Geopolitics

Climate Change Could Soak Up Brazil's Freshwater Wealth

"Olá"
"Olá"
Marcelo Leite

SÃO PAULO — When it comes to freshwater, Brazil, home to somewhere between 12% and 16% of the world’s total supply, is a very wealthy country.

Inhabitants only use 0.7% of the 43,000 cubic meters of water per year that could, theoretically, be available to each and every one of them. In this regard, Brazil contrasts sharply with places like Algeria and Palestine, which use nearly half of their available resources, or Saudi Arabia and the United Arab Emirates, which have to desalinate seawater to meet their needs.

Brazil’s situation is not, however, quite as enviable as it would seem. The first problem lies in the location of these resources. Water is most abundant in the uninhabited parts of the country and in the most protected forests, particularly in the Amazon, but is in short supply where it is most needed, namely the southeast and northeast regions, home to 70% of the population.

Supply problems have been complicated further still by this year’s drought in São Paulo. Another serious drought — in Brazil’s semi-arid region — occurred between 2012-2013.

Changing weather patterns due to climate change could make matters even worse. Because of increasing emissions of CO2 and other so-called greenhouse gases, the Earth’s atmosphere retains more heat close to its surface, causing the temperatures of higher air masses to increase.

The energy contained in the atmosphere is what fuels the winds and the storms. Climate simulations predict that additional radiation will alter circulation patterns. As a result, some regions could see more frequent and more severe droughts while others will be faced with floods that might also be more intense during abnormal rain episodes.

The Brazilian Panel on Climate Change (PBMC), a committee representing some of the country’s top climatology experts, has come up with its own projections of what the climate could be like in Brazil’s various regions.

The panel predicts that by the end of the century, temperatures in the Amazon could jump 5 to 6 degrees Celsius and that precipitation could decrease by 40% to 45%, with a 10% drop already in the next five years. Temperatures in the northeast region could rise 3.5 to 4.5 degrees, with a 50% drop off in precipitation, and in the south, temperatures could rise 3 degrees with a 35% to 40% increase in rainfall, according to the PBMC.

Researchers cannot say with certainty whether the recent drought episodes in the southeast and northeast regions, or the tragic floods that affected Rondônia state earlier this year, are directly connected to climate change, either globally or locally. But the possibility cannot be ruled out either.

What is certain is that these disasters — and the heavy economic costs they imply — are a good demonstration of what we can expect in the coming decades assuming global warming worsens. They are also a reminder that Brazil, despite its current water wealth, must do more to adapt to the challenges, which will affect one of the most basic human needs: water to drink, to clean and to plant.

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Society

Debt Trap: Why South Korean Economics Explains Squid Game

Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.

In the Netflix series, losers of the game face death

Yip Wing Sum

-Analysis-

SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.

The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.


It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.

Seoul housing prices top London and New York

In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.

According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.

Average home loans are equivalent to 270% of annual income.

One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.

According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.

Playing the stock market

At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.

A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."

In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.

42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s

Simon Shin/SOPA Images/ZUMA

Game of survival

In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.

But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.

This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.

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