by Richard Gowan | Jun 2, 2008 | Climate and resource scarcity, Conflict and security, North America, Off topic
I was recently hiking in Putnam County, NY, a charming slice of hill country on the Hudson made famous by a musical about a Spelling Bee. I picked up the Putnam County News and Recorder, an old-fashioned newspaper with old-fashioned stories like “Sloop Club Strawberry Festival Serves Up Shortcakes and Sails” and “Heritage Funeral Home Allegations Unproven Says Owner”. But I was struck by the signs of resource scarcity in small (if admittedly liberal, Obama-signs-everywhere) town America. Here are some article openings from the 21 May edition:
The Putnam County Legislature’s Physical Services Committee implicitly acknowledged the financial impact that rising fuel prices are having on the county when, during its May 13 meeting, it heard a presentation on alternate fuels and ways of reducing the ever-escalating costs of heating the county’s buildings.
Water is perhaps our most precious natural resource. All life is dependent on a supply of clean water. And whether you are an average resident changing the oil in your car or a developer constructing several new houses – you have a legal obligation to ensure that your activities do not jeopardize the quality of water in area streams – and ultimately in the Hudson River. That was the gist of a presentation made at a meeting on May 14 at Cold Spring.
Gasoline continues to be a subject of considerable interest in and around the Village of Cold Spring – and not only because consumers are paying more than four dollars to purchase one gallon of regular at area pumps. At the meeting of the Village Board, Trustees passed a resolution requiring Mayor Anthony Phillips to submit expense claims documenting mileage incurred on Village business in order to be reimbursed.
It’s a sort of Olde Worlde Resilience, I guess. And good to see. Although most Putnam residents are probably most concerned about exactly how Olde Worlde their local 1970s-vintage nuclear power station is, especially as it has a “history of problematic performance”. This week it’ll be testing its 156 emergency sirens – a temporary system, it transpires, while a new one is sorted out. Reassuring.
UPDATE: for thoughts on why this post makes me look like a fool, look here.
by Alex Evans | Jun 2, 2008 | Climate and resource scarcity, Economics and development, Global system
Here’s a question I’ve been wondering about for a while now. Just how much of an impact are soaring oil costs having on international trade through making it more expensive to ship freight? And if oil costs keep rising – to $200 and beyond, say, as some analysts reckon could happen by the end of the year – is there a risk that transport costs could in effect start to roll back globalisation’s relentless advance over the last few decades?
Last week, courtesy of John Robb, I found the first serious attempt I’ve yet come across to answer that question, from Jeff Rubin and Benjamin Tal (both at CIBC, an investment bank) – see pdf here (scroll down to page 4). And it’s pretty powerful stuff, right from the first sentence, which says bluntly: “Globalisation is reversible.”
The authors say that every one dollar rise in world oil prices translates into a one per cent rise in transport costs. And as freight costs rise steadily upwards, they argue, what’s in effect happening is a de facto reversal of the tariff reductions that have been painstakingly negotiated in international trade rounds.
Back when oil prices were $20 a barrel, they explain, transport costs were the equivalent of a 3% US tariff rate. But at $150 a barrel – just $15 or so higher than oil today – the equivalent tariff rate goes up to 11% – “going back to the average tariff rates of the 1970s”. And $200? “We are back at ‘tariff’ rates not seen since prior to the Kennedy Round GATT negotiations of the mid-1960s.” So with this kind of economic impact, the authors continue, markets will seek shorter, and hence less expensive supply lines – which is “precisely what we have witnessed in response to past OPEC oil shocks”.
Now think about what this means for economies that – like China and India – have emerged by exploiting their cheaper labout (albeit that wage costs have more recently been rising sharply in both countries). China’s steel exports to the US, they say, are now falling by 20% on a year-on-year basis – and they think that’s not only because of the slowing US economy, but also because cheaper Chinese labour is starting to be offset by the sheer cost of transporting the steel across the Pacific. Bottom line:
“In a world of triple-digit oil prices, distance costs money. And while trade liberalisation and technology may have flattened the world, rising transport costs will once again make it rounder.”
Although Rubin and Tal don’t get into the effect on food prices specifically, the drivers they discuss are profoundly relevant for the longer term food outlook. More on that in a future post.
by Alex Evans | May 28, 2008 | Climate and resource scarcity, Economics and development
A couple of weeks ago, I wrote a post noting that the global food prices debate was hallmarked by three competing schools of thought on trade contesting food as a key battleground. One schools thinks liberalisation is the answer (think World Bank). A second reckons self-sufficiency is the way forward (think 1970s import substitution). A third likes long-term bilateral contracts (think of China’s approach to securing energy food supplies). But as I wrote at the time, it seemed to me that the none of these three approaches really offered a complete answer.
Talking to friends at NGOs recently, it seems they think so too. But that’s not to say that they’ve got a fully worked-up narrative yet either.
Back in 2005, during the heyday of Make Poverty History and the One Campaign, the mainstay of development NGOs’ policy agenda on trade was something called “policy space“. In a nutshell, policy space was an argument that developing countries should have the freedom to set their own trade rules rather than have liberalisation, or any other standardised approach, forced upon them: they should have the ‘space’ to determine their own policy in other words.
Fast forward to today, though, and the policy space narrative is starting to look in need of renewal – for three reasons.
The first is that arguments about policy space are fighting the last war. NGO activists love to saddle up to fight the evil Washington Consensus, with its dark plans of forcing privatisation, liberalisation and other ills on hapless low income countries. Just one problem: the Washington Consensus ended 15 years ago. Today, the idea that NGOs did so much to champion back then – that there are no one-size-fits-all answers in development – has gone mainstream.
Secondly, the policy space argument is silent about the trade issue that is at the top of developing country governments’ in-tray: security of supply. On food, energy and other commodities, the big worry this year is about scarcity of strategic resources – and as the Philippines discovered this year when its rice supply chains sputtered, all the policy space in the world is no use if the goods you need aren’t for sale.
Finally, arguments in favour of policy space rest on the problematic assumption that if only developing countries were free to take their own decisions, everything would be fine. But what about when developing countries use their policy space to take decisions that are extremely problematic for other poor countries – for instance when Argentina, Kazakhstan, Vietnam or India decide to reduce or suspend exports, leaving other countries (like the Philippines) in the lurch? Policy space has lots to say about developing countries’ rights, in other words – but what about their responsibilities?
While there’s no shortage of specific ideas and policy proposals in the trade context that can help to move things forward on the food prices agenda, what’s still lacking is a narrative that set out the basic approach.
by Alex Evans | May 15, 2008 | Climate and resource scarcity, Conflict and security, UK
How much should people in Britain worry about food security? Here’s a starter for ten, taken from a recent Guardian article by Harriet Green:
For three years, my husband has talked about taking to the hills. About buying a smallholding on Exmoor where, with our four-year-old daughter, we can safely survive the coming storm – famine, pestilence and a total breakdown of society. I would wait for his lectures to finish, then return to my own interests. I had no time for the end of civilisation. As an editor on a glossy magazine until a few months ago, I was too busy. There was always a new Anya Hindmarch bag to buy, or a George Clooney premiere to attend.
But recently, I’ve wavered. Much of what he has been predicting has come true: global economic meltdown, looming environmental disaster, a sharp rise in oil and food prices that has already led to the rationing of rice in the US, and riots in dozens of countries worldwide. This week, the details got scarier. The UN warned of a global food crisis, like a “silent tsunami”, while Opec predicts that oil, which broke through $100 (£50) a barrel for the first time a few weeks ago, may soon top $200.
In one sense, it’s no surprise that food figures so prominently in her list of concerns: along with shelter and water, after all, food is about as basic as human needs get. But on the other hand, you have to wonder: if you can afford Anya Hindmarch bags, do you really have anything to worry about on food prices? Isn’t the problem actually the converse – namely that as the global middle class grows, its appetite for meat and dairy products (and handbags too) also grows – taking staple grains out of the purchasing power reach of poorer consumers in the process?
Still, the fact remains: people in developed countries who think about resilience a lot are worried about food. John Robb, for instance, sees food as a critical dimension of his concept of the Resilient Community. Or look at the Transition Towns movement in Totnes, who are going nuts about food security (literally):
… the idea is to use town-wide plantings [of nut trees] to create a stock of healthy, productive trees that can serve as a great source of local food, and a buffer in times of scarcity. The reason that the group is concentrating on nut trees is their potential to outgrow cereal crops in terms of carbohydrates, and to utilise poorer soils with fewer inputs. The group has already planted hazelnuts, walnuts and almonds across the town …
So: how worried should we be in Britain, the US or other developed countries? Is it time to head for the hills? (more…)
by Alex Evans | May 14, 2008 | Climate and resource scarcity
Just back from ten gorgeous days on holiday in Cornwall – hence radio silence on the blogging front, and a much-needed break from frenetic activity on the food prices research front.
(As I found, Cornwall is actually about the best place you could go to get some fresh perspective on food. The Lost Gardens of Heligan have the most impressive kitchen gardens I’ve ever seen; the Eden Project fizzes with thoughts about how we’ll feed ourselves through this century; and Tim Smit – who led the construction of Eden and the restoration of Heligan – and Tony Kendle, director of the Eden Foundation, were both full of ideas about the future of food. Plus, just over the Devon border is Totnes, home of the transition towns movement – which John Robb admires as an exemplar of the idea of the resilient community.)
So with last month’s briefing paper on food prices out of the way, I’m starting to think in earnest about the content of the main pamphlet that I’ll be writing over the summer.
Although we’re not out of the woods yet on gearing up the humanitarian response to immediate term food price impacts, the issue is firmly on the agenda; by the time of the G8 at the start of July, most governments should have made their initial pledges of increased assistance. Meanwhile, the UN’s new task force on food prices met for the first time on Monday, and will pull together a framework for action over the next few months.
But what about the longer term? What are the big questions we need to think through between now and the Italian G8 in 2009, by which time we’ll need to have thought through a global plan for the longer term challenge of meeting 50 per cent higher demand by 2030 – and a population of nearly ten billion by 2050?
I’m tentatively organising my thoughts into three main clusters: questions about the future of agriculture; questions about the future of trade; and questions about the future of demand for food among wealthier consumers. (more…)
