26 Feb, 2008

Worldwatch “Green Economics”: Turning Mainstream Thinking On Its Head

Imtiaz Muqbil

Information about the impact of climate change, and how to help combat it, abounds on the Internet, all available free-of-charge. Like open-source software, many of these practical solutions, creative ideas and research studies are placed in the public domain by those with a passion for the cause, and not pursuing professional profit or private aggrandisement.

In this dispatch:

1. WORLDWATCH “GREEN ECONOMICS”: TURNING MAINSTREAM THINKING ON ITS HEAD

2. BREAKING DOWN THE BARRIERS TO A GREEN ECONOMY

3. WARMER WORLD MAY MEAN LESS FISH

4. AFRICAN FORESTRY SECTOR CRITICAL TO CLIMATE CHANGE DEBATE

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1. WORLDWATCH “GREEN ECONOMICS”: TURNING MAINSTREAM THINKING ON ITS HEAD

By Thomas Prugh [Tom Prugh is editor of the Worldwatch Institute’s bimonthly magazine, World Watch, and co-director, with Gary Gardner, of State of the World 2008]. Source: http://www.worldwatch.org/node/5623

February 15, 2008, Worldwatch: A few years ago, a homeowner in Las Vegas — a place that gets maybe five inches of rainfall a year — was confronted by a water district inspector for running an illegal sprinkler in the middle of the day. The man became very angry. He said, “You people and all your stupid rules — you’re trying to turn this place into a desert!”

Ideas about how the world works that don’t accord with reality can be unhelpful. That’s especially true about mainstream economics, which is based in part on ideas that made a lot of sense at some point in the last 250 years but that have outlived their time and usefulness. These ideas—such as the reliance on GDP as the key index of general wellbeing—still dominate assumptions and thinking about economic matters in the media, governments, businesses, and popular consciousness.

But in recent decades, economics theoreticians and researchers have suggested a variety of reforms that would make economics truer, greener, and more sustainable. My colleague Gary Gardner and I describe seven of these in Chapter 1 of the Worldwatch Institute’s latest report, State of the World 2008: Innovations for a Sustainable Economy:

1) SCALE: How big is the global economy relative to the global ecosystem? This is crucial, because the economy resides totally inside the global ecosystem—the ecosystem gives the economy a place to operate, supplies all of its raw materials, and supports it with many critical services. In physical terms, economic activity is basically converting bits and pieces of the ecosystem to human uses: trees and forests into lumber and houses, grasslands and other habitats into farms to feed the billions of humans, and so on.

We’ve gotten really good at economic growth. Since Adam Smith’s time, the number of people in the world has exploded from about 1 billion to nearly 7 billion. And in the last 200 years, Gross World Product has risen by nearly a factor of 60. The ecosystem has suffered as a result, hence the headlines we see every day: climate change, species extinctions, dwindling rainforests, water shortages, and all the rest.

Piecemeal, we’re starting to get the message about the economy’s scale. For instance, we know that there’s too much carbon floating around for the system to handle benignly. Last year, more than 90 major corporations, including General Electric, Volvo, and Air France, called on governments to set goals for reducing greenhouse gas emissions, and the European Union has set up a carbon cap-and-trade system.

Waste minimization is another way to reduce scale. Every year we dig up and process more than half a trillion tons of raw materials—and six months later more than 99 percent of it is waste. That can be fixed too: Ray Anderson’s Interface carpet company is a leader in this area, reducing manufacturing waste by 70 percent since the mid-1990s and saving over $300 million while doing it.

2) STRESS DEVELOPMENT OVER GROWTH. That is, make the economy better at satisfying human needs, not simply bigger.

This is partly about eco-efficiency. It’s now cost-effective to boost resource efficiency by at least a factor of four—and possibly by a factor of 20. And given the need for billions of people to grow their way out of dire poverty, we have to pursue these gains.

But it’s also about asking the question, what is an economy really for? Not only can the global economy not keep growing forever, growth isn’t even working for many of us in wealthy nations anymore: U.S. per-capita income has tripled since 1950, for instance, but the share of Americans who say they’re very happy has dropped over the last 30 years. Studies in hedonic psychology reveal that higher incomes only improve life satisfaction up to a point. The research also says that the more materialistic people are, the lower levels of happiness they report. And it says that there appears to be a correlation between rising consumption and the erosion of the things that do make people happy, especially social relationships, family life, and a sense of community.

In response, a lot of people are rejecting the competition and get-ahead mentality of consumerism. They’re downshifting and pursuing voluntary simplicity all over the globe, and they’re taking collective action via campaigns for healthy eating, work leave for new parents, and shortened workweeks. The governments of Australia, Canada, and the United Kingdom have made wellbeing a national policy goal, and there is a lot of interest in indicators that measure wellbeing more directly than GNP.

3) MAKE PRICES TELL THE ECOLOGICAL TRUTH: Cheating a bit here—this isn’t really a conceptual reform. Every economist knows that markets fail when prices don’t reflect actual costs. The reform would be actually applying this rule to the ecosystem. For instance, climate change is arguably the result of failing to charge for dumping carbon dioxide into the atmosphere. Another example is human-caused species extinction. We’re basically dismantling our life-support machinery, and by and large until recently nobody paid for it. Fortunately, governments and business are beginning to experiment with carbon markets, water pricing mechanisms, and conservation banking. Carbon market trading was worth $59 billion in 2007, and there are now several hundred wetlands and species banks in the United States alone.

4) ACCOUNT FOR NATURE’S SERVICES. This is closely related to #3. In the United States, the pollination performed by honeybees is worth about $19 billion per year. There’s also air and water purification, soil generation, pest control, seed dispersal, and nutrient recycling, among the many other services that nature provides. Tearing up ecosystems undermines these services, so some countries have begun trying to value them properly. Costa Rica, for example, pays landowners to preserve forests and their biodiversity, with the money coming from fuel taxes and sale of environmental credits to businesses. Mexico and Victoria, Australia, have also set up systems to assign values to formerly free services.

5) THE PRECAUTIONARY PRINCIPLE. This is just the age-old wisdom of “first, do no harm” and “look before you leap,” but applied to public policy toward new products (like chemicals) and technologies that could pose serious risk. Ordinary risk analysis asks, “How much environmental damage will be allowed?” But the precautionary principle asks, “How little damage is possible?” Today we’re seeing the principle adopted more and more widely. The Maastricht Treaty that created the European Union in 1991 puts the principle at the center of its environmental policy, and San Francisco made precaution official policy in 2003.

6) COMMONS MANAGEMENT. People generally believe that there are only two workable regimes for managing resources: private property or government control. But commons management regimes are a third way, one that taps the strong human impulse toward cooperation and the common good. Commons management has proven itself over centuries of experience — there are collectively managed irrigation systems in Spain that were begun in the 15th century, for instance, and other commonly managed forests and pastures in Switzerland, Japan, the Philippines, and Indonesia that are centuries old.

Commons management lives and thrives today in such things as Wikipedia, community gardens, and farmers markets everywhere. The writer and entrepreneur Peter Barnes has suggested that the atmosphere, which everyone ought to own, could be successfully managed and protected via a commons regime. Ocean fisheries might be as well.

7) VALUE WOMEN. Economic systems ought to be gender-blind but they’re not. A UN report in the 1990s noted that “most poor people are women, and most women are poor.” All over the world, women earn less than men for equivalent work, they lack access to land and credit, and they do more than their share of child- and elder care, volunteer work, and other unpaid labor. There is evidence that this gender bias actually suppresses economic activity. In response, a few governments in industrial countries are trying to develop policies that take unpaid work into account. Muhammad Yunus’s Grameen Bank in Bangladesh is using the terms of its loans to help to ensure that wives are legally entitled to their share of a couple’s assets. And the microfinance movement appears to have given millions of women a valuable economic boost.

These seven ideas are hardly the only changes brewing in economics, but the innovations described in State of the World 2008 can generally be traced to one or more of them. Hopefully, they are on the way to transforming economics from “the dismal science” into more of a delightful one—or, to paraphrase E.F. Schumacher, into an economics as if people and the planet mattered.

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2. BREAKING DOWN THE BARRIERS TO A GREEN ECONOMY

Excerpted from: http://www.unep.org/Documents.Multilingual/Default.asp?DocumentID=528&ArticleID=5748&l=en

Monaco, 20 February 2008 — An emerging Green Economy is glimpsed in the latest United Nations Environment Programme’s (UNEP) Year Book as growing numbers of companies embrace environmental policies and investors pump hundreds of billions of dollars into cleaner and renewable energies.

Climate change, as documented in the Year Book, is increasingly changing the global environment from the melting of permafrost and glaciers to extreme weather events. But it is also beginning to change the mind-sets, policies and actions of corporate heads, financiers and entrepreneurs as well as leaders of organized labour, governments and the United Nations itself.

Increasingly, combating climate change is being perceived as an opportunity rather than a burden and a path to a new kind of prosperity as opposed to a brake on profits and employment, the new report shows. The UNEP Year Book 2008 says the emerging green economy is also driving invention, innovation and the imagination of engineers on a scale perhaps not witnessed since the industrial revolution of more than two centuries ago.

Despite a great deal of activity and action, formidable challenges remain if all these fledgling transformations are to be sustained and embedded in the global economy over the coming years and decades.

Barriers include subsidies that favour fossil fuels over cleaner energies; tariff and trade regimes that make cleaner technologies more expensive and the risk-averse lending patterns of banks and other financial institutions when it comes to solar and wind power loans for poorer communities, the new report says.

The Year Book’s findings were presented today at the opening of the largest gathering of environment ministers since the climate convention meeting in Indonesia late last year which gave birth to the Bali Road Map. The Road Map is the climate negotiation agreement scheduled to be completed by the climate convention meeting in Copenhagen in 2009 in order to deliver a post 2012 climate regime.

The ministers, joined by senior figures from the worlds of business, organized labour, science and civil society, are attending UNEP’s Governing Council/Global Ministerial Environment Forum under the theme “Mobilizing Finance for the Climate Challenge”.

Achim Steiner, UN Under-Secretary General and UNEP Executive Director, said: “Hundreds of billions of dollars are now flowing into renewable and clean energy technologies and trillions more dollars are waiting in the wings looking to governments for a new and decisive climate regime post 2012 alongside the creative market mechanisms necessary to achieve this.”

“Formidable hurdles remain as to whether these funds will ultimately seek out new, climate-friendly investments for the future or whether they will seek the lowest common denominator by flowing into the polluting technologies of the past,” he said.

“Designing an attractive, creative and equitable investment landscape which rewards those willing to invest in tomorrow’s economy today is the challenge before ministers here in Monaco and the challenge for the international community over the next two years in the run up to Copenhagen,” said Mr Steiner.

“However I am optimistic that we can shift gears to a Green Economy. If humans can go to the Moon; submarines sent under the Arctic; liver and heart transplants perfected; the mysteries of the human genome deciphered and tiny nano-machines designed then managing a transition to a low carbon society must be within humanity’s grasp and intellect,” he added.

SOME KEY FINDINGS

The findings here are based on the UNEP Year Book 2008 with some additional supporting facts and figures from documents prepared by UNEP for the GC/GMEF

Responsible Investing Takes Off

The UNEP Year Book, an annual report requested by ministers, underlines some of the elements of a Green Economy which are already falling into place.

Corporate Social Responsibility (CSR) reporting including environmental concerns is now found among corporations in over 90 countries with the number of such statements mushrooming from virtually zero in the early 1990s to well over 2,000 now.

<> The Investor Network on Climate Change, launched in November 2003, now has some 50 institutional investors with assets of over $3 trillion.

<> The Principles for Responsible Investment, jointly facilitated by UNEP’s Finance Initiative and the UN Global Compact in 2006, now has 275 institutions with $13 trillion of assets.

Many companies now perceive that ‘going’ Green also improves their bottom line. A survey of companies in six sectors-ranging from mining and energy to food and media-indicates that those with pioneering environmental, social and governance strategies are out-performing the general stock market by 25 per cent.

Industrial Emission Reductions Remain Mixed

Meanwhile, some of the globe’s most carbon-intensive industries are leading the way in publicly disclosing their carbon footprint under an eight year-old initiative called the Carbon Disclosure Project. Disclosure is seen as one powerful route towards companies taking responsibility and acting to reduce their emissions.

The Project, aimed also at empowering shareholders to better understand the current and future economic risks facing the companies they support, estimates that:-

<> Close to 80 per cent of the Financial Times 500 corporations are disclosing their carbon performance.

<> Over three quarters of those who are disclosing such information are now also implementing greenhouse gas reductions via direct emissions reductions or via the emerging carbon markets. This is up from nearly half the year before.

Interestingly the highest rate of achievement in terms of carbon disclosure is among the carbon-intensive industries such as metals, mining and steel sectors alongside oil and gas and the power sector.

The UNEP Year Book 2008 can be found by clicking here: http://www.unep.org/publications/search/pub_details_s.asp?ID=3980. It can be purchased at Earthprint www.earthprint.com and is available in all six official UN languages (Arabic, Chinese, English, French, Russian and Spanish).

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3. WARMER WORLD MAY MEAN LESS FISH

Excerpted from: http://www.unep.org/Documents.Multilingual/Default.asp?DocumentID=528&ArticleID=5751&l=en

Monaco/Nairobi, 22 February 2008 – Climate change is emerging as the latest threat to the world’s dwindling fish stocks a new report by the UN Environment Programme (UNEP) suggests. At least three quarters of the globe’s key fishing grounds may become seriously impacted by changes in circulation as a result of the ocean’s natural pumping systems fading and falling they suggest.

These natural pumps, dotted at sites across the world including the Arctic and the Mediterranean, bring nutrients to fisheries and keep them healthy by flushing out wastes and pollution.

The impacts of rising emissions on the marine world are unlikely to end there. Higher sea surface temperatures over the coming decades threaten to bleach and kill up to 80 per cent of the globe’s coral reefs-major tourist attractions, natural sea defences and also nurseries for fish.

Meanwhile there is growing concern that carbon dioxide emissions will increase the acidity of seas and oceans. This in turn may impact calcium and shell-forming marine life including corals but also tiny ones such as planktonic organisms at the base of the food chain.

The findings come in a new rapid response report entitled “In Dead Water” which has for the first time mapped the multiple impacts of pollution; alien infestations; over-exploitation and climate change on the seas and oceans.

“The worst concentration of cumulative impacts of climate change with existing pressures of over-harvest, bottom trawling, invasive species infestations, coastal development and pollution appear to be concentrated in 10-15 per cent of the oceans,” says the report.

This 10-15 per cent of the oceans is far higher than had previously been supposed and is “concurrent with today’s most important fishing grounds” including the estimated 7.5 per cent deemed to be the most economically valuable fishing areas of the world, it adds.

The report, the work of UNEP scientists in collaboration with universities and institutes in Europe and the United States, was launched today during UNEP’s Governing Council/Global Ministerial Environment Forum taking place in Monaco.

The report comes in wake of findings issued last week by a team led by the National Center for Ecological Analysis and Synthesis which estimates that over 40 per cent of the world’s oceans have been heavily impacted by humans and that only four per cent remain relatively pristine.

“In Dead Water” Key Findings

– Half the world’s catch is caught along Continental shelves in an area of less than 7.5 per cent of the globe’s seas and oceans.

– An area of 10-15 per cent of the world’s seas and oceans cover most of the commercial fishing grounds.

– 80 per cent to 100 per cent of the world’s coral reefs may suffer annual bleaching events by 2080 under global warming scenarios.

– Those at particular risk are in the Western Pacific; the Indian Ocean; the Persian Gulf; the Middle East and in the Caribbean

– Over 90 per cent of the world’s temperate and tropical coasts will be heavily impacted by 2050. Over 80 per cent of marine pollution comes from the land. Marine areas at particular risk of increased pollution are Southeast and East Asia.

– Increasing concentrations of C02 in the atmosphere are likely to be mirrored by increasing acidification of the marine environment.

– Increasing acidification may reduce the availability of calcium carbonates in sea water, including a key one known as aragonite which is used by a variety of organisms for shell-building.

– Cold-water and deep water corals could be affected by acidification by 2050 and shell-building organisms throughout the Southern Ocean and into the sub-Arctic Pacific Ocean by 2100.

– Climate change may slow down the ocean thermohaline circulation and thus the continental shelf “flushing and cleaning” mechanisms, known as dense shelf water cascading,over the next 100 years. These processes are crucial to water quality and nutrient cycling and deep water production in at least 75 per cent of the world’s major fishing grounds.

– Dead zones, area of de-oxygenated water, are increasing as a result of pollution from urban and agriculture areas. There are an estimated 200 temporary or permanent ‘dead zones’ up from around 150 in 2003.

– Up to 80 per cent of the world’s primary fish catch species are exploited beyond or close to their harvesting capacity. Advances in technology, alongside subsidies, means the world’s fishing capacity is 2.5 times bigger that that needed to sustainably harvest fisheries.

– Bottom trawling is among the most damaging and unsustainable fishing practices at the scales often seen today

– Alien invasive species, which can out-compete and dislodge native ones, are increasingly associated with the polluted, overharvested and damaged fishing grounds. The report shows that the concentration of ‘aliens’ matches with some precision the world’s major shipping routes.

The report “In Dead Water: Merging of climate change with pollution, over-harvest, and infestations in the world’s fishing grounds” can be accessed at www.grida.no or at www.unep.org or www.globio.info including high and low resolution graphics for free use in publications.

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4. AFRICAN FORESTRY SECTOR CRITICAL TO CLIMATE CHANGE DEBATE

Excerpted from: http://www.fao.org/newsroom/en/news/2008/1000786/index.html

18 February 2008, Khartoum/Rome – “Forests play a critical role in climate change,” the Food and Agriculture Organization said today during the opening day of the first-ever joint meetings between the Near East Forestry Commission and the Africa Forestry and Wildlife Commission. “The Forestry sector, mainly deforestation in tropical areas, causes 17 percent of global emissions of greenhouse gases. Sustainable forest management is a necessary component of a global strategy to combat climate change”, said Jan Heino, FAO Assistant Director-General for Forestry.

Trees are even more important in countries that do not have a large forest area. “The development of guidelines for best forestry practices in arid and semi-arid zones can be a significant step forward in the Near East region,” said Pape Djiby Koné, Senior Forestry Officer for the Near East.

The meetings in Khartoum are the largest single gathering in history of the heads of national forestry and wildlife agencies in the two regions. The wildlife experts will develop strategies to address the conflict between humans and wildlife, which destroy hundreds of hectares of food crops and claim human lives each year in Africa.

Over 80 percent of wood is used for energy in Africa, mainly for cooking and heating. In the Near East, most wood products are imported, and oil products are the main source of energy. The importance of forests in the energy strategies for countries in both regions will be addressed throughout the week of meetings in Khartoum, according to Heino.

Clean water is increasingly scarce in many parts of Africa and the Near East. The joint sessions will consider options for improving the conservation of water, with a focus on new approaches to watershed management that take into consideration the impact of human development activities in each watershed.