economic growth | ukwatch.net

Ending Poverty in a Carbon Constrained World

Ellie Keen — Sun, 06 Jul 2008 13:12:07 +0000

Rapid Transition and New Development Directions

Several years ago the International Red Cross sent me on behalf the World Disasters Report to assess the early impacts of climate change on vulnerable populations. What I saw in Tuvalu, in the South Pacific, and learned from other small island states, about being resilient in the face of an unpredictable and extreme climate, may hold lessons now for how many millions more can withstand the upheaval of global warming on our small island planet. Tuvalu is living a uniquely modern paradox. It won the lottery of the internet age being awarded the domain name ‘.tv.’ Allegedly it has a bigger delegation in Los Angeles to sell rights, than it has here at the UN to protect its political interests. But, lying just a few metres above sea level, Tuvalu is in acute danger of losing its real home, just as it benefits from its new, virtual one.

We can learn a lot from the mere fact that island communities like this survived for so long on remote shards of land, exposed to the full force and vagaries of nature To do so, first they had to respect their obvious environmental limits. Next they evolved resilient local economies that helped them cope with extreme and unpredictable weather. These were, of necessity, based on reciprocity, sharing and co-operation, and not unlimited growth fed by individualistic, beggar-thy-neighbour competition.

Today, as collectively we face and exceed the limits of the earth’s bio-capacity, we are challenged at the global level to learn in a few short years, lessons that such small communities often took millennia to arrive at. Our task is enormously complicated by the intricate interdependence of the modern global economy, the unbalanced distribution of power and benefits within it, and a pace of international decision making that, until the ice started to melt so rapidly, I would have described as glacially slow. Fortunately there is much that we already do know to guide our actions, drawing on decades of experience in dozens of countries and through thousands of community based organisations around the world.

For example, the Working Group on Climate Change and Development, a coalition of leading NGOS based in the UK, that we helped to form, spelt out in a series of reports looking in detail at different global regions, how climate change, if unchecked, stands not only to block further progress on the Millennium Development Goals, but to reverse gains hard won over many years. Our conclusion was that irreversible global warming, which appears perilously close, would mean not just greater hardship for millions, but the end of development as we have understood it for the last half a century.

One severe drought in Australia has already partly triggered world-wide food shortages and high and rising prices, creating shocks that ripple from the High Street in Britain to the markets of Dhaka and Port au Prince. And the UK’s official Hadley Centre for Climate Prediction and Research, recently concluded based on a moderate scenario for change, that the percentage of the Earth’s land surface prone to extreme drought having already trebled to three per cent in less than a decade, will rise to fully one third by 2090, with droughts also longer in duration.

More worrying still, the edge of the climate cliff is not clearly visible. Scientists such as NASA’s James Hansen believe we may already be tipping over. This means not just stabilising atmospheric greenhouse gases, but reducing them, with unimagined implications for the global economy. Oddly-named ‘positive environmental feedbacks’ are volatile, hard to predict and may be terrifyingly sudden. So we must act on precaution and the best estimates available.

Because the economy is a wholly owned subsidiary of the biosphere we have no choice but to act, using precaution and the best information available. An individual may recover from financial bankruptcy, but if we allow our ecological debts to bankrupt a climate conducive to human civilisation, geological history shows that it could take tens of thousands of years to be restored if, indeed, it ever is.

We already know that people living in poverty are hit first and worst by global warming. This and the challenge of reducing poverty in a carbon constrained world calls for a new development model which is climate proof and climate friendly. From now on, all decisions will need to be scrutinised for whether they will increase or decrease vulnerability to climate change. We must look through the lenses of building resilience at the community level, and reducing risk. And, it is the communities at risk who must shape our plans.

Parallel to the approach of the IPCC, the recent report of the International Assessment of Agricultural Knowledge, Science and Technology showed that a massive shift of support to small scale farmers using a diverse range of agro-ecological methods would be one of the most efficient ways to build resilience, inoculate against food crises, and insure against increasingly hostile weather patterns. Community-based coping strategies such as the use of seed banks, water management, vulnerability mapping, storm and flood protection that works with the local environment, and the conservation of forests and other ecosystems – all represent effective ways for threatened communities to adapt.

If replicated and scaled-up, small-scale renewable energy projects promoted by governments and community groups can help both to tackle poverty and reduce climate change. But this needs political commitment, significant new funds from governments and a major shift in priorities for energy lending by the World Bank and other development bodies. There is no either/or approach possible; the world must meet both its commitments to achieve the MDGs and tackle climate change. The two are inextricably linked.

Here we crash headlong into another, equally large problem. It is clear that conventional economic growth will happen in poor countries as a consequence of effective poverty reduction. But at a global level, the policies designed to pursue growth have become a mask for making the rich, richer, whilst leaving the poor with few benefits and abandoned to deal with growth’s environmental consequences. During the 1980s – what was called lost decade of development – from every $100 worth of global economic growth, around $2.20 found its way to people living below the absolute poverty line. A decade later that had shrunk to just $0.60c, and the actual mean income of those living under $1 per day in Africa also fell.

There has been, in effect, a sort of ‘flood-up’ of wealth from poor to rich, rather than a ‘trickle-down.’ It means, perversely, that for the poor to get slightly less poor, the rich have to get very much richer, implying patterns of consumption which, in a world facing climate change, cannot be sustained. It now takes around $166 worth of global growth – made up of all those energy-hungry giant flat screen TVs and sports utility vehicles – to generate a single dollar of poverty reduction for people in absolute poverty, compared with just $45 dollars in the 1980s. Earnings of between $3 and $4 per day is the approximate level at which the strong link between income and life expectancy breaks down. So, let us ask what would happen if we agreed $3 per day as the minimum level of income to escape absolute poverty?

Using the ecological footprint measure, if the whole world wished to consume at the level of the United States – a consumption pattern which has been fuelled, incidentally, by the credit binge which led to the current economic crisis – we would need, conservatively, over 5 planets like earth to support them. But, under the current pattern of unequally distributed benefits from growth, to lift everyone in the world onto a modest $3 per day, would require the resources of around 15 planets like ours. Where, you might ask, will the other 14 come from?

To tackle poverty in a carbon constrained world, then, we need a new development model, based on better measures of progress, and a shift from relying on unequal global growth to serious redistribution. If we think of the planet as a cake, we can slice it differently, but we surely cannot bake a new one. Climate change is not the only reason that we have to learn to live with far fewer fossil fuels. Development must also contend with the high and rising price of oil, and the imminent global peak and long decline of oil production.

What, if any, guides do we have to surviving these multiple shocks?

One country, much maligned, provides a glimpse of a near future that many more may face. Almost like a laboratory example, positioned on the flight path of the annual Hurricane season, since 1990 Cuba has lived through the economic and environmental shocks that climate change and peak oil hold in store for the rest of the world.

The sudden loss of cheap Soviet oil and its economic isolation were so extreme at the end of the cold war, and its reaction to the shock was so contrary to orthodox approaches, and relatively successful, that it was dubbed in Washington the ‘anti-model.’ Then oil imports dropped by over half. The use of chemical pesticides and fertilisers dropped by 80 percent. The availability of basic food staples like wheat and other grains fell by half and, overall, the average Cuban’s calorie intake fell by over one third in around five years.

But, serious and long-term investment in science, engineering, health, education, plus land redistribution, reduced inequality and research into low-input ecological farming techniques, meant the country had a strong social fabric and the capacity to act.

At the heart of the transition after 1990 was the success of small farms, and urban farms and gardens. Immediate crisis was averted by food programmes that targeted the most vulnerable people, the old, young, pregnant women and young mothers, and a rationing programme that guaranteed a minimum amount of food to everyone. Soon, half the food consumed in the capital, Havana, was grown in the city’s own gardens and, overall, urban gardens provide 60 percent of the vegetables eaten in Cuba. The threat of serious food shortages was overcome within five years.

Time magazine recently called for a ‘War on Climate Change,’ and, interestingly, Cuba’s experience echoed what America achieved in a more distant time of hardship during World War II. Then Eleanor Roosevelt led the ‘victory gardening movement’ to produce between 30-40 percent of vegetables for domestic consumption, and public education campaigns warned that wasting fuel was like fighting for the enemy. Cuba demonstrated it is possible to feed a population under extreme economic stress with very few fossil fuel, but there were other surprises too.

As calorie intake fell by more than one third, of necessity the proportion of physically active adults more than doubled and obesity halved. Between 1997-2002, deaths attributed to diabetes halved, coronary heart disease fell by 35 percent, and strokes and other causes by around one fifth. The approach was dubbed the ‘anti-model’ because it was both highly managed and led by communities, it focused on meeting domestic needs rather than exports, was largely organic and built on the success of small farms. The same countrys approach to disaster preparedness and management is also instructive.

Compared to the deaths and destruction in New Orleans following Hurricane Katrina, when Hurricane Michelle hit Cuba in 2001 only 5 lives were lost, and recovery was quick. It was due to proper planning, and a collective approach managed by government, but owned at the local level. Disasters expert Dr Ben Wisner commented on the evacuation of 700,000 of Cuba’s 11 million population, ‘This is quite a feat given Cuba’s dilapidated fleet of vehicles, fuel shortage and poor road system.’ At least one analyst suggests that the Cuban experiment, ‘may hold many of the keys to the future survival of civilisation.’

Currently, according to our calculations, in a given calendar year the world as a whole goes into ecological debt around October 7th – by which time we have consumed more and produced more waste than ecosystems can deal with. The results are seen in climate change, oceans emptied of fish, and desertification. Forty years ago Robert Kennedy said that economic growth measured everything apart from that which really matters. But it is possible to assess if we are achieving human development whilst living within our environmental means.

nef’s own ‘Happy Planet Index’, compares the relative success of nations at delivering long life expectancy and high levels of well being, compared to their size of ecological footprint. The results reveal many middle income countries performing well, with good life expectancy and well-being, and relatively low footprints. Strikingly, some of the best performers are small island states. Somehow, they have worked together to produce more convivial communities, whilst respecting environmental limits.

The UN faces huge challenges. Not least is how to recognise and protect the large and growing number of people we can expect to be displaced in a warming world. The climate refugee crisis will dwarf that of political refugees. What will happen to the nationhood and economic areas of countries that could disappear entirely, like Tuvalu? How can we change our locked-in thinking about economic development, and reorganise around the principles of resilience, social justice, sufficiency, ecological efficiency, and the capacity to adapt?

We might begin by asking, as acid tests:

Will what we do make people more or less vulnerable?
Will it move us toward truly sustainable, one-planet-living?
Will it move us fast enough to prevent irreversible, catastrophic climate change?

When the people of Tuvalu first encountered Europeans in the 19th century, they gave them the name palangi. Victorian travellers translated the word to mean “heaven bursters,” a reference to their ship’s guns. Now, some of our lifestyles truly threaten to burst the heavens. At the very least, to achieve poverty reduction in world threatened by climate change, we know that rich countries must radically cut their own consumption to free-up the environmental space in which others can pursue, as a first step, the Millennium Development Goals.

The good news is that we now know from the literature on human well-being, that making the rich, richer does nothing to increase their life satisfaction. On the contrary, numerous studies confirm that once your basic needs are met, you are just as likely to have high life satisfaction, whether your ecological footprint is large or small. My conclusion is that a new development model is needed as much, if not more, in countries like Britain and the US as the majority world. We have to demonstrate that good lives do not have to cost the earth.

Impassable ecological obstacles lie on the path down which we chase the shadows of over-consumption to deliver our well-being, expecting the poor to be grateful for and crumbs that fall from our plates. The good news is that another way is not only possible, as the philosopher A.C. Grayling writes, it is better, richer and more enduring.

Andrew Simms is policy director and head of the climate change programme at nef (the new economics foundation). This article is from a speech he gave to the UN ECOSOC special session on climate change and the MDGS, New York, 2 May 2008.

Bring on the Recession

Tim Holmes — Tue, 09 Oct 2007 10:22:16 +0000

If you are of a sensitive disposition, I advise you to turn the page now. I am about to break the last of the universal taboos. I hope that the recession now being forecast by some economists materialises.

I recognise that recession causes hardship. Like everyone I am aware that it would cause some people to lose their jobs and homes. I do not dismiss these impacts or the harm they inflict, though I would argue that they are the avoidable results of an economy designed to maximise growth rather than welfare. What I would like you to recognise is something much less discussed: that, beyond a certain point, hardship is also caused by economic growth.

On Sunday I visited the only UN biosphere reserve in Wales: the Dyfi estuary. As is usual at weekends, several hundred people had come to enjoy its beauty and tranquillity and, as is usual, two or three people on jet skis were spoiling it for everyone else. Most economists will tell us that human welfare is best served by multiplying the number of jet skis. If there are two in the estuary today, there should be four there by this time next year and eight the year after. Because the estuary’s beauty and tranquillity don’t figure in the national accounts (no one pays to watch the sunset) and because the sale and use of jet skis does, this is deemed an improvement in human welfare.

This is a minor illustration of an issue which can no longer be dismissed as trivial. In August the World Health Organisation released the preliminary results of its research into the links between noise and stress(1). Its work so far suggests that long-term exposure to noise from traffic alone could be responsible, around the world, for hundreds of thousands of deaths through ischaemic heart disease every year, as well as contributing to strokes, high blood pressure, tinnitus, broken sleep and other stress-related illnesses. Noise, its researchers found, raises your levels of stress hormones even while you sleep. As a study of children living close to airports in Germany suggests, it also damages long-term memory, reading and speech perception(2). All over the world, complaints about noise are rising: to an alien observer it would appear that the primary purpose of economic growth is to find ever more intrusive means of burning fossil fuels.

This leads us to the most obvious way in which further growth will hurt us. Climate change does not lead only to a decline in welfare: beyond a certain point it causes its termination. In other words, it threatens the lives of hundreds of millions of people. However hard governments might work to reduce carbon emissions, they are battling the tide of economic growth. While the rate of growth in the use of energy declines as an economy matures, no country has yet managed to reduce energy use while raising gross domestic product. The UK’s carbon dioxide emissions are higher than they were in 1997(3), partly as a result of the 60 successive quarters of growth that Gordon Brown keeps boasting about. A recession in the rich nations might be the only hope we have of buying the time we need to prevent runaway climate change.

The massive improvements in human welfare – better housing, better nutrition, better sanitation and better medicine – over the past 200 years are the result of economic growth and the learning, spending, innovation and political empowerment it has permitted. But at what point should it stop? In other words, at what point do governments decide that the marginal costs of further growth exceed the marginal benefits? Most of them have no answer to this question. Growth must continue, for good or ill. It seems to me that in the rich nations we have already reached the logical place to stop.

I now live in one of the poorest places in Britain. The teenagers here have expensive haircuts, fashionable clothes and mobile phones. Most of those who are old enough have cars, which they drive incessantly and write off every few weeks. Their fuel and insurance bills must be astronomical. They have been liberated from the horrible poverty their grandparents suffered, and this is something we should celebrate and must never forget. But with one major exception, can anyone argue that the basic needs of everyone in the rich nations cannot now be met?

The exception is housing, and in this case the growth in value is one of the reasons for exclusion. A new analysis by Goldman Sachs shows that current house prices are not just the result of a shortage of supply: if they were, then the rise in prices should have been matched by the rise in rents. Even taking scarcity into account, the analysts believe that houses are overvalued by some 20%(4).

Governments love growth because it excuses them from dealing with inequality. As Henry Wallich, a governor of the US Federal Reserve, once pointed out in defending the current economic model, “growth is a substitute for equality of income. So long as there is growth there is hope, and that makes large income differentials tolerable”(5). Growth is a political sedative, snuffing out protest, permitting governments to avoid confrontation with the rich, preventing the construction of a just and sustainable economy. Growth has permitted the social stratification which even the Daily Mail now laments.

Is there anything which could sensibly be described as welfare that the rich can now gain? A month ago the Financial Times ran a feature on how department stores are trying to cater for “the consumer who has Arrived”(6). But the unspoken theme of the article is that no one arrives – the destination keeps shifting. The problem, an executive from Chanel explained, is that luxury has been “over-democratised.” The rich are having to spend more and more to distinguish themselves from the herd: in the US the market in goods and services designed for this purpose is worth £720bn a year. To ensure that you cannot be mistaken for a lesser being, you can now buy gold and diamond saucepans from Harrods. Without conscious irony, the article was illustrated with a photograph of a coffin. It turns out to be a replica of Lord Nelson’s coffin, carved from wood taken from the ship on which he died, and yours for a fortune in a new, hyper-luxury department of Selfridges. Sacrificing your health and happiness to earn the money to buy this junk looks like a sign of advanced mental illness.

Is it not time to recognise that we have reached the promised land, and should seek to stay there? Why would we want to leave this place in order to explore the blackened wastes of consumer frenzy followed by ecological collapse? Surely the rational policy for the governments of the rich world is now to keep growth rates as close to zero as possible?

But because political discourse is controlled by people who put the accumulation of money above all other ends, this policy appears to be impossible. Unpleasant as it will be, it is hard to see what except an accidental recession could prevent economic growth from blowing us through Canaan and into the desert on the other side.

References:

1. Andy Coghlan, 22nd August 2007. Dying for some quiet: The truth about noise pollution. New Scientist.

2. Charlotte Thomas, 18th October 2002. Airport noise damages children’s reading. New Scientist.

3. DEFRA, 2007. Table showing UK Greenhouse Gas Emissions 1990-2005 and progress against the Kyoto and Domestic Targets. http://www.defra.gov.uk/news/2007/070131a.pdf

4. Martin Wolf, 5th October 2007. Britain faces its own housing risk. Financial Times.

5. Henry Wallich, 24th January 1972. Zero Growth. Newsweek. Quoted by Herman Daly, 1991. Steady-State Economics. Island Press, Washington DC.

6. Vanessa Friedman, 8th September 2007. What luxury means now. Financial Times.