The threat of nuclear war has been embedded in global consciousness since the invention of the atomic bomb. Most fears are focused on blast radius and radioactive fallout; but the long-term effects of a nuclear conflict could be far more concerning.
According to new research from the International Physicians for the Prevention of Nuclear War and Physicians for Social Responsibility, a phenomenon known as "nuclear famine" is keeping experts up at night. The study estimates that more than 2 billion people are at risk. Its author, Ira Helfand, says even a limited nuclear war could lead to "the end of civilization."
Image via Gavroche, Flickr.
How could this happen?
Stages of a catastrophe
Helfand theorizes it could occur in stages. The first is climate change. Existing literature shows that a regional nuclear war between India and Pakistan could drastically affect temperatures throughout the world. A 2007 study published in Atmospheric Chemistry and Physics predicts that the soot created by such an event could reduce temps by 1.25°C per year for at least a half-decade.
This would wreak havoc on global crops. A separate analysis from Rutgers estimated that this cooldown would cut corn and soy yields by 10% over the next decade. Rice production, centered in China, would be hit twice as hard. It's assumed this supply shock would boost grain prices by 10% to 20%, with costs doubling in some developing nations.
The final stage of this catastrophe is starvation. With his best guess, Helfand breaks the at-risk into three groups: (a) 870 million people already facing malnourishment, (b) grain-importing nations, and (c) the entire population of China. The first group gets more than 75% of its nutrition from grain, and a significant portion would not be able to afford higher prices.
Grain-importing nations, like South Korea, Japan, most of North Africa, and the Middle East, would be hard hit by trading partners who suddenly decide to stop exporting. Additionally, China's 1.3 billion citizens would use up their rice and wheat reserves in a few months, and international hoarding may make open-market purchases impossible.
Rational expectations
In a normal market environment, rising grain costs would be a boon to fertilizer companies like Mosaic (MOS -0.10%), Agrium (NYSE: AGU), and Potash Corp (POT). Farmers have traditionally demanded more fertilizer when grain prices are high. In Helfand's scenario, I doubt this would happen. A decline in crop yields would actually serve as a negative supply shock, leading to higher prices and less need for agricultural inputs like fertilizer. Mosaic, Agrium, Potash, and the rest of this industry would lose in the long run.
Another event Helfand talks about is hoarding. Throughout history, significant famines have typically led to "panic ... on an international scale," as the study explains. Such a phenomenon could push grain costs higher -- and fertilizer demand even lower -- by cutting the market's supply again.
Does anyone win? Well, if grain prices rise high enough, it's quite possible that dietary substitutes come into play, particularly for grain importers. Companies like GNC Holdings (NYSE: GNC) and Herbalife (NYSE: HLF) offer meal replacement products, but I'm not sure if anyone in this market has the scale to serve entire nations. In the aftermath of Helfand's scenario, there's opportunity for a GNC or a Herbalife to fulfill this demand, but mass production of a low-cost dietary substitute would be required.
How can potential disaster be prevented?
That's the obvious question most people are asking. As Helfand has said: "This is a disaster so massive in scale that really no preparation is possible. We must prevent this."
In the Middle East, the International Physicians for the Prevention of Nuclear War says the world can "guarantee a nuclear-weapon-free Iran" if the nine major nuclear powers -- Israel, India, Pakistan, North Korea, Russia, China, France, the UK, and the United States -- prohibit their usage altogether. By setting an example that nukes are unnecessary, it would theoretically reduce the need for other countries to join in.
It's too late to prevent hot spots like India and Pakistan from obtaining nuclear weapons, but a comprehensive ban is gaining traction. The International Campaign to Abolish Nuclear Weapons, or ICAN, is working on a solution. The organization spoke at the UN earlier this year to express the concerns of non-nuke countries.
With the vast majority of the world's nations still unable to build the bomb, a blanket approach could work. ICAN pleads that the "very survival of humanity depends on nuclear weapons never being used."
Another alternative
An organization that offers a different solution is Corporate Accountability International. Its boycotts led General Electric (GE 0.68%) to stop producing some nuclear weapons components nearly two decades ago. Today, it could theoretically take this fight to defense contractors like Lockheed Martin (LMT -0.75%), Honeywell (HON 0.22%), and Northrop Grumman (NOC -1.56%).
Together, these three companies manufacture nuclear warhead components, according to The Center for International Policy, along with Fluor (FLR 0.79%), Babcock & Wilcox (BWXT 1.37%), and Bechtel Group. Any boycott seeking to prevent the production of nuclear weapons would likely start with this "big six."
Secondarily, companies that make the bombers and submarines designed to carry nukes could be included in a boycott. This route would include names like Boeing (BA 0.25%), General Dynamics (GD -0.17%), and United Technologies (RTX -0.29%), all of whom are among the largest nuclear weapons contractors in the US.
Although the Department of Defense doesn't release specific statistics, it's estimated that the U.S. government will spend between $350 billion and $390 billion on its nuclear arsenal over the next decade. The aforementioned "big six," plus Boeing, General Dynamics, and United Technologies, should take in revenues of about $4.1 trillion over the next 10 years, assuming modest growth of 2% a year.
At its most effective, then, a boycott on each of these companies would reduce their collective top line by about 10%. Likewise, a U.S. nuke ban would have a similar effect on the industry.
Final thoughts
In my humble opinion, it's time for government officials to see the forest through the trees. If America can lead the world in taking a step toward the prohibition of nukes, the rest of the world would listen. Alternatively, if the U.S. government does not act, a boycott is an option, and it's been done in the past.
As tempting as it may be to think a conflict between countries like India and Pakistan won't affect anyone else, this reasoning is shortsighted. More than 2 billion people may face famine if just a regional nuclear war breaks out, and that's a risk no one should stomach.
