CLIMATE TRIAGE: A RESOURCES TRUST TO ADDRESS INEQUALITY IN A CLIMATE-CHANGED WORLD.

• Author: Hsu, Shi-Ling

1. INTRODUCTION II. CLIMATE CHANGE, NATURAL RESOURCES, AND LIFE STAPLES III. ECONOMIC INEQUALITY, VITAL RESOURCES, AND HOARDING IV. RESOURCES TRUST NOW V. SUPPLYING RESOURCES A. Water B. Food C. Energy VI. IMPLEMENTATION OF A RESOURCES TRUST A. What Government: State, Federal, or Regional? 1. Federal Resources Trust 2. State Resources Trust 3. Regional Resources Trust B. Sunrise, Sunset: When Resource Trusts Step In and Step Out C. Governance and Oversight 1. Sovereign Wealth Funds 2. Publicly-Chartered Corporations 3. A Synthetic GSE, and More Cautionary Tales VII. CONCLUSION I. INTRODUCTION

   Global climate change poses an existential threat to human civilization because it disrupts the supply of vital natural resources such as land and water that sustain life. (1) Unusually high temperatures and extreme weather disrupt the functioning of systems, natural and manmade, that have adapted or been designed around specific climate 1 conditions. (2) If predictions from climate models are even roughly accurate (and so far they have been, if even a bit too optimistic), (3) then human adaptation must redouble. Climate change threatens the supply of vital natural resources that contribute to the provision of the basic staples of human life: water, food, and energy. (4) If climate change strikes a society riven by economic inequality, it may overwhelm the capacity of governments to provide for basic human needs. (5) Resources will be privately hoarded6 by force, and unrest may follow. (7)

   The worsening news of the coming climate crisis calls for some climate triage to anticipate and address shortfalls in vital resources. This Article proposes a measure to head off future shortages, and hopefully unrest: the creation of a government-funded resources trust to acquire assets and future rights to natural resources and life staples, for the purpose of supplying them in case of scarcity. The function of such a trust or trust-like entity (hereinafter, a "Resources Trust") would be to make credible assurances that the vast majority of individuals in a jurisdiction will have access to vital natural resources and life staples even in times of climate-induced scarcity. In a worst-case scenario, a Resources Trust must act as a supplier of last resort, providing a lifeline to a vast majority of its populace. With that assurance, the pressure to hoard resources decreases, and hopefully the potential for unrest.

   A Resources Trust can be established at national and sub-national levels, and possibly even transnational-regional levels, though there are obvious tradeoffs at each level. As well, the need for a Resources Trust is predicated on the prospect of inequality of life-sustaining resources. This inequality may pose a threat to peace and order at one level or another, so the formation of Resources Trust may be driven by the locus and scale of emerging security threats.

   Importantly, a Resources Trust need not stockpile reserves of these goods; it must obtain the rights to secure and the capacity to supply these goods in sufficient quantities to pre-empt shortages. This might, for example, involve the acquisition of options on water rights, rather than water rights themselves. (8) It might involve the acquisition of land with water rights as a hedge against drought. (9) It might accumulate energy supplies or develop methods of energy generation that are not profitable in normal markets but vital in times of stress. (10) The role of a publicly-chartered Resources Trust would be to be able to step into a situation of near-crisis and proactively calm markets by injecting supplies of vital life staples.

   This Article does not set forth a case for a Resources Trust to supplant private markets, but to supplement them, infusing supply when needed, albeit in large quantities if necessary. That said, a commitment to ensure that every person within a chartering jurisdiction has access to water, food, and energy is a non-market allocation. As such, it flies in the face of conventional economic wisdom, which generally frowns upon government intervention in the face of shortage, on the grounds that it usually does more harm than good. (11) But three things would make climate-induced resource shortages different that may warrant governmental intervention: 1) the potential for long-term shortages, 2) the indispensability of the life-sustaining resources, and 3) economic inequality that concentrates buying power. Climate change poses the threat of very broad environmental change (12) that could cause prices of these life staples to rise sharply and set off buying panics--hoarding, made possible by the concentration of wealth. (13)

   Governmental action to avert consumer panic is familiar. The Federal Deposit Insurance Corporation was created in 1933 in response to bank failures caused by "bank runs," the panic withdrawal of money by depositors. (14) Bank runs are particularly unfortunate, because they are driven by a fear of bank failure, which can itself cause a bank failure that might otherwise not have happened. (15) Depositors might prefer to avoid withdrawing their money but still do so, out of fear; in a sense, they are hoarding liquidity at a loss. (16) Similarly, a "run" on vital life staples in a climate-induced shortage might compel people, out of fear, to hoard life staples and exacerbate or even create a shortage.

   By preventing hoarding, a Resources Trust accomplishes its other goal: restoring a measure of economic equality. Climate change exacerbates economic inequality (17) because if vital resources run short, prices will rise, and the buying power of consumers will shrink. The wealthy are also worse off but have the means to deal with the uncertainty by buying up life's necessities, leaving less for everyone else. Hoarding is just the translation of wealth inequality into another currency: vital life staples.

   It is thus critical that the creation of Resources Trusts begin now, before shortages actually become widespread. Once resources become scarce, they become expensive or otherwise difficult to acquire. (18) Secondly, a Resources Trust has the potential to affect market prices, so minimizing the interference with markets would require it to acquire resources over long time frame. And finally, developing the capacity to be a supplier of last resort by accumulating the needed assets and rights is a massive undertaking. It is essential to get on with this vital task now.

   Part II of this Article reviews the threats posed by climate change to natural resources that provide vital life staples to humans. Part III of this Article lays out how climate change exacerbates economic inequality, leading to shortages and hoarding. Part IV makes the case that the work of constructing Resources Trusts must being now, before shortages loom too large. Part V describes how a Resources Trust would accumulate assets and rights to enable it to be a supplier of last resort, including a discussion of possible legal instruments that may be used. Part VI discusses some of the implementation issues that come with constituting a Resources Trust. Part VII concludes.

2. CLIMATE CHANGE, NATURAL RESOURCES, AND LIFE STAPLES

   Climate change poses such an existential threat to human civilization because changes are projected to occur that are unprecedented in both scale and time. The last time that atmospheric carbon dioxide concentrations were this high--more than 400 parts per million--was three to five million years ago. (19) The temperature was approximately 5[degrees]F to 7[degrees]F warmer, and sea levels were between sixteen and 131 feet higher than today. (20) Human and non-human systems certainly change and adapt to changing conditions, but the pace at which temperatures increase, oceans acidify, and extreme weather intensifies, may be too quick for human societies and natural systems to adapt. (21)

   Consider one life staple: water. Climate change is expected to intensify hydrological cycles throughout the world, potentially changing dramatically where, when, and how intense precipitation occurs. (22) Nearly every human civilization and every ecological system has organized itself around access to water. (23) Short-term interruptions to water supply are handled quite routinely in developed countries, but climate change may, quite soon, introduce very large and long-term changes in precipitation patterns. Cape Town, South Africa infamously flirted with "Day Zero" in 2018, a date in which city taps for the prosperous coastal city of over 400,000 residents would be shut off; the city was within months of reaching that date. Water rationing at fifty liters per day--not enough to maintain long-term health--combined with rains has deferred Day Zero, (24) but projections of future precipitation are ominous. (25)

   Another case in point involves agricultural systems, which, above all, are vulnerable to both short-term shifts in weather as well as longterm shifts in climate. (26) Modern crop and livestock agriculture have become more intensive and productive, exploiting economies of very large scales. (27) But this technical efficiency is dependent upon a narrower set of conditions, so that it becomes more vulnerable to disturbances, including those caused by climate change. (28) The groundnut, a staple in India, produces far less fruit when exposed to temperatures above 95[degrees]F, which has become a common occurrence in India. (29) Wheat grain decreases significantly when exposed to 86[degrees]F for just eight hours. (30) Relatively sudden changes in precipitation can wreak havoc on a carefully-engineered system of production: torrential rains in the Midwestern United States have produced flooding along the Illinois, Missouri, Arkansas, and Mississippi rivers that have devastated the entire region. (31)

   Another threat to food supply lies in the way that climate change affects the oceans. (32) Oceans buffer temperature increases, absorbing some of the...