Globalization and Environment

1. Globalization and Environment Steve Colt UAA Institute of Social and Economic Research http://local.uaa.alaska.edu/~afsgc/ Version Fall 2003

2. Learning Objectives • Three perceived problems • Four real challenges • Five tough questions

3. Three Perceived Problems • Growth • Pollution Havens • Bad governance (environmental policy and institutions)

4. Four Real Challenges • Poverty • Sustainable consumption by the rich (us!) • Protecting the Global Commons from negative spillovers • Effective Global Environmental Governance (policy and institutions)

5. Story 1: Thank Japan for Clean Air • 1970 Clean Air Act mandated big drop in auto emissions • Detroit Big 3 said “can’t do it” – especially for California • Honda was ready with catalytic converters that worked • CA was dominant consumer so it dictated standard practice to rest of US.

6. Story 2: Turtles and Trade • Asian shrimp boats catching endangered sea turtles • WTO (1998): US can’t discriminate against imports based on how shrimp are caught • US continued to press for Turtle Excluding Devices (TEDs) • Legal wrangling continues today

7. The Twin Environmental Crises • Poverty • 1.2 Billion people live on less than $1/day • Human-Dominated Ecosystems • 42% of Earth’s annual production of plant material is used by people (Pimm 2001) • Both Numbers Matter

8. Poverty and Environment • 1.2 billion people live on less than $1/day • In Ghana: • 60% of urban people have no sewers • 70% of energy from open wood burning • 40% of people drink contaminated water • Worldwide, waterborne diseases annually cause 11 million childhood deaths • 700 million people breathe smoke from open indoor fires (Todaro 2000)

9. Globalization is Not New

10. Three Perceived Problems • 1) Growth wrecks the planet Source: World Bank, “Greening Industry”

11. Three Perceived Problems • 2) Pollution Havens: Globalization causes competition for industry, causing (forcing?) some (all?) countries to live with dirty industry • 3) Bad Governance: Secret decisionmaking by the“unelected WTO” and corporations ignores environmental effects

12. Growth has Three Effects • How Much is Produced? • World CO2 emissions continue to rise with world economy • What is Produced? • Massages vs. Steel • How are things produced? • Carbon Monoxide down due to catalytic converters

13. Growth Example: China

14. Growth Example: China • Economic output doubling every decade, concentrated in urban areas • (how much / scale) • People switching from bicycles to cars and from rice to meat • (what / composition) • Slow switch from coal to natural gas, controls on particulates • (how / technique)

15. Switching from Coal to Gas has other Implications…

16. Growth in China: Effects Source: World Bank, Greening Industry

17. World Growth: How Much Source: World Bank, Globalization Growth and Poverty

18. World Growth: What?

19. World Growth: How? Source: World Bank, Greening Industry

20. World Growth: Good Newsl • Cleaner production is reducing air pollution (Antweiler Copeland Taylor AER sep 2001) • Little direct evidence for strong “Pollution Haven” effects (but debate continues )

21. World Growth: Mixed News Examples of estimated changes in pollution as income increases. (Panatayou 2000)

22. World Growth: Cautions • Most evidence of supposed improvement over time is from cross-country comparisons • Little direct evidence from countries at the (supposed) turning point from more to less pollution. “The evidence certainly does not support the complacent notion that environmental degradation is simply a temporary phase that can be easily reversed.” -- World Bank 2001 (GGP) • Secondary effects (access) are probably more important than primary effects (pollution)

23. Trade: Exporting Pollution? • Easier trade certainly allows rich countries to export pollution. • Should countries be able to trade off more pollution for more income?

24. Exporting Pollution or Technology? Compliance with standards in Indonesia manufacturing (green / blue / red / black scale) Source: Wheeler and Afsah 1996

25. Adoption of Clean Technologyin Rich Countries, Open LDCs, and Closed LDCs Source: World Bank, “Greening of Industry”

26. Trade Policy and Environmental Policy • Should Countries be able to exclude products based on how they are produced? • WTO saying “maybe” for Shrimp that harm turtles • Which products??? • Generally, When should one country intervene in affairs of another?

27. Transboundary Externalities (Global Spillovers) • Particulates from China drift to Alaska in four days (ADN 12/7/98) • US Demand for Shrimp kills Sea Turtles in Malaysia • Russian Fleet takes half the Pollock in the Bering Sea • Carbon Dioxide warms the Arctic

28. The Global Commons • Owned by everyone • Owned by No One • Crucial part of our Human-Dominated Ecosystem • Threatened by All • Currently Lacks Effective Governance

29. Four Real Challenges • Poverty • Sustainable Consumption by the Rich • Protecting the Global Commons • Effective Global Environmental Governance

30. Five Tough Questions • What is the fastest and cheapest way to promote environmental protection? • What is the fastest way to attack poverty in ways that help the planet? • Should poor countries follow rich country environmental standards? By when? • How can rich people and countries manage their consumption? • How can we manage our human-dominated ecosystem during the next 100 years?

31. Answers: End Perverse Subsides • UNEP estimates perverse subsidies – at $500 billion – $1.5 trillion per yr • Fisheries, forestry, agriculture • Promotes “too many boats chasing too few fish,” “mining the rainforest” • Puts huge pressure on the planet • WTO allows exceptions for “green” subsidies

32. Answers: Health-Led Development • Conventional wisdom: wealth causes health • New wisdom: Health causes wealth • (Bloom, Science 18 Feb 2000) • Productivity is the key link – it’s hard to work when you’re sick

33. Answers: Invest in High Payoffs • UN Global Environment Facility (GEF) and Clean Development Mechanism • Protect the planet wherever it’s cheapest to do so, through prevention • 36 Rich countries funding $3 billion of GEF projects in poor countries (1998)

34. Answers: Informed Investors and Consumers • “Know what you own” -- Peter Lynch, Fidelity Investments • AK Permanent Fund top 10 stocks??? • Microsoft, GE, Citigroup, Pfizer, American Int’l, Johnson&Johnson, ExxonMobil, Intel, Walmart, IBM • Shade-grown coffee – it sells • Home Depot now buys only certified lumber

35. Answers:Harmonization of Policies • 25 Environmental Treaties in 1960 • 250 today

36. Answers: Tradable Greenhouse Gas Permits • CO2 is not the only problem: • Methane is 25 times more potent • Choose a target level of GHG emissions for entire planet • Distribute permits to all (how?) • Free trade in GHG permits

37. Tradable Permits, cont. • Follows Pay-to-Play (Polluter Pays) Principle • Cheapest reductions (leaky gas pipelines) will occur first • Stimulates technical innovation • Start with equal numbers of permits per person? (Global Commons Institute) • Carbon is already being traded

38. Closing Thoughts

39. Globalization vs Industrialization • Industrialization was an unstoppable process – started in 1800 • The benefits were (are still) unevenly distributed • It took at least 50 years for the benefits to reach everyone, especially women • Let’s focus on making the lag time shorter for globalization

40. Take-Home Messages • Poverty and stress on our Human-Dominated Ecosystem (climate, oceans, biodiversity) are the real global environmental problems – regional pollution will largely take care of itself • Growth of poorest countries attacks poverty and helps environment without creating pollution havens • The Global Commons requires new forms of global management, such as tradable permits.

41. Fancy Terms We Have Learned • Human-Dominated Ecosystem • Pollution Haven • Transboundary Externalities • Global Commons • Tradable Carbon Permits

42. Teaching and Learning Resources Download this Slideshow from: http://local.uaa.alaska.edu/~afsgc/

43. Teaching and Learning Resources Globalization, Growth and Poverty: Building an Inclusive World Economy World Bank Policy Research Reports (2001) http://econ.worldbank.org/prr/subpage.php?sp=2477 Environment and Trade: A Handbook UN Environment Program, et al. (2000) http://iisd.ca/trade/handbook. Vanishing Borders: Protecting the Planet in the Age of Globalization. Hilary French, Worldwatch Institute. (2000) http://www.worldwatch.org/ Global Environment and Trade Study (GETS) Tufts University http://www.gets.org/

44. Teaching and Learning Resources Going Public On Polluters In Indonesia: Bapedal’s PROPER PROKASIH PROGRAM David Wheeler and Shakeb Afsah* World Bank Policy Research Dept (1996) http://www.worldbank.org/nipr/work_paper/proper/ Greening Industry World Bank Development Research Group (2000) http://www.worldbank.org/research/greening/ World Wildlife Fund (certification and ecolabeling programs) http://www.wwf.org Global Commons Institute http://www.gci.org.uk/main.html

45. Teaching and Learning Resources United Nations Global Environmental Facility (GEF) http://www.gefweb.org/index.html