made of shipping containers. All he needed was a signature coming from the president of South Sudan because they had passed a new law that restricted land rights. The investor was saying that the strength of this general made all of the paper stuff irrelevant, but at the same time it would be nice to get a signature. He kept trying to get the signature while I was there, but didn’t get it. I don’t know if he ever got it.

MF: When you wrote the chapter on droughts and water rights there were droughts gripping California and Australia. And now there are other similar droughts as well. What are some of the investment opportunities in these droughts?

Funk: It’s striking to have them come back so soon. The opportunities with water rights are the most obvious ones, or maybe not the most obvious but the ones that shock people the most. In both California and Australia you can buy a water right like you can buy a piece of land. The earlier investment in water is what you’d imagine: better metering systems, better drips, better faucets, better gaskets, water efficiency measures, or just putting money into water utilities servicing cities. That is all kind of a boring and hugely profitable business.

In the last drought hedge funds increasingly started looking at water rights. One of the first water hedge funds went from being just utilities and gaskets and whatnot to entire funds focused on water rights. In Australia the game was a little bit different. They would go to ranchers and farmers and buy their water and rent the water back to the same people they bought it from. They would collect a rent check and the value would go up as the droughts got worse.

MF: Isn’t it detrimental to the farmers and ranchers to sell their water in a drought?

Funk: Its equivalent to, say I have an expensive house but I don’t have any money. I sell that house to my mom. Then my mom rents my house back to me for the equivalent of a mortgage payment. So I have a little bit more cash in my pocket in the short term and in the long term, as a small farmer, you are actually buying yourself out of a business. That was the trend in Australia and it has already been the trend in this country for a long time. The traditional small farmers are selling out to bigger, more corporate entities. That was especially clear in the Murray-Darling drought in 2007, none of the small farmers had the capital to keep it together and they were the ones selling out. Driving down the Murray-Darling you could see for sale sign after for sale sign after for sale sign. Some of the more corporate entities could buy enough water to keep their operations going while the drought was going on.

MF: Other texts on climate change usually end with an uplifting chapter about how we could stop global warming if we all come together. I expected that from you, but then you end by placing a $100 bet on shrinking ice in the arctic. Do you think there is any way out of this hole we find ourselves in?

Funk: I’m not really a pessimistic person in my normal life, but I wasn’t going to make a fake happy ending here because there isn’t one. I didn’t come to the book as an activist. I just wanted to report on this thing. We aren’t going to zero emissions tomorrow, its already too late to stop all climate change. In that respect, we have already lost. I did come away with some hope. Like the fact that very few of the people I met, as crazy as some of their schemes were, seemed like bad people, in the sense that they had bad intentions. Everyone, from Exxon-Mobil to Monsanto, wholeheartedly agrees that climate change is real and that it’s bad for society and they have to understand the reality of it because they want to make money. I’m certainly not too optimistic and I don’t have any answers and I didn’t try to come up with any.

MF: You mentioned all these people you met didn’t seem like bad guys. They are just out to make a buck. Of all these people you ran into, who stuck with you the most?

Funk: I think one who stuck with me was the guys we were just talking about, the investor who was doing this thing in South Sudan because it sounds like the craziest. Partnering with a general, who is known to have killed many people, in order to buy up a Delaware-sized chunk of farmland and grow food for possible export to richer countries. Everything about it raises alarm bells and I got to say, he was a funny guy. A good guy in his way. So he stuck with me, as a sign that there are no real villains in this world the way there are in the movies. That was an important lesson for me. It doesn’t take bad people for bad things to happen. I liked the lack of bullshit from a lot of people who were trying to make money off climate change. They were often almost dangerously straightforward about what they were doing.

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