viernes, 8 de abril de 2011

Environmental Sustainability and Poverty Alleviation. Is there a trade-off?

As I was preparing myself for my Macroeconomics Exam, the question hit me again. Why am I trying to learn all this material? Is it helpful to mildly understand how the economy of a country is supposed to behave? Am I learning something that is actually proven or is it just one theory to help justify a flawed paradigm of reality. I ask myself this question often because one of the main reasons that brought me to this city, the heart of the western world, New York, was the idea that there is something completely wrong in the way our species is behaving in the planet. We seem to be degrading the planet, harming a phenomenon that until now is exceptional and has only been found in one planet: life. It seems that we cannot value biodiversity and the earth systems that fuel our economy. And after almost one year in Columbia University, I have learned that biodiversity is not productive, we need to make some trade-offs if we want to keep development functional. When I first came I thought development was the problem, GDP was the problem, private corporations and profit maximization were the problem, developed countries were the problem. Today I realize that I would not have lived the life that I have without all of these things and indeed I should be grateful. I now understand that the things I considered to be utterly wrong are in someways a better alternative to the other options. Markets are valuable in a very important way, government regulation can produce more harm than good, especially when corruption is present all across the society. But still... 

Markets fail, they fail for several reasons... Asymmetrical information, externalities, common goods. The clearest example of market failure is Climate Change. For me it is the challenge of our generation, with the other environmental problems, we will need to find a solution fast. But there is a very hot debate going on about these subjects. Climate Change, Ocean Acidification, Loss of Biodiversity, it seems that they are not as important when we compare them to sustained economical development. Trying to reduce our impact would entail a slowing down in our economies that could prove fatal to the levels of wealth and progress we have achieved. And there are still more than 5 Billion humans that want to have a taste of this improved lifestyle. Who are we to say no? I am not talking about the charade that some pseudo-scientists hired by some pseudo-politicians payed by some corporations to try and convince us that climate change is not a real threat and it is only a climatologist conspiracy to put Al Gore in the White House. No, I am referring to the the  argument of poverty alleviation and sustainable development. It seems a bit selfish when we worry about other species and still 1 Billion humans go to bed hungry. It also seems that given the current trends, future generations will be richer than our, and that reducing consumption today would be unnecessary and even counterproductive in the long-run. First because by continuing to develop we will accumulate more capital that future generations will profit from, if we stop developing we will actually be reducing their capital and their technology. Secondly because since they will be much richer than us, it would be unnecessary to reduce consumption today. Especially if people are dying of treatable diseases today...

I do not agree with these arguments, and I still believe that we need to stop fooling ourselves and start to behave as a responsible specie, protecting the natural capital of our planet because of the intrinsic value that earth systems and life have. Not just for future human generations but as an ethical value, because the marvels of this planet up to now only happen in this planet. We need to learn to control ourselves. Poverty is not an issue of unfulfilled development, it is an issue of inequity. But these ideas go against the current canon of thought that occurs in the international affairs stage. The UN states that sustainable development requires to achieve environmental sustainability and poverty alleviation at the same time.  China, India, Brazil will not stop their development now that it is their turn to become world superpowers. And I understand it. I don't agree with it, but I guess that I have had to learn to listen to these valid ideas. (Again not the climate skeptics or those that believe that worrying about the environment is childish). I am talking about those that believe that we also need to concentrate on the life fulfillment of humans across the planet. That I agree to discuss...

This post is about those ideas that make me doubt in my conviction that we need to tackle the environmental crisis headstrong. I find the following TED Talk to be instructive  and present an argument that made me reconsider my position. 

The talk is given by Bjorn Lomborg, he is the author of a very controversial book called "The Environmental Skeptic" and although I am not a tremendous fan of of him, the Ted Talk he gave does make some points I had not considered. He uses the tool of Cost-Benefit Analysis to rank which should be the key problems that humanity should tackle first. His conclusions made quite an impression. From wikipedia:

"Lomborg's main argument is that vast majority of environmental problems such as pollution, water shortages, deforestation, and species loss as well as population growth, hunger, and AIDS, are area-specific and highly correlated with poverty. Therefore, the problem is essentially a matter of logistics and can be largely solved by economic and social development. Concerning problems that are more pressing at the global level, such as the depletion of fossil fuels and global warming, his argument is that these problems are often overstated and the recommended policies (Litany) are often inappropriate if assessed against alternative policies"
Bjorn Lomborg argues that when economists use the tool of cost benefit analysis applied to the list of challenges that humanity is facing including elements such as Climate Change, AIDS, Malnutrition, Access to Water, Free Trade limits, Governance and Corruption. The idea is quite interesting, I have gotten myself into very complicated discussions when trying to explain why solving the climatic crisis should be a priority to some of my colleagues who consider that women empowerment, food security, education, social entrepreneurship and poverty alleviation are much more pressing than the uncertain threats caused by the environmental degradation and pollution. These conversations have made me reconsider my position on the importance of the climate challenge. I can even remember in a lecture by one of France's most recognized policy researcher on climate change mitigation a very uncomfortable moment. She mentioned that it's not just about the "climate nerds" and that climate change might be only the hot topic for a while. Indeed if carbon sequestration is possible, it might be that the problem will be rapidly solved. At least that is what one eminent professor in Columbia argues. I have talked with other experts on the subject, who mention that the idea might be feasible, capturing atmospheric CO2 directly from the ambient air, put it underground and solidifying it, but the problem is the scale at which we would have to do it. So apparently there are no clear answers.

When you consider the cost of interventions and the possible benefit, according to his expert panel of economists, climate change is by far the less urgent item on the list. By spending much less money, we could actually start solving issues like the AIDS pandemic in Africa, Malaria in Africa and South Asia, Micronutrient deficiencies all around the world and elimination of subsidies in the developed countries that affect the business activities of poor countries when they can't produce at the distorted prices (think of corn in the USA). It makes a hell of a lot of sense. It doesn't mean we shouldn't work on the environmental agenda but if we can't solve issues like these then what is the future of the climate negotiations. In recent years the Global Fund and PEPFAR have actually started combating AIDS and Malaria in Africa and the results can be seen in the statistics. So we can solve these issues, it's just about the political will. If as Lomborg says these problems can be solved quickly with existing technologies, I have to say: "let's do it".

That justifies my summer in Uganda, in one of the Millenium Villages where proven interventions are being provided in an holistic manner to bring a village cluster out of the poverty trap. I will try to find some answers to my questions.

I found this in an article written in the Copenhagen Consensus Center facebook's page. It is a think-tank in Denmark that publicizes the best ways for governments and philanthropists to spend aid and development money. And was founded by Mr. Lomborg. The article ends with the following ideas:

Lomborg notes that the world still depends on fossil fuels for more than 80% of its energy. “What will developing countries use to power their economies if they can’t burn fossil fuels?” he asks. “Alternative energy technologies like solar, wind, and geothermal power all have great promise, but they are nowhere near ready to shoulder that kind of load.”

“Those who put their hopes in the Copenhagen summit will be bitterly disappointed. But this failure could be a blessing in disguise, if it jolts politicians into recognizing the deep flaws in their current approach, and chart a smarter course”, says Lomborg. “Until now we have put the cart in front of the horse by promising carbon cuts before alternative energy is affordable.”

Lomborg argues that if governments are serious about wanting to solve global warming, they should massively increase spending on green-energy research and development. “We should increase the amount we spend on green energy R&D by a factor of fifty, to $100 billion a year – or 0.2% of global GDP. This would be more than enough to bring about the kind of game-changing technological breakthroughs it will take to make green energy cheaper and fuel our carbon-free future.”

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