by Alex Evans | Jan 3, 2008 | Climate and resource scarcity
Martin Wolf opines in his blog that his last column of the year is possibly also his most important of the year. He’s right. His subject: prospects for civilisation if we move to a zero sum world economy. His premise:
We live in a positive-sum world economy and have done so for about two centuries. This, I believe, is why democracy has become a political norm, empires have largely vanished, legal slavery and serfdom have disappeared and measures of well-being have risen almost everywhere. What then do I mean by a positive-sum economy? It is one in which everybody can become better off. It is one in which real incomes per head are able to rise indefinitely. How long might such a world last, and what might happen if it ends?
For Wolf, the two issues that might trigger the end of a non-zero sum world economy are climate change and energy security. You might argue for casting the net a little wider, to include water scarcity, agricultural yields, fisheries depletion and population – and their interconnections with each other and with energy and climate – but the basic analytical frame is still right.
Wolf leaves his readers in no doubt about what he thinks is at stake: “fossilised sunlight and ideas have been the twin drivers of the world economy. So nothing less is at stake than the world we inhabit, by which I mean its political and economic, as well as physical, nature.” For Wolf, you see, “a zero-sum economy leads, inevitably, to repression at home and plunder abroad.” He explains –
In traditional agrarian societies the surpluses extracted from the vast majority of peasants supported the relatively luxurious lifestyles of military, bureaucratic and noble elites. The only way to increase the prosperity of an entire people was to steal from another one. Some peoples made almost a business out of such plunder: the Roman republic was one example; the nomads of the Eurasian steppes, who reached their apogee of success under Genghis Khan and his successors, were another. The European conquerors of the 16th to 18th centuries were, arguably, a third. In a world of stagnant living standards the gains of one group came at the expense of equal, if not still bigger, losses for others. This, then, was a world of savage repression and brutal predation.
In a positive sum economy, on the other hand, all of this changes.
Democratic politics became increasingly workable because it was feasible for everybody to become steadily better off. People fight to keep what they have more fiercely than to obtain what they do not have. This is the “endowment effect”. So, in the new positive-sum world, elites were willing to tolerate the enfranchisement of the masses. The fact that they no longer depended on forced labour made this shift easier still. Consensual politics, and so democracy, became the political norm. Equally, a positive-sum global economy ought to end the permanent state of war that characterised the pre-modern world. In such an economy, internal development and external commerce offer better prospects for virtually everybody than does international conflict.
And this is why climate change and energy security cause him such shudders. For:
“…the biggest point about debates on climate change and energy supply is that they bring back the question of limits. This is why climate change and energy security are such geopolitically significant issues. For if there are limits to emissions, there may also be limits to growth. But if there are indeed limits to growth, the political underpinnings of our world fall apart. Intense distributional conflicts must then re-emerge – indeed, they are already emerging – within and among countries.
The response of many, notably environmentalists and people with socialist leanings, is to welcome such conflicts. These, they believe, are the birth-pangs of a just global society. I strongly disagree. It is far more likely to be a step towards a world characterised by catastrophic conflict and brutal repression. This is why I sympathise with the hostile response of classical liberals and libertarians to the very notion of such limits, since they view them as the death-knell of any hopes for domestic freedom and peaceful foreign relations.
The optimists believe that economic growth can and will continue. The pessimists believe either that it will not do so or that it must not if we are to avoid the destruction of the environment. I think we have to try to marry what makes sense in these opposing visions. It is vital for hopes of peace and freedom that we sustain the positive-sum world economy. But it is no less vital to tackle the environmental and resource challenges the economy has thrown up. This is going to be hard. The condition for success is successful investment in human ingenuity. Without it, dark days will come. That has never been truer than it is today.
Now that is a column. I’ll post a proper comment on it in the next couple of days. But for now, just reflect on how rare it is to see a heavyweight commentator prepared seriously to consider the implications of a scenario in which the uncertainties on energy and climate change go against us.
Wolf’s narrative here – on both problem and solutions – is situated at the ‘civilisation’ level. It’s impossible to think intelligently about either the causes of a zero sum scenario, or about potential paths through it, without thinking hard about our capacity as people to take collective decisions; the risks if we fail to use that capacity effectively; our conception of the good life and the values that underpin it; and the question of whether we can recognise that in a situation of scarcity, interdependence and equity become the same thing.
In other words: Wolf’s solution narrative is commensurate with his problem narrative (c.f. David and my discussion of this in Climate Change: the State of the Debate).
What a refreshing change from the legions of climate hacks who use the same hair-raising problem narrative as Martin Wolf – and then tell you that all you need do is turn off lights, recycle and remember not to leave your TV on standby.
by Alex Evans | Jan 2, 2008 | Climate and resource scarcity
No ho-ho-hos from the International Energy Agency this Christmas. They chose December 27th, of all days, to announce that, er, their reserves data is – how to put it? – rather Enronesque.
As the FT says, the Agency “has been paying insufficient attention to supply bottlenecks as evidence mounts that oil is being discovered more slowly than once expected”. The article continues: “To make amends, the International Energy Agency has started work on a new study to be published next year that will rework its long-term projections for global oil reserves”.
Alongside a plan to build a new set of data for the decline in production rates in the world’s top 250 oilfields, the IEA is also ready to reassess its own forecasts for projected oil discoveries, which it based on estimates by the US Geological Survey.
Any downward revisions in oil discoveries or upward revisions to decline rates will in theory increase the probability that global oil reserves will be smaller than expected and that global oil supply will peak much sooner than expected.
Natural decline rates for discovered fields are a closely guarded secret in the oil industry, and the IEA is concerned that the data it currently holds is not accurate.
Doubts are also surfacing about the original estimates for new oil discoveries around the world that were calculated by the USGS in 2000. A USGS re-assessment of these statistics in 2005 showed that actual new oil discoveries averaged only 9bn barrels a year between 1996-2003, 60 per cent less than the average annual estimates for the forecast period of 1995-2025. Just a few months ago, the USGS also downgraded its estimates of future new discoveries around Greenland by 38bn barrels.
“Insufficient attention to supply bottlenecks”? Call me lacking in seasonal goodwill, but wasn’t the whole point of creating an International Energy Agency to have organisation whose job it was to pay attention to supply bottlenecks?
What’s all the more alarming about the IEA’s Yuletide admission is that the Agency was already sounding alarm bells and pointing to flashing red lights on the dashboard even before this announcement. Regular GD readers will recall that November 16 saw the publication of the latest World Energy Outlook, when the Agency said that over the next 25 years some $22,000 billion – just under half 2006 world gross product – would need to be invested in supply infrastructure. If even that astronomical figure was based on an over-optimistic assessment of reserves data, then – ?
Nor was this even the end of the IEA’s Christmas message to the world. The following day, it announced its finding that the rising cost of oil has already wiped out the benefits of increased aid and debt relief to non-oil producing African countries, according to an IEA survey of 13 countries including South Africa, Ghana, Tanzania, Ethiopia and Senegal. According to the IEA, the increased cost of oil bought by these countries since 2004 was 3 per cent of their combined GDP: “more than the sum of debt relief and aid received over the past three years by the countries, which have a combined population of 270m, of whom 104m live on less than $1 a day”. One implication:
The situation is raising fears that, in spite of the strong growth many African countries have seen in recent years, there could be a repeat of the 1980s’ debt crisis in the developing world that was caused in part by the oil shocks of the 1970s.
by Alex Evans | Dec 21, 2007 | Cooperation and coherence, Influence and networks
The last working day before Christmas. Time to brave the streets and get those last few presents? Bah! Here at Global Dashboard we’re made of sterner stuff, so naturally our thoughts are skipping over the festive season altogether and focusing instead on strategic goals for 2008 – and in particular the need, still outstanding, to fix the UK’s foreign policy apparatus.
So here, in what passes for our warped variation on festive cheer, are two stocking fillers to print out and take home with you: the full text of Sir Richard Mottram’s speech on national security, given at Demos earlier this week, and a speech on FCO reform given by William Wallace at Chatham House on 7 December.
There’s now a burgeoning literature on why and how governments need to overhaul their co-ordination structures to deal more effectively with cross-cutting global risks like terrorism, climate change, pandemics, energy security and economic shocks. So early next year, we’ll be launching a ‘canon’ of reading on the theory and practice of reforming foreign policy to deal more effectively with global risks. Please let us know what should be on it and we’ll link to it. (You can find our email addresses on the Contact page.)
2007 has been a rich year for debate of these issues, but consensus on the actual reforms needed lies still in the future. The UK is an especially good country in which to start work on some tangible proofs of concept, given the range of people here thinking actively about these issues, and given Britain’s potential to act as a springboard from which to apply innovations to EU, UN and other international bodies also suffering from a coherence deficit. Given how many global risks are now coming home to roost, 2008 is the year in which debate needs to turn into action.
Happy Christmas.
by Alex Evans | Dec 20, 2007 | Climate and resource scarcity
While we’re on the subject of food, two interesting things to report from the Brussels conference that I mentioned a couple of posts ago:
First, it looks as though there may be pressure in Brussels for the EU to revisit its (extremely ill-advised) target for 10% of transport fuels to come from biofuels by 2020. Avril Doyle, an MEP who sits on the EP’s Environment and Climate Change Committees, was especially blunt about this, having returned from Bali apparently horrified by the revelation that the amount of corn it takes to fill a fuel tank with ethanol could feed someone for a year (a stat I can’t vouch for, not having come across it before). The EU’s target was, she said, a policy commitment made in good faith, but loooked now like it had been a mistake.
Interestingly, Tom Spencer – a former MEP who used to chair the EP Foreign Affairs Committee and who remains a leading light of GLOBE, the global network of green-minded Parliamentarians – flatly rebutted the notion that Brussels had set the target on the basis of a sustainability case that was sincere if perhaps flawed. In fact, he said, GLOBE had made it abundantly clear to MEPs throughout the policy development process that a biofuels target of the kind that was set would have serious, negative repercussions for global food security; but, he went on, the EP had backed the target anyway, not on the basis of a sustainability case, but purely and simply because of pressure from agricultural lobbies.
The other interesting point on food was in remarks made by a USAF Colonel representing EUCOM, the US military command for Europe. In an arrestingly forthright presentation, he led on the argument that in years to come, the real scarce resources were not, as policymakers were starting to think, oil and gas: instead, it would be food and water.
