Globalization and Environment

Steve ColtUAA 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?

Source: Wheeler and Afsah 1996

Compliance with standards in Indonesia manufacturing

(green / blue / red / black scale)

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 Questions1. What is the fastest and cheapest way to

promote environmental protection?2. What is the fastest way to attack poverty

in ways that help the planet? 3. Should poor countries follow rich country

environmental standards? By when?4. How can rich people and countries

manage their consumption?5. 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 EconomyWorld Bank Policy Research Reports (2001)http://econ.worldbank.org/prr/subpage.php?sp=2477

Environment and Trade: A HandbookUN 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 Universityhttp://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 IndustryWorld Bank Development Research Group (2000)http://www.worldbank.org/research/greening/

World Wildlife Fund (certification and ecolabeling programs)http://www.wwf.org

Global Commons Institutehttp://www.gci.org.uk/main.html

45

Teaching and Learning Resources

United Nations Global Environmental Facility (GEF)http://www.gefweb.org/index.html