by Alex Evans | Jan 28, 2008 | Climate and resource scarcity, Global system
And so to a new report on soft (i.e. agricultural) commodities from Bidwells, the agribusiness property consultancy, noteworthy for its observations about water scarcity and the need for productivity on existing agricultural land to rise by as much as 50 per cent (!) by 2050 if we’re to feed 9 billion.
In particular, though, note this interesting remark in the context of a discussion of how to invest in agricultural land profitably:
Logistics need consideration. The distances to market will impact on the options available and can be vital in cost sensitive commodities where transport costs can easily make up 20% of their total value. Cheap land a long way from markets and infrastructure may only be profitably farmed at very high prices.
Translated: before we see serious investment in increasing available acreage, investors will want assurance that prices for crops are going to remain high, in order to avoid being stranded with massive sunk costs. Sound familiar? Why yes! It’s the same with oil: no-one’s going to invest in hugely expensive, infrastucture-intensive exploration and production in the middle of nowhere (probably in temperatures of -30 degrees C on a warm day) without assurance of the oil price remaining high.
Problem is, while confidence is rising that the long term trend in oil and crops is upwards, short run trends are likely to be notable primarily for their volatility. Until a few weeks ago, lots of investors were confident that demand in China, India and other emerging economies would hold things up – but the balance of consensus seems to be tipping towards Nouriel Roubini‘s much more bearish view, which says that emerging economies absolutely remain coupled to industrialised countries’ fortunes.
by Alex Evans | Jan 27, 2008 | Climate and resource scarcity, Economics and development
Yale and Columbia universities have just published their 2008 Environmental Performance Index, which grades 149 countries on their sustainability. Here’s the press release and the summary for policymakers. According to the Index, the most environmentally sustainable country in the world is – ready? – Switzerland. Then Sweden, Norway and Finland. The United States comes in at number 39. China is at number 105; India even lower, at 120.
Now when you stop and actually think about these “data”, you begin to experience a creeping sense that something strange is going on here. Start from the recognition that climate change is far and away the most significant global issue that the Index looks at, and then ask yourself: how can the United States be 66 places above China – when US emissions are 19.5 tons of CO2 per person compared to less than 4 tons per capita in China (source: WRI EarthTrends)? How can China score so much better than India, when Indian per capita emissions are between a third and a quarter of those of China? And what is Finland doing in the top four countries with per capita CO2 emissions of more than 14 tons per person? What on earth is going on here? Were the researchers drunk?
Dan Esty, were he here, would presumably point out in a tone of hurt sincerity that his Index aggregates numerous indicators other than per capita emissions. Indoor air pollution, irrigation stress, pesticide regulation, access to sanitation, habitat protection and many others are all part of the mix. Plus there are other climate indicators besides emissions per capita; industrial carbon intensity and emissions per unit of electricity generated are also used to gauge climate friendliness.
But that’s exactly why this “Index” is so pernicious – and deserves to be roundly derided as the crude exercise in bullshit that it is. The point about Esty’s indicator set is that countries score badly for being poor. Notice anything about the bottom 20 countries on the index? How about the fact that 16 of them are in Africa?
Of course if you’re poor, you’re more likely to lack access to sanitation, suffer from poor indoor air quality or struggle in combating infectious disease (another metric used by the Index). But much more significant is the fact that the world’s poorest people and countries are those that tread lightest on the planet in terms of their consumption and carbon footprints. If anything, they deserve to be consuming more of the earth’s resources, including atmospheric space.
Yet what Esty’s extraordinarily misleading Index does is to convey the opposite message: that’s it’s the poor who are most at fault in driving environmental unsustainability. Words fail me.
by Charlie Edwards | Jan 27, 2008 | Conflict and security, Influence and networks, Middle East and North Africa, South Asia, UK
Last week saw Dan Korski’s excellent new paper on Afghanistan – and, following the announcement of Paddy Ashdown’s nomination to be the UN’s Envoy to the country, signs that Afghan leaders were concerned about the appointment. Today’s news suggests such speculation was if anything too cautious: the Afghan Government are digging in their heels and have made it clear they do not want Paddy Ashdown. Period.
The West, for its part, is hoping that Lord Ashdown will help bolster the entire international effort in Afghanistan – nothing like the weight of the (western) world on one’s shoulders. Will there be a compromise? Let’s hope not: the Afghan Government’s new preferred candidate is General Sir John McColl, a British General who has already served in Afghanistan.
So why not Ashdown? According to the Afghan ambassador to the UN, their reason for wanting General McColl is based on an assessment of “…who is going to be more helpful and who is going to be more able to work with the Afghan government and with different elements of the international community in Afghanistan.”
Ouch.
Update: Ashdown has pulled out of the role, having told UN Secretary General Ban Ki-Moon that the job needed Afghan government backing which did not exist. As the BBC’s coverage notes, Hamid Karzai has recently criticised the performance of British troops fighting the Taleban in Helmand province; note that while Karzai is criticising UK policy he is also praising US involvement.
Update 2: The FT reports that the UN is unlikely to welcome a serving soldier (General McColl) as head of its mission in the country. Many officials already worry that the neutrality of the UN, whose agencies oversee a huge amount of reconstruction and humanitarian assistance in Afghanistan, has been un-dermined by its political activities and close involvement with Isaf.
by Richard Gowan | Jan 26, 2008 | Conflict and security, Europe and Central Asia, Middle East and North Africa
British journalist Jonathan Steele has been getting a good deal of coverage for Defeat, his account of the Iraq war (if nothing else, he deserves a prize for finding an even pithier title for an Iraq book than Fiasco by Thomas Ricks). While I’m all for picking over the bones of US and UK decision-making in 2002-3, I grow more and more concerned that this sort of retrospective analysis distracts readers/voters from wondering what we should actually do in Iraq now, and what options may open up after the U.S. elections. The absence of serious debate about Iraq among the Democrats – and most Republicans bar McCain – was well-described by Noah Feldman in the NYT Magazine earlier this month:
What if the United States were at war during a presidential election — and none of the candidates wanted to talk about it? Iraq has become the great disappearing issue of the early primary season, and if nothing fundamental changes on the ground there — a probable result of current policy — the war may disappear even more completely in the new year.The reasons for Iraq’s political eclipse begin with the unfortunate fact that candidates strive to create feel-good associations, and the war is a certain downer. The film studios could barely get a Middle East movie to break even in the past 12 months (”In the Valley of Elah,” anyone?), and the political image makers have apparently taken note.
“How true,” I thought on reading this over a pint of the excellent Brooklyn Winter Ale in, suitably, Brooklyn. But, after lingering by Lake Geneva for a week, I’m struck by the extent to which Iraq is now simply off the European agenda in a way that is still quite hard to imagine in the US. And that is worrying because, as Feldman acutely observes in the American context, the glimmer of stability offered by the Surge means that there is a real debate to be had about whether it’s time for another go at statebuilding in Iraq:
According to one view, the United States cannot shape the local players into a cohesive order regardless of Iraq’s level of killing. The best we can do is calm the worst of the violence, leave and let the Iraqis sort things out for themselves.An alternative view presumes that state-building has failed so far in Iraq because of the violence. Once the bloodletting has decreased and there are credible negotiators on all sides, a stable Iraq is just barely possible, even if it will never be an exemplar of democracy.
Now, that’s mainly an issue for the Iraqis and Americans, but I don’t think that EU governments (whether pro- or anti-war back in the day) can really ignore it either. As I’ve just pointed out in a new piece that’s both available from EU Observer and on the ECFR website, a renewed decline in Iraq’s fortunes would undo European efforts on Turkey, Iran, Lebanon, maybe even Palestine – so ignoring it isn’t really an option. (Charles Grant has just made a similar argument in a new CER pamphlet). Here’s the nub of my argument, which could be summed up as “start thinking really hard”:
Rather than passively wait to see who’ll be driving Middle East policy in Washington in 2009, EU governments should use the next twelve months as an opportunity to iron out their differences and develop new options on Iraq.Whoever enters the White House next year, the incoming administration will probably make charting a new course on Iraq the central priority for their first hundred days. If the EU is still trying to work out where it stands at that stage, it will find it’s irrelevant soon enough. If it has a package of ideas about what it can contribute – even if it is relatively limited – its initiative is likely to be welcomed, getting relations with the new administration off to a good start.To start outlining what such a package should look like, European governments should now agree to put their differences to one side, and appoint a senior political figure (or maybe two, one originally against the war, one for it) to lead a small “EU Options Team”: a brains-trust of European officials and experts on Iraq, tasked with laying out a menu of potential plans for coordinated EU policies from 2009 on.To ensure that these aren’t just abstract term papers, the Team should have a cell based in Iraq – in part modelled on the EU police and civilian planning teams that have been developing policy in Kosovo since 2006. And to give the Team a sense of immediate relevance, its political chief(s) should also be directly involved in trying to sort out the dysfunctions of EU aid to Iraq.
To be quite honest, even this level of hatchet-burying and deep thinking may still be beyond the EU, but hope springs eternal. My argument is also meant to be an invitation for those who still think we have some obligations and interests in Iraq to offer new ideas – if you go the ECFR version of the piece, you can add a comment, and I’d be a happy junior public intellectual if any Dashboard readers had constructive thoughts to add there.
by Alex Evans | Jan 26, 2008 | Africa, Climate and resource scarcity, Economics and development
The FT’s consumer industries correspondent, Jenny Wiggins – who along with commodities correspondent Javier Blas deserves a medal (or at the very least a rise) for excellence in covering the food prices story over the last year – is looking at changing patterns of food consumption in India in the paper’s Saturday magazine today. The whole story is a terrific piece of feature journalism, but it was this passage towards the end that got me thinking in particular:
India, which is still trying to lift millions of people out of poverty, is having problems satisfying its appetites. One of the reasons the Punjabi dairy farmers are doing so well is that demand for milk, and milk-derived products, is increasing so quickly that farmers can’t keep up. India, despite being the world’s largest producer of milk, temporarily halted exports of milk powder last summer to try and stop domestic milk prices from rising too fast after some dairy farmers were tempted by record high global prices and sold their product to exporters rather than local food producers.
Milk isn’t the only hot commodity. After restarting wheat imports in 2006, for the first time since the late 1990s, India banned wheat exports last year. The country can, of course, try and produce more food. But Ajay Shankar, a government secretary in the ministry of commerce and industry, says that while India wants to increase its agricultural yields (which are low compared with the rest of the world), expanding the amount of land farmed is difficult in a country already struggling to support more than one billion people. In Punjab, the state that produces a hefty chunk of India’s wheat, rice and milk, decades of intensive farming and heavy fertiliser use have taken a heavy toll on the land, and water tables are falling sharply.
Although India’s economy is expanding at about 9 per cent a year, its agricultural sector is slowing, with growth declining from 4.7 per cent between 1992-1997 to just 1.5 per cent between 2002-2006. If India can’t produce enough of its own food, it will have to import more. Shankar says it is unclear how much more food India will need, but acknowledges that significant increases in imports would affect the global economy. ”If we become a major importer of food grains as some fear, clearly it will have an impact on global prices,” he says over tea in his Delhi office.
And India is not the only country expected to import more food in coming years. Over the next decade, per capita income in China is expected to triple, which means the Chinese will be eating more – and better. They are already each eating twice as much meat as they were in 1990 and the country now accounts for one third of all meat eaten in the world, according to research by Goldman Sachs.
Now as Wiggins explains earlier in the article, it’s changing consumption in the BRIC countries, more than falling grain stocks or increasing government support for biofuels, that’s really been driving rising food prices. But if the two most populous of those four nations, India and China, are having to import more and more of their food, that raises the question: who’s going to be growing the supply to meet all this extra demand?
And the thing that struck me, as I pondered this, was that if there’s one region that by rights out to be making a mint out of rising food prices, it’s Africa. Africa, after all, is the continent that the green revolution forgot. While productivity was going through the roof in Asia in the 1960s and 1970s, African agriculture remains stubbornly unproductive. Now that agricultural commodities appear finally to be heading out of their interminable slump, there’s a powerful case for investors to tackle the productivity gap, you’d think. So is lady luck finally smiling on Africa’s people?
Well, a big part of the answer to that question depends on whether you’re looking at those of her people in her mushrooming cities, or alternatively those of her people still working the land. If you look at the global statistics on hungry people, most of them are in rural areas. Fully 50 per cent of the world’s undernourished people (400 million souls) are in low income farm households. Another 22 per cent, 176 million people, are rural landless and low income non-farm households; and a further 8 per cent, 64 million people, are poor herders, fishers or forest people dependent on community or public resources.
In fact, only 20 per cent of the world’s undernourished people are in low income urban households – 176 million people – and a great many of them are to be found in China and India rather than Africa. [All stats from John Shaw’s masterly World Food Security: a history since 1945.] So presumably, rising prices for agricultural goods ought to spell good news for all those rural poor in Africa, especially if rising prices also incentivise investment in improving productivity – right?
As I blogged back in October last year, development economist legend Dani Rodrik’s answer is that it depends – but that “it depends in predictable ways on household and country characteristics”:
…it depends on whether a poor household is a net seller or buyer of food (that is, whether it grows more or less food than it consumes). This means that the rural poor generally tends to benefit from higher food prices, whereas the urban poor generally get hurt. How large the impact is depends, in turn, on the size of the food account as a share of total expenditures or income of a household. And whether the change is good or bad for a nation’s poor as a whole depends on the geography of poverty in a country.
But there’s a factor that Rodrik overlooked: climate change. While northern latitude global breadbaskets like Canada and Russia stand to be net beneficiaries from climate change in the short to medium term, the outlook for Africa is not good at all. Falling yields as a result of climate impacts risk increasing Africa’s needs for imported food, rather than its opportunities to export food. For countries already dependent on imported oil – which, as I noted in December, have already seen all their increases in aid and debt relief from the last three years wiped out by higher fuel import costs – it’s a vicious spiral, especially given that biofuels mean that energy and food prices are now linked.
The irony and injustice here is heartbreaking. Just when one major global trend – rising food prices – looks set finally to offer Africa some kind of a break, we find that in fact other trends – climate change and energy scarcity – may convert higher food prices instead into yet another problem, that despite being created elsewhere, somehow ends up in Africa’s lap.
(For more on the international implications of rising food prices, see my briefing note from December last year.)
Update: see also
– On collision course: scarcity and African patronage systems – 5 March 2008
– Food prices: where to get briefed – 2 March 2008
– Third world debt (the sequel) – 1 March 2008
