ENVIRONMENT: Is Panama listening?
A bunch of Panamanian politicians are in Rio for the world environment conference.
Local environmentalists query whether it is another lip-service jaunt, a reward for achieving little in environmental protection, while back at home marches are planned to protest degradation of Panama’s wetlands.
Recommended reading a recent article in the Economist and published on the UN website.
It makes interesting reading and even quotes neighboring Costa Rica for environmentally friendly activities. Panama doesn’t get a mention:
ON THE southern shore of Lake Naivasha, Kenya’s lush Rift Valley holds an unexpected scent of English summer. For inside vast plastic greenhouses grow mile upon mile of roses. Exported to Europe, they account for a fifth of the commercial roses sold there and provide a tenth of Kenya’s foreign exchange. But the business is a victim of its own success.
Attracted by a scent more pungent than flowers, a quarter of a million Kenyans followed the rose growers into the valley, hoping to make money. To feed themselves, they ploughed the surrounding hills, felling the trees that filter and constrain the streams that flow into the lake; it is now polluted by silt and run-off.
That might seem a classic story of development choked by the environmental damage it causes. But this one has a twist. The rose growers have started lending money to the smallholders, encouraging modern farming methods which leave the trees in place. Though it is early days, the results are promising; they benefit growers, small farmers and the lake.
Paying for environmental services is not a new idea. Pioneered in Mexico and Costa Rica, such projects keep clean the water supplies of many of Latin America’s giant cities. In China’s north-west, the Loess plateau, an area the size of France, was brought back from near-desert by paying farmers to stop uncontrolled grazing and to look after terraces and waterways. Local incomes doubled in a decade.
These schemes have a wider significance. They are examples of “green growth”, an attempt to improve the often destructive relationship between economic development and the environment. In the run-up to the “Rio+20” conference on sustainable development in Brazil on June 20th-22nd, it has become the new mantra for business people and policymakers. But does it work?
The central claim of “green growth” is that the course of industrialisation taken by Europe, America and other rich countries will not work for the rest of the world. Their route was “grow first, clean up later”. Environmental concerns played almost no role in the early stages of industrialisation and remained weak until at least the 1960s. The Cuyahoga river in Ohio was so polluted that it caught fire as recently as 1969. That spurred the creation of America’s Environmental Protection Agency.
The idea that environmental concerns are mainly for the rich is still powerful and persistent. It shapes parts of diplomacy. The Kyoto protocol on climate change exempted China and other developing polluters from obligations to cut greenhouse-gas emissions. It affects domestic politics. Costa Rica’s former environment minister, Carlos Manuel Rodríguez, says Latin America’s politicians can mess up on health, literacy and the environment but if they provide jobs and growth, they will get re-elected. And it influences economics, which long ignored the environment in its models of how economies work. In 1991 the chief economist of the World Bank, Larry Summers, even sent out a memo saying poor countries ought to import pollution from rich ones because the damage it did there would be less costly. (He said his sarcasm had been misunderstood.)
But the costs of waiting for a clean-up are rising, undermining the argument that poor countries cannot afford to go green. The Chinese Academy of Social Sciences reckons the total annual damage to China’s economy from environment degradation is the equivalent of 9% of GDP The World Bank says bad sanitation and water pollution cost India 6% of national income. Even ignoring the global impact of rising temperatures and falling biodiversity (see article), therefore, the local and national costs of environmental damage are alarming. Nicholas (now Lord) Stern, a British economist, said in a big report in 2006 that climate change would be a brake on growth. That prediction may already be coming true.
The brake is likely to get worse as countries grow richer. Most of the world’s population increase in the next 40 years will be in developing countries. Two or three billion people will move into the middle class. This is two or three times as many as have achieved that status in the past 150 years. Many will want big cars, large air-conditioned houses and to eat meat, which uses up more water and land than grain does. This will put more stress on the environment in ways that will curtail growth. That would leave a lot of people poor and polluted—the worst of all possible worlds. Avoiding such an outcome is a problem for today, not tomorrow.
To see why, look at the implications of different sorts of urban design on pollution (cities account for 80% of all pollution so the way they are arranged matters a lot). Atlanta and Barcelona have roughly the same population. But in 1990 Atlanta sprawled over an area 26 times larger, and has expanded since. As a result, it produces far more pollution (see chart 2). The difference between a sprawling city and a compact one is fixed early in a city’s development; once sprawl begins, it is hard to reverse. Choices about urban design last centuries (or for many decades in the case of roads and power stations). Asked to name the main cause of climate change, the mayors of São Paulo, Mexico City and Dar-es-Salaam replied urban design. Countries can no longer afford to wait until they get rich before worrying about urban design, or their energy mix. By then, it will be too late.
So though the advice to “grow first, then go green” may have made sense in an era when the industrialising population was 500m and growth relatively slow, it will not work when billions of people are following suit and economies are growing by up to 8% a year. Development has to be green from the start. In recognition of that, “green growth” plans are proliferating in poor and middle-income countries. Ethiopia hopes to double GDP by 2025, while keeping its greenhouse-gas emissions at 2015 levels. Lord Stern describes China’s five-year plan (which hopes for growth of 7% a year in 2011-15) as the biggest contribution to greenhouse-gas reduction by any country. Green policies are no longer the preserve of the rich.
But just because something is fashionable does not make it useful. The real question about green growth is whether it can fulfil its promise that poor countries canhave both greenery and prosperity.
The core idea is that the environment is another kind of capital. It makes a measurable contribution to output and should be accounted for, invested in, exploited efficiently and (ideally) increased in value.
This is controversial. Many do-gooding outfits are horrified at the idea of exploiting the environment, however efficiently. (Indeed, some might think exploiting it efficiently is worse.) They accuse green-growth proponents of “greenwashing capitalism” and insist the only way to safeguard the world’s natural resources is to cut consumption.
Some large countries resist green growth for the opposite reason. They think it means imposing Western environmental standards on them by stealth, stifling job creation and exports. Both sides agree on one thing: that greenery and growth are in conflict. A subtler criticism is that green growth is merely good economic housekeeping, with a lot of fuss about environmental costs that should be factored in anyway. To these critics, green growth is more like a slogan than a distinctive policy.
In response, green-growth advocates argue, in essence, that the evidence is on their side. Marianne Fay, the principal author of “Inclusive Green Growth”, a new World Bank report, likens economists and environmentalists now to economists and anti-poverty campaigners in the 1990s. Then, she says, the campaigners stopped arguing for incentive-destroying policies like high minimum wages and instead started to promote social reforms like conditional cash-transfer schemes. These encouraged growth and cut poverty at the same time. In a similar way, green-growth advocates are now starting to abandon incentive-destroying demands about “degrowth”, and are seeking policies that might work better.
Claire Melamed of the Overseas Development Institute, a think tank in London, expects this to mean that environmentalists will learn from anti-poverty campaigners. On the face of it, these two look different. Environmentalists set store by science, particularly the study of climate change. They have long-term goals (aiming to limit the rise in global temperatures over 50 years). They often adopt a hair-shirt approach to economics. In contrast, anti-poverty campaigners say poverty is a moral matter: it is wrong that a billion people should be hungry in a world of surplus food. They have shorter time horizons (the United Nations’ millennium development goals span 15 years). And their economic policies aim to expand economic opportunities for the poor and for companies.
In some ways, green growth applies development-like features to environmentalism. It recommends fairly short-term projects, such as the reclamation works in Kenya’s Lake Naivasha or China’s Loess plateau. It pays a lot of attention to market and co-ordination failures, usually seen solely as economic matters. And it encourages the private sector.
In practice, this means looking for investment-hungry projects that bring high returns in broad environmental and narrow commercial terms. These are more numerous than the trade-off view of growth would suggest. McKinsey, a business consultancy, drew a cost-curve (see chart 3) for projects to cut carbon emissions. Those at the bottom are cheap as well as good for the environment (though ensuring that the people who pay for the investment reap the benefits is not straightforward). The biggest gains are in things influenced by consumer choice: hybrid cars, energy-efficient light bulbs and fridges. The International Finance Corporation, the private-sector arm of the World Bank, reckons that a 1% increase in building costs can cut energy and water bills by 20%. Other examples include drought-resistant crops and “no-take zones” in overfished waters. Drought-resistant crops (including genetically modified ones) reduce the amount of water plants draw from the soil—an environmental plus—and are hardier, raising returns to farmers in bad years. “No-take zones” let fish stocks recover and have been found to boost the incomes of fishermen in the surrounding area.
