Growth is Always Good?

The 25 March 08 Wall Street Journal published an extensive article on the rise in commodity prices and Limits to Growth. Have a look.

For a fun visual of the "Growth is Always Good" paradigm, have a look at the Opus comic strip for Sunday 23 March. It describes well the "growth is always good" paradigm.

Growing world economies is the historical solution to poverty. Should economists and humanitarians seek a new strategy? How could we redefine growth so it wouldn't have the negative consequences of resource depletion and environmental destruction?

Mighty Currents of Hope: Economic Possibilities

“Let the future say of our generation that we sent forth mighty currents of hope, and that we worked together to heal the world,” writes Jeffery Sachs, author of bestselling The End of Poverty and director of the Earth Institute of Columbia University. In this brief but effective statement, Sachs uncovers the pressing reality that in order to address the global pandemic of poverty, health problems like HIV/AIDS, and improve economic and human development through capacity building and education, sustainability must be central to our ideals as the driving force behind our personal decisions and greater national policies.

Sustainability is today’s buzzword, used to articulate our envisioned solutions, but more often than not, is nothing more than semantics and PR. Sustainability requires action. Not just simple action, but action on a scale that becomes daunting to those who, at first glance, are interested in change. This action must come from both governments and grassroots organizations, and increasingly civil society and larger non-governmental organizations. To address the types of global problems discussed in Sachs’ book, serious commitment and dedication are required by everyone from donor countries to the developing world. And, according to Sachs, the world can still do it on the timeline established by the UN Millennium Development Goals.

Sachs is an economist, whose view of the world and the possibilities it holds, is shaped by markets. In some circles, markets are the very intangible demons that have contributed to the cycle of poverty in developing nations. Consumerism, inequality, unsustainable production practices, and environmental degradation plagues the idea of industrialization, the very concept that the West sees as the solution to the developing world’s problems of poverty. Although pioneers such as Amartya Sen have contributed drastic changes to the way we conceive of development, the field is still dominated by institutions driven by national and donor interests, and continues to rely on economic development as a driving force. So what can Sachs and his economic ideals contribute to the discussion? Apparently, quite a lot.

As special advisor to the UN Secretary General and countries such as Bolivia, Poland, Russia, and China, Sachs’ experience and economic expertise has helped to stop hyperinflation, aid in transition economies, and develop goals to reduce poverty worldwide. He is accurate to point out that development is plagued by the search for a magic bullet, one that will rid the world of its problems with one lump sum and one golden policy. He is an advocate for what he calls “a clinical approach” to development, one that “should train the development practitioner to hone in much more effectively on the key underlying causes of economic distress, and to prescribe appropriate remedies that are well tailored to each country’s specific condition.” This idea flies in the face of the popular structural adjustment programs that do little to address unique country specificities, but rather push for free markets and privatization that has little, if any, proven track record.

If that idea isn’t enough, Sachs is also an advocate for debt forgiveness in particular circumstances. Countries with a heavy debt burden have no possible way to pay off debt AND fund social and economic programs that will help to advance the well being of the citizenry. In addition, he also calls for donor money to be reallocated so that more money reaches projects on the ground, rather going towards experts who consult in the field. Sachs goes through nearly half the book sharing his experiences, but also makes considerable recommendations on how to improve the well being of people around the world by 2025.

Why has Sachs made so many enemies in the development field? It depends on where you stand relative to his position. If you’re a big donor country, he has lost you money by calling for debt forgiveness, and in many cases, has won. If you’re against markets because lack of access to them creates greater inequality, you have a good argument. But he provides a series of possible solutions on how to make access to markets more feasible in the developing world. If you are a US politician who campaigns on the solution to national security as the war on terror, he counters the argument by saying national security is improved when poverty is reduced and education is increased, so we should be focusing our time and money on poverty reduction. If you believe that countries are poor because they “choose to be,” he demonstrates why circumstance, geography, and history all combine and contribute to inequality.

He has ruffled feathers in different disciplines, countries, and international institutions, which makes this writer think he may actually be on to something big. Business as usual will only continue to increase inequality in the current generation, and does nothing to address the problems the next generation will face. Sachs’ ideas are certainly not a magic bullet, but he doesn’t pretend them to be. Rather, his ideas are tools for the toolbox as we push for global action and change.

The Carbon Tax Debate...Continued

From ES&T
What would happen if policy makers in the U.S. suddenly approved a tax on CO2? Would electric utilities instantaneously switch to more efficient power plants with lower CO2 emissions? Would consumers immediately become more careful of their electricity use?

According to the article in Environmental Science and Technology (ES&T), the answer is "YES".

A tax on CO2 emissions as low as $35 per metric ton (t) would lead to a 10% reduction in CO2 from facilities located in the Northeast and Midwest, whereas the same price would result in reductions one-third as large in Texas.

The study indicated that a carbon tax would indeed lower consumer demand for electricity, implying that consumers would begin to invest in more energy efficient appliances and reduce energy use. Other studies suggested that a carbon tax would effectively lead energy companies to invest in low-carbon technologies.

A couple blogs ago, we were debating the idea of a gas tax vs. a carbon tax vs. a cap and trade system. You may recall that the political feasibility of a carbon tax was questioned. Co-author of this study, Granger Morgan, agrees that the introduction of carbon tax is not likely. "I don't think anybody would actually instantaneously switch on a high carbon price. It will probably be phased in or done through a cap-and-trade system, and that is how it should be," he asserts.

Recall that Sharlissa recommended this article describing the different implications of a carbon tax and cap and trade system. The author advocates a cap and trade system but warns about the danger of creating a secondary carbon market in which carbon traders have a stake in not completely eliminating carbon emissions.

Do you agree that America's first step to addressing climate change should be a cap and trade system? Under a cap and trade system, do you think a secondary carbon market could be avoided, or do you think the US would fall prey to the same problems seen in Europe?

Poverty and Carbon Dioxide

How are the people of the Global South to reduce poverty while cutting carbon dioxide emissions to zero?

The Global North has powered its "development" with fossil fuels and carbon dioxide emissions. The Global South as expected to do the same.

Now Juliet Eilperin reports on the front page of the 10 March 2008 Washington Post that two new studies point to the need for humans not just to reduce carbon emissions, but to cut them to zero. How is poverty to be reduced while cutting carbon emissions to zero?

One study by Ken Caldeira of the Carnegie Institution was published in Geophysical Research Letters. The other by Andreas Schmittner of Oregon State University was published in Global Biogeochemical Cycles. Both are based on advanced computer simulations.

The temperature of Earth has already increased by 0.76 degrees C (1.4 degrees F). Under the business-as-usual scenario, Earth will warm 7.2 degrees C by 2100. Most scientists agree that even a 2 degree increase in temperature would very serious consequences for young people. This is in part because warming continues long after emissions stop. So, emissions must stop and soon.

If the Global South is never to have the benefits of the kind of fossil-fuel-based development that has been enjoyed in the Global North, will global tensions rise? Terrorism?

Should the parents' and grandparents' generations simply go on burning fossil fuels and let young people inherit a severely damage Earth?

I would like to hear some opinions on these questions. What do young people think? What do the parents and grandparents think?

Why Corporations (should) Want to Stop Ecosystem Degradation

Article by Craig Hanson, Cross-posted from WRI (World Resources Institute)

Companies Respond to Ecosystem Degradation
Location: Montreux, Switzerland

Climate change may dominate headlines today. Ecosystem degradation will do so tomorrow. Why should business care? Because ecosystem health goes straight to the bottom line.

Just ask the beverage industry, which depends on nature’s ability to filter and provide fresh water.

Ask agribusiness, which relies on grasslands for insect pollinators, nutrient cycling, and erosion control.

Ask the insurance industry, which benefits from the fact that coastal marshes reduce the damage caused by hurricanes and that wetlands absorb water from floods.

If you’re still not convinced then ask a host of other industries that rely on forests for benefits ranging from wood to genetic resources, carbon sequestration, and tourism.

In short, healthy ecosystems and the services they provide underpin corporate performance.

The findings of the Millennium Ecosystem Assessment–the largest audit ever conducted of the condition and trends in the world’s ecosystems–is thus a cause of concern. The Assessment found that ecosystems have declined more rapidly and extensively over the past 50 years than at any other comparable time in human history. In fact, 15 of the 24 ecosystem services it evaluated had degraded over the past half century. These trends portend new winners and losers in the world of business.

Today in Montreux, Switzerland, WRI and its partners launched a set of guidelines to help companies prepare for this new landscape. The guidelines, called the Corporate Ecosystem Services Review (ESR), consist of a structured methodology that helps managers develop strategies to manage business risks and opportunities arising from their company’s dependence and impact on ecosystems. WRI developed the ESR with support from the Meridian Institute and the World Business Council for Sustainable Development, and with feedback from “road tests” by five WBCSD companies—Akzo Nobel, BC Hydro, Mondi, Rio Tinto, and Syngenta.

The road-tests helped companies identify new business risks and opportunities. For instance, Mondi, Europe’s largest producer of office paper, developed strategies that will increase the company’s efficiency in using freshwater—a scarce ecosystem service—and will lead to new markets for the company’s byproducts. BC Hydro factored ecosystem services into its water-use planning processes, resulting in greater regulatory certainty, fewer lawsuits, and improved stakeholder relationships. Other companies used the guidelines to anticipate new markets and government policies that may emerge in response to ecosystem degradation.

In addition, the guidelines augment existing business strategy development and environmental management. For example, environmental impact assessments are often not fully attuned to the risks and opportunities arising from the use and decline of ecosystem services. Many “traditional” tools are better suited to handle conventional issues of pollution and natural resource consumption. Most focus on environmental impacts, not dependence. Furthermore, they typically focus on risks, not business opportunities. As a result, companies may be caught unprepared or miss new sources of revenue associated with ecosystem change.

By filling these gaps, the guidelines help make the connection between ecosystem health and the bottom line. They also offer a promising approach for companies to manage emerging risks—and opportunities—while at the same time becoming better stewards of the environment.

Climate change concerns are rising to the top of the corporate agenda; those about ecosystem services won’t be far behind.

----end of article---

Does this new paradigm of businesses being dependent on ecosystems make sense? Why have businesses and corporations typically neglected this perspective and facilitated ecosystem degradation instead of working to prevent it?

Sustainability in the Eyes of an Economist?

My good friend Angeline just sent me a very interesting article. It is definitely from an economist point of view pointing at wildlife professionals and environmentalists. Extremists in both don't want to compromise that the best solution is a sustainable one. You all can read the article for yourselves, but I thought I'd give you my take one what they are saying.

I don't necessarily agree with hunting all of the time...especially for sport, and I'm not saying it is right, but sustainable use is the best way to preserve any kind of resource. I know I'm preaching to the choir. Endangered species at least need to be protected until populations reach a level of sustainable use--and can subsequently be removed from lists/protection (i.e. wolves and bears in the US are a good example). Then, the world needs to agree upon and enforce sustainable use.

The editorial mentions the "other reasons" that species are endangered, but it doesn't discuss the importance of addressing those "other reasons".
I do agree that wildlife needs to be viewed as more valuable to man, but I don't agree with their use of the term sustainable exploitation. They do bring up a point about what they are terming sustainable exploitation in that it makes money and saves species. Tourism, which they mention, is a way to allow people to view wildlife in a more valuable manner, but not once their population levels reach carrying capacity.

I do agree with the statement that many groups are more concerned with the harm to individuals than a population, and once again, I'm not saying that it is a bad thing, but a happy medium works for everyone including the wildlife and other resources. We wildlife professionals, if I can term myself one because of my academic background, are being taught to understand carrying capacity and sustainability. We also discuss what is known as the Bambi Effect. After the movie Bambi was released, there was a large anti-hunting and not just wildlife, but animal, protection movement. I'm not saying those movements didn't help with monumental legislation and aren't still helping, but in order to maintain a healthy population, carrying capacity must not be breached, which leads us to the most sustainable solution that is use in a manner that allows the population to continue and remain fit. Fitness, in biological terms, does not mean being the toughest in the group, but it is the ability to reproduce viable offspring and continue a population. If carrying capacity is reached, it is just as dangerous and inhumane as slaughtering entire populations because that is, in a sense what it does...it destroys populations in what is known as a crashing population.

I'm not sure if I agree with their statement about lifting bans to save species. Lifting bans to bring populations back to or below their carrying capacity is one thing, but I do not believe it is right to lift bans on populations that can not sustain themselves. If a population can not sustain itself, then that defeats the purpose of sustainable use...or in their terms...sustainable exploitation (I don't like that term...).

Sustainable use of populations and individuals allows for us to use resources effectively, but also maintain them for future generations of wildlife and human populations including poverty stricken areas. Sustainable use of populations also allows for a very important aspect that is forgotten in everyday life...biodiversity. Biodiversity is what maintains the ability for populations, communities, and biomes to adapt to change. Biodiversity can be termed as genetic diversity, but is not necessarily limited to that. So, it is important that we work together to create a sustainable future...for the right reasons.

What are your thoughts OT blog?

Discounting and Intergenerational Equity

We're starting a series of Guest Blogs! This is one of (hopefully) many more to appear over the next couple months, intensifying over the summer. Please comment, enjoy, and especially comment!!

This post is from Dennis Meadows, "a professor of Systems Management and director of the Institute for Policy and Social Science Research at the University of New Hampshire. He lives in Durham, New Hampshire" (From Chelsea Green Publishing). He also is the author of Limits to Growth: The 30 Year Update. Find more about him at Wikipedia.

Discounting and Intergenerational Equity

Young people should be aware of the importance of discounting of costs and benefits in all matters relating to intergenerational considerations.

Discounting is used in many studies of costs and benefits of proposed actions and policies. It is essentially a way of taking into account that money is more useful now than in the future because it can be put on deposit and interest collected. The higher the discount rate, the more severely future costs and benefits are "disregarded".

Sir Nicholas Stern, a senior economic advisor the UK Government, recently completed his report on the economic implications of climate change. It was submitted to the Prime Minister and the Chancellor of the Exchequer. He used discounting to compare costs of taking action now with the value of reduced damage from climate change in the future. His report stimulated much discussion of discounting. Economists' criticisms of the Stern report are almost totally focused on his use of the discount rate. He uses a low one, and they think it should be higher. I will not get into that issue, because I believe the concept of a discount rate (high or low - it makes no difference) is completely invalid in this case.

The idea that future costs and benefits should be discounted from their present values is based absolutely on one implicit assumption that the economists never mention. Probably they are even mainly unaware of it. Discounting only makes sense if you can buy back in the future whatever benefits you forego now. Or putting it in another way, it only makes sense if the costs of correcting current actions do not become infinite in the future.

A related assumption is that all the costs and benefits of an action can and will be expressed in financial terms. Economists are content to do a discounted cost analysis of species extinction, for example. I think that is total lunacy and arrogance. What qualifies a couple of economists living today to judge if losing a species forever will only impose on us the costs and benefits that we can foresee accurately now? And how could we imagine that future generations -- who will be deprived forever of the species -- will evaluate the costs and the benefits exactly as we do?

With climate change we are facing a social problem where delay now will give us a future that cannot be reversed, no matter how much money we spend. If we permit the climate to change, there will simply be no way we can buy back the situation we have now (to which we have adapted technically, politically, and economically over the past several centuries.) So there is no discount rate that can legitimately be used to decide whether it is "optimal" to act now or later.

I would caution all young people that if they get into the argument about the appropriate discount rate to use in developing climate policy, they have already lost the argument.

For decisions related to global climate change, modern economists' theory of discount rates is simply irrelevant.

-Dennis L. Meadows

Is there something we can learn from the Mayan Empire?

Good morning everyone,

I just opened my email, and I got the latest National Geographic newsletter that I subscribe to, and found a very interesting article titled "Maya May Have Caused Civilization-Ending Climate Change."

The article briefly goes through many different theories and factors about the collapse of the Mayan Empire, but says "'Our recent research shows that another factor may have been climate change,' [Tom Server] said during a meeting of the American Association of the Advancement of Science in Boston, Massachusetts, earlier this month." The researchers are using satellite imagery and are from the Marshall Space Flight Center in Huntsville, Alabama.

The article suggests that the Mayan Empire collapse is, directly and indirectly, because of the lack of sustainability in their everyday practices. They practiced slash-and-burn agriculture, which "Sever and his colleagues say such methods couldn't have sustained a population that reached 60,000 at its peak." Researchers think that they also exploited seasonal wetlands. "The data suggest that the combination of slash-and-burn agriculture and conversion of the wetlands induced local drought and turned up the thermostat."

Impressively, and on a good note, the researchers are also taking their data to the people, and have had a few regional successes including: "In one instance the Guatemalan congress was inspired to create the Maya Biosphere Reserve, Central America's largest protected area, after viewing satellite imagery and seeing striking differences between their forests and those that had been clear-cut to the north."

The article also discusses how even though there are some success stories from the use of their program, that it isn't enough. "Despite these local efforts in environmental stewardship, however, Latin American countries are facing a heavy burden from worldwide climate change." Local residents are reporting lower harvesting rates, and the growing lack of rain.

We should all take a minute and read this article...we could learn something from the collapse of the Mayan Empire. If the lack of sustainability has caused climate change in the past, even if minor and regional, and lead to the downfall of one of the most famous/infamous cultures in the world...it makes me wonder about ours...

What are your thoughts OT blog?

The Story of Stuff

Take 20 minutes to watch this video. Then tell me what you think.

Don't go away without checking out this part of the website too.