Ferraris for all

Miller-McCune magazine, a publication from the Miller-McCune Center for Research, Media and Public Policy in California, has a useful review essay by David Villano on the “more-is-less” thesis. In other words it examines (sympathetically) the argument that it is possible to be more prosperous while consuming less.

Many of the points it makes are familiar – Americans consume far more per head than most of the rest of the world, the threat of climate change is imminent, the need to change lifestyles etc – but it includes many useful references. Among them are Confronting Consumption, (MIT Press) a 2002 book on America’s consumer society co-edited by Michael Maniates. Others include the California-based Global Footprint Network, the Voluntary Simplicity Movement, Redefining Progress and Mean Genes, a book on how our desire to consume is embedded in our DNA.

Labels: affluenza, America, book, climate, consumption, environment, footprint, inequality, progress, review, sustainability

I have been sidetracked for the past week so no time for blogging. Hopefully this will now change. However, two things worth catching up on:

- Attended the launch of the Prix Pictet photographic competition last Tuesday (29 April). It is a new photographic awarded focusing on sustainability with Kofi Annan, a former UN secretary general, as its honorary president. It also has the endorsement of Gro Harlem Brundtland, a special envoy to the UN on climate change. This year’s theme is water.

The PR stunt at the start of the event gives some flavour of what it was about. All of those attending were given a clear glass bottle with a little water in it and the name of a country. Mine had a tag on it saying “Ghana” and a note saying the average daily domestic water consumption was 27 litres per head which was equivalent to five minutes in an ordinary shower. What is this bizarre counter-position meant to mean? Perhaps that by having a shower in Britain we are depriving ordinary Ghanaians of water? Or that water is a scarce resource? (see post of 12 March 2008).

- Michael Fitzpatrick wrote a pithy critique of the mainstream happiness discussion in an article (30 April) on spiked on the contemporary obsession with healthy living:

“Having replaced heaven (in either terrestrial or celestial forms) as the goal of human existence, health has been reduced to the anatomical and physiological functions of the human organism. The highest aspiration of the modern individual is biological survival, complemented by the state of bovine contentment celebrated as ‘happiness’ by government advisers, a condition to be achieved by making healthy lifestyle choices, appropriately corrected by short courses of cognitive behaviour therapy.

“For Aristotle a true state of health meant a ‘flourishing life’, not merely in terms of prolonging our bodily existence, but in terms of personal achievement. What matters is not merely feeling good about ourselves, but living and acting well. Happiness is the result of human activity in the world, it is not just a state of mind, and even less mere animal fitness.”

Labels: consumption, development, environment, happiness, sustainability

This week’s Fund Strategy included the following comment by me on sustainability. There is also a related cover story but it is too long to put on this blog. It can be reached through fundstrategy.co.uk - you need to register but it is free.

The fund management industry seems to have taken on sustainability as a self-evident good. It is seen as being worthwhile almost by definition. The fundamental problems with the concept are ignored.

Yet as Daniel Ben-Ami shows in this week's cover story the idea of sustainability has a specific meaning.

In its basic form it embodies two fundamental assumptions. First, the idea that humanity should accept environmental limits on its actions. Second, development needs to focus on basic needs if humanity is to survive into the future.

Both of these premises are contestable. There is a long tradition that sees human progress as consisting of overcoming environmental limits. From such a perspective such limits can be overcome by the power of science and reason. As a result the world becomes more prosperous and human well-being can flourish.

The idea of focusing on basic needs can also be seen as suffering from a chronic lack of ambition. Societies have typically done best when they have striven to achieve difficult objectives rather than reconciling themselves to mere survival.

The best thing we can do for future generations is to try to make society as prosperous as possible in the present.

None of this means that sustainable funds, or ethical funds more generally, need not be lucrative. It is quite possible for them to provide good returns. But it does not follow that the shift to "green capitalism" is a positive one overall.

There is always the possibility of niche investments in sustainable themes proving profitable. Huge government subsidies and extensive regulations are also likely to benefit some companies over others. Many ethical fund managers probably play as much attention to these as to corporate fundamentals.

The so-called "carbon markets" are a good example of the direction in which things are heading. They are not really markets at all but indirect forms of state regulation. The number of permits issued and the forms these exchanges take are the result of government action rather than organic development.

No doubt money can be made from such trading, in some cases bonanzas, but whether they are the best mechanism to deal with climate change is another matter.

More generally the shift to green capitalism is likely to hinder rather than promote genuine development. Although the economy will still grow its expansion is likely to take the most conservative forms. Renovating the old will take preference over developing the new.

The tried and tested will be favoured over the innovative. We will be trapped in a mundane world in which the ambitious is viewed with anxiety while the familiar is exalted.

Labels: environment, Fund Strategy, sustainability

Sports are getting into sustainability according to the latest issue of Marketing Week (3 May). It quotes the organisers of the London 2012 Olympics as saying they will deliver a “sustainable games”. Apparently this involves, among other things, ensuring that 60% of the venues are existing structures. Given the poverty of the infrastructure in East London this limitation is disappointing.

Even Formula One racing is going green. The article quotes Alistair Watkins, Honda Formula 1 marketing director, as saying “Being green is our primary marketing concept for 2007.” Its cars will have an image of the earth rather than sponsorship logos. There is more on this at myearthdream.com.

Evidently the football World Cup in Germany last year was carbon neutral and more big sports events are likely to follow in the future.

Labels: corporations, environment, sustainability

I was planning to do a brief review of last night’s television programme on the human footprint. The programme reduces human life to consumption and waste. To quote the Channel 4 website: “From our babyhood – when we get through a massive 3,796 nappies and produce 254 litres of urine – through to our old age and death – by which time we will have had sex 4,239 times, eaten 10,866 carrots, taken 7,163 baths and done an average of 15 farts a day – this extraordinary film tells the story of an average life, the story of our human footprint.”

However, James Heartfield has saved me the trouble with an excellent review on spiked. He points out that humans have a productive and creative side rather than simply being consumers. It also includes a useful reference to his critique of Herbert Giradet on sustainability along with Giradet’s reply.

Labels: footprint, spiked, sustainability, television

Tom Friedman, a foreign affairs columnist for the New York Times, has a cover story in the newspaper’s Sunday magazine today calling for a new green patriotism in America ("The Power of Green"):

“Well, I want to rename “green.” I want to rename it geostrategic, geoeconomic, capitalistic and patriotic. I want to do that because I think that living, working, designing, manufacturing and projecting America in a green way can be the basis of a new unifying political movement for the 21st century. A redefined, broader and more muscular green ideology is not meant to trump the traditional Republican and Democratic agendas but rather to bridge them when it comes to addressing the three major issues facing every American today: jobs, temperature and terrorism.”

The underlying theme in Friedman’s piece is that environmentalism can be a unifying ideology for America: “a new green ideology, properly defined, has the power to mobilize liberals and conservatives, evangelicals and atheists, big business and environmentalists around an agenda that can both pull us together and propel us forward. That’s why I say: We don’t just need the first black president. We need the first green president. We don’t just need the first woman president. We need the first environmental president. We don’t just need a president who has been toughened by years as a prisoner of war but a president who is tough enough to level with the American people about the profound economic, geopolitical and climate threats posed by our addiction to oil — and to offer a real plan to reduce our dependence on fossil fuels.”

He concludes by calling for what he calls “an ethic of stewardship”: “Stewardship is what parents do for their kids: think about the long term, so they can have a better future. It is much easier to get families to do that than whole societies, but that is our challenge. In many ways, our parents rose to such a challenge in World War II — when an entire generation mobilized to preserve our way of life. That is why they were called the Greatest Generation. Our kids will only call us the Greatest Generation if we rise to our challenge and become the Greenest Generation.”

Friedman has a related documentary on "Green: The New Red, White and Blue" on the Discovery Channel and article in Foreign Policy on “the first law of petropolitics”.

Labels: America, environment, sustainability

John Elkington, writing in Open Democracy, reminds us that the idea of sustainable development became mainstream at least 20 years ago. It was spelt out in the landmark Brundtland report, officially known as Our Common Future, in 1987. Elkington gives a useful chronological history of the development of the idea of sustainability in four “waves”. The first is in the 1960s (including the publication of Silent Spring and the formation of the World Wildlife Fund) and the current, fourth, wave focuses on climate change.

Labels: environment, sustainability

Just managed to catch up on the BBC Panorama programme “Go green or else!” on a year in the life of “ethical man” (currently available to view on the internet). The programme is itself a recycling of the regular items by Justin Rowlatt on the BBC Newsnight programme over the past year. Rowlatt and his family cut back on consumption over the year including ditching their car, forsaking air travel, eating fewer animal products, recycling and even urinating on their compost heap. The aim, which they achieved, was to cut the family’s carbon footprint by 20% over the year. They also made significant financial savings along the way.

The problems with this approach are straightforward. It is obviously possible to save money if you are prepared to accept austerity. But why should people have to do without cars, air travel or meat? Even cutting back on such consumption is not desirable.

More fundamentally the programme looked at the question entirely from the perspective of personal consumption. Tackling climate change meant individuals and families consuming less. The possibility of producing more energy, for example through nuclear energy or hydroelectric power, was ruled out of the discussion by the framework of the programme itself.

The programme’s “carbon guru” was Professor Tim Jackson of Surrey University. His website includes several papers putting sustainable consumption and sustainability more generally into a more theoretical context.

Labels: climate, consumption, economics, environment, sustainability, television

This week Fund Strategy published a cover story by me on the economics of climate change. Unfortunately it is too long to fit on this blog and there is no direct internet link. However, I have pasted one of the boxes below:

The discussion on the economics of climate change is typically steeped in the culture of precaution. Even when the language of catastrophe is eschewed - as it is in the Stern report - similar conclusions can be drawn from a precautionary approach. Essentially the idea is that because the future is so uncertain, it is necessary to be particularly cautious about the appropriate action to take. The idea that climate change could be irreversible and harmful to the whole of humanity adds weight to the precautionary approach.

Precaution was certainly built into the Stern review. In a section on "risk and uncertainty" it states: "The analytical approach [in the report] incorporates aspects of insurance, caution and precaution directly, and does not therefore require a separate 'precautionary principle' to be imposed as an ethical criterion."

To Stern, and other advocates of a precautionary approach, this outlook is based on common sense. It is akin to buying insurance for a house except, in relation to climate change, there is only one Earth. If Earth is destroyed or seriously damaged, there is no chance of moving to another planet.

But the idea of precaution is not as straightforward or positive as is generally assumed. An alternative would be to argue that a timid approach towards humanity's relationship with the environment itself entails risks. The bolder and more ambitious the development plans, the better able humans will be to control their environment. In contrast, a limited approach to development leaves humans prey to environmental changes.

Despite seemingly ambitious rhetoric elsewhere, the low horizons of Stern are apparent in its definition of sustainable development: "Future generations should have a right to a standard of living no lower than the current one." Such a miserable definition runs directly counter the experience of the past two centuries. Since about 1800 the level of output per person has risen enormously. As a result, humans have come to live longer, healthier and more fulfilling lives.

Arguably, a precautionary approach is the worst possible response to climate change. It deters humanity from developing the means to control its environment. Greater development, and more widespread prosperity, enhance the ability of humans to create a better life for themselves.

Labels: climate, economics, environment, Fund Strategy, sustainability

The World Wildlife Fund (WWF) has published its latest Living Planet Report (PDF), its biennial statement on the state of the natural world. Its Living Planet Index suggests that global biodiversity has declined by 30% since 1970 and its Ecological Footprint indicates that the UK is living a “three planet lifestyle”.

WWF’s UK website welcomes the adoption of these ideas by the British government but argues it needs to go much further:

“The good news is that the language of One Planet Living is being rapidly and widely taken up by people including David Miliband, Secretary of State for the Environment. However a commitment to One Planet Living must include a commitment by the UK government to adopt Ecological Footprint as a sustainable development indicator and set targets for year on year reduction.”

As previously argued on this website the ecological footprint is essentially a tautology (see 9 October 2006 dispatch). In reality, to the extent it makes sense to talk of an “ecological footprint”, it changes as the efficiency of resource use increases. But this and the discussion of biodiversity deserve a more thorough critique.

Labels: economics, footprint, sustainability

Today is the day the world goes into ecological overdraft, according to the lead story in today’s Independent. A report by the New Economics Foundation, in partnership with the Global Footprint Network, finds that until 9 October the world’s population was using up sustainable resources. But from now until the end of the year it will be drawing on resources that cannot be replenished. The implication is that the world should only be using three-quarters of the resources it is currently using. As the Independent argues:

“Global Footprint estimates that the human race is over-using the Earth's resources by 23 per cent. While each individual should use up no more than the equivalent of 1.8 hectares of the Earth's surface, the actual area we use is 2.2 hectares per person.”

The lack of details on how this measure is calculated is striking. Both the newspaper reports and the information on the New Economics Foundation website seem to be based on pure assertion. There is more on the Global Footprint website but it is lacking in detail. However, a similar report four years ago by the World Wildlife Fund (WWF) was subject to rigorous examination by the Economist. (“Treading lightly” 19 September 2002). The article argued that:

“The approach builds in questionable assumptions. Crucial is an implicit, and very strict, idea of sustainability, which in effect denies that natural resources can often be replaced or augmented by man-made ones.

“This aside, the main drawback of the analysis is the way it treats energy. WWF defines the footprint for fossil fuels as the area of forest required to absorb emissions of CO2 (excluding those absorbed by the oceans). Growth in the energy footprint then drives almost everything else. The energy footprint increased from 2.5 billion hectares in 1961 to 6.7 billion in 1999, the fastest-growing component of the overall footprint—and, by the end of the period, very much the biggest.”

The piece went on to point out that it does not follow that any increase in carbon dioxide is problematic. And even if it was there are alternative energy sources such as nuclear and renewables.

The Economist article was based on a report (PDF) by Bjorn Lomborg’s Environmental Assessment Institute in Denmark.

Despite the crudeness of the “footprint” measure it is increasingly popular in government circles. For example, see my 30 September dispatch on “One Planet Living”.

Labels: economics, footprint, sustainability

There follows a first attempt by me to discuss the economics of climate change. It is from the 2 October issue of Fund Strategy magazine. I intend to return to this topic in the near future.

The consensus that cutting carbon emissions is the only way to tackle climate change is almost universal. Even the few who were sceptical about the need for a low-carbon economy are dwindling in number.

Several fund management groups have already discussed the possibility of specialist firms benefiting from the development of new technology to mitigate climate change.

However, the costs of mitigation, which could affect huge swathes of the economy, have received little attention. To assess the overall economic and investment impact of curbing emissions of carbon dioxide it is necessary to balance these factors against each other. It should not be assumed automatically that mitigation is the only way of tackling climate change, let alone the best.

The consensus in favour of mitigation is certainly striking. Many have long favoured such a strategy, but now almost everybody does.

Under Arnold Schwarzenegger, its Republican governor, California has recently become the first American state to legislate curbs on greenhouse gas emissions. Shortly afterwards the state announced it was suing six of the world's largest carmakers for their responsibility for global warming.

Meanwhile, Rupert Murdoch, long known as a sceptic on climate change, has announced that News Corporation is to go carbon neutral. This outlook is already being reflected in his newspapers, including articles in the Sun such as "going green can be so, so sexy" and "we're on the erode to hell".

Richard Branson, long a target for environmentalists because of his involvement with airlines, has tried to clean up his image with the announcement of a $3bn (£1.6bn) investment in alternative energy over the next decade. He has also called on the global aviation industry to cooperate to help tackle climate change. Although some environmentalists are sceptical of these moves, they do raise the possibility of heavy investment in alternative energy.

In Britain the government is stepping up its pro-mitigation initiative still further. As David Miliband, the environment secretary, told last week's Labour Party conference: "Today I propose we adopt a new goal as a country: to aim to live as a nation within the limits that the environment can tolerate - One Planet Living."

Companies are coming under pressure to live to share Miliband's planet. The new company law, which should be enacted soon, will make it a statutory duty for directors of quoted companies to take into account environmental factors when making decisions. Businesses have countered that such a requirement will increase the regulatory burden they have to bear.

Margaret Hodge, the industry minister, reportedly signalled that the process could go even further at a Labour Party fringe meeting where she argued that private companies too should have such an environmental obligation. Although in a later statement Alistair Darling, the trade and industry secretary, denied this was the government's intention.

Even before the introduction of such legislation most large British companies seem to be moving towards mitigation. According to a survey of FTSE 350 companies by Investec published in July, more than three quarters of respondents claim to measure their emissions and two thirds report on them. More than half are trying to cut emissions.

Under such circumstances those funds that invest in environmental technology could benefit. Those that specialise in this area include the Impax Environmental Markets investment trust and Merrill Lynch New Energy Technology. There are also numerous specialist open-ended environmental funds.

However, despite the overwhelming consensus in favour of mitigation, and the opportunities that could flow from its implementation, it is important to remember it has costs. For many sceptics the costs could be exorbitant. For example, fossil fuels are still by far the cheapest and most efficient form of energy in many cases, and are likely to remain so for a long time. So forcing people to switch to other forms of energy could slow growth or even cause an economic reversal. If the litigation against carmakers is successful, the impact on global growth could be even greater.

Those who suffer most as a result of mitigation are likely to be the developing countries. At present even China, with its rapidly industrialising economy, is responsible for far less greenhouse gas emissions per person than America or the European Union (see bar chart).

If China reaches the level of emissions per head of the EU or Japan, let alone America, the total level of emissions would increase enormously. But that could be the price necessary to raise China out of poverty. The sceptics would argue it is not up to rich Westerners to deny the Chinese, or the rest of the global poor, the benefits of affluence.

The mainstream counter-argument to this stance takes several forms. Some contend that it would be relatively quick and easy to switch to low-carbon technologies. If that is true the economic costs would be lower. At the Labour Party conference Gordon Brown proposed a $20bn global fund to help the poorer countries develop alternative energy sources.

Despite this apparently optimistic talk of new technology many are, more or less explicitly, arguing that economic development needs to be curtailed. That was certainly the implication of Miliband's "One Planet Living" remark at the Labour Party conference. The idea is that Third World development should be limited - or made "sustainable" - and Westerners should curb their living standards too. Understandably, such talk is not popular with the general public.

It is hoped that the Treasury's Stern Review on the economics of climate change, due to report soon, will help answer these questions. But the discussion paper already published on its website . is decidedly skimpy on how much mitigation is likely to cost: "For all countries, understanding the costs of mitigation will be critical. Existing estimates vary considerably.

"One important factor in the variation of these estimates is the assumption made about the nature of technological progress, specifically whether innovation can be stimulated by policy. If policies to reduce emissions are assumed to accelerate the development of these technologies, then the costs of mitigation will look much lower than if technological development is assumed to happen exogenously."

Of course many environmentalists would argue that whatever the economic costs of mitigation it should be implemented. In their view the planet is facing such a serious threat that an immediate switch to a low-carbon economy is essential.

However, even if such environmentalists are right on the science - and there is debate about whether we are facing a catastrophic scenario as opposed to just a serious one - there are other ways to deal with climate change.

The most widely discussed alternative is adaptation, which involves such measures as constructing better flood defences, building at or above current sea levels and developing new crops. Indeed, the preliminary papers on the Stern Review point out that in any case adaptation will be necessary as the climate is set to warm whatever happens.

A more ambitious approach is what could be called geo-engineering or weather modification. For example, Paul Crutzen, a Nobel laureate in chemistry, has raised the possibility of injecting sulphur into the atmosphere to promote cooling. Others have suggested putting trillions of lenses into orbit to divert some of the sun's rays. Although such initiatives may appear like science fiction, it does not mean they cannot play an important role in the future.

The answers to these questions will have a substantial bearing on future economic and investment prospects. For the more optimistic proponents of mitigation there can be a smooth transition to a low-carbon economy without significant economics costs.

For the more pessimistic advocates of mitigation such a strategy is vital to save the planet, to the extent that the economic costs are unimportant. Such pessimists see austerity as a necessary part of the response to global warming.

For the sceptics a strategy based on mitigation is generally seen as bearing high economic costs. It could stunt development in the Third World and undermine economies in the West. They advocate alternative strategies such as adaptation and even geo-engineering as the best way to tackle the threat posed by climate change.

The outcome of this debate is likely to have enormous consequences. At present the proponents of mitigation are overwhelmingly in the ascendant, but it does not necessarily follow that they are right.

Labels: china, climate, economics, environment, Fund Strategy, sustainability

On closer examination it seems that the idea of “one planet living” originated with the World Wildlife Fund (WWF) rather than the government (see 30 September dispatch). David Miliband, the environment minister, credited the WWF with the idea in a speech on the idea of an “environmental contract” on 19 July. He also wrote a joint article on the “environmental contract” with Douglas Alexander, the transport minister, on the BBC website on 25 May. Using apparently radical language the two ministers argued that:

“In the last century, progressives forged a social contract that saved capitalism from itself. In this century, the task is now to address environmental degradation with the same moral passion and practical rigour as we continue to address human degradation.”

Labels: economics, environment, footprint, sustainability

Few commentators seem to have noticed just how far the Labour Party went last week in its advocacy of environmental austerity (see also 25 September dispatch). For example, David Miliband, the environment minister, used his platform speech to promote what he called “one planet living”: “I propose we adopt a new goal as a country: to aim to live as a nation within the limits that the environment can tolerate, One Planet Living.” The phrase evidently comes from the oft-repeated assumption that we are currently using the resources of three planets:

“At the moment, we are living, Britons in the 21st century, as if there were three planets to support us when in fact we have only got one. We are consuming the natural resources of three planets; burning the fossil fuel of three planets; pumping out enough carbon dioxide for three planets; yet we only have one planet to live on.”

Alongside Miliband on the platform was Ken Livingstone, London’s mayor, who favoured water metering, road price charging and “green taxes” on air travel, according to an article in the Guardian. He repeated his call for people not to flush the toilet every time they use it: "You really don't need to flush the toilet when you have just had a pee."

Labels: economics, environment, footprint, sustainability, water

Those who did not listen carefully to Gordon Brown’s speech at the Labour Party conference today might have got the impression he was against Western intervention in the third world. But a close reading shows the Labour chancellor is railing against affluence:

“I make this promise: tackling climate change must not be the excuse for rich countries to impose a new environmental colonialism: sheltering an unsustainable prosperity at the expense of the development of the poor.”

In other words prosperity in the rich countries is “unsustainable”. And somehow it detracts from development in the poor countries (it should also be noted that Brown’s definition of development is an exceedingly narrow one).

Earlier in the speech there is another hint that what he really wants is changing behaviour - presumably to limit consumption or at least the growth in consumption:

“let me say candidly of the environment: Yes it is about personal and collective responsibility to change our behaviour, and I know too that governments across the world have been too slow to recognise the threat of climate change.”

Labels: climate, consumption, ethics, sustainability

I seem to have started a collection of examples of anti-growth thinking from around the world. In France evidently a term for it is “décroissance”. There is even a website for the school of thought. Unfortunately I cannot read French so I cannot talk about it directly.

However, I notice that Serge Latouche, an emeritus professor at the University of Paris-Sud, has written several pieces along these lines including in Le Monde Diplomatique. His January 2006 piece contained several more synonyms for growth scepticism or related ideas including downshifting, anti-productivism, requalified development and sustainable development. It defines décroissance as "the replacement of economic growth with a steady downscaling in production levels to bring human use of the planet’s resources back within sustainable limits."

Labels: economics, sustainability