“We Can’t Trust Capitalism to Just Fix” Our Global Warming Mess

January 24, 2014



In his new book, Windfall, journalist McKenzie Funk visits five continents to bring back stories of the movers and shakers at the forefront of the emerging business of global warming. He introduces us to land and water speculators, Greenland secessionists hoping to bankroll their cause with newly thawed mineral wealth, Israeli snow makers, Dutch seawall developers, wannabe geoengineers, private firefighters, mosquito scientists, and others who stand to benefit (at least in the short term) from climate change. (See this short excerpt, in which he writes about a guy who launched the world’s first water-rights hedge fund.)

Windfall is fascinating, entertaining, and ultimately troubling as the author uncovers more and more evidence of what he calls the implicit "unevenness" of global warming, and the futility and/or unfairness of our approaches to dealing with it. I reached Funk at his home in Seattle to chat about California’s impending drought, why man-made volcanoes won’t save us, and how Hurricane Sandy (figuratively) blew him away.

Mother Jones: How do you supposed your water hedge-fund guy, John Dickerson, feels about California facing its worst drought in 40 years?
McKenzie Funk: He doesn’t consider himself a bad guy. He thinks that he plays a necessary role in moving water from where it is to where it needs to be for things to happen, and I respect that. He told me that California is a bit of a harder market to enter, mostly because there are a few others doing this, and a lot of his plays have been farther upstream in the Colorado system, so I don’t think it’ll have a huge effect on his bottom line immediately.

MJ: But drought in California will affect water futures in other states, right?
MF: It could. One thing that was happening before was that California was getting the extra water from the other states. There was enough surplus that California was able to keep going on what the others weren’t using. That’s stopped. The shit is hitting the fan with the Colorado River Compact. It’s a good time if you’re a water investor. It’s now tight; it’s the market we’ve been expecting. Before this, a lot of what was driving water markets was the housing boom—developers needed water for new houses. That was an artificial driver. This one is natural.

MJ: How will having Wall Street guys buying up water rights affect everyday folks in the Southwest?
MF: Their argument is that everyday people in the Southwest are those who are moving to the city. Right now a bunch of ranchers whose sons don’t want to ranch anymore, whose kids have gone away, are sitting on all this water. The argument is that by buying up this water and packaging it and selling it to the cities downstream that need it, [the hedge funds] are helping the West grow. The sunbelt is where we’ve had all this population growth, and it’s been sort of artificial—we’ve had to move the water there. This helps that happen on a systemic level, setting us up for a bigger fall.

MJ: Will people have to pay higher prices?
MF: Any time utilities try to raise the rates too much, regulators cry foul. But at a certain point, if these utilities aren’t allowed to let the market do its thing, it’s just going to be too expensive for them. That’s when these guys who are holding the water, who are creating artificial aquifers to sell to the utilities, are going to make a ton of money.

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