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1Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
The Kyoto Protocol and The Carbon Cycle
Pegram Lecture 1Brookhaven National Laboratories, Long Island NY
Graciela Chichilniskywww.chichilnisky.comColumbia University
What is Globalization?
• A nations’ economic output is increasingly traded through the international market
• 3% in 1950’s USA - about 18% today
• Globalization connects nations and their people
It changes the world economy
2
3Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: World Trade Organization (WTO): World Trade Report. http://www.wto.org/english/res_e/reser_e/wtr_arc_e.htm
Ratio of merchandise exports to GDP, 1950-2005(Percentage, real trade and GDP at 1990 prices and exchange rates)
0.0
5.0
10.0
15.0
20.0
25.0
1950 1998 2005
Years
Per
cen
t
World Average
4Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: World Trade Organization (WTO): World Trade Report. http://www.wto.org/english/res_e/reser_e/wtr_arc_e.htm
Total
Manufactures
GDP
100
1000
10000
1950 1960 1970 1980 1990 2000
500
2500
5000
250
Average grow th rates, 1950-2005
Total exports 6.2 Manufactures 7.5 GDP 3.8
Semi-log scale
World Exports and GDP, 1950-2005. (Volume indices, 1950=100)
Globalization and Its Risks
• Globalization is not a new phenomenon
• But has achieved historical proportions
• It is a fact – it is here today
• It has benefits – e.g. gains from trade
• But produces risks – political, economic and for the world’s critical resources
• It has deeply increased the Global Divide
5
A position on globalization
• Globalization is a global force
• It is here today
• Are you in favor or against the sun rising?
• The issue is what to do with globalization
• How to transform it into a positive force
6
A historical first
• Todays’ globalization breaks with the past
• Where does it come from?
• What are the risks it creates?
• How to benefit from Globalization and how to avert its main risks?
• How to overcome resource depletion, the global wealth divide and even extinction of our species?
7
Why a Historical First?
The facts
8
9Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Human beings, or their close genetic relatives, have lived on Earth for several million years
Yet only recently has human activity reached levels at which it can affect fundamental natural processes
• the concentration of gases in the atmosphere (CO2, Ozone)
• the planet’s water mass• The complex web of species which
constitute life on earth
Global risks
• Changes to the planet’s atmosphere
• Changes to the world’s water mass
• Changes to the world’s biodiversity
10
11Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: Des Marais (2000) “When did Photosysnthesis emerge on Earth?” Science 289 5485, 1703 – 05.
12Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: Rice, Patricia R. and Norah Moloney (2005) Biological anthropology and prehistory: exploring our human ancestry, Pearson Education: Boston
13Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Climate Change a Major Risk
• A risk of survival
• Why focus on that?
• How?
• What to do?
14
15Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
In 1996, the IPCC reported that human induced emissions of carbon have a discernible effect on climate
• Scientific uncertainty persists
• But the risk of climate change is real and potentially catastrophic
16
Black lines are decadally averaged observations. Blue bands are computer modelswith natural forgings only. Pink bands are computer models with human + natural forgings.
Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Computer models match observed ΔT on all continents
Source: IPCC Working Group 1: The Physical Science
Basis of Climate Change. IPCC 2007: WG1-AR4
17Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: : Arctic Climate Impact Assessment (ACIA) 2004
18Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: “In Dead Water” UNEP 2008
http://www.unep.org/pdf/InDeadWater_LR.pdf
19Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: “In Dead Water” UNEP 2008
http://www.unep.org/pdf/InDeadWater_LR.pdf
20Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Sea ice is receding
Source: NASA
21Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Coastal glaciers are retreating
Muir Glacier, Alaska, 1892-2005
September 1892
August 2005
Source: NSIDC/WDC for Glaciology, Boulder, compiler. 2002, updated 2006. Online glacier photograph database. Boulder, CO: National Snow and Ice Data Center
22Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Greenland Ice Sheet, 2001-2005
Source: Satellite Imaging Corporation, http://www.satimagingcorp.com/gallery/aster-greenland-ice-sheet.html
23Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Harm is already occurringTotal power released by tropical cyclones (green) has increased
along with sea surface temperatures (blue)
Source: Kerry Emanuel. Anthropogenic Effects on Tropical Cyclone Activity, 2006.
http://wind.mit.edu/~emanuel/anthro2.htm
24Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Number of flood events by continent and decade since 1950
Source: Millennium Ecosystem Assessment, http://www.millenniumassessment.org/en/index.aspx
25Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Number of major wild fires by continent and decade since 1950
Source: Millennium Ecosystem Assessment, http://www.millenniumassessment.org/en/index.aspx
26Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Where we’re headed: temperate-zone agriculture
Corn and wheat yields versus temperature increase in the temperate zone averaged across 30 crop modeling studies. All studies assumed a positive change in precipitation. CO2 direct effects were included in all studies.
Source: Easterling W. E., Apps M. Assessing the consequences of climate change for food and forest resources: A view from the IPCC, Climatic Change 70 (1-2) 2005 : 165-189.
27Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: Millennium Ecosystem Assessment 2005. Ecosystems and Human Well-Being Synthesis. http://www.millenniumassessment.org/en/index.aspx
28Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
29Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Top panel shows best estimates of human & natural forcings 1880-2005.
Bottom panel shows that state-of-the-art climate model, given these forcings, reproduces almost perfectly the last 125 years of observed temperatures.
The smoking gun for human influence
Source: Hansen et al., Science 308, 1431, 2005.
30Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: J. Hansen et al., PNAS 103: 14288-293 (26 Sept 2006), updated by NASA Goddard Institute for Space Studies, GISS Surface Temperature Analysis
2004
31Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Rapidly increasing ozone holes
Source: NASA. http://science.hq.nasa.gov/missions/satellite_22.thm
32Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
How the greenhouse effect works
Source: Sources: Okanagan University collage in Canada, Department of Geography, University of Oxford, school of geography; United States Environmental Protection Agency (EPA), Washington; Climate change 1995, The science of climate change, working group 1 to the second assessment report of the IPCC, UNEP and WMO, Cambridge Univ. Press, 1996.
33Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: US Environmental Protection Agency (EPA)
34
Composition of greenhouse gases
Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: Sources: Emission Database for Global Atmospheric Research (EDGAR) 3.2 Fast Track 2000. Netherlands Environmental Assessment Agency.
www.mnp.nl/edgan/. Accessed 3/21/07
35Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Many environmental problems are global in scope. Solving them requires international cooperation
• The planet’s ozone’s layer and CFC’s emissions
• Loss of biodiversity• Greenhouse gases and climate change-CO2
emissions• Acid rain and international transport of SO2
International dimensions of environmental policy
36Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
• Most of the destruction of the earth’s ecosystems is driven by economic incentives
• Forests, where most known biodiversity resides, are cleared for the extraction of natural resources (oil, wood products) or to grow cash crops and graze livestock
37Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: Food and Agriculture Organization of the United Nations Global Forest Resources Assessment 2005: Progress towards sustainable forest management
38Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Population and the global environment
The regions with the lowest population growth are the main cause of global environmental damage:
●biodiversity loss
●carbon emissions
●CFC emissions (ozone layer)
39Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
40Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Emissions per capita vs. Population
Source: UN Millennium Report
41Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Emissions per capita vs. Population
Sources:
UN World Population Prospects: The 2006 Revision;
International Energy Agency 2003
Population vs. Carbon Emissions per Capita
Mexico
Egypt
United Kingdom
India
Germany
Finland
China
Canada
y = -1.2547Ln(x) + 11.724
R2 = 0.2566
0
2
4
6
8
10
12
14
16
18
20
22
0 200 400 600 800 1000 1200 1400Population (Billions)
CO2
Emis
sion
s pe
r Ca
pita
(Met
ric
Tons
of
Carb
on)
42Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Sources: Earthtrends Database of the World Resource Institute (WRI) http://earthtrends.wri.org/
43Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: UNEP-Building and Climate Change Report-2007
GNI per capita vs. Carbon Emissions per capita
Horizontal axis: GNI/capita
Vertical axis: CO2/capita
44Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Tota
l C
O2 E
mis
sion
s (M
illio
n M
etr
ic
Ton
s)
GDP (2004 Billion $US)
Source: Earthtrends Database of the World Resource Institute (WRI) http://earthtrends.wri.org/
45Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: US Energy and Information Administration, International Energy Annual 2009
Source: US Energy and Information Administration, International Energy Annual 2004
46Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: Pimentel, D. et al. (2002). Renewable energy: Current and potential issues. BioScience, 52 (12), 1111-1120.
47Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: US Energy and Information Administration (EIA) 2010
Source: US Energy and Information Administration (EIA) 2004
48Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Cumulative Emissions (1900-2002):Source: World Resource Institute
Source Where WRI Got Data: WRI calculates carbon dioxide emissions from 3 sources
EIA. 2004. International Energy Annual 2002. Available online at: http://www.eia.doe.gov/iea/carbon.html.
IEA. 2004. CO2 Emissions from Fuel Combustion (2004 edition). Available online at: http://data.iea.org/ieastore/co2_main.asp.
Marland, G., T.A. Boden, and R. J. Andres. 2005. Global, Regional, and National Fossil Fuel CO2 Emissions. in Trends: A Compendium of Data on Global Change. Carbon Dioxide Information Analysis Center, Oak Ridge National Laboratory, U.S. Department of Energy, Oak Ridge, Tenn., U.S.A.
CO2 Emissions (2002) Source: World Resource Institute
Sources Used by World Resource Institute:
EIA. 2004. International Energy Annual 2002. Available online at: http://www.eia.doe.gov/iea/carbon.html.
IEA. 2004. CO2 Emissions from Fuel Combustion (2004 edition). Available online at: http://data.iea.org/ieastore/co2_main.asp.
Marland, G., T.A. Boden, and R. J. Andres. 2005. Global, Regional, and National Fossil Fuel CO2 Emissions. in Trends: A Compendium of Data on Global Change. Carbon Dioxide Information Analysis Center, Oak Ridge National Laboratory, U.S. Department of Energy, Oak Ridge, Tenn., U.S.A.
Population (2002) Source: World Resource Institute.
Sources where WRI Got Data From:
Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat. 2007. World Population Prospects: The 2006 Revision.
GDP (2002)Source: World Resource Institute.
Source WRI Got Data From: Development Data Group, The World Bank. 2007. 2007 World Development Indicators Online. Washington, DC: The World Bank
49Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
In the future:Most emissions could originate in developing countries as they industrialize
• Industrialization is resource intensive
• North-South issues
50Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Climate change:
• The causes of climate changes are economic
• The effects are physical and biological
51Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Since the effects are physical, economists underestimate them
Since the causes are economic, physical scientists cannot find solutions
52Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Climate change requires thinking and acting across social and physical disciplines
A major challenge
53Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Climate change is global
It therefore requires us to focus on:
• Global socioeconomic issues• Global equity
54Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
To address these issues we introduced in 1974 the concept of development based on the satisfaction of “basic needs”
The Bariloche Model: “Catastrophe or New Society: A Latin American World Model” A. Herrera, G. Chichilnisky et al,1974
It was a response to the Club of Rome “Limits to Growth” model – D. Meadows, MIT
55Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Economic development based on the satisfaction of basic needs
Basic Needs were introduced to rethink development patterns, so they would be consistent with the environmental constraints (Chichilnisky 1974, 1977)
Bariloche Model (1974-76) and sustainability
Bruntland Report, needs and sustainability
56Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Sustainable development
•Sustainable Development is anchored on the concept of Basic Needs voted by 150 nations in 1992 UN Earth Summit of Rio de Janeiro as the cornestone of efforts to define Sustainable Development, cf. G. Heal Valuing the Future 2000.
“Development that meets the needs of the present without compromising the ability of future generations to
meet their own needs”
Our Common Future, Bruntland Report 1987
57Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Global Environmental Policy
Requires Equity and Efficiency
“North South Trade and the Global Environment”, G. Chichilnisky American Economic Review, 1994Environmental Markets: Equity and Efficiency, G. Chichilnisky, G. Heal Kluwer publishers 1998.
How did it all happen?
A brief history
of the
Anthropocene
58
59Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Scientists find that most of the damage to biodiversity and the
atmosphere has occurred in the last 60 years
WHY?
What happened 60 years ago?
60Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
•Emissions of greenhouse gases and destruction of biodiversity are connected to the rapid industrialization since World War II
61Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
History
• After World War II, the U.S. became 40% of the world economy following the destruction of Germany and Japan
• Today the U.S. is back to 25%, as it was before World War II
62Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
The U.S. pattern of economic development became a benchmark
• based on rapid industrialization led by deep and extensive use of natural resources
• A frontier approach to economics
63Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Global institutions were created that reinforced this vision of resource-intensive
economic development
• The World Bank• The International Monetary Fund-Bretton Woods• The United Nations• The current system of National Accounts
• The American Dream went Global
64Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
65Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
66Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: World Trade Organization (WTO): World Trade Report. http://www.wto.org/english/res_e/reser_e/wtr_arc_e.htm
Ratio of merchandise exports to GDP, 1950-2005(Percentage, real trade and GDP at 1990 prices and exchange rates)
0.0
5.0
10.0
15.0
20.0
25.0
1950 1998 2005
Years
Per
cen
t
World Average
67Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: World Trade Organization (WTO): World Trade Report. http://www.wto.org/english/res_e/reser_e/wtr_arc_e.htm
Total
Manufactures
GDP
100
1000
10000
1950 1960 1970 1980 1990 2000
500
2500
5000
250
Average grow th rates, 1950-2005
Total exports 6.2 Manufactures 7.5 GDP 3.8
Semi-log scale
World Exports and GDP, 1950-2005. (Volume indices, 1950=100)
68Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: World Trade Organization (WTO): World Trade Report. http://www.wto.org/english/res_e/reser_e/wtr_arc_e.htm
Growth in the volume of world merchandise trade and GDP, 1996-2006(Annual percentage change)
-2
0
2
4
6
8
10
12
1996 97 98 99 00 01 02 03 04 05 2006
GDP
Merchandise exports
Average export growth 1996-06
Average GDP growth
1996-06
69Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
GD
P p
er
Capit
a (
19
90
Inte
rnati
onal G
eary
-Kham
is D
olla
rs)
Year
Source: Angus Maddison, Historical Statistics for the World Economy: 1 – 2006 AD.
70Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: US EIA 2010
71Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Sources: UN FAO 2010 World Roundwood and Sawnwood Total Production
72Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: Angus Maddison, Historical Statistics for the World Economy: 1 – 2008 AD.
73Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: US Energy and Information Administration (EIA)
74Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
GD
P p
er
Capit
a (
19
90
Inte
rnati
onal G
eary
-Kham
is D
olla
rs)
Year
Source: Angus Maddison, Historical Statistics for the World Economy: 1 – 2006 AD.
75Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: World Bank (2002 data)
76Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Economics drives global change:
• In the North, emission of CO2 is linked to intensive energy use for production of goods and services
• In the South, intensive destruction of ecosystems for agricultural production and mineral extraction for export markets
77Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Sources: Earthtrends Database of the World Resource Institute (WRI) http://earthtrends.wri.org/
78Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: IPPC
79Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Cumulative Emissions (1900-2002):Source: World Resource Institute
Source Where WRI Got Data: WRI calculates carbon dioxide emissions from 3 sources
EIA. 2004. International Energy Annual 2002. Available online at: http://www.eia.doe.gov/iea/carbon.html.
IEA. 2004. CO2 Emissions from Fuel Combustion (2004 edition). Available online at: http://data.iea.org/ieastore/co2_main.asp.
Marland, G., T.A. Boden, and R. J. Andres. 2005. Global, Regional, and National Fossil Fuel CO2 Emissions. in Trends: A Compendium of Data on Global Change. Carbon Dioxide Information Analysis Center, Oak Ridge National Laboratory, U.S. Department of Energy, Oak Ridge, Tenn., U.S.A.
CO2 Emissions (2002) Source: World Resource Institute
Sources Used by World Resource Institute:
EIA. 2004. International Energy Annual 2002. Available online at: http://www.eia.doe.gov/iea/carbon.html.
IEA. 2004. CO2 Emissions from Fuel Combustion (2004 edition). Available online at: http://data.iea.org/ieastore/co2_main.asp.
Marland, G., T.A. Boden, and R. J. Andres. 2005. Global, Regional, and National Fossil Fuel CO2 Emissions. in Trends: A Compendium of Data on Global Change. Carbon Dioxide Information Analysis Center, Oak Ridge National Laboratory, U.S. Department of Energy, Oak Ridge, Tenn., U.S.A.
Population (2002) Source: World Resource Institute.
Sources where WRI Got Data From:
Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat. 2007. World Population Prospects: The 2006 Revision.
GDP (2002)Source: World Resource Institute.
Source WRI Got Data From: Development Data Group, The World Bank. 2007. 2007 World Development Indicators Online. Washington, DC: The World Bank
80Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
DISTRIBUTION OF TROPICAL FORESTS
Source: www.marietta.edu
Source: Food and Agricultural Organization of the United Nations
81Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
HOLDRIDGE LIFE ZONE CLASSIFICATION
82Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
The North Produces Most Risks
• Most CO2 emissions
• Most CFC emissions
• Most biodiversity destruction
83Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
The South suffers most of the effects. It is most vulnerable to the effects of climate change on:
• food production
• living conditions
84Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
The North produces most risks
The South bears them most
85Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
The origins of today’s environmental dilemmas involve the historical coupling
of two different worlds through the international market: the industrialized and the developing regions, the North
and the South
86Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
•The globalization of the world economy since World War II has intensified a pattern of resource use by which developing nations extract most natural resources, exporting them to industrialized nations at prices that are often below replacement cost
87Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: World Bank 2004 data
88Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: World Trade Organization (WTO) 2005 data
89Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: Dani Rodrik. “Sea Changes in the World Economy.” Paper prepared for the Techint conference, Buenos Aires, August 30, 2005
90Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: World Trade Organization (WTO): World Trade Report. http://www.wto.org/english/res_e/reser_e/wtr_arc_e.htm
Ratio of merchandise exports to GDP, 1950-2005(Percentage, real trade and GDP at 1990 prices and exchange rates)
0.0
5.0
10.0
15.0
20.0
25.0
1950 1998 2005
Years
Per
cen
t
World Average
91Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: World Trade Organization (WTO): World Trade Report. http://www.wto.org/english/res_e/reser_e/wtr_arc_e.htm
Total
Manufactures
GDP
100
1000
10000
1950 1960 1970 1980 1990 2000
500
2500
5000
250
Average grow th rates, 1950-2005
Total exports 6.2 Manufactures 7.5 GDP 3.8
Semi-log scale
World Exports and GDP, 1950-2005. (Volume indices, 1950=100)
92Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: World Trade Organization (WTO): World Trade Report. http://www.wto.org/english/res_e/reser_e/wtr_arc_e.htm
Growth in the volume of world merchandise trade and GDP, 1996-2006(Annual percentage change)
-2
0
2
4
6
8
10
12
1996 97 98 99 00 01 02 03 04 05 2006
GDP
Merchandise exports
Average export growth 1996-06
Average GDP growth
1996-06
93Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Through the international market, industrial nations, housing 20% of the world population:
• Consume most forest products (pulp, wood)
• Consume most products produced through the clearing of forests (cash crops, livestock)
94Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
The North’s economy represents the main driving force:
• Has used, and continues to use, most of the global resources and environment,
• Produces 60% of all CO2 emissions,• Consumes most forest and mineral
products,• Emits most CFCs
Source: WRI
95Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
■The South, with 80% of the world’s population, extracts and exports most resources, which are mostly consumed in the North.
■Resources – such as petroleum and wood – are traded at prices which are below real costs, leading to increased dependence on resource use and to a deepening North-South divide
96Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Source: Baker, E, Bournay, E, Harayama, A, & Rekacewicz, P (2004). Vital Waste Graphics. UNEP/DEWA/GRID-Europe, RetrievedJan. 24, 2009, from http://www.grida.no/_res/site/file/publications/vital-waste/wastereport-full.pdf
97Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
GREENHOUSE INDEX: COUNTRIES WITH HIGHEST
GREENHOUSE GAS EMISSIONS, 2004
Source: CAIT
98Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
Total Exports
Exports of Raw Materials
Source: World Trade Organization (WTO). World Trade Overview 2005. http://www.wto.org/english/res_e/statis_e/its2006_e/its06_overview_e.pdf
99Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
100Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
101Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
The UN Food and Agriculture Organization (FAO) has estimated that direct emissions from meat production account for about 20% of the world's total greenhouse gas emissions
Exceeding emissions from the world’s entire transportation system•
102Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
GD
P p
er
Capit
a (
19
90
Inte
rnati
onal G
eary
-Kham
is D
olla
rs)
Year
Source: Angus Maddison, Historical Statistics for the World Economy: 1 – 2006 AD.
103Columbia Consortium for Risk Management (CCRM) www.columbiariskmanagement.net
The U.S. uses 24.3% of the world’s oil output yearly, even though it has about 4% of the
world’s population
SOURCE: CIA World Factbook, December 2008
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It is not how much you export but what you export
Note: “income content of exports” (EXPY) represents the income level of the typical country with your export basket. Source: World Trade Organization (WTO). World Trade Overview 2005. http://www.wto.org/english/res_e/statis_e/its2006_e/its06_overview_e.pdf
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Source: World Trade Organization (WTO). World Trade Overview 2005. http://www.wto.org/english/res_e/statis_e/its2006_e/its06_overview_e.pdf
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The remarkable rise of China
Source: Dani Rodrik. “Sea Changes in the World Economy.” Paper prepared for the Techint conference, Buenos Aires, August 30, 2005
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The remarkable rise of China
Source: Dani Rodrik, op.cit. 2005
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Source: United Nations Comtrade Database for Oil Export Data. http://comtrade.un.org/pb/CountryPages.aspx?y=2007.
World Bank for GDP data
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Source: United Nations Comtrade Database for Oil Export Data. http://comtrade.un.org/pb/CountryPages.aspx?y=2007.
World Bank for GDP data
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Pattern of World Trade
• Since WWI, world trade became the exports of manufactured and capital intensive products from the North against raw materials mostly exported by the South
• Previously imposed through colonialism, this pattern became entrenched through ‘market colonialism’ after the liberation movements of the mid 20th century
• ‘Export led growth’
• An illusory theory of comparative advantages 111
Why did this happen?
• The economics of North-South Trade
• Its impact on the Global Environment
• G. Chichilnisky “North South Trade and the Global Environment” AER 1994
112
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This pattern of trade after WWII can be explained in substantial measure by a historical difference in property
rights in the developing and industrial worlds
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Developing countries hold most resources as common property while in industrial economies
these are usually private property
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Natural resources, such as forests and mineral resources are often held as common property in developing countries. They are often used on a “first come first served” basis in an open access process
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Source: World Trade Organization (WTO). World Trade Overview 2005. http://www.wto.org/english/res_e/statis_e/its2006_e/its06_overview_e.pdf
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In a world where agricultural societies trade with industrial societies,
international markets magnify the extraction of resources. The result is that exports and world use of natural
resources exceed what is optimal
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The resulting agricultural output is mostly sold in international markets (pulp and wood, cash crops, livestock, Barbier)
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Differences in property rights explain:
• The South’s over-extraction of natural resources for the international market
• Why the South sells natural resources below real cost
Chichilnisky, American Economic Review, 1994
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Source: World Trade of IT products by region 2005, Source Comtrade database and WTO. Exports and Imports,This Chart appears on Page 17, World Trade Report 2007 WTOhttp://www.wto.org/english/res_e/booksp_e/anrep_e/world_trade_report07_e.pdf
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Note: The graph corresponds to the regression system in Table 3, column 2 (next slide). The curve shows the partial relation between the Gini coefficient and the log of per capita GDP, holding fixed the estimated effects of the explanatory variables other than the log of per capita GDP and its square. Source: Robert Barro. Inequality and Growth Revisted. ADB January 2008. http://aric.adb.org/pdf/workingpaper/WP11_%20Inequality_and_Growth_Revisited.pdf
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Source: Robert Barro. Op.cit. 2008.
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Source: World Trade Organization (WTO). World Trade Overview.http://www.wto.org/english/res_e/statis_e/its2006_e/its06_overview_e.pdf
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Note: GNNP (Green Net National Product) is GNP minus the damage from carbon dioxide emissions, depreciation of produced assets and depletion of forests and subsoil assets. Source: “When Self Interest is Key to a Better Environment.” Nature. Volume 395. October 1998. http://www.nature.com/nature/journal/v395/n6701/pdf/395428a0.pdf
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Without computing the “replacement costs” of extraction, there is a false impression of resource abundance and comparative advantage leading to a global version of the “tragedy of the commons”
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Note: GNNP (Green Net National Product) is GNP minus the damage from carbon dioxide emissions, depreciation of produced assets and depletion of forests and subsoil assets. Source: “When Self Interest is Key to a Better Environment.” Nature. Volume 395. October 1998. http://www.nature.com/nature/journal/v395/n6701/pdf/395428a0.pdf
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Source: Development Data Group, The World Bank. 2008. 2008 World Development Indicators Online. Washington, DC: The World Bank. Available at: http://go.worldbank.org/U0FSM7AQ40.And World Trade Organization (WTO). World Trade Overview.http://www.wto.org/english/res_e/statis_e/its2006_e/its06_overview_e.pdf
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Barr
els
of
Oil (
Billion
s)
Source: Energy Information Administration. August 27, 2008. http://www.eia.doe.gov/emeu/international/oilreserves.html
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Source: World Trade Organization (WTO): World Trade Report. http://www.wto.org/english/res_e/reser_e/wtr_arc_e.htm
Growth in the volume of world merchandise trade and GDP, 1996-2006(Annual percentage change)
-2
0
2
4
6
8
10
12
1996 97 98 99 00 01 02 03 04 05 2006
GDP
Merchandise exports
Average export growth 1996-06
Average GDP growth
1996-06
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Source: World Trade Organization (WTO) 2005 data
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Source: International Monetary Fund (IMF). World Economic Outlook 2008.http://www.imf.org/external/pubs/ft/weo/2008/01/index.htm#ch1fig
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Source: Alan Thein Durning. “How Much is Enough?” The Worldwatch Environmental Alert Series. 1992http://www.ncseonline.org/PopPlanet/ePopulationReports/rest/abstracts/148954.pdf
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Source: Baker, E. et al. (2004). Vital Waste Graphics. UNEP/DEWA/GRID-Europe, Retrieved Jan. 24, 2009, from http://www.grida.no/_res/site/file/publications/vital-waste/wastereport-full.pdf.
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Source: US Energy and Information Administration (EIA) 2004 Data
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Source: International Monetary Fund (IMF). World Economic Outlook 2008.http://www.imf.org/external/pubs/ft/weo/2008/01/index.htm#ch1fig
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As a result of this trade pattern the North over-consumes
resources, and the South over-extracts them
Chichilnisky, American Economic Review, 1994
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As a consequence of these historical facts, the Earth
Resources are undervalued in international markets
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Because most resource-intensive exports come from developing nations, their own
economies and people are undervalued in economic terms
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Resource intensive trade leads to an increasingly divided North-
South world
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YearG
DP p
er
Cap
ita (
19
90 Inte
rnati
on
al G
eary
-Kham
is D
olla
rs)
Source: Angus Maddison, Historical Statistics for the World Economy: 1 – 2006 AD.
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Privatizing resources in developing countries may be impractical in any reasonable
time scale.
An alternative is to privatize the global commons.
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Rather than privatizing forest and mineral deposits “on the ground”, we can privatize and
trade the rights to use the atmosphere as a carbon sink,
and the use of biodiversity
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The Kyoto Protocol• Signed by 160 nations in 1997 – including USA
• International Law since 2005
• First international agreement based on a new global market: for trading the rights to use the world’s atmosphere
• The United Nations voted to extend its limits in COP 17 Durban December 2011 until 2015
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New Economic Findingsfrom the UN Carbon Market
• Efficiency in trading permits requires more emission rights to developing countries
• Why?
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Typically efficiency requires that those with fewer endowments of private goods should have a higher allocation of property rights on the public goods
■Chichilnisky, 1992-3■Chichilnisky and Heal, 1993■Chichilnisky, Heal and Starrett, 1993-4
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Kyoto Protocol:The way ahead
• How to develop incentives for international cooperation?
• How to obtain support from the private sector?
• Will the three flexibility mechanisms be unified
• How to regulate private sector emission traders?
• How to achieve equitable markets?
The World needs more Energy
• The developing nations need energy
• Most of all energy increase (doubling today’s use by 2030) expected to come from developing nations (IEA)
• But today power plants are 45% of the global emissions of CO2
• How to resolve this cruel dilemma?
151
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The clean development mechanism of the Kyoto Protocol has already transferred $50Bn to poor nations for private projects decreasing carbon emissions – The World Bank “Trends and Facts of the Carbon Market” 2011
The CDM must be extended to Carbon Negative projects to allow funds for Latin America, Africa and AOSIS –
Why?
And How?
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The next lectures will address these issues and the rays of
hope for a solution