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					Globalization and Environment




                  Steve Colt
UAA Institute of Social and Economic Research
     http://local.uaa.alaska.edu/~afsgc/
                          ECON 651
       New Global Realities and the American Economy
              University of Alaska Anchorage
                     6 February 2001
         Learning Objectives
•   One planet
•   Two stories and Two numbers
•   Three perceived problems
•   Four real challenges
•   Five tough questions




                                  2
    Three Perceived Problems
• Growth
• Pollution Havens
• Bad governance




                               3
       Four Real Challenges
• Poverty
• Sustainable consumption by the rich
  (us!)
• Protecting the Global Commons
• Effective Global Environmental
  Governance



                                        4
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.
• A parable for our times?
                                      5
    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

                                        6
  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



                                                  7
      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)       8
Globalization is Not New




                           9
          Three Perceived Problems
• 1) Growth wrecks the planet




 Source: World Bank, “Greening Industry”   10
     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


                                          11
    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


                                            12
      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)
                                          13
             Growth in China: Effects




Source: World Bank, Greening Industry   14
       World Growth: How Much




Source: World Bank, Globalization Growth and Poverty   15
World Growth: What?




                      16
            World Growth: How?




Source: World Bank, Greening Industry   17
     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 )




                                                   18
      World Growth: Mixed News




Examples of estimated changes in
pollution as income increases. (Panatayou 2000)
                                                  19
          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)

                                                             20
    Trade: Exporting Pollution?
• Easier trade certainly allows rich
  countries to export pollution.

• Should countries be able to trade off
  more pollution for more income?




                                          21
Exporting Pollution or Technology?

 Compliance with
 standards in
 Indonesia
 manufacturing
 (green / blue / red
 / black scale)




Source: Wheeler and Afsah 1996
                                     22
    Adoption of Clean Technology
   in Rich Countries, Open LDCs, and Closed LDCs




Source: World Bank, “Greening of Industry”
                                                   23
 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?

                                        24
   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

                                         25
       The Global Commons
• Owned by everyone
• Owned by No One
• Crucial part of our Human-Dominated
  Ecosystem
• Threatened by All
• Currently Lacks Effective Governance



                                     26
         Four Real Challenges
•   Poverty
•   Sustainable Consumption by the Rich
•   Protecting the Global Commons
•   Effective Global Environmental
    Governance




                                          27
        Five Tough Questions
1. 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?
                                               28
 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

                                           29
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



                                             30
             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)



                                              31
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

                                                    32
           Answers:
    Harmonization of Policies


• 25 Environmental Treaties in 1960
• 250 today




                                      33
           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



                                      34
       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


                                           35
Closing Thoughts




                   36
 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
                                       37
        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.
                                         38
    Fancy Terms We Have Learned
•   Human-Dominated Ecosystem
•   Pollution Haven
•   Transboundary Externalities
•   Global Commons
•   Tradable Carbon Permits




                                  39
Teaching and Learning Resources
Download this Slideshow from:
http://local.uaa.alaska.edu/~afsgc/




                                  40
 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/

                                                         41
 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


                                                               42
 Teaching and Learning Resources
United Nations Global Environmental Facility (GEF)
  http://www.gefweb.org/index.html




                                                     43

				
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