You are currently browsing the monthly archive for December 2007.
Congratulations to all aboard City Index Leopard for finishing a close second across the line in the 2007 Sydney-Hobart Yacht Race.
This puts into perspective my own wet-and-cold efforts to get the washing machine to work properly over Christmas.
How to construct an international financial governance system for carbon trading has become a more pressing question in light of the exposure of global banks to investments in sub-prime mortgages – with the OECD estimating losses of $300billion – described as “a measure of the depth of mismanagement, non-regulation and structural dysfunctionality of today’s financial system.”
The growth of derivatives and other investment vehicles and their impact is told by John Lancaster in the London Review of Books.
But it is from this mess that phoenix-like new and credible instruments and regulations will be needed not least for the delivery of payments on an unprecedented scale to a variety of forest stakeholders – forest managers, poor rural communities, government agencies — to manage and conserve forest resources. While initiatives such as the World Bank’s Forest Carbon Partnership Facility, and other similar multilateral and bilateral assistance to countries to implement carbon trading systems, as well as conservation efforts — such as the recent news to support Sierra Leone’s Gola forest, and Guyana’s invitation to the UK to its manage tropical forests (which conjures up images of ‘reversed’ groundnut schemes) are all welcome, the bulk of the necessary investment can only come from international private equity markets.
The central point — whether sub-prime lending or payments for avoided deforestation — arises from the principal-agent problem: the separation of consumers — mortgage holders or forest stakeholders — from financiers. The myriad of ever more complicated investment vehicles designed to spread risk began to create the illusion that risk had been abolished, and in doing so magnified the risk and infected financial markets to such an extent that everyone now bears a part of the risk. The credit crunch at Northern Rock was not as a result of mortgage holders being unable to make their regular payments; the problem was the bank’s inability to secure liquidity in the wholesale money markets which had in essence become the bank’s main customer.
Dani Rodrik in “One Economics, Many Recipes” argues for policies rooted in local realities and strategies that respond to their specific constraints. Forest governance can be designed at a local level — its success will reduce risk and increase carbon values. The success of forest certification over the past 10 years provides a starting point, together with improved national fiscal systems. Poorly performing states will receive, and be answerable for, lower carbon receipts
Powered by ScribeFire.
Martin Wolf — author of Why Globalisation Works — has written in his FT column what amounts to a cri de coeur article on the prospects of future economic growth and democracy.
We live in a positive-sum world economy and have done so for about two centuries. This, I believe, is why democracy has become a political norm, empires have largely vanished, legal slavery and serfdom have disappeared and measures of well-being have risen almost everywhere. What then do I mean by a positive-sum economy? It is one in which everybody can become better off. It is one in which real incomes per head are able to rise indefinitely.
Leaving aside some distinctly odd arguments on the emergence and nature of democracy, (and plainly crass comments about environmentalists and socialists), Wolf’s belated awakening to the dependence of the positive-sum world economy (his long hand for capitalism?) on intensive energy use is well illustrated by four charts:
Now climate change and future energy demands become a security and not least distributional issue, upon which Wolf takes unsurprisingly an apolitical middle path between optimists and pessimists on growth and concludes that the “condition for success is successful investment in human ingenuity”.
Whatever that means…
There are real physical limits to growth and the world’s capacity to sustain life (see an earlier post) — and foremost amongst the policy choices to achieve a steady-state international economic system is the need for redistribution within and between countries. It would be interesting to redraw these graphs according to class, which might show the extent to which the rich distort the world’s ecology. The turbo capitalism generated by today’s globalisation is undermining the ability of trade to pull people out of poverty and has created financial markets that have taken the world hostage.
Not quite the end of the year, still dreaming…
Much of the outcome of the Bali climate change conference is becoming clear – regardless of the theatrics, scaremongering and grandstanding – both in terms of the process (the Bali roadmap) over the next two years preceding the ratification of a new treaty prior to 2012 and the broad content.
There will a closing of the gap over emission reduction targets between those already industrialised countries (including the US) and countries such as China and India which have experienced rapid economic growth and energy consumption in the past two decades. Quality air and ambient temperatures are global public goods: comparing past energy use by country is a futile exercise – what counts is future carbon consumption. Most of the existing political problems in the current discussions stem from a green economic nationalism; yet the growth of emerging economies is due in large part from increased openness, trade and technological transfers – precisely the elements that will contribute most to emission reductions. Countries such as China, India and Brazil do recognise that they need to commit domestic investment in emission cuts in parallel to international efforts to correct global climate market failures.
Many other “developing” or poor countries claim that accepting emissions constraints will hinder economic growth. But these countries have a dismal record on introducing even the most basic governance reforms that are a prerequisite for economic growth and progress. Climate change will necessitate more openness and transparency than many of their leaders would like: but without stepping up their own reform programmes additional financial and technical assistance transfers to help them adapt to the consequences of climate change are unlikely to have much impact. Read the rest of this entry »
The issue of deforestation was assiduously left out during the negotiations for the Kyoto agreement, not least because the difficulties were clearly recognised. Now the Bali climate change conference seems set to include deforestation. A draft agreement states that it will address “enhanced action on mitigation of climate change including consideration of … policy approaches and positive incentives to reduce emissions from deforestation in developing counties.”
Avoided deforestation has become a buzz word du jour. It is estimated that deforestation accounts for 20% of current emissions, and that the carbon emission trading market is worth about US$30 billion at present. Including carbon credits for avoided deforestation as part of emissions reductions schemes seems a win-win solution. However the graph below illustrates the challenges ahead.
This shows the relationship between forest cover and governance in 2005 for 40 developing countries accounting for about 750 million hectares of primary forest taken from FAO data. The governance score is taken from the indicators compiled by the World Bank: the scores range from -2.5 to +2.5 with the higher values indicating a more positive governance outcome. There are six broad categories: voice and accountability, political stability, government effectiveness, rule of law, regulatory quality and control of corruption. The latter is used here, although frankly the results hardly change with any of the others. Brazil is the outlying spot on the far right. The Democratic Republic of Congo in Central Africa should be in the centre of the chart in terms of forest area, but there is no comparable primary forest data, and with a corruption score of -1.39 (which is also its best score) it would lie on the bottom.
Transferring large amounts of funding to the least well-run countries, mostly small economies, such as these encompassing the bulk of the tropical and sub-tropical forests – often with a substantial proportion of their land area under forest (as shown in the lower graph) has not proved successful to date in terms of development or poverty reduction. Paul Collier in his recent book “The Bottom Billion” has written: “A reasonable estimate is that over the past thirty years [aid] has added one percentage point to the annual growth rate of the bottom billion… Aid has been a holding operation preventing things from falling apart.”
In an earlier post I made an argument for a market-based approach, with the market pricing carbon according to risk for individual countries so providing an incentive for governments to introduce governance reforms themselves, supported by bilateral and multilateral aid programmes.
Spain proudly & rightly celebrated the 29th anniversary of the restoration of democracy on the 6th of December. This weekend we mark this by hiking from Montilivi, Girona eastwards through the twisting, undulating 8km trail to Els Angels (Santuari Dels Angels) through the magnificent oak, cork and pine 
forests. Its a 2-3 hour and 480m uphill slog (with a couple of detours due to a couple of rather poorly-signed routes…) and a little less (downhill) homeward bound. The hilltop sanctuary is worth a visit not least for the view – westwards back cross the forests of the Girones region and eastwards to the Costa Brava coast (it was too murky to see the Pyreenes to the north) – but otherwise it seemed rather disappointing – in part because of the on-going restoration work and also perhaps because we were too tired to make more of an effort and needed to turn back to reach home before darkness fell (Dali married here, we guess the guests did not walk).
For many people this is the time of year for lists: shopping lists, lists of presents to give, lists of books to prompt Santa, end-of-year “to do” lists, and – for some – lists of resolutions.
The last three can be combined – books to buy (or beg, steal and borrow), books to finish and books to look forward to. This would be my list of books to read, starting with three recommended by The Times in this season for trees – and for lovers of trees: Richard Mabey’s “Beechcombings: The Narrative of Trees“, Roger Deakin’s “Wildwood: A Journey Through Trees“, and “The Wild Places” by Robert Macfarlane.
To which I would add Richard Mabey’s “Concise Flora Britannica” and Roger Deakin’s “Waterlog: A Swimmer’s Journey Through Britain”.
Plus two books of poetry, old and new. First, “Collected Poems of Ted Hughes” (there was a good article recently on the poet’s involvement in environmental campaigns), and second, “Woods Etc.” by Alice Oswald.
Also and more eclectically: “Feet in the Clouds: A Tale of Fell-Running and Obsession” by Richard Askwith, “The Worm Forgives the Plough” by John Stewart Collis, “Understories: The Political Life of Forests in Northern New Mexico” by Jake Kosek, and “Unnatural Wonders. Essays from the Gap Between Art and Life” (Arthur Danto).
Two text books: Herman Daly’s “Ecological Economics Textbook: A Workbook for Problem-based Learning”, and “Forest Ecology and Conservation: A Handbook of Techniques” by Adrian Newton.
And one to look out for in the library: “Welsh Furniture, 1250-1950″ by Richard Bebb.
Finally, a late addition: “Ecological Debt: Global Warming & the Wealth of Nations” by Andrew Simms.
Powered by ScribeFire.
I was in Zimbabwe on the eve of independence in April 1980. We danced all night in the shattered ruins of the hotel at Victoria Falls. I returned with the African Development Bank on a project appraisal mission mission in 1986 (to fund a resettlement/rural development programme in the Zambezi Valley), and again in the late 1990s to research economic participatory research techniques for forest resources. It is nothing less than horrific what Mugabe has done to the country.
UPDATE 4 Dec 2007:
A group of writers – including Wole Soyinka, Chimamanda Ngozi Adichie, Ben Okri, JM Coetzee and Nadine Gordimer – have sent an open letter to all European and African leaders ahead of the EU-Africa Summit accusing them of “political cowardice” for failing to squarely address “two of the world’s worst humanitarian crises” namely Zimbabwe and Darfur.
What can we say of this political cowardice? We expect our leaders to lead, and lead with moral courage… When they fail to do so they leave all of us morally impoverished.
UPDATE 7 Dec 2007:
For the latest on the current situation in Darfur and continuing recalcitrance of the Sudanese government click here.
A delegation of British parliamentarians, led by Lord Steel, the former leader of the Liberal Democrats and Michael Howard, the former Tory party leader, flew to Sudan this week to press Bashir to respond to the serious allegations.
His answers were unsatisfactory,” said Howard. “[He] gave no good reason why he is blocking the involvement of Swedish and Norwegian advanced engineering battalions in the combined UN and African Union force.
It is clear the Sudanese government is deliberately hampering the ability of the peacekeepers to safeguard the security of the refugees.
UPDATE: 9 Dec 2007
Even the sanguine Euro-crat (and current president of the EU) was sufficiently moved to ask Mugabe:
We cannot understand that those who once fought for the freedom of their country now deny that freedom to their citizens
Powered by ScribeFire.
