Pegram Lecture 1, August 10, 2012

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Pegram Lecture 1, August 10, 2012

  1. 1. The Kyoto Protocol and The Carbon Cycle Pegram Lecture 1Brookhaven National Laboratories, Long Island NY Graciela Chichilnisky www.chichilnisky.com Columbia University Columbia Consortium for Risk Management 1 (CCRM) www.columbiariskmanagement.net
  2. 2. 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
  3. 3. Ratio of merchandise exports to GDP, 1950-2005 (Percentage, real trade and GDP at 1990 prices and exchange rates) 25.0 20.0 Percent 15.0 World Average 10.0 5.0 0.0 1950 1998 2005 YearsSource: World Trade Organization (WTO): World Trade Report.http://www.wto.org/english/res_e/reser_e/wtr_arc_e.htm Columbia Consortium for Risk Management 3 (CCRM) www.columbiariskmanagement.net
  4. 4. World Exports and GDP, 1950-2005. (Volume indices, 1950=100) Semi-log scale 10000 Average grow th rates, 1950-2005 5000 Total exports 6.2 Manufactures 7.5 GDP 3.8 2500 Manufactures Total 1000 GDP 500 250 100 1950 1960 1970 1980 1990 2000Source: World Trade Organization (WTO): World Trade Report. http://www.wto.org/english/res_e/reser_e/wtr_arc_e.htm Columbia Consortium for Risk Management 4 (CCRM) www.columbiariskmanagement.net
  5. 5. 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
  6. 6. 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
  7. 7. 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
  8. 8. Why a Historical First? The facts 8
  9. 9. Human beings, or their close genetic relatives, havelived on Earth for several million yearsYet only recently has human activity reached levelsat which it can affect fundamental naturalprocesses• the concentration of gases in the atmosphere (CO2, Ozone)• the planet’s water mass• The complex web of species which constitute life on earth Columbia Consortium for Risk Management 9 (CCRM) www.columbiariskmanagement.net
  10. 10. Global risks• Changes to the planet‟s atmosphere• Changes to the world‟s water mass• Changes to the world‟s biodiversity 10
  11. 11. Source: Des Marais (2000) “When did Photosysnthesisemerge on Earth?” Science 289 5485, 1703 – 05. Columbia Consortium for Risk Management 11 (CCRM) www.columbiariskmanagement.net
  12. 12. Source: Rice, Patricia R. and Norah Moloney (2005) Biologicalanthropology and prehistory: exploring our human ancestry,Pearson Education: Boston Columbia Consortium for Risk Management 12 (CCRM) www.columbiariskmanagement.net
  13. 13. Columbia Consortium for Risk Management 13(CCRM) www.columbiariskmanagement.net
  14. 14. Climate Change a Major Risk• A risk of survival• Why focus on that?• How?• What to do? 14
  15. 15. In 1996, the IPCC reported thathuman induced emissions of carbonhave a discernible effect on climate• Scientific uncertainty persists• But the risk of climate change is real and potentially catastrophic Columbia Consortium for Risk Management 15 (CCRM) www.columbiariskmanagement.net
  16. 16. Computer models match observed ΔT on all continents Black lines are decadally averaged observations. Blue bands are computer models with natural forgings only. Pink bands are computer models with human + natural forgings.Source: IPCC Working Group 1: The Physical ScienceBasis of Climate Change. IPCC 2007: WG1-AR4 Columbia Consortium for Risk Management 16 (CCRM) www.columbiariskmanagement.net
  17. 17. Source: : Arctic Climate Impact Assessment(ACIA) 2004 Columbia Consortium for Risk Management 17 (CCRM) www.columbiariskmanagement.net
  18. 18. Columbia Consortium for Risk Management 18Source: “In Dead Water” UNEP 2008 (CCRM) www.columbiariskmanagement.nethttp://www.unep.org/pdf/InDeadWater_LR.pdf
  19. 19. Source: “In Dead Water” UNEP 2008http://www.unep.org/pdf/InDeadWater_LR.pdf Columbia Consortium for Risk Management 19 (CCRM) www.columbiariskmanagement.net
  20. 20. Sea ice is recedingSource: NASA Columbia Consortium for Risk Management 20 (CCRM) www.columbiariskmanagement.net
  21. 21. Coastal glaciers are retreating Muir Glacier, Alaska, 1892-2005 September 1892 August 2005Source: NSIDC/WDC for Glaciology,Boulder, compiler. 2002, updated 2006.Online glacier photograph database.Boulder, CO: National Snow and Ice DataCenter Columbia Consortium for Risk Management 21 (CCRM) www.columbiariskmanagement.net
  22. 22. Greenland Ice Sheet, 2001-2005Source: Satellite Imaging Corporation,http://www.satimagingcorp.com/gallery/aster-greenland-ice-sheet.html Columbia Consortium for Risk Management 22 (CCRM) www.columbiariskmanagement.net
  23. 23. Harm is already occurring Total power released by tropical cyclones (green) has increased along with sea surface temperatures (blue)Source: Kerry Emanuel. Anthropogenic Effectson Tropical Cyclone Activity, 2006. Columbia Consortium for Risk Management 23http://wind.mit.edu/~emanuel/anthro2.htm (CCRM) www.columbiariskmanagement.net
  24. 24. Number of flood events by continent and decade since 1950Source: Millennium Ecosystem Assessment, http://www.millenniumassessment.org/en/index.aspx Columbia Consortium for Risk Management 24 (CCRM) www.columbiariskmanagement.net
  25. 25. Number of major wild fires by continent and decade since 1950Source: Millennium Ecosystem Assessment, http://www.millenniumassessment.org/en/index.aspx Columbia Consortium for Risk Management 25 (CCRM) www.columbiariskmanagement.net
  26. 26. 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 forestresources: A view from the IPCC, Climatic Change 70 (1-2) 2005 : 165-189. Columbia Consortium for Risk Management 26 (CCRM) www.columbiariskmanagement.net
  27. 27. Source: Millennium Ecosystem Assessment 2005. Ecosystems and Human Well-Being Synthesis.http://www.millenniumassessment.org/en/index.aspx Columbia Consortium for Risk Management 27 (CCRM) www.columbiariskmanagement.net
  28. 28. Columbia Consortium for Risk Management 28(CCRM) www.columbiariskmanagement.net
  29. 29. The smoking gun forhuman influenceTop panel showsbest estimates ofhuman & naturalforcings 1880-2005.Bottom panel showsthat state-of-the-artclimate model, giventhese forcings,reproduces almostperfectly the last 125years of observedtemperatures. Source: Hansen et al., Science 308, 1431, 2005. Columbia Consortium for Risk Management 29 (CCRM) www.columbiariskmanagement.net
  30. 30. 2004Source: J. Hansen et al., PNAS 103: 14288-293 (26 Sept 2006), updated by NASA Goddard Institutefor Space Studies, GISS Surface Temperature Analysis Columbia Consortium for Risk Management 30 (CCRM) www.columbiariskmanagement.net
  31. 31. Rapidly increasing ozone holesSource: NASA. http://science.hq.nasa.gov/missions/satellite_22.thm Columbia Consortium for Risk Management 31 (CCRM) www.columbiariskmanagement.net
  32. 32. How the greenhouse effect worksSource: Sources: Okanagan University collage in Canada, Department of Geography, University of Oxford, school of geography; United StatesEnvironmental Protection Agency (EPA), Washington; Climate change 1995, The science of climate change, working group 1 to the second assessmentreport of the IPCC, UNEP and WMO, Cambridge Univ. Press, 1996. Columbia Consortium for Risk Management 32 (CCRM) www.columbiariskmanagement.net
  33. 33. Source: US Environmental Protection Agency (EPA) Columbia Consortium for Risk Management 33 (CCRM) www.columbiariskmanagement.net
  34. 34. Composition of greenhouse gasesSource: 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 Columbia Consortium for Risk Management 34 (CCRM) www.columbiariskmanagement.net
  35. 35. International dimensions of environmental policyMany environmental problems are global inscope. Solving them requires internationalcooperation• 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 Columbia Consortium for Risk Management 35 (CCRM) www.columbiariskmanagement.net
  36. 36. • 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 Columbia Consortium for Risk Management 36 (CCRM) www.columbiariskmanagement.net
  37. 37. Source: Food and Agriculture Organization of the United Nations Global Forest Resources Assessment 2005: Progress towards sustainable forest management 37Columbia Consortium for Risk Management(CCRM) www.columbiariskmanagement.net
  38. 38. Population and the global environmentThe regions with the lowest populationgrowth are the main cause of globalenvironmental damage:●biodiversity loss●carbon emissions●CFC emissions (ozone layer) Columbia Consortium for Risk Management 38 (CCRM) www.columbiariskmanagement.net
  39. 39. Columbia Consortium for Risk Management 39(CCRM) www.columbiariskmanagement.net
  40. 40. Emissions per capita vs. PopulationSource: UN Millennium Report Columbia Consortium for Risk Management 40 (CCRM) www.columbiariskmanagement.net
  41. 41. Emissions per capita vs. Population Population vs. Carbon Emissions per Capita CO2 Emissions per Capita (Metric Tons of Carbon) 22 20 18 Canada 16 14 Finland 12 10 Germany 8 United Kingdom y = -1.2547Ln(x) + 11.724 R2 = 0.2566 6 4 Mexico China 2 Egypt India 0 0 200 400 600 800 1000 1200 1400 Population (Billions)Sources:UN World Population Prospects: The 2006 Revision;International Energy Agency 2003 Columbia Consortium for Risk Management 41 (CCRM) www.columbiariskmanagement.net
  42. 42. Sources: Earthtrends Database of the WorldResource Institute (WRI) http://earthtrends.wri.org/ Columbia Consortium for Risk Management 42 (CCRM) www.columbiariskmanagement.net
  43. 43. GNI per capita vs. Carbon Emissions per capita Horizontal axis: GNI/capita Vertical axis: CO2/capitaSource: UNEP-Building and Climate ChangeReport-2007 Columbia Consortium for Risk Management 43 (CCRM) www.columbiariskmanagement.net
  44. 44. Total CO2 Emissions (Million Metric Tons) GDP (2004 Billion $US)Source: Earthtrends Database of the World ResourceInstitute (WRI) http://earthtrends.wri.org/ Columbia Consortium for Risk Management 44 (CCRM) www.columbiariskmanagement.net
  45. 45. Source: US Energy and Information Administration, International Energy Annual 2004Source: US Energy and Information Administration,International Energy Annual 2009 Columbia Consortium for Risk Management 45 (CCRM) www.columbiariskmanagement.net
  46. 46. Source: Pimentel, D. et al. (2002). Renewableenergy: Current and potential issues.BioScience, 52 (12), 1111-1120. Columbia Consortium for Risk Management 46 (CCRM) www.columbiariskmanagement.net
  47. 47. Source: US Energy and Information Administration (EIA) 2004Source: US Energy and InformationAdministration (EIA) 2010 Columbia Consortium for Risk Management 47 (CCRM) www.columbiariskmanagement.net
  48. 48. Cumulative Emissions (1900-2002): CO2 Emissions (2002) Population (2002)Source: World Resource Institute Source: World Resource Institute Source: World Resource Institute.Source Where WRI Got Data: Sources Used by World Resource Institute: Sources where WRI Got Data From:WRI calculates carbon dioxide emissions from 3 sources EIA. 2004. International Energy Annual 2002. Available Population Division of the Department of Economic and SocialEIA. 2004. International Energy Annual 2002. Available online online at: http://www.eia.doe.gov/iea/carbon.html. Affairs of the United Nations Secretariat. 2007. World Populationat: http://www.eia.doe.gov/iea/carbon.html. Prospects: The 2006 Revision. IEA. 2004. CO2 Emissions from Fuel Combustion (2004IEA. 2004. CO2 Emissions from Fuel Combustion (2004 edition). Available online at:edition). Available online at: http://data.iea.org/ieastore/co2_main.asp.http://data.iea.org/ieastore/co2_main.asp. GDP (2002) Marland, G., T.A. Boden, and R. J. Andres. 2005. Source: World Resource Institute.Marland, G., T.A. Boden, and R. J. Andres. 2005. Global, Global, Regional, and National Fossil Fuel CO2Regional, and National Fossil Fuel CO2 Emissions. in Trends: Emissions. in Trends: A Compendium of Data on Global Source WRI Got Data From:A Compendium of Data on Global Change. Carbon Dioxide Change. Carbon Dioxide Information Analysis Center,Information Analysis Center, Oak Ridge National Laboratory, Oak Ridge National Laboratory, U.S. Department of Development Data Group, The World Bank. 2007. 2007U.S. Department of Energy, Oak Ridge, Tenn., U.S.A. Energy, Oak Ridge, Tenn., U.S.A. World Development Indicators Online. Washington, DC: The World Bank Columbia Consortium for Risk Management 48 (CCRM) www.columbiariskmanagement.net
  49. 49. In the future:Most emissions could originate indeveloping countries as theyindustrialize• Industrialization is resource intensive• North-South issues Columbia Consortium for Risk Management 49 (CCRM) www.columbiariskmanagement.net
  50. 50. Climate change:• The causes of climate changes are economic• The effects are physical and biological Columbia Consortium for Risk Management 50 (CCRM) www.columbiariskmanagement.net
  51. 51. Since the effects are physical,economists underestimate themSince the causes are economic,physical scientists cannot findsolutions Columbia Consortium for Risk Management 51 (CCRM) www.columbiariskmanagement.net
  52. 52. Climate change requiresthinking and acting across socialand physical disciplinesA major challenge Columbia Consortium for Risk Management 52 (CCRM) www.columbiariskmanagement.net
  53. 53. Climate change is globalIt therefore requires us to focus on:• Global socioeconomic issues• Global equity Columbia Consortium for Risk Management 53 (CCRM) www.columbiariskmanagement.net
  54. 54. To address these issues weintroduced in 1974 the conceptof development based on thesatisfaction of “basic needs”The Bariloche Model: “Catastrophe or New Society: ALatin American World Model” A. Herrera, G. Chichilniskyet al,1974It was a response to the Club of Rome “Limits to Growth”model – D. Meadows, MIT Columbia Consortium for Risk Management 54 (CCRM) www.columbiariskmanagement.net
  55. 55. Economic development based on the satisfaction of basic needsBasic Needs were introduced to rethinkdevelopment patterns, so they would be consistentwith the environmental constraints (Chichilnisky1974, 1977)Bariloche Model (1974-76) and sustainabilityBruntland Report, needs and sustainability Columbia Consortium for Risk Management 55 (CCRM) www.columbiariskmanagement.net
  56. 56. 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 presentwithout compromising the ability of future generations to meet their own needs” Our Common Future, Bruntland Report 1987 Columbia Consortium for Risk Management 56 (CCRM) www.columbiariskmanagement.net
  57. 57. Global Environmental PolicyRequires Equity and Efficiency“North South Trade and the Global Environment”, G. ChichilniskyAmerican Economic Review, 1994Environmental Markets: Equity and Efficiency, G. Chichilnisky, G.Heal Kluwer publishers 1998. Columbia Consortium for Risk Management 57 (CCRM) www.columbiariskmanagement.net
  58. 58. How did it all happen? A brief history of the Anthropocene 58
  59. 59. Scientists find that most of the damage to biodiversity and theatmosphere has occurred in the last 60 years WHY? What happened 60 years ago? Columbia Consortium for Risk Management 59 (CCRM) www.columbiariskmanagement.net
  60. 60. •Emissions of greenhouse gases anddestruction of biodiversity are connected tothe rapid industrialization since World War II Columbia Consortium for Risk Management 60 (CCRM) www.columbiariskmanagement.net
  61. 61. 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 Columbia Consortium for Risk Management 61 (CCRM) www.columbiariskmanagement.net
  62. 62. The U.S. pattern of economicdevelopment became a benchmark• based on rapid industrialization led by deep and extensive use of natural resources• A frontier approach to economics Columbia Consortium for Risk Management 62 (CCRM) www.columbiariskmanagement.net
  63. 63. Global institutions were created thatreinforced 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 Columbia Consortium for Risk Management 63 (CCRM) www.columbiariskmanagement.net
  64. 64. Columbia Consortium for Risk Management 64(CCRM) www.columbiariskmanagement.net
  65. 65. Columbia Consortium for Risk Management 65(CCRM) www.columbiariskmanagement.net
  66. 66. Ratio of merchandise exports to GDP, 1950-2005 (Percentage, real trade and GDP at 1990 prices and exchange rates) 25.0 20.0 Percent 15.0 World Average 10.0 5.0 0.0 1950 1998 2005 YearsSource: World Trade Organization (WTO): World Trade Report.http://www.wto.org/english/res_e/reser_e/wtr_arc_e.htm Columbia Consortium for Risk Management 66 (CCRM) www.columbiariskmanagement.net
  67. 67. World Exports and GDP, 1950-2005. (Volume indices, 1950=100) Semi-log scale 10000 Average grow th rates, 1950-2005 5000 Total exports 6.2 Manufactures 7.5 GDP 3.8 2500 Manufactures Total 1000 GDP 500 250 100 1950 1960 1970 1980 1990 2000Source: World Trade Organization (WTO): World Trade Report. http://www.wto.org/english/res_e/reser_e/wtr_arc_e.htm Columbia Consortium for Risk Management 67 (CCRM) www.columbiariskmanagement.net
  68. 68. Growth in the volume of world merchandise trade and GDP, 1996-2006 (Annual percentage change) 12 GDP Merchandise exports 10 8 Average export growth 1996-06 6 Average GDP growth 4 1996-06 2 0 1996 97 98 99 00 01 02 03 04 05 2006 -2Source: World Trade Organization (WTO): World Trade Report. http://www.wto.org/english/res_e/reser_e/wtr_arc_e.htm Columbia Consortium for Risk Management 68 (CCRM) www.columbiariskmanagement.net
  69. 69. GDP per Capita (1990 International Geary-Khamis Dollars) YearSource: Angus Maddison, Historical Statistics for the World Economy: 1 – 2006 AD. Columbia Consortium for Risk Management 69 (CCRM) www.columbiariskmanagement.net
  70. 70. Source: US EIA 2010 Columbia Consortium for Risk Management 70 (CCRM) www.columbiariskmanagement.net
  71. 71. Sources: UN FAO 2010 World Roundwood and Sawnwood Total Production Columbia Consortium for Risk Management 71 (CCRM) www.columbiariskmanagement.net
  72. 72. Source: Angus Maddison, Historical Statistics for the World Economy: 1 – 2008 AD. Columbia Consortium for Risk Management 72 (CCRM) www.columbiariskmanagement.net
  73. 73. Source: US Energy and Information Administration (EIA) Columbia Consortium for Risk Management 73 (CCRM) www.columbiariskmanagement.net
  74. 74. GDP per Capita (1990 International Geary-Khamis Dollars) YearSource: Angus Maddison, Historical Statistics for the World Economy: 1 – 2006 AD. Columbia Consortium for Risk Management 74 (CCRM) www.columbiariskmanagement.net
  75. 75. Source: World Bank (2002 data) Columbia Consortium for Risk Management 75 (CCRM) www.columbiariskmanagement.net
  76. 76. 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 Columbia Consortium for Risk Management 76 (CCRM) www.columbiariskmanagement.net
  77. 77. Sources: Earthtrends Database of the WorldResource Institute (WRI) http://earthtrends.wri.org/ Columbia Consortium for Risk Management 77 (CCRM) www.columbiariskmanagement.net
  78. 78. Source: IPPC Columbia Consortium for Risk Management 78 (CCRM) www.columbiariskmanagement.net
  79. 79. Cumulative Emissions (1900-2002): CO2 Emissions (2002) Population (2002)Source: World Resource Institute Source: World Resource Institute Source: World Resource Institute.Source Where WRI Got Data: Sources Used by World Resource Institute: Sources where WRI Got Data From:WRI calculates carbon dioxide emissions from 3 sources EIA. 2004. International Energy Annual 2002. Available Population Division of the Department of Economic and SocialEIA. 2004. International Energy Annual 2002. Available online online at: http://www.eia.doe.gov/iea/carbon.html. Affairs of the United Nations Secretariat. 2007. World Populationat: http://www.eia.doe.gov/iea/carbon.html. Prospects: The 2006 Revision. IEA. 2004. CO2 Emissions from Fuel Combustion (2004IEA. 2004. CO2 Emissions from Fuel Combustion (2004 edition). Available online at:edition). Available online at: http://data.iea.org/ieastore/co2_main.asp.http://data.iea.org/ieastore/co2_main.asp. GDP (2002) Marland, G., T.A. Boden, and R. J. Andres. 2005. Source: World Resource Institute.Marland, G., T.A. Boden, and R. J. Andres. 2005. Global, Global, Regional, and National Fossil Fuel CO2Regional, and National Fossil Fuel CO2 Emissions. in Trends: Emissions. in Trends: A Compendium of Data on Global Source WRI Got Data From:A Compendium of Data on Global Change. Carbon Dioxide Change. Carbon Dioxide Information Analysis Center,Information Analysis Center, Oak Ridge National Laboratory, Oak Ridge National Laboratory, U.S. Department of Development Data Group, The World Bank. 2007. 2007U.S. Department of Energy, Oak Ridge, Tenn., U.S.A. Energy, Oak Ridge, Tenn., U.S.A. World Development Indicators Online. Washington, DC: The World Bank Columbia Consortium for Risk Management 79 (CCRM) www.columbiariskmanagement.net
  80. 80. DISTRIBUTION OF TROPICAL FORESTS Source: Food and Agricultural Organization of the United NationsSource: www.marietta.edu Columbia Consortium for Risk Management 80 (CCRM) www.columbiariskmanagement.net
  81. 81. HOLDRIDGE LIFE ZONE CLASSIFICATION Columbia Consortium for Risk Management 81 (CCRM) www.columbiariskmanagement.net
  82. 82. The North Produces Most Risks• Most CO2 emissions• Most CFC emissions• Most biodiversity destruction Columbia Consortium for Risk Management 82 (CCRM) www.columbiariskmanagement.net
  83. 83. The South suffers most of theeffects. It is most vulnerable to theeffects of climate change on:• food production• living conditions Columbia Consortium for Risk Management 83 (CCRM) www.columbiariskmanagement.net
  84. 84. The North produces most risks The South bears them most Columbia Consortium for Risk Management 84 (CCRM) www.columbiariskmanagement.net
  85. 85. The origins of today’s environmentaldilemmas involve the historical coupling of two different worlds through the international market: the industrialized and the developing regions, the North and the South Columbia Consortium for Risk Management 85 (CCRM) www.columbiariskmanagement.net
  86. 86. •The globalization of the world economysince World War II has intensified apattern of resource use by whichdeveloping nations extract most naturalresources, exporting them toindustrialized nations at prices that areoften below replacement cost Columbia Consortium for Risk Management 86 (CCRM) www.columbiariskmanagement.net
  87. 87. Source: World Bank 2004 data Columbia Consortium for Risk Management 87 (CCRM) www.columbiariskmanagement.net
  88. 88. Source: World Trade Organization (WTO) 2005 data Columbia Consortium for Risk Management 88 (CCRM) www.columbiariskmanagement.net
  89. 89. Source: Dani Rodrik. “Sea Changes in the World Economy.” Paper prepared for the Techintconference, Buenos Aires, August 30, 2005 Columbia Consortium for Risk Management 89 (CCRM) www.columbiariskmanagement.net
  90. 90. Ratio of merchandise exports to GDP, 1950-2005 (Percentage, real trade and GDP at 1990 prices and exchange rates) 25.0 20.0 Percent 15.0 World Average 10.0 5.0 0.0 1950 1998 2005 YearsSource: World Trade Organization (WTO): World Trade Report.http://www.wto.org/english/res_e/reser_e/wtr_arc_e.htm Columbia Consortium for Risk Management 90 (CCRM) www.columbiariskmanagement.net
  91. 91. World Exports and GDP, 1950-2005. (Volume indices, 1950=100) Semi-log scale 10000 Average grow th rates, 1950-2005 5000 Total exports 6.2 Manufactures 7.5 GDP 3.8 2500 Manufactures Total 1000 GDP 500 250 100 1950 1960 1970 1980 1990 2000Source: World Trade Organization (WTO): World Trade Report. http://www.wto.org/english/res_e/reser_e/wtr_arc_e.htm Columbia Consortium for Risk Management 91 (CCRM) www.columbiariskmanagement.net
  92. 92. Growth in the volume of world merchandise trade and GDP, 1996-2006 (Annual percentage change) 12 GDP Merchandise exports 10 8 Average export growth 1996-06 6 Average GDP growth 4 1996-06 2 0 1996 97 98 99 00 01 02 03 04 05 2006 -2Source: World Trade Organization (WTO): World Trade Report. http://www.wto.org/english/res_e/reser_e/wtr_arc_e.htm Columbia Consortium for Risk Management 92 (CCRM) www.columbiariskmanagement.net
  93. 93. Through the international market,industrial nations, housing 20% ofthe world population:• Consume most forest products (pulp, wood)• Consume most products produced through the clearing of forests (cash crops, livestock) Columbia Consortium for Risk Management 93 (CCRM) www.columbiariskmanagement.net
  94. 94. 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 CFCsSource: WRI Columbia Consortium for Risk Management 94 (CCRM) www.columbiariskmanagement.net
  95. 95. ■The South, with 80% of the world’spopulation, extracts and exports mostresources, which are mostly consumed inthe North.■Resources – such as petroleum and wood– are traded at prices which are below realcosts, leading to increased dependence onresource use and to a deepening North-South divide Columbia Consortium for Risk Management 95 (CCRM) www.columbiariskmanagement.net
  96. 96. 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 Columbia Consortium for Risk Management 96 (CCRM) www.columbiariskmanagement.net
  97. 97. GREENHOUSE INDEX: COUNTRIES WITH HIGHEST GREENHOUSE GAS EMISSIONS, 2004Source: CAIT Columbia Consortium for Risk Management 97 (CCRM) www.columbiariskmanagement.net
  98. 98. Total Exports Exports of Raw MaterialsSource: World Trade Organization (WTO). World Trade Overview 2005.http://www.wto.org/english/res_e/statis_e/its2006_e/its06_overview_e.pdf Columbia Consortium for Risk Management 98 (CCRM) www.columbiariskmanagement.net
  99. 99. Columbia Consortium for Risk Management 99(CCRM) www.columbiariskmanagement.net
  100. 100. Columbia Consortium for Risk Management 100(CCRM) www.columbiariskmanagement.net
  101. 101. The UN Food and AgricultureOrganization (FAO) has estimated thatdirect emissions from meat productionaccount for about 20% of the worldstotal greenhouse gas emissionsExceeding emissions from the world’sentire transportation system• Columbia Consortium for Risk Management 101 (CCRM) www.columbiariskmanagement.net
  102. 102. GDP per Capita (1990 International Geary-Khamis Dollars) YearSource: Angus Maddison, Historical Statistics for the World Economy: 1 – 2006 AD. Columbia Consortium for Risk Management 102 (CCRM) www.columbiariskmanagement.net
  103. 103. The U.S. uses 24.3% of the world’s oil output yearly, even though it has about 4% of the world’s populationSOURCE: CIA World Factbook, December 2008 Columbia Consortium for Risk Management 103 (CCRM) www.columbiariskmanagement.net
  104. 104. 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 Columbia Consortium for Risk Management 104 (CCRM) www.columbiariskmanagement.net
  105. 105. Source: World Trade Organization (WTO). World Trade Overview 2005.http://www.wto.org/english/res_e/statis_e/its2006_e/its06_overview_e.pdf Columbia Consortium for Risk Management 105 (CCRM) www.columbiariskmanagement.net
  106. 106. The remarkable rise of ChinaSource: Dani Rodrik. “Sea Changes in the World Economy.” Paper prepared for the Techintconference, Buenos Aires, August 30, 2005 Columbia Consortium for Risk Management 106 (CCRM) www.columbiariskmanagement.net
  107. 107. The remarkable rise of ChinaSource: Dani Rodrik, op.cit. 2005 Columbia Consortium for Risk Management 107 (CCRM) www.columbiariskmanagement.net
  108. 108. Source: United Nations Comtrade Database for Oil Export Data. http://comtrade.un.org/pb/CountryPages.aspx?y=2007.World Bank for GDP data Columbia Consortium for Risk Management 108 (CCRM) www.columbiariskmanagement.net
  109. 109. Source: United Nations Comtrade Database for Oil Export Data. http://comtrade.un.org/pb/CountryPages.aspx?y=2007.World Bank for GDP data Columbia Consortium for Risk Management 109 (CCRM) www.columbiariskmanagement.net
  110. 110. Columbia Consortium for Risk Management 110(CCRM) www.columbiariskmanagement.net
  111. 111. 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
  112. 112. 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
  113. 113. This pattern of trade after WWII canbe explained in substantial measureby a historical difference in property rights in the developing and industrial worlds Columbia Consortium for Risk Management 113 (CCRM) www.columbiariskmanagement.net
  114. 114. Developing countries hold mostresources as common property while in industrial economies these are usually private property Columbia Consortium for Risk Management 114 (CCRM) www.columbiariskmanagement.net
  115. 115. Natural resources, such as forests andmineral resources are often held ascommon property in developingcountries. They are often used on a“first come first served” basis in an openaccess process Columbia Consortium for Risk Management 115 (CCRM) www.columbiariskmanagement.net
  116. 116. Source: World Trade Organization (WTO). World Trade Overview 2005.http://www.wto.org/english/res_e/statis_e/its2006_e/its06_overview_e.pdf Columbia Consortium for Risk Management 116 (CCRM) www.columbiariskmanagement.net
  117. 117. 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 Columbia Consortium for Risk Management 117 (CCRM) www.columbiariskmanagement.net
  118. 118. The resulting agricultural outputis mostly sold in internationalmarkets (pulp and wood, cashcrops, livestock, Barbier) Columbia Consortium for Risk Management 118 (CCRM) www.columbiariskmanagement.net
  119. 119. 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 Columbia Consortium for Risk Management 119 (CCRM) www.columbiariskmanagement.net
  120. 120. Columbia Consortium for Risk Management 120(CCRM) www.columbiariskmanagement.net
  121. 121. Columbia Consortium for Risk Management 121(CCRM) www.columbiariskmanagement.net
  122. 122. 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 Columbia Consortium for Risk Management 122 (CCRM) www.columbiariskmanagement.net
  123. 123. Note: The graph corresponds to the regression system in Table 3, column 2 (next slide). The curve shows the partial relationbetween the Gini coefficient and the log of per capita GDP, holding fixed the estimated effects of the explanatory variablesother than the log of per capita GDP and its square. Source: Robert Barro. Inequality and Growth Revisted. ADB January2008. http://aric.adb.org/pdf/workingpaper/WP11_%20Inequality_and_Growth_Revisited.pdf Columbia Consortium for Risk Management 123 (CCRM) www.columbiariskmanagement.net
  124. 124. Source: Robert Barro. Op.cit. 2008.Columbia Consortium for Risk Management 124(CCRM) www.columbiariskmanagement.net
  125. 125. Source: World Trade Organization (WTO). World Trade Overview.http://www.wto.org/english/res_e/statis_e/its2006_e/its06_overview_e.pdf Columbia Consortium for Risk Management 125 (CCRM) www.columbiariskmanagement.net
  126. 126. Note: GNNP (Green Net National Product) is GNP minus the damage from carbon dioxide emissions, depreciation of producedassets 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 Columbia Consortium for Risk Management 126 (CCRM) www.columbiariskmanagement.net
  127. 127. Without computing the “replacementcosts” of extraction, there is a falseimpression of resource abundanceand comparative advantage leadingto a global version of the “tragedy ofthe commons” Columbia Consortium for Risk Management 127 (CCRM) www.columbiariskmanagement.net
  128. 128. Note: GNNP (Green Net National Product) is GNP minus the damage from carbon dioxide emissions, depreciation of producedassets 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 Columbia Consortium for Risk Management 128 (CCRM) www.columbiariskmanagement.net
  129. 129. Source: Development Data Group, The World Bank. 2008. 2008 World Development IndicatorsOnline. 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 Columbia Consortium for Risk Management 129 (CCRM) www.columbiariskmanagement.net
  130. 130. Columbia Consortium for Risk Management 130(CCRM) www.columbiariskmanagement.net
  131. 131. Barrels of Oil (Billions)Source: Energy Information Administration. August 27, 2008. http://www.eia.doe.gov/emeu/international/oilreserves.html Columbia Consortium for Risk Management 131 (CCRM) www.columbiariskmanagement.net
  132. 132. Growth in the volume of world merchandise trade and GDP, 1996-2006 (Annual percentage change) 12 GDP Merchandise exports 10 8 Average export growth 1996-06 6 Average GDP growth 4 1996-06 2 0 1996 97 98 99 00 01 02 03 04 05 2006 -2Source: World Trade Organization (WTO): World Trade Report. http://www.wto.org/english/res_e/reser_e/wtr_arc_e.htm Columbia Consortium for Risk Management 132 (CCRM) www.columbiariskmanagement.net
  133. 133. Source: World Trade Organization (WTO) 2005 data Columbia Consortium for Risk Management 133 (CCRM) www.columbiariskmanagement.net
  134. 134. Source: International Monetary Fund (IMF). World Economic Outlook 2008.http://www.imf.org/external/pubs/ft/weo/2008/01/index.htm#ch1fig Columbia Consortium for Risk Management 134 (CCRM) www.columbiariskmanagement.net
  135. 135. Source: Alan Thein Durning. “How Much is Enough?” The Worldwatch Environmental Alert Series. 1992http://www.ncseonline.org/PopPlanet/ePopulationReports/rest/abstracts/148954.pdf Columbia Consortium for Risk Management 135 (CCRM) www.columbiariskmanagement.net
  136. 136. Source: Baker, E. et al. (2004). Vital Waste Graphics. UNEP/DEWA/GRID-Europe, Retrieved Jan. 24, 2009, fromhttp://www.grida.no/_res/site/file/publications/vital-waste/wastereport-full.pdf. Columbia Consortium for Risk Management 136 (CCRM) www.columbiariskmanagement.net
  137. 137. Source: US Energy and Information Administration (EIA) 2004 Data Columbia Consortium for Risk Management 137 (CCRM) www.columbiariskmanagement.net
  138. 138. Source: International Monetary Fund (IMF). World Economic Outlook 2008.http://www.imf.org/external/pubs/ft/weo/2008/01/index.htm#ch1fig Columbia Consortium for Risk Management 138 (CCRM) www.columbiariskmanagement.net
  139. 139. As a result of this trade pattern the North over-consumesresources, and the South over- extracts them Chichilnisky, American Economic Review, 1994 Columbia Consortium for Risk Management 139 (CCRM) www.columbiariskmanagement.net
  140. 140. As a consequence of these historical facts, the EarthResources are undervalued in international markets Columbia Consortium for Risk Management 140 (CCRM) www.columbiariskmanagement.net
  141. 141. Because most resource- intensive exports come from developing nations, their own economies and people areundervalued in economic terms Columbia Consortium for Risk Management 141 (CCRM) www.columbiariskmanagement.net
  142. 142. Resource intensive trade leadsto an increasingly divided North- South world Columbia Consortium for Risk Management 142 (CCRM) www.columbiariskmanagement.net
  143. 143. GDP per Capita (1990 International Geary-Khamis Dollars) YearSource: Angus Maddison, Historical Statistics for the World Economy: 1 – 2006 AD. Columbia Consortium for Risk Management 143 (CCRM) www.columbiariskmanagement.net
  144. 144. Privatizing resources in developing countries may be impractical in any reasonable time scale.An alternative is to privatize the global commons. Columbia Consortium for Risk Management 144 (CCRM) www.columbiariskmanagement.net
  145. 145. Rather than privatizing forestand mineral deposits “on theground”, we can privatize and trade the rights to use theatmosphere as a carbon sink, and the use of biodiversity Columbia Consortium for Risk Management 145 (CCRM) www.columbiariskmanagement.net
  146. 146. Columbia Consortium for Risk Management 146(CCRM) www.columbiariskmanagement.net
  147. 147. 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 Columbia Consortium for Risk Management 147 (CCRM) www.columbiariskmanagement.net
  148. 148. New Economic Findings from the UN Carbon Market• Efficiency in trading permits requires more emission rights to developing countries• Why? Columbia Consortium for Risk Management 148 (CCRM) www.columbiariskmanagement.net
  149. 149. Typically efficiency requires thatthose with fewer endowments ofprivate goods should have ahigher allocation of propertyrights on the public goods■Chichilnisky, 1992-3■Chichilnisky and Heal, 1993■Chichilnisky, Heal and Starrett, 1993-4 Columbia Consortium for Risk Management 149 (CCRM) www.columbiariskmanagement.net
  150. 150. 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? Columbia Consortium for Risk Management 150 (CCRM) www.columbiariskmanagement.net
  151. 151. 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
  152. 152. The clean development mechanism of theKyoto Protocol has already transferred$50Bn to poor nations for private projectsdecreasing carbon emissions – The World Bank“Trends and Facts of the Carbon Market” 2011The CDM must be extended to CarbonNegative projects to allow funds for LatinAmerica, Africa and AOSIS –Why?And How? Columbia Consortium for Risk Management 152 (CCRM) www.columbiariskmanagement.net
  153. 153. The next lectures will address these issues and the rays of hope for a solution Columbia Consortium for Risk Management 153 (CCRM) www.columbiariskmanagement.net

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