Is Antarctica turning into foggy, rainy Seattle?

Not quite. But winter on parts of Earth’s southernmost continent brings more snow than it used to, and summer brings more rain. In West Antarctica’s peninsula in particular, year-round air temperatures have risen and the warmer air carries more moisture, creating a climate far wetter than it was only a few decades ago -– and far foggier, it seemed to me on a January 2015 visit to the area. So the sea ice forms later in winter now, and the extra snow takes longer to recede in summer. Not only do these physical changes disrupt and threaten some of the region’s once-booming penguin colonies, as I discovered on my trip, but they also have major implications for the human inhabitants of our planet, including the businessperson, the risk manager and the investor. And they are potentially dwarfed by the changes we cannot so easily see – what warmer water is doing to the Antarctic ice cap.

Life is changing in the Antarctic

Let’s start with the penguins.

Most activity in Antarctica actually happens – surprise – in the ocean! Wildlife forms in the region are particularly adapted to extremely cold water, so even a small temperature change can mean potential disaster, especially if it affects krill, the keystone shrimp-like species so crucial to the Southern Ocean food chain. Limited winter ice means disappearing krill food, both the algae growing on the underside of the ice and the free-floating diatoms at the mercy of increasingly acidic ocean waters. Acidification also affects the krill, slowing their development and reducing survival rates in the larval stages. A krill-short world could mean a drastic change in the ecosystem and thus for most animal life in the region, including penguins, seals and many others, with global repercussions as the habitats of whales and other migrating animals also disappear.

For the Adelie penguins, this threat to their food source only compounds the difficulties of a late snowpack, which delays the start of nesting and mating. At least 70 percent of the Adelie population is currently at risk, and chinstrap penguins are on the decline for similar reasons. Other, more adaptive penguins like the Gentoo may be doing better … for now.

 

But how does all this impact our human population? How can we adapt and, in particular, how should investors play their hand? Antarctica is a long way from the world’s market, but some signals, I submit, are beginning to emerge.

Antarctica: The start of the ripple effect

First, a threat to the creatures in this key ecosystem indicates a threat to human industry and economy. Much of our $400 billion global seafood market comes from the Southern Ocean or from places thousands of miles north where upwelling cold, nutrient- and oxygen-rich waters are forced to the surface. Thus, given the systemwide threat of a krill shortage, it’s clear that investors will need to generate significant support for the fast-growing aquaculture industry, which is nowhere near as developed as its land partner, agriculture.

Second, the Thermohaline Circulation (the aquatic conveyor belt that carries global oceanic nutrients) is also partly responsible for our planetary thermal control, e.g., in the Atlantic, the Gulf Stream that keeps Europe warm. If this system were to change too much due to changes at the cold ends – Antarctica and, of course, the Arctic – our land-based food system and much more would be in jeopardy. Insurers would hold increasing amounts of uncompensated risk.

Third, and most obvious, there is sea-level rise, much discussed lately because ice melt may be much more sensitive to temperature than previously thought.

Overall, any investor seeking to understand the increasing levels of risk from climate change will want to monitor Antarctica news. The simple fact about Antarctica is, important pieces of it are melting, both swiftly and irreversibly.

What will happen as Antarctica melts?

As with the recent bad news from Greenland, scientists are finding out new and uncomfortably rapid ways that Antarctica’s marine ice shelves are already melting. In key areas and at key depths of the Southern Ocean, warmer waters are eroding the ice from underneath. Few took notice when Ohio State University glaciologist J.H. Mercer predicted this risk in 1978, and now we face the unsettling prospect that little can be done to can stop it. After all, the thinning shelves of West Antarctica are roughly the size of Texas, releasing vast accumulations of glacial ice into the ocean when their edges break off. The largest of these – the Ross Ice Shelf – is currently losing about 300 cubic kilometers per year. 

Until now, most modelers looking at rising sea levels have not been factoring in the loss of Antarctic ice. Measurement efforts over the next decade will clarify the rate of ice loss, especially in West Antarctica, where the total outcome could be a sea level rise of 4 meters. That would leave cities like Miami and New York underwater and insurance companies facing a liability they can’t sustain.

In East Antarctica, once considered a stable if not growing ice mass, the Totten Glacier is now thinning by about 2 meters per year thanks to a warm channel eating away at its underside. Since the capture area for the Totten alone is huge, we could experience sea levels rising another 3 meters. Recent studies indicate at least five other high-melt ice shelves may potentially exist at glacier outlets in East Antarctica.

As the seas rise, a whole raft of impacts for human cities and facilities will become very evident. For example, salt water can contaminate fresh groundwater sources for both society and agriculture; coastal soils will become more saline (reshaping both vegetation and wildlife), which will affect coastal tourism and real estate economies. Antarctica melting is a game changer that exposes us to not only environmental risk but also business risk. Data should be coming in soon to better understand how fast all this would happen – and whether there are identifiable tipping points. But business-as-usual is already the wrong answer. Recent events in the Arctic have shown that, despite high costs, U.S. oil companies and their Russian, Chinese and other counterparts are prepared to lay claim to remote stocks of oil in the frozen poles. Though energy exploitation of this nature in the Antarctic currently is forbidden by treaty, moves by China and others reveal uncertainty over whether the treaty will hold up. Consider the global outrage if an Antarctica already melting due to fossil fuel burning is then exploited for oil exploration. The ultimate wildcatters trying this strategy might be the first to be dropped by investors.

Of course, for investors the ripple effect works in both directions – what to buy, as well as sell. Given the inexorable slide toward a less icy Antarctica, companies to avoid include both oil entities willing to support Antarctic mining and the insurers that would be first in line to experience losses from geo-catastrophes such as rising sea level. The companies to watch include innovative aquaculture businesses scaling up water-based farming and industry. The changes affecting Antarctica’s life systems have significant implications not only for the world’s ocean ecosystem, but also for the $400 billion seafood market, the global risk management industry and possibly other economic sectors.

 

See:

http://www.eoearth.org/view/article/153847/

http://www.nytimes.com/2013/05/15/business/insurers-stray-from-the-conservative-line-on-climate-change.html?_r=0

http://www.scientificamerican.com/article/antarctica-s-ice-shelves-thin-threaten-significant-sea-level-rise/

http://www.climatecentral.org/news/antarctica-ice-thinning-sea-level-rise18815

 

Robert “Hutch” Hutchinson, MBA has 35 years of experience in energy research, design, business strategy and decision-making. He is currently a Senior Fellow at Rocky Mountain Institute (RMI), an investor, advisor and Board member for startup companies in the energy, environmental and impact spaces, a consultant to breakthrough efforts in industrial and buildings efficiency, and a writer and speaker on energy topics.