Tuesday, November 29, 2011

Aging populations will end growth

Those that thinks that our society will continue along the same path forget that the Western European countries just have undergone a “once-in-the-millennium” demographic transition, which will never happen again, and that the USA are still in this transition and China has reached there as well. Throughout history of mankind, a relatively stable population has been normal and the rapid population growth of the last 200 years is the abnormal. The end to population growth is perhaps a bigger challenge for the capitalist project than the population explosion; after all, the population explosion had gone hand in hand with the capitalist expansion. A country like Japan has completed its transition and there has been virtually no growth for twenty ears and a constant "crisis". 

The changing population pyramid will change society. Many manufacturers, service providers and retailers are adapting their offers to be more appealing to rapidly growing groups of elderly, who are also used to be active consumers (earlier generations of old people were still not raised as “consumers”). Politically, the care for the elderly was earlier mainly a question of relief for the working generation, and it was their perspective that dominated; the elderly were “objects” rather than subjects. Today it is the old people themselves that shape how care of them is developed with a combination of political action and letting their considerable wealth speak. Less observed, but equally important, is the shift in values that will come.

The demographic transition shape societies. The big cohorts of young people that characterized the youth of capitalism and industrialism is the demographic reflection of the expansion and pioneership. Like with so many other things one can also turn this on the head and say that it was this demographic structure that drove capitalism in its early stages. It is not only economic growth that is propelled by a big share of young people; it is also the values typical for the young such as rejection of traditions, rebellion, glorification of strength, risk taking and body culture. Our current society's glorification of youth stands in stark contrast to the attitudes of earlier cultures. 

Society, but also many old themselves has a kind of youth obsession. Old people are expected to behave as “old youth” in a similar way as children were treated as “small adults” some hundred years ago. Eighty year olds engage in mountaineering, speed dating, wind surfing or parachuting: 
Former President George H.W. Bush marked his 85th birthday on Friday the same way he did his 75th and 80th birthdays: He leaped from a plane and zoomed downward at more than 100 mph in free fall before parachuting safely to a spot near his ocean front home.[...] He told reporters that he jumped Friday for two reasons: to experience the exhilaration of free-falling and to show that seniors can remain active and do fun things." Just because you're an old guy, you don't have to sit around drooling in the corner," Bush said  (AP 2009).
 This is about to change. Other properties, other characteristics of being human, will be in higher esteem for elderly people. Properties like maturity and reflection and even slowness (e.g. Slow Food) itself. Add to that, values such as care, spirituality and safety, opposition to risk-taking. Care for things close and interest in the beauty of and satisfaction by the small things in life are also typical for age, in contrast to youth's taste of exploration, expansion and novelties. The values of the old are better adapted to the values needed in a sustainable society. The combined effect of the shift in values and the effect on growth, caused by an aging population will be a strong determining factor the coming century. 

read more

7 Billion and Peak Child

The population follows our production system


Monday, November 28, 2011

Money: The only way to assign value to anything is to sell it.

Adam Smith (1776) stated that labour is the real standard by which the value of commodities can at all times and places be estimated and compared, and money is only a nominal price. How far we have gone in those 240 years! Today the notion that labour represent the real value would be seen as quaint or perhaps communist, even if Marx was the one that realised that through capitalism, labour is no longer a standard value, but a commodity to be bought and sold for profit. Money is like an alphabet with only one sign says Alf Hornborg (2010). That is the reason for why you can't communicate any meaning with money, anything more nuanced than a call to consume, i.e. to use up resources. In the market society the only way to assign a value to anything is to sell it, which means that things that are outside the market circulation almost by definition has no value. Well, reality is a bit more complex than that, we know that our personal relationships are not traded and we certainly enjoy them, and most people still enjoy many free pleasures, but policy makers are increasingly discussing access to those freebees, such as a forest, in terms of willingness-to-pay-for. 

In economics, there are attempts to add more "real" values to ecosystem services and assign costs to the depletion of natural and social capital as well as to pollution. However, in order to have an impact on "policy makers" all this has to be expressed in dollars, in money. It's like the system of bride prices or dowry, where you assign material values to the union of two people. But as little as a dowry is an indicator of love are the values assigned to ecosystem services an expression of their real values. With money as the determinant of value, we make nature a subsystem of the economy. That is one reason for why the efforts of valuing environmental services are not sufficient to re-direct our economy from the path of self-destruction - and why it even can be negative in the long run. A similar problem we have in the valuation of work. By definition, market prices are always "right". This serves as a justification of that a business leader earns 100 times as much as his workers, or that an worker in the rich countries are "worth" twenty times as much as a worker in a poor country or fifty times as much as a small-holder farmer. In this way, money obscures the reality, and justifies the logic of exploitation and inequality. In the short term, as measures to slow down or even reverse environmental destruction, assigning values to environmental services, and fees for their use, or assigning costs to pollution makes a lot of sense, exactly because it works within the capitalist economic paradigm. In the longer term though, we need to find other ways because ecologist can't do a better job of managing capitalism than economists. 

We can also discuss the economic system in ecological terms, in biophysical terms. This makes a lot of sense, at least for analytical purposes, because our economy is a subsystem of the physical system we live in. The idea is to instead of expression of the economic system in monetary values, it is expressed in "real" values, such as land use, labour, tons of minerals extracted. What comes out of that is certainly very interesting as it clearly exposes destruction of nature; increase in entropy as well as the social disparities. From this, there is of course a big step to implement a system whereby our current currency would be attached to one or more of such "real" values. In the end, you would have to select one parameter, like gold was such a parameter for a long period, and once you do that you would experience problems.

(extract from Garden Earth)

The best painters in the romantic tradition: corporations

It is hardly a surprise that a broad study of the application of Corporate Social Responsibility shows that it is mostly hot air and high ambitions,  but little actual delivery. 

"The quality of environmental data in sustainability reports remains appalling at times, even today," said Dr Ralf Barkemeyer, a lecturer in CSR at Leeds and one of the team leaders. "In financial reporting to leave out an undisclosed part of the company in the calculation of profits would be a scandal. In sustainability reporting it is common practice. Put provocatively, companies get points for knowing where they want to go, but nobody seems to check whether this is where they are heading. Aspiration replaces performance."

As I write in Garden Earth :

"Not only products, but also companies can be certified for being environmentally friendly or socially responsible. The layman might believe that companies that have a certified environmental management system (ISO 14000 or EMAS) are performing better in the environmental arena than those companies that have no such system. This impression is enhanced by the certified companies, the consultants helping them and the certification bodies selling certificates stating compliance. They use expressions like “environment certified” or “eco certified” (118,000 and 83,000 hits on Google July 2010). These certifications mean not much more than that national legislation is followed; that the company has a system to control its environmental effects and that the environmental impact is monitored. It is also, typically, the worst industries that are keen on letting themselves be certified to these standards. There is less direct value in terms of improved performance from these systems than from eco-labels. Companies, nevertheless, or perhaps exactly because of this, are more keen on these systems. 

It is not negative as such, they still, mostly, perform better than they would without these systems, but it is misleading when they are promoted as making a big difference. In all fairness, there are companies that try. Swedish McDonald’s reuses 90 percent of all packaging: uses up to 90 percent renewable electricity: serves organic coffee and milk and has a ventilation system that adjusts itself to the numbers of visitors thereby saving a lot of energy (and money…) (McDonald’s 2008). Coca Cola aims to be “water neutral” by 2020 and Rio Tinto, one of the world’s largest mining companies, launched its biodiversity strategy in 2004 with a voluntary commitment to achieve ‘Net Positive Impact’ on biodiversity. To fulfil this commitment, the company first aims to reduce its impacts on biodiversity through avoidance, minimization and rehabilitation activities, and then aims for a positive impact through the use of biodiversity offsets and additional conservation actions (TEBB 2010). What this means in reality remains to be seen. 

Corporate Social Responsibility (CSR) or just Corporate Responsibility is another concept that has been adopted by large part of business, cheered by governments and United Nations. The UN secretary general, Kofi Annan, launched a CSR initiative called Global Compact in 1999. In the same manner as companies that produce rubbish get quality certification (ISO 9000) and the worst polluters are certified for their environmental managements systems (ISO 14000) companies committed to CSR are often involved in questionable business. The military contractor BAE shows their responsibility by lead free bullets and less poison in missiles and grenades causing less pollution (Porrit 2007). Scandal companies like Enron and many of the banks that were caught red-handed in the financial crisis 2008/2009 are among the pioneers in CSR. "
Jonathon Porrit commented on that the tobacco company BAT was identified as a "leader in sustainability" 2008, he said in the Guardian 
"Any case of so called leading companies in CSR that includes BAT is a sick joke." He added: "Central to sustainability and business models is fully priced risks and fully allocating capital properly. When any company is systematically mispricing risks and systematically misallocating capital it makes no sense to talk about corporate responsibility. We're going to have to face the fact some of the measures used to judge relative CSR performance are useless."
One reasons for why CSR will never bring substantial changes is that the business plan of corporations include the externalization of costs: The business plan of the factory is to produce externalities

To a very large extent, many of our industrial technologies are about producing "externalities". The industrial capitalist model extracts resources in distant places (destroying other peoples' nature and possibly livelihoods), it has workers do something with them and pay them only part of the added value, the cost of pollution is carried by the local communities, the cost of health care is footed by society, the cost of schooling the workers is covered by society etc. The products are sold at a profit and the waste is someone else's problem.

Wednesday, November 23, 2011

Don't buy organic instead of changing the world - do it as part of changing the world

Are there really any benefits for the farmers in developing countries that engage in organic or fair trade schemes?

A recent literature review casts doubts on the merit of "sustainability" certification systems. It includes studies of Fairtrade, Organic, Rainforest Alliance and the Forest Stewardship council. The authors Allen Blackman and Jorge Rivera note that rather few studies have a rigorous control against non-certified production, which is needed to form a scientific basis for claims that certification is beneficial for producers.

The 11 rigorous studies provided very weak evidence for the hypothesis that sustainable certification has positive environmental, social, or economic effects at the producer level. Only four of the 11 provided evidence of such benefits (Table 3). Of these four, all tested for economic effects. In two of these four studies, both on coffee, the authors remark that the benefits are either idiosyncratic or inconsistent (Arnould et al. 2009; Bolwig et al. 2009). The results of the remaining seven rigorous studies (two studies of environmental effects and five of social and economic effects) did not show that certification benefits producers.
As the authors note "the hypothesis that certification benefits the environment or producers is limited. More evidence could be generated by incorporating rigorous, independent evaluation into the design and implementation of projects promoting certification."

One of the few studies that show economic benefits is the one of Bolwig and others, The economics of smallholder organic contract farming in tropical Africa. I was personally engaged in those projects studied, in the EPOPA programme. It was successful mainly because it was designed with the explicit purpose to be commercial and increase farmers income (and hopefully because it was well implemented).It spoke less about sustainability and smallholder empowerment than most similar programs, but generated more direct results in terms of increased income, and with low costs compared to many other projects.

It is worrying, however, that there is so little result coming out of so big efforts, even more troubling considering that the vast majority of all situations with certified smallholders are in to form of "projects" where substantial external funds are used to support them. As a matter of fact, I have yet to come across any small farmer project with sustainability certification which has not benefited external support; most of them are even established by external actors.To include even more rigorous evaluations and scientific monitoring of the projects, as suggested by the authors, will make the projects even more donor dependent and consultant dependent, and decrease the efficiency of the deployment of resources substantially.

I think the jury is still out regarding the direct and indirect benefits of the sustainability schemes. But what should be clear, even without more scientific studies, is that the economic benefits, and environmental benefits are limited. And that is not because the schemes are bad. There is simply no way such schemes can shift global economic relations fundamentally. Not even Fair trade, which has this as it's focus is more than a marginal adjustment of fundamental factors such as unjust trading relations and an ongoing exploitation of smallholders; limited access to resources and therewith associated low labor productivity; and inequality. As a matter of fact there is no particular evidence that fair trade farmers have any higher income than organic ones.

Note that this study is about farms in developing countries, there are numerous studies about farms in developed countries that show environmental benefits for organic farming. When it comes to economy it is a more complex picture. But clearly, organic farms in developed countries are exposed to the same commercial pressures as non-organic and respond in more or less the same way: more specialization, larger farms, more input buying etc., because that is the logic of the competitive market economy, whether you like it or not.

My suggestion is not that we should throw the sustainability schemes overboard, but that we should realise that they will not make the Big Difference which is needed to reach a fair(er) world. Go on and buy organic, but don't do it instead of changing the world, but as part of changing the world. 

Read also:


Friday, November 18, 2011

Stop pretending there are only winners in the global market

 Obama: "Increase Competitiveness"!
"My principal focus, my number one focus, is going be making sure that we are competitive, that we are growing, and we are creating jobs not just now but well into the future"
What is striking is that the same groups that emphasize that there are only winners and no losers with globalization; that it is beneficial for everybody, they constantly remind us of how important it is that “we keep our edge”, or “improve out competitiveness”, that we upgrade our society so that we are in the forefront of research and technical development.

The columnist Thomas L Friedman writes in the World is Flat that:
So if the flattening  of the world is largely (but no entirely) unstoppable, and holds out the potential to be as beneficial to American society as a whole as the past market evolutions have been. How does an individual get the best out of it? What do we tell our kids?. There is only one message: You have to constantly upgrade your skills. There will be plenty of good jobs out there in the flat world for people with the knowledge and ideas to seize them. I am not suggesting that this will be simple. It will not be (Friedman 2005).
This is echoed by politician from all kinds of camps and by institutions such as in the European Union's vision 2020.

Our economies are increasingly interlinked. Europe will continue to benefit from being one of the most open economies in the world but competition from developed and emerging economies is intensifying. Countries such as China or India are investing heavily in research and technology in order to move their industries up the value chain and "leapfrog" into the global economy. This puts pressure on some sectors of our economy to remain competitive, but every threat is also an opportunity. As these countries develop, new markets will open up for many European companies (European Commission 2010).
Clearly, if it is so important for the USA and Europe to be ahead of the pack, it must be because the ones falling behind are “losers”, i.e. globalization is actually more of a threat for them than an opportunity. Why can't we just relax a bit, spend our energy on cleaning up the environment, reducing our ecological foot-print and enjoy a good life, instead of being coerced into working harder and harder to keep the edge?

There are inherent inequalities that drive the global trade. The global "division of labour" that is the basis for globalisation is as much a global "division of power" as the difference between the capitalist industrialist and his workers. Alf Hornborg shows how, in 1850, when England swapped cotton fabric for 1000 pounds with cotton lint for the same sum, it corresponded to an exchange of 4,000 hours of work in a textile mill with more than 32,000 hours in tropical cotton production, as well as the resource of 58 hectares of land (Hornborg 2006). All factors point to that the patterns of exploitation inherent in globalization are the same today. It is mainly because of the big difference in purchasing power of the "rich" as opposed to the poor that the rich can benefit from the cheap coffee from Nicaragua, the cell phone from China or the service of the call centre in the Philippines. And it is the knowledge of this that makes it so important "to keep the edge".
The text is derived from Garden Earth
"Competitiveness, which is usually measured in terms of unit labor costs, is a relative concept. One country’s gain is another’s loss. Restoring competitiveness in some member countries (Spain, Greece) would require others (Germany in the first instance) to accept deterioration in theirs." writes Daniel Gros in an relevant post, Europe's Competitiveness Obsession

Wednesday, November 16, 2011

Some good news from Brussels

It is always nice to have something positive to say. Below is my leader for the last issue of The Organic Standard

Congratulations, is the right greeting for the more than thirty certification bodies that have recently been approved by the European Union as providing equivalent guarantees that organic products are produced to standards equivalent to those within the European Union.

And congratulations are also in order for the Commission which managed to take this decision. It took two years. Hopefully we will see the process handled quicker in the future. It is hard to know the reasons why the process was so slow, apart from the fact that there seems to be a constant lack of human resources to implement increasingly complex regulations, developed by the European Union. As a result of the lack of transparency
- no list of applicants has, for example, been published - in the dealings of the European Union we are often left to guess when discussing the work of the Commission. For more than a year there was no communication from the Commission to the applicants. Initially, the Commission believed that it could make a simple ‘yes or no’ decision based on each applicant’s initial submission.

It appears, however, that hardly any certification body would have been approved if the Commission had followed that line. So finally, the Commission was forced to communicate
with the applicants. It appears that many of the well established European certification bodies and their accreditation bodies were a trifle too self-confident that they would be
approved and they paid the price. It is known that European accreditation bodies were disgruntled that many of the certification bodies that they have accredited did not get approval by the EU. Likewise, some Member States were not happy that certification
bodies based in their countries failed. Two times the organic committee failed to reach a decision on the list, but on the third attempt they approved it with only minor changes. The Commission should have credit for staying the course.

The winners are the underdogs; those certification bodies that for years have fought hard for acceptance in a competitive field where the EU based certification bodies had a much
easier access to approval. It is also a great victory for the International Organic Accreditation Services (IOAS). A substantial proportion of the certification bodies approved by the Commission are accredited by the IOAS, which means that their standard was assessed by the IOAS. The IOAS has had to fight for recognition by providing excellent service, competing in the EU with national accreditation bodies that are often considered ‘competent by default’ as they have nobody checking them.

There are still things in the model that need improvement. Current decisions are limited to a particular country, and certification bodies must prove that they have worked in a particular country to have this country included in their approval. This will be possible in a transitional situation where products can also be approved in other ways. But once the old import approval system is discarded, this will pose real problems for all those that work mainly with EU exports, a classic catch-22 situation. There are similar issues associated with how the scope of approval will be extended to include new product categories and
even a new standard. In addition, the system has not solved the problem of new entrants. If a certification body operates in a market where certification services are basically demanded for exports, how does it get its first approval if it has to demonstrate proof of actual operation? Which clients will buy the certification body’s services if it is not approved? The Commission should look into how its own Members States have solved this, and offer those on the others side of the frontier the same opportunities.

For a long time the EU offered import approvals based on single lots. These were administered by the Member States, and though it was a messy and unpredictable system it
did provide a pragmatic solution to a problem. A big step forward took place when the USA opened up direct accreditation of certification bodies as an option for imports, rather than
only approving countries. This appeared to be a lot better than the EU system, however, as more countries introduced the same system it is also apparent that such a system is very
resource-demanding. Some certification bodies pay the US Department of Agriculture more than fifty thousand dollars for their accreditation. Paying such sums for dozens, or even
hundreds, of separate accreditations is simply not rational. Also, insisting that overseas farmers comply in minute detail to the accrediting country’s standards is very far from
an organic perspective. The world needs to move towards a situation where one approval, one standard and one supervision is enough. The EU system is not there but it certainly is a
big step in the right direction.

Sunday, November 6, 2011

Tale from the sandpit

Once upon a time there were two producers of sand, Henry and Loser. They dug out the sand from the same place, with a shovel and a wheelbarrow. The sand was sold at the side of the road to by-passers. They didn’t earn a lot but enough to survive, to send their children to school, and buy a new wheelbarrow and shovel every other year. The little they could save was used for funerals or if someone in their families fell sick, or had an accident.

One day, for reasons we don’t have to discuss here, Henry was able to buy an excavator. It was expensive and the fuel is also expensive – but still, he can dig sand thousand times faster then before. And he can dig longer hours, his machine works all around the clock and he has bought a truck to supply customers with sand. Through the increased productivity sand prices fall, and therefore consumption increases. More houses and roads are built, the wealth increases. Henry produces more and more sand.
 Taste the word “produce” by the way. Doesn’t that give the impression that Henry creates something, that he creates the sand? In our way of speaking we say that we “produce” when we dig up a piece of nature and sell it. And “our wealth increases”? How, when there is less and less sand left and one has to dig deeper and deeper to get it, can we say that wealth increases? Pertinent questions, but let’s put them aside and look at Loser.
 Loser leads a hard life. The price of sand falls again and again, and the clients now want to have the sand delivered to their doorstep. And the sand is deeper and further away as Henry’s excavators dig more and more. Clients also have very specific demands on the sand, it should be graded in various fractions and there must be no ”foreign” materials. One day a client even asked about the social conditions for Loser’s employees.

Loser looked at him with an empty look: “I have no employees, it is just me and my family.”
“How much do you pay yourself? And what about the children, do they go to school?” the conscientious client asked.
Loser had to admit that he had to take one of the boys out of school to help carry the sand to the clients and that one girl had been taken out of school as they no longer could afford her school uniform, books and pencils. The conscientious client said, “we can no longer buy from you; I am sure you understand that we have to take social responsibility.”

Another client was concerned that Loser was destroying nature, “Didn’t you destroy a fox burrow the other year, when expanding the sand pit?”
“Well I did”, Loser said, “but Henry’s excavators are driving this, they take almost all sand; the little I dig up makes hardly any difference”.
The client replied, “Henry has an environmental policy; he offsets damages here by protecting precious sand dunes in Morocco. Also, he made a very nice mountain bike track for the children in old parts of the pit. He is a good example of corporate responsibility, while you are just destroying the environment.”

As you might have realized by now, life was hard for Loser. Every year his income shrank. When the wheelbarrow broke down, he couldn’t buy a new one. Another child had to quit school and carry the sand in buckets.

For a short while he had a rebound. A consultant from the regional development agency came and told him to look for another market niche; sell sand for special purposes and not “commodity-sand”. “There is a huge demand” the consultant said, “and there is special support for such local quality production” he said, before driving off in his SUV leaving a cloud of dust in his tracks. As long as the support kept coming in it was okay. The support ended, clients were unreliable and fads came and went and as soon as some business was lucrative enough Henry went in and out-competed him. One day Loser had to throw in the towel for good. He now lives on social support.

Our little story shows what happens in an unequal world with free trade and access to fossil fuel; where the price of oil determines the “value” of human labor. That is one of the most important factors in the story. It is simply not possible for human muscle power to compete with fossil fuel driven machinery. We might think that gas is expensive, but a barrel of oil has as much energy as 14 peoples’ annual labor. The absolute poverty line is 1 dollar per day, which is more or less the lowest salary one can pay any place on earth. Even with such deplorable salary, the cost for 14 peoples annual work is around 5,000 dollars, while a barrel of oil costs 100 dollars.

For sure, once can’t compare oil and human toil one-to-one. Human labor has skills and intelligence. True, that is why we have machines to convert energy into something useful. The market is also rarely as “free” as in this example; people with so varied conditions hardly compete next to each other. Some simplifications are made. But with cheap transportation technologies and largely deregulated markets differences in market conditions have plummeted, and prices for most commodities are converging on the planet.

Some may also say that there is rarely such a competition for resources as in this example. To some extent this is true, but seen in a global perspective and long term, there is just one planet with a certain quantity of any resource.  The first oil brought into the industrial economy was available, in good quality, in abundant shallow reserves on land and was therefore very cheap to extract. Oil is now pumped from big depth under difficult conditions, and qualities are often lower, simply because the best sources are long depleted. To be closer to the example, there is even a global market for sand, which is a scarce resource in some places, for example, Singapore imports sand from the USA.

The relevance of our story is most easily seen in agriculture, where farmers using the most basic hand tools, such as a hoe or a spade, are competing with farmers who have a machine fleet that is worth millions of dollars. In this case, the labor of the small farmer is competing with oil and machinery. Making things even more absurd, the highly mechanized farmers are subsidized by their governments. To borrow money for an investment costs them a few percent in interest rate, while the poor have to pay twenty to forty percent interest rates for loans – if they can get any. The conditions for competition in the so-called “free market” are exactly so skewed.

The brutal truth is that there is no future for most of the half a billion small farmers of the world in this market place.  A few can survive by going for niche, organic or high-value products, others have to migrate out of the farm sector, and they do. There are, however fewer employment opportunities for them than there were for my grandparents in Sweden who could go from farming to industries that needed workers. And there is no space for the farmers to invest so that they could compete more fairly with “us”.

These are the conditions that we should discuss when we discuss global poverty and starvation (and not increasing GMOs or the use of chemical fertilizers). These are the conditions which actually make the poor poorer. The neo-liberal market doctrines can’t produce viable solutions to the poverty trap of billion people.

We must realize that a “free” market in a deplorably unequal world is not “free” at all. One percent of the world’s population controls around half of all wealth and gaps are widening. When we have so different access to resources, a free market creates bigger gaps and not only relative but also absolute poverty.

The way out? Well, I don’t say it is easy. I don’t claim that we will solve the problems with government regulations, tariffs and government monopolies – in most cases these have had devastating effects. The first step is to clearly see the problems that are generated by a capitalist market economy and fossil fuel, and realize that their root causes are systemic and structural. The solutions are therefore to be found in alternatives to this.  How they can look like is a subject of another fairy tale.

”One doesn’t discover new lands without consenting 
to lose sight of the shore for a very long time.”
– André Gide
This was first published on my Swedish blog and now in English on the excellent Post Growth blog.  Other posts on Post Growth that are closely related to this one are:
 Four Degrees of Sharing, Two Myths That Keep The World Poor,  Freedom from money

Thursday, November 3, 2011

Carbon Markets - a corporate Trojan Horse?

Carbon farmers

Both the United Nations Food and Agriculture Organisation, FAO (2003), and the World Bank promote that carbon emission trading should encompass also carbon sequestration (sinks) in soils, i.e. that farmers could get paid for increasing soil organic matter. The carbon sink capacity of the world's agriculture and degraded soils is said to be 50% to 66% of the historic carbon loss from soils or some 42-78 Gt of carbon (FAO 2009). Measures in the farm sector for mitigation of climate change are among the cheapest measure to take, and in many cases, they also lead to other environmental improvements (reduced water pollution). Increased soil organic matter also leads to richer soils; to soils that can keep water and resist erosion longer. A major hurdle is that there are so many farmers and their conditions are very diverse;  it is very hard to determine exactly how much carbon a farmer will capture if he or she does this or that. To measure it on an individual level will be very costly. A new scenario emerges where farmers in developing countries can sell their services as carbon farmers to governments and companies in the developed countries. This could become a business replacement for aid, or a way to compensate developing countries farmers for absurd subsidies to their competitors in developed countries. 

But it also means that a larger part of their activities are integrated into the world economy, in the market economy. It can also be seen as a new frontier of exploitation, where the rich countries will use the land in developing countries as "dumping" ground for their waste, which is what this eventually amounts to. 

I recently wrote a report for UNEP where I had drawn this graph: 
Carbon changes in the soil
download report

It is important to keep in mind that once farmers have got compensation for the carbon stored in their sold through the means of carbon credits, they are forced to maintain practices that keeps the carbon there. One could say that they actually don't own their soil organic matter no more.They don't control how they manage their own soils.

Australia has already a Carbon Rights Act: 
The Carbon Rights Act 2003 establishes a statutory basis for the ownership and protection of carbon rights, in order to facilitate trading. It enables a carbon right to be registered on the land title as a separate interest in that land. The Act provides that a carbon right may be registered with the consent of all parties having an interest in the relevant land.....Owning a carbon right is like owning land. The title guarantees who owns the land (or carbon right). The market will determine what the land (or carbon right) is worth, based on a wide range of factors including how the land is used.

In this way, carbon payments can become a Trojan horse for large scale corporate take over of the land. 

Farmers question what they’ll get out of cap-and-trade
Pay farmers 'to deposit carbon' says businessman
Africa’s pollution and land grab threat from UN carbon market
Biofuel demand and CO2 quotas drive violent land grabs in Honduras
Land grabbing in the neocolonial order
Land grabbing, corporate farming to deepen hunger, poverty, and unemployment: Moot

There are similar issues around carbon credits for forests, for instance read: 
Beyond Carbon: Rights-based Safeguard Principles in Law
Forest carbon rights for poor at risk – study
It is your forest but my carbon