Wednesday, October 29, 2008

Climate change: feed it and weep or lead and reap

Jeffrey Sachs
Australia will reap important benefits from the carbon pollution reduction scheme. Properly, the Government has left itself considerable flexibility on several points, which will depend heavily on what other countries do. But the value of the scheme lies not in the details but in three more basic considerations. Australia can now lead economically, technologically and diplomatically in the global effort that lies ahead.
A global climate control regime is on its way. It will almost surely not be a global emissions trading system, but a regime in which participating countries commit to national targets implemented through national means. The Government's proposals can work whether or not global trading comes to pass.
Until now Australia, like the United States, has absented itself from a carbon policy. Some may have viewed this as clever "free riding" on the exertions of others, but that view was short-sighted and wearing thin. A global system will come, and the laggards will face sharper economic dislocations than those who have taken a running start.
In the US, for example, the financial sector has basically stopped financing conventional coal-fired powerplants. Nuclear power is also a huge question mark for market financing, given public worries and the lack of an agreed national strategy. The automotive industry, long betting on cheap oil and a lack of public interest in climate change, is flat on its back. Australia will spare itself the risks of backing into a stalemate on energy technology and infrastructure investment by charting a course consistent with long-term climate change mitigation.
Emissions trading can support the transition to sustainable energy in Australia but will surely not be enough, a fact acknowledged by the Government's initiation of complementary programs such as the Climate Change Action Fund, to spur the adoption of innovative energy technologies.
Transformative technologies, such as carbon capture and sequestration at coal-fired power plants, large-scale solar power, plug-in hybrids, green buildings and perhaps nuclear power, are even more important in achieving a low-cost transformation.
Australia stands to benefit enormously by speedier action on technological development and demonstration. As the world's largest coal exporter, and as a continent with vast solar potential, Australia could find itself a sustainable energy technology leader in just a few years. I think the same could be true about nuclear power in Australia, despite the obvious grounds for public reservations.

One of the greatest benefits from the Government's new initiative will be geopolitical. Australia needs to be at the global negotiating table, not only to defend its national interests but also to help broker the global grand bargain. There is probably no world leader better placed than Kevin Rudd to help intermediate the complex pas de deux that will begin between China and the US next year. Only a solid agreement between the two largest emitters can underpin global actions beyond mere gestures.
China will have to understand that it can no longer hang back and call on rich countries to lead first. China is already rich enough, and emitting enough, to bear major global responsibilities. In any event, the US Senate will not ratify an agreement that puts US industry at a competitive disadvantage. At the same time, China will not move unless it sees a way to combine its continued rapid economic growth with emissions restraint.
Since Australia and China are close neighbours and major trading partners, and share such basic challenges as coal-based power sectors, increasing water stress and solar potential, Australia is especially well placed to help identify global principles and a technological pathway that can accommodate the concerns of China, the US and Europe.
I don't subscribe to every detail of the green paper. I would have leaned more heavily on upstream carbon taxes than downstream carbon permits as the way to put a market price on carbon with least administrative difficulty and most long-term predictability. I am more sympathetic to nuclear power. But Australia has taken a huge step forward to protect its economy, its fragile climate-stressed ecology, its long-term technological leadership and its geopolitical role.
Jeffrey Sachs is the director of the Earth Institute at Columbia University and a special adviser to the Secretary-General of the United Nations, Ban Ki-moon, on the Millennium Development Goals. He is author of Common Wealth: Economics For A Crowded Planet.

Why no bailout for the hungry?

Could all those bailout billions been put to better use? How about feeding poor, starving people?
From the Washington Post:
"The amount of money used for the bailouts in the U.S. and Europe -- people here are saying that money is enough to feed the poor in Africa for the next three years," said Stephen Muchiri, head of the Eastern Africa Farmers Federation.
No question: On its face, there is an obscene disparity between the trillions of dollars that will be spent by Western governments to keep financial markets from breaking down and the paltry $12.3 billion pledged in July by governments and other donors in Rome to tackle the world food crisis. Even just in the United States, the Department of Energy appears to see little problem with loaning GM $5 billion to purchase a nearly worthless Chrysler, but the White House couldn't find the cash to expand the State Children's Health Insurance Program from $5 billion to $12 billion a year so as to cover everyone. These are the kinds of funding gaps that drive caring people insane.
But suppose that the U.S. and various European governments had decided not to bail out their banking systems, and in consequence, credit markets completely collapsed and world trade ground to a halt. It's quite possible that global poverty and hunger would drastically worsen. If farmers have no access to credit, they are unable to pay for seed and fertilizer and labor. If shipping companies have no access to credit, food doesn't move across the oceans. If enough banks collapse, mass unemployment is sure to follow.
I do not mean to privilege one form of spending over another. I think one of the clear lessons from the efforts of governments to address the financial crisis is that when properly motivated, political leaders will throw astonishing amounts of money at a problem. If we can find $700 billion to bail out our banks, surely we can fund national health care and end starvation. But it's also not an either-or question. We would all likely be worse off, in Africa and the United States, if the wheels came completely off the global economy.
― Andrew Leonard

It's Time for Poverty to Have the Spotlight

by Chelsea Wieber
After a few fumbled attempts on their own, global financial leaders gathered in Washington D.C. last weekend to develop a joint plan to prevent the spread of the financial crisis.
Imagine if they focused just a fraction of that attention on alleviating global poverty. After all, high food and fuel prices pushed an additional 75 million people further into poverty this year.
"When food prices peaked and began to come down, despite the fact that conditions within poor countries remained hugely adverse, attention already started to wane," development economist Jeffry Sachs told Reuters. By contrast, the world's finance ministers jumped to commit incredibly large sums of money when credit markets started to fail — a crisis that continues to hold the world's attention.
"The amounts that are needed (to help the poor grow more food) are in the low billions of dollars and we're talking every day now about a new commitment of hundreds of billions for this and hundreds of billions for that," says Sachs. "The truth about poverty is that the poor don't need very much."
In other words, $700 billion — or whatever the astronomical total the worldwide bailout turns out to be — would go a long, long way.

The Real North Korean Crisis

by Manasi Sharma
When you think of North Korea, you may first think of the ongoing nuclear weapons debates and political squabble with the U.S. Yet according to the latest United Nations report, the most significant problem affecting North Koreans is the current shortage of food there.
The UN report found that more than three-quarters of North Korean families have cut their food intake to two meals per day. Even city dwellers are facing higher food prices. A recent Time magazine article says many children have stopped attending school due to hunger, while their parents search for food instead of going to work.
North Korea hasn’t seen such a devastating food crisis since the 1990s, when a famine took more than a million lives. Time blames the government for the current food shortage. In the 1990s, government officials privatized food distribution to some extent so that farmers could sell grains and food throughout the country. The result was that famished North Koreans could still find food. But in 2005, according to Time, the government broke up these markets and confiscated grain from farmers, leading to the current shortfall of production. Destructive floods in 2007 further hampered the country's agricultural production.
The UN also reported a rising number of children suffering from malnutrition and diarrhea. The food crisis guarantees more hunger-related deaths according to an expert on North Korean economy at the Peterson Institute for International Economics in Washington.
North Korea’s leadership does not want to pursue market reform according to Nicholas Eberstadt, a North Korea expert at the American Enterprise Institute in Washington. He says allowing open markets to emerge in the state dominated food distribution sector would imply a significant change of Pyongyang’s policies. Major reforms are not a part of North Korean culture or government, a regime that requires government permission to own a cell phone or computer. However, without changes in policy and perhaps even ideology, North Koreans will continue to experience health-related problems if the government is unable to provide basic necessities such as food.
The World Food Program has expanded their food aid program in North Korea in hopes of reaching 6.5 million people. Without additional help from donor countries, North Koreans may see the 1990s famine repeat itself.

World Vision warns of looming food crisis in southern Africa

Christian relief and development agency World Vision has warned that there will be no long-term fix to the impending food crisis in southern Africa unless the international community unites to combat its root causes.
“As we mark World Aids Day, the international community must focus its attention on the looming food crisis in southern Africa, whilst also addressing its long-term causes – including the Aids pandemic currently devastating countries such as Malawi and Zambia,” said World Vision policy adviser Stephen Doughty.
The appeal from World Vision comes as world leaders meet in New York this week to discuss the impact of soaring food and fuel prices on developing countries.
World Vision Emergency Officer, Nick Wasunna, was recently in Zimbabwe where he encountered the effect of high Aids infection rates on the food crisis.
"I saw queues of people at food distribution centres," he said, in a report on the agency’s website. "After talking to them you discover they are all affected in some way by HIV.
"The impact of HIV/Aids across the region cannot be underestimated," he continued.
"When a family cannot work or grow food because carers are sick or dying from Aids, the problems facing them and their community are severely compounded. Children, especially girls, drop out of school as they are required to look after dying family members.”
The long-term consequences, he said, would be a persistently “uneducated, unskilled and poverty-stricken generation” and less development.
World Vision launched an emergency appeal on Wednesday to assist the 12 to 14 million people it says are facing hunger across southern Africa, most seriously in Malawi and Zimbabwe.
On the web:

In India, Global Crisis Is Not All Bad News

By Rama Lakshmi
GURGAON, India -- In the mortgage crisis that has enveloped much of the Western world in recent weeks, Manoj Malhotra's outsourcing company sees an enhanced business opportunity.
As lenders in the United States and Europe move to firm up loans, sharpening quality control and fraud verification, the Gurgaon-based company that Malhotra heads has designed a Web program to help them do just that.
"The loan processing industry needs less of manual intervention and subjectivity and more of technology-based solutions, especially in the current climate," said Malhotra, who launched the program at a mortgage industry conference in San Francisco last week.
His company, Salient Business Solutions, is not the only one in this country to see opportunities and lessons in the global financial meltdown.
Indians working in information technology and outsourcing have long shared a joke: "When America sneezes, our industry will catch a cold here in India."
But as the credit crisis drags down the U.S. economy, India's booming technology and outsourcing industry is taking steps to boost its resistance to infection. Taking the crisis as a warning, it is hastening efforts to reduce dependence on U.S. and European companies, scale up high-end products and services, find new ways of billing and move beyond merely leveraging the low-cost, English-speaker advantage. (washingtonpost)

Financial Meltdown Worsens Food Crisis

As Global Prices Soar, More People Go Hungry(washingtonpost)

SHANGHAI -- As shock waves from the credit crisis began to spread around the world last month, China scrambled to protect itself. Among the most extreme measures it took was to impose new export taxes to keep critical supplies such as grains and fertilizer from leaving the country.
About 5,700 miles away, in Nairobi, farmer Stephen Muchiri is suffering the consequences.
It's planting season now, but he can afford to sow amaranthus and haricot beans on only half of the 10 acres he owns because the cost of the fertilizer he needs has shot up nearly $50 a bag in a matter of weeks. Muchiri said nearly everyone he knows is cutting back on planting, which means even less food for a continent where the supply has already been weakened by drought, political unrest and rising prices.
While the world's attention has been focused on rescuing investment banks and stock markets from collapse, the global food crisis has worsened, a casualty of the growing financial tumult.
Oxfam, the Britain-based aid group, estimates that economic chaos this year has pulled the incomes of an additional 119 million people below the poverty line. Richer countries from the United States to the Persian Gulf are busy helping themselves and have been slow to lend a hand.
The contrast between the rapid-fire reaction by Western authorities to the financial crisis and their comparatively modest response to soaring food prices earlier this year has triggered anger among aid and farming groups.
"The amount of money used for the bailouts in the U.S. and Europe -- people here are saying that money is enough to feed the poor in Africa for the next three years," said Muchiri, head of the Eastern Africa Farmers Federation.
The U.N. Food and Agriculture Organization estimates that 923 million people were seriously undernourished in 2007. Its director-general, Jacques Diouf, said in a recent speech that he worries about cuts in aid to agriculture in developing countries. He said he is also concerned by protectionist trade measures intended to counteract the financial turmoil.
Although the price of commodities has come down in the past few months, Diouf said, 36 countries still need emergency assistance for food, and he warned of a looming disaster next year if countries do not make food security a top priority.
"The global financial crisis should not make us forget the food crisis," Diouf said.
Commodity prices have plummeted in recent weeks as investors have shown increasing concern about a global recession and a drop in the demand for goods. Wheat futures for December delivery closed at $5.1625 on Friday -- down 62 percent from a record set in February. Corn futures are down 53 percent from their all-time high, and soybean futures are 47 percent lower.
Such declines, while initially welcomed by consumers, could eventually increase deflationary pressures -- lower prices could mean less incentive for farmers to cultivate crops. That, in turn, could exacerbate the global food shortage.