CLIMATE CHANGE and ECONOMIC EQUITY: carbon counting - xenophobic tiddlywinks or scientific elixir?

Several months after M&S and Tesco dropped their ill-advised "air freight logos", consumers might be doubly surprised that the "carbon counting" carousel is still turning. This is in large part to the increasingly impotent and cranky UK Government departments that sling copious cash into Carbon Trust. Nice bunch of well meaning people, but whether they like it or not, they will have to deliver some "killer facts" for their burgeoning accounts. Nowhere do they use the word trade-off - e.g. what if i buy crisps today and an apple tomorrow? etc. What about the global and national economic equity implications? The parameters on these carbon counts are ridicuolous and open to ridicule from anyone with a inquiring mind. Have they included the amortised carbon load of producing and maintaining a tractor over all the fields it has and will plough? What about the kit-kats the tractor driver eats - if he had a nice office job, he'd be eating ciabatta? What about the carbon saved by the tractor not being 30 farting draught animals? The Tall Economist is happy that Terry Leahy is leading us down a pathway where this issue is on the horizon behind us ...

Source: The Guardian (UK)

It all began with a packet of cheese and onion Walkers crisps. For this humble potato snack boldly went where no other food product, not even the fearsome Lion Bar, had yet dared to go – the brave new world of carbon labelling.
The smelliest flavour of Britain's favourite crisps has had its carbon footprint measured and, since last year, it has been exhibited on its royal blue packaging for all to see.
It took over a year and a half for the Carbon Trust to figure out a carbon label for the Walkers cheese and onion pack. It's 75g — almost double the weight of the pack (34.5g).
Two other products were also put to the test: Boots Botanics shampoo (average 148g for a 250ml bottle) and Innocent Smoothies (average 225g for a 250ml bottle).
You would be forgiven for thinking that taking this much time to measure the carbon footprint of the lifecycle of a packet of crisps is rather ludicrous, over-complicated, and a waste of time.
But the Carbon Trust and companies argue that it will raise public awareness and, more importantly, will help them, through the evaluating process, realise where companies' biggest carbon sins are. They can then make amends by adjusting their supply chain.
More foods and other products are now set to follow suit. They're even going to measure the carbon footprint of an iron. The Carbon Trust announced this week that seven more companies have signed up to the carbon labelling scheme. That makes 20 in total now — including Tesco, who have pledged to add carbon labels to 30 of their own-brand products, taking in orange juice, lightbulbs, washing detergent and some veg. Cadbury has put forward its Dairy Milk bar and Andrex toilet tissue, and Foster's lager are also getting carbon labelled up.
The idea is to work towards a single standard that will eventually be applicable not just to food, but to a wide range of sectors and products. Halifax bank has already labelled its online Web Saver account with a carbon footprint of 204g. Make of that what you will.
The calculations are done from cradle to grave so, for example, with Walkers crisps, the process began by calculating the carbon emissions of the fertilisers used in the soil, then proceeded to the farmer ploughing the field, the manufacturing process, packaging, distribution, retailing and finally to the disposal of the packets at the end of their life, including transport from disposal site to the recycling point or landfill site, as well as emissions from the recycling or landfill process.
If that sounds full-on, think about the number of calculations needed to find the carbon footprint of a food with larger numbers of ingredients, such as a pizza or a pre-prepared fruit salad.
The point to all this, said former Defra head David Miliband last year, is to help consumers, who often feel confused and powerless, as well as producers, who feel their environmental efforts are going unrecognised and unrewarded.
But does it really? It is likely to confuse a lot of people who will be faced with a number which, at present at least, has no meaning. Is 75g per pack a lot or a little? It sounds a lot, coming in at double the weight of the pack. So, does Walkers get a big green thumbs up or down?
And even with a common standard, it is going to take an age to carbon footprint every product. Last year, Tesco boss Terry Leahy announced that the giant supermarket chain would carbon label all of its products — some 70,000 different lines. This was wisely pared down to a more manageable 30 products a few months on once Leahy — or more likely the poor soul he put in charge — realised how much work it would entail.
So is it worth all this effort? Will the carbon label system work, and will we ever understand it, and care enough to change our habits?
A quick straw poll amongst friends revealed that there may be some way to go. "What if my flowers have been flown in from Kenya?" one points out. "I'm supporting the community there but the carbon label will be huge from all the air miles." "And if they're taking into account the whole lifecycle, including how I cook my food, does that mean I am never again allowed to slow roast my potatoes and am condemned to a life of mash?" quips another.
Others complained of being labeltastically fatigued, with Fairtrade, organic and traffic lights amongst others already fighting for space. But there is something morbidly interesting in knowing how much carbon has been emitted producing the food we'll gobble down in a few minutes. And more often than not, it's far too much.

CLIMATE CHANGE and THE POOR: Can the Poor be Insured Against Climate Change?

Microinsurance forwarded as an option to help the poor. Good article by a serious economist!

Source: Le Panoptique, by João Sarmento Cunha

Moving into the XXI century, images of lives devastated by floods in Asia, droughts in Africa and cyclones in Central America are becoming increasingly familiar, reminding us of how vulnerable people in developing countries are to climate change. Considering the hardships these people face every time a catastrophe dawns on them, could they not perhaps be insured against the perils of climate?
Recent headlines of devastation caused by Cyclone Sidr in Bangladesh, displacing over half a million people, or the massive floods in southern Mexico, leaving vast stretches of land completely submerged, are just the visible face of a growing problem affecting developing countries. According to a recent Oxfam report1, the number of weather related disasters has quadrupled over the past 20 years, with an average of 500 disasters taking place each year compared to 120 in the 1980s. Vulnerability to adverse weather events occurs for several reasons, among them the geographic location, poor infra-structure, economies highly dependent on agriculture, high incidence of poverty and limited means of coping with risk, including access to formal insurance. Climate change is expected to make matters worse, raising the likelihood of more extreme events like the ones mentioned above and posing real risks to development2. So, considering that many instruments already exist for risk-sharing and transfer, can these also be provided to the poor in rural areas of developing countries? Can the poor be insured against adverse weather events and climate change more broadly?
Risks, vulnerability and poverty
The rural poor own very few assets and income generation is largely dependent on labour put into agricultural activities. The main threats to livelihoods are therefore those pertaining to loss of life, critical illness, old age, lower agricultural productivity and loss of assets. To counter these risks, and considering that formal protection mechanisms such as social security and formal insurance are wholly absent, these people have developed sophisticated strategies to “insure” against negative surprises. Ex ante, they may diversify their sources of income and make more conservative decisions on farm technologies and techniques. Although less risky, these forms of income smoothing tend to yield low returns and contribute to the vicious circle of poverty.
They may also resort to risk coping strategies following a shock, such as drawing down their savings or through mutual assistance arrangements. The downside is that these strategies are often insufficient in dealing with shocks that affect whole regions (i.e. covariate shocks). This is especially true if the savings are held in cattle or grain, and thus perishable, and if the social networks are based on close relatives and neighbours which may be equally affected by the shock. There is also significant evidence that when severe economy-wide shocks occur, certain survival strategies are used that divert spending away from investments in education and health, with serious implications on the well-being of future generations3-4. Transitory events can therefore have permanent effects on household welfare5.
For more see here.

'Creative Capitalism': Equity and sustainability as natural economic outcomes

Bill Gates made a nice speech at Davos - seen in full here - his call for "creative capitalism" challenges those big companies to show that they have the skills, capacity for doing the right thing [on a range of development issues] while also making money. He is in effect saying: "earn your bonuses/ wages ... show us how clever you are".

"If we just have the company that was doing the best in the sector matched by other companies, say all the drug companies were doing as well as GlaxoSmithkline thinking about the needs of the poor, if the banks were thinking micro-financing as well as the best, if the cell phone companies were thinking how the cell phone can even help the poor low cost financial transactions then we could see the condition of the poor improve dramatically,” Gates said.

EU, CLIMATE CHANGE and ECONOMIC EQUITY: Can equity be maintained through the EU's latest plan?

Climate change proposals for sweeping emissions targets/ cuts by the EU announced today indicate first this issue is being taken seriously and that the EU wishes to be a world leader in this [not just the UK]. Yet, the taxes proposed are on many basic items - such as electricity, heating, etc - products that the poor [and elderly] consume as a higher proportion of their disposable income. When the focus was on the illogical food miles issue, the proposed taxes on air freight would have disproportionately hit higher-value/ luxury products such as fresh produce. While illogical, inefficient and socially costly to developing countries, equity issues in consumer countries were not a consideration. Furthermore, what of small and medium enterprises in the EU - scraping by currently, facing higher energy costs anyway. Selling out and becoming a shelf-stacker in Lidl becomes a more viable option than struggling on with the family business. Are we continuing to pursue those easier targets at the expense of economic equity [nationally and internationally] and ignoring the potential win-wins from appropriate taxing of industry, incentives for innovation? Furthermore, what if predictions about climate change's sequencing/ timing and ferocity are overstated; what cost to our economies from such "eyes wide shut" knee-jerk reactions from Brussels?

Source: Deutsche Welle

The European Commission will on Wednesday, Jan. 23, unveil sweeping plans to fight global warming, under heavy fire from industry and many EU member countries over the possible costs of the scheme.
Consumers too will not escape the costs, which Commission chief Jose Manuel Barroso said would amount to a total of around 60 billion euros ($86.6 billion) a year -- 0.5 percent of gross domestic product. Commission officials, however, have said the bill might be double that.
The package is an attempt by the EU executive to translate into action the aim of EU leaders, announced last March, to cut emissions of the gases that cause climate change by 20 percent by 2020, compared to 1990 levels.
The measures, including a new look at state aid for environment projects, will set the 27 nations specific targets for renewable energy use, to ensure that 20 percent of the bloc's energy in 2020 comes from these forms.
he commission has come under attack from virtually all sides, including in-house, even before the plans are examined by EU countries and the European Parliament, a process Brussels hopes to conclude by the end of the year.
"These proposals are going to raise electricity prices for households and enterprises," said EU Commission Vice-President Günter Verheugen from Germany. "This has to be openly said to citizens."
Carbon dioxide emissions from industry totaled more than two billion tons in 2005, around half of the greenhouse gases produced in the EU. Much of the other half comes from transport and agriculture.
Under the EU's emissions trading scheme, set to expire in 2012, nearly 12,000 energy-intensive plants can buy or sell permits to emit carbon dioxide.
In future such permits, currently provided free, would be managed by member states and gradually increase in price. The system would also be extended to other sectors like aviation, petrochemicals, ammonia and aluminum.
Some companies have complained they could be forced to move abroad, taking jobs with them, and according to Green MEP Claude Termes, major steelmakers were knocking on the Commission's door on Monday.
The threat to employment is a powerful argument, but Barroso has warned that the energy and climate status quo is unacceptable.
"Taking action is not cost free," he said Monday. The price of inaction "could even approach 20 percent of GDP. The longer we delay, the higher the costs."
EU countries are concerned about the burden they will have to assume on renewable energy.
Around 8.5 percent of the bloc's energy comes from renewable forms, like biomass, wind and solar power, but future load sharing will be based on GDP; simply put, on a nation's wealth.
This has particularly angered Sweden, which already derives around 40 percent of its energy from renewable sources, but could, according to Green party calculations be asked to raise that to 52.7 percent.
Stockholm argues that it is being punished, rather than rewarded, for the eco-friendly efforts it has already made.
In Germany, 18 percent of energy would have to come from renewable resources, according to the proposal, doubling the current percentage.

SUSTAINABLE DEVELOPMENT IS OUR ONLY CLIMATE CHANGE MITIGATION METHODOLOGY

In order to address climate change, most commentators would be happy to agree that we will aim to maximise sustainable development. Yet, this is nice in theory. What does this mean in practice? Here is my simplified guide:

Sustainable Development = Environment + Markets + Society

This "equation" challenges us to ensure that we think logically, laterally and thoughtfully about each of our decisions. If this is all we achieve, it would be a huge step forward. In practice, we would stretch this definition to include monitoring for equity, gender, equitable opportunity, and other societal norms. Plus, global social justice must be maximised not just national social justice.

Is this equation fair? Does it make decisions so darn hard that we should rather take a simple course of action? Is it uncomfortable for too many people to take a logical approach to a complex problem? Are ‘tabloid’ solutions better because they are measurable if not actually helpful? Is it unhelpful because it cannot be “solved”?

To illustrate how poorly ‘sustainable development objectives’ are imbued in the climate change debate, let’s contrast emissions trading and food miles:

• emissions trading - Environmental and economic efficiency but require tweaking to ensure that poverty alleviation, and quality environmental mitigation are secured. An economist would see this as an attractive option. The political dimension would prove the trickiest to maximise.
• consumer-led campaigns - e.g. food miles - often fail on all three –
• environmental [local is not always best - thanks to imported animal feeds, hot-housing, road transport inefficiencies];
• economic [the complementarities between imported foods and domestic foods are so great – such as permanent shelf exposure – that solidarity is required not competition]
• social [recent research has shown that over one million livelihoods in rural sub-Saharan Africa alone rely on the UK’s consumption of fresh fruit and vegetables. Indeed, supermarkets are talking about so-called “fair miles” increasingly as a principle for procurement]
  

Should a decision maker or campaigner or activist or celebrity chef be asked to demonstrate they have thought about these three interlinked elements and considered the global as well as the local?

I feel the equation itself is helpful if only to make us all think / realise/ remember that there is a global social contract, there is an overriding objective, and many of the simple solutions are not going to help us win this time.

Climate change requires flexible economies

We need to address the fundamental impact that climate change will have to our economies as well as to our environment. Identifying and filling so-called “missing markets” in developing countries becomes critical to ensuring that future climate-based shocks do not have an exponentially larger impact on future economic growth globally. Fortunately a suite of potential solutions exist, it is a case of relocating them from Canary Wharf to Bobo Dioulasso.

It is unequivocal that however shocks, risks or threats manifest, the benefits accrue disproportionately to the rich while the costs fall disproportionately to the poor. The poor in any society, particularly developing countries, tend to be those with a less buoyant ‘structure of opportunities’ facing them, and experience more “missing markets”. This is usually evident in poorer access to information, credit and other means of alternative production/ livelihoods.

Regardless of the underlying reason for climate change, it is a shock, risk and threat. Hence, we can expect it will impose costs disproportionately highly on the poorest people, and any benefits there might be will tend to accrue to the richer people.

But how should the developed world address these concerns? If we intend to secure sustainable development:

• Environmentally, we need to be clear about the causes of climate change and efficiently/ rationally address these.
• Socially and economically, we need to find ways to create a new pathway of development that insures the poorest from these shocks.

For the latter, building a stronger ‘structure of opportunities’ in rural areas of developing countries is a starting point and by:

• being creative with our development/ donor money and
• nudging the appropriate industries to provide services where the business case appears weak – credit, insurance, information flows

we stand a good chance of producing more flexible developing economies, more able to adapt to the scale of climate change shock.

Is 50% of climate change caused by local land use change?

Are we missing half of the climate change picture by focusing on carbon? Might it be easier and more economically efficient to limit activities that affect the local climate through better planning and judicious use of economic incentive mechanisms?

Last week, I was in hallowed company in Davos, Switzerland, at the World Economic Forum meeting on 'climate change and tourism'. An excellent presentation from Shardal Agrawala of the OECD on the loss of snow from Alpine resorts showed declining trends eastwards - possibly indicating some local effects. Remembering the impact London has on Kent through its urban heat island, I canvassed the meterological experts there, asking what proportion of climate change in Europe [where temperatures have risen by 0.5% in the last century] is attributable to:

• global public goods/bads [i.e. greenhouse gases] and
• what is caused by local changes [i.e. urban sprawl, natural forest loss, pollution].

Resoundingly, the experts replied that around half is down to the global greenhouse effects and half to local land-use changes.

News to me. And I should think, news to the global debate over climate change mitigation. We can only wonder why this "fact" does not produce outrage among conservationists. Maybe my trust in these experts is misplaced - please let me know.

Significantly, such a "fact" necessitates a different sort of policy response - tax breaks/ incentives for natural forest restoration, green roofs, and urban trees; limits on city expansion; and research into how we can individually minimise our footprint [carbon, urban sprawl, etc] without rudely and wrongly telling others [often poorer people in developing countries] to limit their activities.

Is the science missing? Is the current answer more convenient? Is climate change actually a local phenomenon? Or is my head really in the clouds ...