Treasure

Last few days i have been digging through this treasure trove of environmental reporting. Its a collection of essays written by Dana Meadows over a period of almost two decades. What has impressed me about this collection is the extraordinary clarity and simplicity with which the author presented seemingly complex issues. No hyperbole. No doomsdaying. Just plain facts, and choices we can make in dealing with those facts. Its difficult to find such a comprehensive treatment of environmental issues, taking cues from perspectives far and wide — science, technology, economic policy, public perception, politics, ethics .. what have you. Oh, by the way, its pretty entertaining too. The writings are from 80’s and 90’s, but i found them to be extremely relevant even now. Please, go read the stuff. E-mail me, dear reader, if you don’t come out a tad wiser

Putting it all together: part-3

Hybrid cars, windmills, solar panels, energy efficient CFL bulbs, carbon sequestration, biofuels … The list almost seems endless. These are the often touted panacea for resource and environmental crisis of our times. How do they alter the dynamics of earth-economy interaction, in terms of resource consumption, waste output and the overall effect on the earth system ?

On the input side, some technologies give access to new low entropy resources. They enable new resources to be exploited — for example, wind energy, solar energy, or energy from biomass. Some of the solutions enable more efficiency — for example, a hybrid car will let you move from point-A to point-B with lesser fossil energy consumption; a CFL bulb will get you same lighting with lesser electricity consumption.

On the output side, some solutions result in lesser pollutant output — for example, carbon sequestration from coal fired power plants may capture co2 before emitted into the atmosphere. Some of the solutions have advantages on both input and output sides — Wind power lets us tap new forms of energy, and has no harmful emissions.

So far so good. On the face of it, these technological solutions may appear promising and contributing to the overall solution. However, if we investigate a little deeper, we will see that there are some major pitfalls in depending solely on a technology / efficiency driven solution.

Firstly, there is the obvious problem that most of these “solutions” are not a complete package. At some point during their life cycle, they involve great impacts on the earth system. Take carbon sequestration. Even if we manage to capture co2 and store it in the ground, it addresses only the climate part of the problem. What about coal mining and the disastrous impacts it has ? Take hybrid cars. Yes, they enable fuel efficiency, thus save precious fossil energy and emit less co2 per unit distance traveled. But obtaining the metal needed to build the body of the car involves mining for ores in sensitive ecosystems and manufacturing of the metal itself involves lot of adverse impact on the earth system. Take biofuels. Leaving aside the debate whether biofuels actually involve less co2 emissions than fossil fuels after taking into account the full life cycle of biofuel production, there are other side effects. There are reports that forest land is being cleared to grow biofuel crops. Also, biofuels put upward pressure on the food prices as lesser crop produce is available as food, when part of it is converted to fuel.

The second, less obvious pitfall in depending solely on efficiency solutions is that “as technological improvements increase the efficiency with which a resource is used, total consumption of that resource may increase, rather than decrease.” (This is popularly known as Jevons paradox). I would add to this observation that total consumption of other resources may also increase because of efficiency gains in a particular resource. Let me explain why. Suppose there is a technological breakthrough and the fuel efficiency of hybrid car is double that of currently used car. Initially, that may reduce the demand for fuel — thereby decreasing its price. However, the decreased price of fuel will inturn stimulate more demand — either through more driving or demand from other existing applications or a decreased price of fuel may even make new applications market competitive. Thus, the overall use of fuel may actually increase even after the efficiency gains achieved in one application. There is another way of arriving at this rather counter-intuitive conclusion. Lets start again with the assumption of a technological breakthrough in doubling fuel efficiency. The consumer will have saved half the fuel money by the end of the month. Now, what can he do with that saving ? (a) He could choose to drive more, thereby consuming some of the gains due to efficiency. (b) He could spend that money to buy another good or service. Say to buy a cell phone. Now, the manufacture of the cell phone needs some materials and energy to produce. Thus the efficiency saving on fuel has resulted in spending of material and energy to manufacture a cell phone. Thus efficiency gain on fuel has resulted in stimulation of consumption of different materials ! (c) He could choose to put the saving in a bank. Now we all know the very purpose of a bank is to loan these savings to borrowers, thus stimulating more consumption ! Infact, thanks to fractional reserve banking, bank can loan out n-times the fuel savings deposited in the bank. More consumption !

My point is this: Energy-and-material efficiency gains will stimulate economic growth and only make an economy more efficient in terms of consumption of resources. Efficiency gains will only improve the energy intensity or material intensity of the economy — the amount of energy or material used per unit of GDP. Looked at from earth system point of view, however, the energy-and-material intensity numbers are not very useful. What matters to health of the earth system is the overall use of resources by the economy and its impact on the earth system, and not how efficiently the economy is running. In the context of an actively pursued policy of economic growth — and — without explicit policies which aim to reduce the overall impact on earth system, efficiency gains will most likely increase the overall consumption of resources, thus increasing the impact on earth system.

Don’t get me wrong. Iam all for employment of efficient and less-polluting technologies. However, to have a lasting positive impact, they must be part of an explicit larger policy which aims to reduce the overall impact of our economies on the earth system. At the risk of stating the obvious, this policy is again a political decision our societies have to make.

A word on “economic growth”. I think growth per-se is not as much of a problem, as the kind of growth we are pursuing. I believe the current state of technology ought to direct how-much and what-kind of growth is to be pursued. Our current technologies regarding energy production-and-use or material production-and-reuse are dirty, and involve harming the larger ecosystem — think oil, coal, mining, industrial chemicals etc. So our current state of technology does not warrant a growth policy in the direction of intense usage of materials-and-energy. But unfortunately, we are doing exactly that. Case in point is personal transportation, which currently involves profligate wastage of energy and material resources. Imagine that down the road our technologies evolve to be cleaner and having less impact on the earth system — say we perfect extracting solar energy efficiently or improve material production using nano-technology. Then that technological improvement can expand the sphere of choices with respect to what kind of economy we can safely have, without impacting the larger ecological system. I’ll call it “ecologically safe economic possibilities frontier”. Until an improvement in technology expands that frontier, we need to direct economic activity within the sphere warranted by current technology.

Given current population of the earth and the technologies available to us, two trends in economy seem to be appropriate , so that we remain within the current safety sphere: (a) Shared use economy (b) Services economy. By “shared”, i mean the kind of economy that optimizes the use of resources. For example, lets take housing. Given our current population on earth, especially in densely populated countries such as India, we cannot afford individual villas for everyone. It creates sprawl, takes up green lands for building houses and roads (which could be used for gardens or agriculture), and creates a more energy intensive economy by requiring people to move around too much. When housing is compact and apartment style, it enables sharing and optimal use of other resources as well. I chose this particular example because i see and hear in the news everyday, acres and acres of land being taken up for “real estate” projects. Just an awful waste of precious land. There are a number of other examples on how our economy can get the job done, but at the same time optimize the use of the resources.

The other broad trend appropriate in our times is to have a predominantly service economy rather than a manufacturing economy. This is because services in general tend to take less material-and-energy resources than manufacturing activities. Think public transportation services, rather than private automobile manufacturing. Think economy focused less on producing tangible goods, but on services like education, health-care, arts etc. The jobs in a service economy will be directed at delivering services, rather than producing goods.

Why are we not implementing policies which keep an economy within a sphere of ecological safety, and which direct an economy in terms of shared-use and services. Its because free market fundamentalists continue to insist, despite evidence to contrary, that “free markets” will always automatically generate the optimal solution, and that all “interference” with markets is to be avoided. I think markets do a fantastic job at creating efficiencies — However, the market cannot automatically know (as i discussed in part-2) the boundaries within which to create efficiencies, or the direction in which an economy ought to go. To me, these are clearly policy choices to be made. Within a framework of direction and boundaries, defined explicitly through our policy choices, iam all for markets and private sector to work out the efficiencies.

(To be continued. This is part-3 of a series)

Putting it all together: part-2

From part-1 it is clear that, since human economy is a subsystem of the larger ecological system, the long term sustainability of an economy depends on whether the economic system takes into account two important factors: (a) How is the sourcing of resources from the earth system affecting the health of earth system ? (b) How is the waste output from the economy back into the earth system affecting its health ? Let us see how our current economic models fare in this regard.

By and large, we have market oriented economies across the world. In a market economy, the price of labor and goods, is determined by an ‘invisible hand’, depending on supply – demand push-pull forces (for the most part, excluding the cases where there is intervention from governments etc). The final price of any product is a very important signal in a market economy, as it drives the demand for that product vis-a-vis alternative options.

What does the price of any product, typically include ? It includes cost of labor, raw materials and capital. Add profits and taxes, and we get the final sales price. The idea is that the costs of the factors of production should be included in the price of the product. And this obviously includes the cost of the capital directly employed in producing the good or service. For example, the cost of machinery used to produce a car. That’s capital directly employed in producing the good. The price of the car includes (its share of) the cost of capital used to produce it.

The interesting thing is, the process of producing or using a product, may be affecting valuable earth system services. This is called an ‘externality’ in economics jargon. Example: Use of oil affects the climate service. The production of metals, first involves mining the ore from sensitive ecosystems which provide ecosystem services. The production of paper or timber, may first involve cutting forests which provide anti-flooding, carbon-sink and innumerable other services. All these natural services provided by nature may be considered as ‘natural capital’. So, the process of producing or using a product, may be depreciating ‘natural capital’. Obviously, the price of the product should include the capital depreciation cost it incurs, so that it presents a true picture of the costs of producing or using that product.

The crux of the matter is, we are not doing that. In other words, the prices of our products do not include costs of environmental externalities. Because price is the most important variable in a market economy, we have extremely distorted use of resources — An overuse of polluting resources such as oil because of cheap price, which also creates a disincentive for investing in and adopting cleaner technologies. Excess demand for products such as metals or timber or paper or plastics, without regard to environmental costs.

In Plan B 2.0, Lester Brown sums it up:

The central challenge, the key to building the new economy, is getting the market to tell the ecological truth. The dysfunctional global economy of today has been shaped by distorted market prices that do not incorporate environmental costs. Many of our environmental travails are the result of severe market distortions. (…)

Faulty corporate accounting systems that leave costs off the books have driven some of the world’s largest corporations into bankruptcy, costing millions of people their lifetime savings, retirement incomes, and jobs. Distorted world market prices that do not incorporate major costs in the production of various products and the provision of services could be even costlier. They could lead to global bankruptcy and economic decline.

Why do the market distortions occur ? Its because “The market” by itself, is blind to externalities. The market is like a super computer into which we feed costs of everything, and it turns out an optimal allocation. The costs of labor, raw materials, and man-made capital, are all automatically fed into this machine by humans who have a stake in getting their products & services valued. But nature unfortunately does not speak. The climate, the forests, the wetlands and the bees, do not demand a return on their services. When costs of critical services are not fed into the market-machine, the market does throw out faulty resource allocations. Garbage-in Garbage-out. In short, the market system hasn’t failed. We failed the free-market idea by unleashing it without plugging in the right numbers.

Thus the only way to remove market distortions is to pro actively feed environmental costs into the market-machine. This may be in the form of taxation on use of some resources. For example, carbon tax on the use of fossil energy. Or it may be outright ban of disruptive economic activity in sensitive ecosystems (thus associating an infinite value to that particular ecosystem).

Tools such as eco-taxation are just that. Tools. At the core, the decision to apply these tools is a political decision our societies have to make. The “market” or some “invisible hand” cannot apply these tools or incorporate environmental costs automatically.

(To be continued. This is part-2 of a series)

Putting it all together: Part-1

“Human beings and the natural world are on a collision course. Human activities inflict harsh and often irreversible damage on the environment and on critical resources. If not checked, many of our current practices put at serious risk the future that we wish for human society and the plant and animal kingdoms, and may so alter the living world that it will be unable to sustain life in the manner that we know. Fundamental changes are urgent if we are to avoid the collision our present course will bring about.” (World scientists’ warning to humanity. Union of concerned scientists)

Earth – Economy interaction

“Take nothing but memories. Leave nothing but footprints.” This is the message a sign board wore, at Kambalakonda eco-tourism park, where i went hiking with my friend a few weeks back. On a micro scale, this is a message to the park visitors to leave the park intact — not to take stuff from the park, and not to trash the park. Lets mentally transport ourselves to the international space station, and imagine looking at the whole earth. Now planet earth is the macro park and the collective human society is the park visitor. From this perspective, the message on the sign board leads to this question on a macro level : How much is human society taking from the earth, and what is it leaving back to the earth ?

The collective human society may be viewed as an organism, living within the bounds of the earth system, with the ‘human economy’ being its metabolic process. The human economy takes in food from the earth system, maintains itself, and leaves out stuff back to the earth system. The input into the economy is non-living resources such as oil, metals etc, and living beings such as trees, fish etc. The output from the economy is products such as industrial chemical wastes, co2, plastics, metal scrap etc.

To put this in a little more technical terms: “For the metabolic activities of an economy such as production and consumption to be carried repeatedly, the economic system would require continuous inputs of low-entropy matter-and-energy from the ecosystem and in turn release high-entropy matter-and-energy wastes to the ecosystem for absorption”.(Ecology and economics, by Ramprasad Sengupta)

The Entropy concept provides a wonderful perspective through which we may view human economic activity. Ramprasad Sengupta explains: “Entropy is a measure of bounded or unavailable energy in a closed thermodynamic system. Energy exists in two qualitative states — available or free energy over which man has complete command, and bound energy which is unavailable or which man cannot possibly use”. Let take wood. In unused form wood is low-entropy, i.e it stores usable energy. After its used to heat something, it produces ash. Ash, the end product, is high entropy. It no more stores easily usable energy. Lets take petrol. In unused form, it’s low-entropy. Our economy takes-in petrol, say to run a car. The resultant by-products are high-entropy wasted heat, co2, particulate matter etc. Lets take metals. When low entropy iron ore is converted to steel sheet, it may still be considered to be of low entropy as it has high concentration of Fe. However, with the wearing out of steel over time, it is thrown as high entropy waste back to Earth system. Also, the production process of steel involves usage of large amounts of low-entropy resources (energy), and associated production material which end up in high-entropy state. Lets take food. The food that we eat daily is a low-entropy resource. Our bodies maintain themselves using energy from this low-entropy resource, and generates high entropy body heat and other wastes as output. (I have used the term “Entropy” in a somewhat casual sense to explain the point. For a more precise discussion, start here).

Thus, survival of individual human organism or running of human economy involves taking in low-entropy resources from the earth system and leaving out high entropy stuff back to the earth system.

Now, the next obvious question: If human economy is continuously taking-in stuff from the earth system, and leaving-out stuff back to the earth system, is it sustainable ? Won’t we run out of input low-entropy resources and won’t the output high entropy stuff buildup within the earth system ?

Fortunately, nature has taken care of this, to a certain extent.

Input side

Each second, the earth system is blessed with energy from the Sun. This solar energy is the main source for regeneration and renewal of low-entropy resources. The renewable low-entropy resources take various forms. Solar energy is available as chemical energy through photosynthesis by plants. Thus plant produce and animal life, are low entropy stores. Solar energy is available as wind power, as Sun’s heat drives the geological processes which generate wind. Solar energy is available as hydro power, as Sun drives the geological processes which cause rains. Solar energy is available directly, if our technology is capable of capturing it efficiently through photo-voltaic cells.

Even though vast amounts of Solar energy hits the earth at any point of time, the rate of renewal of low entropy resources is finite per unit of time. Nature takes its own sweet time. Trees take time to grow. Top soil takes time to accumulate. Our economic system can be said to be sustainable on the input side, if the system uses resources at a rate lower than the rate of regeneration of low entropy resources. If we cut forests at a rate higher than the regeneration of forests, there would be loss of forest cover. If we extract groundwater at a rate higher than that of its recharging, there would depletion of reserves.. and so on.

In addition to renewable resources, our economic system has one-time non-renewable low entropy resources like oil, coal, metals etc, at its disposal. These resources have been generated and stored in the earth over millions of years, due to various bio-geo-chemical processes. Human economy currently depends almost entirely on this one-time abundance, and is using up these resources at an astonishing pace. In this aspect, our current economic activity is extremely unsustainable as there is little conclusive data on just how much of this one-time abundance of oil, coal or metals, is left in the earth. Since the last two hundred years, we are on a binge of one-time abundance that has accumulated over millions of years.

Output side

The output side refers to the waste generated by our economic system, and thrown back into the Earth system. What happens to the chemical effluents of our industrial processes ? What happens to the co2 emitted during economic activity ? What role do pesticides play in the earth system ? Where does all the plastic and metal trash go ?

Over millions, nay billions of years, nature has evolved processes which recycle matter into basic elements such as carbon, oxygen, nitrogen, phosphorous etc. Organic waste is typically recycled by nature into elements in a matter of days. Any product of economic activity which is compatible with existing recycling processes of nature, and degradable into basic elements by nature within a reasonable time frame, is generally harmless. It’s bio-degradable. Any byproduct of economic activity which does not fit into existing cycles of nature, could build up in the earth system, and disturb the delicate cycles of nature. CFC disturbs ozone layer. Co2 disturbs climate cycle. Pesticide chemicals have various unintended consequences. Plastics and metal trash build up in the earth system. Vehicular smog affects human respiratory health. There are endless examples of how products of current human economic activity are massively interfering with natural cycles.

Some of the waste such as plastics or radio active waste, may be degradable by nature in timescale of hundreds or thousands of years. But, the rate of generation of these wastes by human activity is much more, thus they build up in the earth system as pollutants. Thus the rate of absorption of waste becomes an important parameter.

Conflicting paradigms

Putting these two pieces on input-side activity and output-side activity, we arrive at a beautiful summary:

“A resource crisis arises if the rate of regeneration of low entropy resources falls short of the required flow of resources from the ecosystem to the economic system, rendering the existing growth process unsustainable. If the rate of regeneration of high entropy wastes, on the other hand, exceeds the rate of absorption of waste by nature per unit of time, the remaining waste would be deposited in the ecosystem as pollutant. The stock of the pollutant would accumulate in the ecosystem and the accumulated stock would adversely affect the productivity of the natural system, human health, and the regenerative function of nature. That resource crisis and environmental crisis are now real life threats for the sustainability of the developmental process, is indicative of conflicting paradigms of ecological principles and conventional economic principles of development”. (D.Meadows et al, obtained from Ecology-and-economics by R.Sengupta)

Twin crisis

The two biggest crisis of this century are these two — resource crisis and environmental crisis. Stripped of all the jargon, it comes down to this — We are taking too much from the earth system, resulting in a resource crisis. We are dumping too much toxics back to the earth system, resulting in environmental crisis. Very briefly, following are some of the important issues that confront us now.

Resource crisis:

• Oil – Our economies involve profligate use of oil and are extremely dependent on this energy source. Theories abound that we may be at or very near peak oil production per day.
• Food – Our food production is almost entirely dependent on continued use of fertilizers which are inturn manufactured using fossil fuels. Fertilizers are like steroids for land. It keeps the land productive on the short term. A scarcity of fossil energy has immediate impact on food production.
• Water – Depleting ground water reserves because of overuse.
• Life – Biodiversity is being lost at an astonishing pace because of over-expansion. Cutting of forests for agricultural purposes. Taking up of wetlands, agricultural land and other protected land, to setup industries, housing, mining activity, entertainment projects etc.

Environmental crisis:

• Climate: Overuse of fossil energy is resulting in accumulation of co2 in atmosphere, resulting in global climate change.
• Affect on life: There is adverse affect on human health and great loss of biodiversity, because of release of pesticides, industrial chemicals, gases etc, into the earth system.

What we must do

Currently, the structure of our economies and the popular indicators of our economic wellbeing such as GDP, are fixated on quantity of output regardless of its effects on the surrounding earth system. We need to restructure our economies so that there is an emphasis on quality of economic wellbeing. This involves being conscious of two factors: (a) How is our sourcing of resources from the earth system affecting the health of earth system ? Can we depend on the continued availability of the resources ? (b) How is our output back into the earth system affecting its health ?. Its as simple as that. For this we need — an economy based on conservation. An economy based on de-consumption. An economy based on efficiency. An economy based on radical simplicity. An economy in tune with nature.

(To be continued. This is part-1 of a series)