INDUSTRIALISATION AND GLOBAL CLIMATE CHANGE

SEMESTER 2 2014
INDUSTRIALISATION AND GLOBAL
CLIMATE CHANGE
IDEAS THAT WILL CHANGE THE 21ST
CENTURY

LECTURE 2: THE SCIENTIFIC METHOD
FEBRUARY 1616:
THE CARDINALS OF THE HOLY OFFICE DELIVERED
THE UNANIMOUS VERDICT ON GALILEO GALILEI:
I. THE ‘SUN IS THE CENTRE OF THE WORLD’ IS
“FORMALLY HERETICAL”
II. THE ‘EARTH IS NOT THE CENTRE OF THE
WORLD’ IS “ERRONEOUS IN FAITH”
ON 26 FEBRUARY 1616 THE INQUISITION TOOK
GALILEO INTO CUSTODY

OXFORD MEETING OF BRITISH
ASSOCIATION 1866 ON DARWIN
• BISHOP WILBERFORCE TO T H HUXLEY: “DO
YOU CLAIM DESCENT FROM AN APE ON
YOUR FATHER’S OR YOUR MOTHER’S SIDE?
• T H HUXLEY TO BISHOP WILBERFORCE: “I
WOULD RATHER HAVE AN APE FOR A
GRANDFATHER THAN A MAN WHO MISUSED
HIS GIFTS TO OBSCURE IMPORTANT
SCIENTIFIC DISCUSSION BY RHETORIC AND
RELIGIOUS PREJUDICE.”

“ HE (TONY ABBOTT) DID SAY CRAP; HE DID SAY ‘I’M A
SCEPTIC’ AND THERE WAS BIG APPLAUSE”, (JOE)
McCRACKEN SAYS ( THE AUSTRALIAN 12 DECEMBER 2009)

THE SCIENTIFIC METHOD
“ A METHOD OF RESEARCH IN WHICH THE
STEPS OF IDENTIFICATION OF A PROBLEM,
COLLECTION OF RELEVANT DATA,
FORMULATION OF HYPOTHESES ON THE
BASIS OF THIS DATA, AND, FINALLY,
EMPIRICAL TESTING OF THE HYPOTHESES TO
PROVE THEIR VALIDITY”

BEGINNINGS OF SCIENTIFIC METHOD
• PYTHAGORAS OF SAMOS: LOGOS COMBINED MATHEMATICS &
THEOLOGY
• 12TH CENTURY SCHOLARS: LOGOS COMBINED DIDACTICS & JUDEO-
CHRISTIAN BELIEF
• LOGIC EMERGED AS THE LANGUAGE OF SCHOLARS (OXFORD TRIPOS)
• ARAB SCHOLARS: LOGIC TO ALCHEMY, ASTROLOGY,ASTRONOMY,
ZOOLOGY
• 17TH CENTURY START OF MODERN SCIENCE EG. COPERNICUS’ METHOD: (1)
PATIENT COLLECTION VAST DATA (2)BOLD HYPOTHESES – THE MARK OF
GENIUS!
• BERTRAND RUSSELL (1994)
“IN THE WELTER OF CONFLICTING FANATICISMS, ONE OF THE FEW UNIFYING
FORCES IS SCIENTIFIC TRUTHFULNESS, BY WHICH I MEAN BASING OUR
BELIEFS UPON OBSERVATIONS & INFERENCES AS IMPERSONAL & AS
MUCH DIVESTED OF LOCAL & TEMPERAMENTAL BIAS AS IS POSSIBLE FOR
HUMAN BEINGS.”

RECOGNISING NON SCIENTIFIC
METHODS OF INQUIRY
(1) AUTHORITY
AN APPEAL TO SOME AUTHORITY IN THE COMMUNITY, NATION ETC.
TO SUBSTANTIATE A VIEW PUT BY AN INDIVIDUAL. EG:
+RELIGIOUS LEADERS
+ POLITICIANS
+ “SHOCK JOCKS”
+ JOURNALISTS
THE MORE DEMENTED THE AUTHORITY FIGURE THE GREATER THE
APPEAL TO HIS INFALLIBILTY – OFTEN VESTED IN COERCION

NON-SCIENTIFIC METHODS CONT.
(2) INTUITION
THIS METHOD USES “SELF EVIDENCE OF TRUTH”. A
PROPOSITION IS SO OBVIOUSLY TRUE THAT WHEN
STATED IT CARRIES WITH IT THE UNDENIABLE
CONVICTION OF ITS TRUTH
EXAMPLES
• USED IN MEDIA “SOUND BITES” & SLOGANEERING
• WHEN USED IN SOCIAL SCIENCES IT IS DANGEROUS
• FAVOURED BY DEMAGOGUES
• MOST RELIGIOUS FUNDAMENTALISTS

NON-SCIENTIFIC METHODS CONT.
“ MYSTICS, INTUITIONISTS, AUTHORITARIANS,
VOLUNTARISTS AND FICTIONALISTS ARE ALL TRYING
TO UNDERMINE RESPECT FOR THE RATIONAL
METHODS OF SCIENCE. THESE ATTACKS HAVE ALWAYS
BEEN MET WITH WIDE ACCLAIM AND ARE BOUND TO
CONTINUE TO DO SO, FOR THEY STRIKE A
RESPONSIVE NOTE IN HUMAN NATURE.
UNFORTUNATELY THEY DO NOT OFFER ANY RELIABLE
ALTERNATIVE METHOD FOR OBTAINING VERIFIABLE
KNOWLEDGE.”
(COHEN AND NAGLE. 1957)

APPLYING THE SCIENTIFIC METHOD
(1): OBTAIN THE FACTS
1. DISCOVER THE FACTS (NEEDS LOTS OF
THOUGHT)
2. SELECT AND SIFT THE FACTS & STATE THE
PROBLEM TO BE SOLVED
3. FORMULATE THE PROBLEM (THINK
LATERALLY)

(2) SET UP THE HYPOTHESES
HYPOTHESIS (MACQUARIE DICTIONARY):
“ A PROPOSITION ( OR SET OF PROPOSITIONS)
SUGGESTED AS AN EXPLANATION FOR THE
OCCURRENCE OF SOME SPECIFIED GROUP OF
PHENOMENA, EITHER ASSERTED MERELY AS A
PROVISIONAL CONJECTURE TO GUIDE
INVESTIGATION (CALLED A WORKING
HYPOTHESIS) OR ACCEPTED AS HIGHLY
PROBABLE IN THE LIGHT OF ESTABLISHED FACTS”

HYPOTHESES CONT.
• H. ARE SUGGESTED BY SOMETHING OBSERVED.
• H. ARE REQUIRED AT EVERY STAGE OF AN
INQUIRY.
• H. CAN BE REGARDED AS SUGGESTIONS OF
POSSIBLE CONNECTIONS BETWEEN FACTS.
• H. CAN BE LIMITLESS IN NUMBER.
• H. CAN BE SET UP BY MATHEMATICS.
• NO H. STATING A GENERAL PROPOSITION CAN
BE ABSOLUTELY TRUE.

(3) COLLECT THE EVIDENCE
• PHYSICAL & SOCIAL SCIENCES DEMAND &
LOOK FOR LOGICALLY ADEQUATE GROUNDS
FOR PROPOSITIONS TO BE PUT FORWARD.
• NO SINGLE PROPOSITION DEALING WITH
FACTS IS BEYOND SIGNIFICANT DOUBT.
• SCIENCE IS ALWAYS READY TO ABANDON A
THEORY WHEN THE FACTS DEMAND IT.
• VERIFICATION OF THEORIES IS ONLY
APPROXIMATE.

(4) SYSTEMATIC INTERCONNECTION
TO FACTS
• SCIENCE DEMANDS & LOOKS FOR LOGICALLY
ADEQUATE GROUNDS FOR PROPOSITIONS.
• NO SINGLE PROPOSITION DEALING WITH
FACTS IS BEYOND SIGNIFICANT DOUBT.
• SCIENCE IS ALWAYS READY TO ABANDON A
THEORY WHEN THE FACTS DEMAND IT.
• VERIFICATION OF THEORIES IS ONLY
APPROXIMATE.

SYSTEMATIC INTERCONNECTION
CONT.
• THE PROPOSITIONS ASSERTED BY “COMMON
SENSE” ARE VAGUE, A MISH MASH OF IDEAS,
MOST OF WHICH ARE INCOMPATIBLE WITH
EACH OTHER.
• THE ABANDONMENT OF A THEORY IN
SCIENCE IS INDICATIVE OF THE ROBUST
NATURE OF THAT SCIENCE – THAT IT CAN
SYSTEMATICALLY HANDLE DISSENT TO
IMPROVE THE THEORIES IN THAT SCIENCE.

(5) APPLY SELF CORRECTING NATURE
• THE SCIENTIFIC METHOD IS A SELF CORRECTING
PROCESS.
• GENERAL PROPOSITIONS ARE ESTBLISHED BY
REPEATED SAMPLING.
• AS NEW EVIDENCE EMERGES THERE IS A
CONTINUOUS PROCESSING OF FACTS LEADING
TO PRINCIPLES & THEORIES, AND BACK FROM
PRINCIPLES & THEORIES TO FACTS.
• THE METHOD OF SCIENCE IS A CIRCULAR
PROCESS.

ABUSES OF THE SCIENTIFIC METHOD
(1) FALLACIES OF REDUCTION
(a) SCIENCE DENIES THE REALITIES OF CAUSAL
LINKS, WHERE SCIENTIFIC WORKS ARE
REGARDED SIMPLY AS WORDS, AND CONSIGNED
TO THE DUSTBIN, IN A BID TO HAVE THEM
FORGOTTEN
(b) SCIENCE IS A FALSIFICATION OF REALITY EG:
FOR CLIMATE SCEPTICS, CLIMATE IS SEEN AS A
SINGLE ENTITY (USING THEIR OWN DEFINITION
OF IT). THEY DO NOT UNDERSTAND THAT
CLIMATE IS A COMPLEX SYSTEM MADE UP OF
THOUSANDS OF PARTS.

(2) FALLACY OF SIMPLISM
“ IN ANY CASE WE MUST GUARD AGAINST
IDENTIFYING THE TRUE WITH THE
APPARENTLY SIMPLE. AND IN FACT HASTY
MONISM, THE UNCRITICAL ATTEMPT TO
BRING EVERYTHING UNDER ONE PRINCIPLE
OR CATEGORY, IS ONE OF THE MOST
FREQUENT PERVERSIONS OF SCIENTIFIC
METHOD.”
(COHEN AND NAGEL)

(3) THE “GENETIC” FALLACY
THERE ARE TWO WAYS IN WHICH THIS FALLACY
WORKS:
(a) MISTAKENLY ACCEPTING A LOGICALLY
PERCEIVED ORDER OF EVENTS AS REALITY.
(b) MISTAKENLY ASSERTING THAT AN ACTUAL
HISTORY OF EVENTS IN NATURAL OR SOCIAL
SCIENCES CAN TAKE THE PLACE OF A LOGICAL
ANALYSIS OF THESE EVENTS

ABUSERS OF THE SCIENTIFIC METHOD
(1) THE MYSTICS
THE ACTIVITIES OF MYSTICS AND OCCULTISTS AND
OTHERS WHO TAKE RELATIVELY EXTREME VIEWS
FROM THEIR PARTICULAR UNDERSTANDING OF BOTH
RELIGION AND “FACTS”, AS THEY PERCEIVE THEM TO
BE, HAS BROUGHT UNNECESSARY CONFLICTS
BETWEEN SCIENCE AND ESTABLISHED RELIGIONS. IT IS
WHEN WHOLE BODIES OF RELIGION STRAY INTO
SCIENTIFIC FIELDS AND MAKE STATEMENTS THAT
CLEARLY FLY IN THE FACE OF THE FACTS THAT WE ARE
IN THE REALMS OF THE MYSTICS AND OCCULTISTS
WHO NEED TO BE OPPOSED EG: DINOSAURS AND
HUMANS CO-HABITED ON EARTH.

ABUSERS OF THE SCIENTIFIC METHOD
(2) THE SOPHISTS
THIS IS THE WORLD WE ARE VERY FAMILIAR
WITH IN THIS AGE OF ELECTRONIC
COMMUNICATION. IT IS A WORLD
INHABITED BY TYRANTS, DICTATORS,
CROOKED POLITICIANS, THEIR SPIN
DOCTORS,BIASSED MEDIA, AND SHOCK
JOCKS . IN MANY CASES SOPHISTRY TURNS
TO ABUSE WHEN CONFRONTED WITH THEIR
ERRORS.

THE SOPHISTS CONT.
“The word ‘sophist’ which originally denoted a wise or
learned man (like the word ‘savant’) has, through
historic accidents, came to mean one who argues to
make the worse seem the better cause … But, leaving
all questions of motive aside as irrelevant to logic, we
may call attention to the fact that in addition to the
examples in the previous section , certain other
arguments are frequently used (against scientific
issues) as if they were logically cogent, though no one
consistently pretends that they are. They are
generally used as refutations and may therefore be
called sophistical refutations.”
(Cohen and Nagel. 1957)

LECTURE 3
THE
GLOBAL COSTS AND BENEFITS
OF
INDUSTRIALISATION

IRONBRIDGE
“ NONE OF THE MANY OVERSEAS VISITORS WHO WALKED ACROSS
THE IRON BRIDGE AROUND THE YEAR 1800 SAID THAT HE WAS
EXAMINING THE FIRST INDUSTRIAL NATION, BUT ALL WERE
AWARE THAT THEY WERE SEEING SOMETHING NEW, A FORM OF
SOCIETY WHICH WAS DIFFERENT FROM ANYTHING THEY HAD
EXPERIENCED IN SWEDEN, FRANCE, GERMANY, ITALY OR THE
UNITED STATES. MUCH OF THE NOVELTY WAS IN THE LANDSCAPE,
IN THE FURNACES, MINES, KILNS, STEAM ENGINES, AND CANALS…
STILL MORE IT COULD BE OBSERVED ON THE SLOPES OF THE
IRONBRIDGE GORGE, IN THE UNTIDY SCATTER OF COTTAGES,
MINES, PRIMITIVE RAILWAYS, WASTE TIPS AND RIVERSIDE
WHARVES.”
(BARRY TRINDER. IRONBRIDGE. THE CRADLE OF INDUSTRIALISATION)

“ IN THE LONG RUN, THEN, SOCIAL AND ECONOMIC GOALS ARE NOT
INHERENTLY CONFLICTING BUT INTEGRALLY CONNECTED.
COMPETITIVENESS TODAY DEPENDS ON THE PRODUCTIVITY WITH
WHICH COMPANIES CAN USE LABOUR, CAPITAL AND NATURAL
RESOURCES TO PRODUCE HIGH QUALITY GOODS AND SERVICES.
PRODUCTIVITY DEPENDS ON HAVING WORKERS WHO ARE
EDUCATED, SAFE, HEALTHY, DECENTLY HOUSED AND MOTIVATED
BY A SENSE OF OPPORTUNITY. PRESERVING THE ENVIRONMENT
BENEFITS NOT ONLY OF SOCIETY BUT COMPANIES TOO, BECAUSE
REDUCING POLLUTION AND WASTE CAN LEAD TO A MORE
PRODUCTIVE USE OF RESOURCES AND HELP PRODUCE GOODS
THAT CONSUMERS VALUE.”
(MICHAEL E. PORTER. “ ON COMPETITION”)

• EVERY ECONOMIC ACTIVITY GENERATES COSTS AND BENEFITS FOR
THOSE WHO OWN AND MANAGE THE FACTORS OF PRODUCTION.
• IF THE ECONOMIC ACTIVITY IS SUCCESSFUL IT PRODUCES BENEFITS FOR
THE “ENTREPRENEURS”, WHICH ARE CALLED “PROFITS”.
• “INTERNAL BENEFITS” ARE THOSE WHICH ACCRUE TO INDIVIDUALS AS A
RESULT OF SOME ECONOMIC ACTIVITY (EITHER AS ENTREPRENEURS OR
THOSE WHO WORK FOR THEM IF THE ENTREPRENEURS ARE NOT
EXPLOITIVE)
• ALL ECONOMIC ACTIVITY HAS “EXTERNAL” BENEFITS AND COSTS
(SOMETIMES CALLED “EXTERNALITIES”) WHICH GO TO PEOPLE OUTSIDE
THE ORGANISATION CREATING ISSUES FOR CAPITALIST ORGANISATIONS
WHO EITHER: NOT PRICE THEM AT ALL (“FREE’ GOODS/SERVICES); OR
REQUIRE GOVERNMENTS TO CONSTRAIN OR PROHIBIT THE ACTIVITIES.
• EXTERNALITIES ARE IGNORED WHERE THERE IS SIGNIFICANT PUBLIC AND
PRIVATE CORRUPTION; OR ECONOMIC ACTIVITY IS UNCONTROLLED AND
JUSTIFIED BY THE MANTRA: “LET THE MARKET MECHANISM DO THE
WORK, UNFETTERED”

EXTERNALITIES
• EXTERNALITIES ARE EITHER: “TECHNOLOGICAL’ OR “PECUNIARY”
• MATHEMATICAL ECONOMICS NOW MAKES IT POSSIBLE TO
MEASURE AND PUT A PRICE ON EXTERNALITIES OF MAJOR
PROJECTS – ESPECIALLY SOCIAL AND ENVIRONMENTAL
EXTERNALITIES.
• MEASUREMENT WAS NOT ENOUGH. METHODS HAD TO BE
FOUND TO COMPENSATE THOSE WHO BORE THE COSTS.
• “SHADOW PRICING” WAS SEEN AS THE ANSWER – THE
“ATTRIBUTED” PRICE OR VALUE GIVEN TO THE EXTERNALITIES,
WHERE NO PRICE CAN BE SET
• MODERN ECONOMICS HAS FOUND MATHEMATICAL
COST/BENEFIT MODELS, BUT THE DIFFICULTY IS ALWAYS THE
ACCURACY OF THE DATA USED.

AMERICAN CIGARETTE INDUSTRY
• THE CIGARETTE INDUSTRY IS THE PARADIGM FOR
INDUSTRIES WHICH CREATE MASSIVE EXTERNAL
COSTS WHICH HAVE BEEN PASSED ON TO SOCIETY
OVER A VERY LONG PERIOD.
• FROM 1964 OVERWHELMING MEDICAL EVIDENCE
BEGAN TO EMERGE REGARDING THE DEADLY EFFECTS
OF SMOKING.
• AMERICAN TOBACCO INDUSTRY MOUNTED A
SOPHISTICATED LEGAL CAMPAIGN TO PROTECT ITS
MARKETS.
• DESPITE LEGAL CONSTRAINTS IN MANY COUNTRIES &
HEAVY TAXATION IT CONTINUES TO THRIVE GLOBALLY.

HOW CIGARETTES CAME TO BECOME
A HUGE INDUSTRY
• AMERICAN CIVIL WAR. OFFICERS SMOKED EXPENSIVE HAND ROLLED CIGARETTES
• 1884 A RENTED CIGARETTE ROLLING MACHINE COULD MAKE 220 CIGS A MINUTE & SOLD FOR 33 CENTS PER
1000. JAMES B DUKE OPENED A MASS MARKET BY SPENDING BIG SUMS ON ADVERTISING
• 1890 DUKE FORMED AMERICAN TOBACCO COMPANY (A.T) – A MONOPOLY FROM 5 LEADING TOBACCO
COMPANIES
• 1900 A.T CONTROLLED 95% OF MARKET & BOUGHT UP 250 COMPANIES AROUND WORLD.
• A.T MONOPOLY BROKEN UP BY SHERMAN ACT
• BY 1925 2 COMPANIES CONTROLLED MARKET – AT AND RJ REYNOLDS TOBACCO COMPANY 82% OF US MARKET.
SMOKING NOW FASHIONABLE AND ITS ADDICTIVE PROPERTIES BECAME KNOWN
• WORLD WAR II AND 1946 TOBACCO ANTI-TRUST CASE & RAPID GROWTH OF SUPPLIERS
• THE INDUSTRY GLOSSED OVER MEDICAL EVIDENCE APPEARING IN 1953. LABELLED A “CANCER SCARE” &
TREATED IT AS A MARKETING & P.R. CHALLENGE. HEAVILY PROMOTED ITS “FILTER” BRANDS WHICH TOOK 51%
OF A MARKET WHICH ONLY DIPPED SLIGHTLY. IN 1950s FILTERS MADE FROM “CROCODILE ASBESTOS”
(crocidolite. Blue asbestos . Best heat resistance but most dangerous)
• OTHER STRATEGY WAS TO MAKE GVERNMENTS ADDICTED TO THE REVENUE THEY COULD MAKE BY TAXING A
“SINFUL” PRODUCT. THIS HAD WORKED WELL WITH ALCOHOL. NORTH CAROLINA HAD TRIED THIS FIRST IN 1900
WHERE CIGARETTES STILL SOLD FOR $1.50 PER THOUSAND WHEN THE STATE CIGARETTE TAX WAS $1. 50
• (MANY YEARS LATER AUTHORITIES WOULD COME TO REALISE THAT THE PRICE OF AN ADDICTIVE SUBSTANCE IS
“INELASTIC” IE: CONSUMERS WILL PAY ALMOST ANY PRICE TO BUY AN ADDICTIVE SUBSTANCE)

AMERICAN CIGARETTE INDUSTRY
ECONOMICS (1958)
• AMER.CIGS CONSUMED 436.3 BILLION
• AMER. SPENDING ON CIGS $5.7 BILLION
• SHARE OF AMER. GDP 1.3%
• STATE EXCISE TAXES $667 MILLION
• FEDERAL EXCISE TAXES $1.6 BILLION
• CORPORATE INCOME TAXES $250 MILLION
• TOTAL TAXES $2.7 BILLION
• TOTAL CIG COMPANY PROCEEDS $5.9 BILLION

IMPACT ON AMERICA OF TOBACCO
• 42.1 MILLION AMERICANS STILL SMOKE
• 18.1 % OF ALL ADULTS SMOKE
• THIS HIGH INCIDENCE OF SMOKING IS DESPITE: OVERWHELMING MEDICAL
EVIDENCE, INCREASING COST, & NEGATIVE ADVERTISING.
• LUNG CANCER CAUSED 160,340 DEATHS IN AMERICA IN 2012
• 81% OF LUNG CANCER SUFFERERS ARE OVER 60 YEARS. 80% – 90% WERE LONG
TERM SMOKERS
• IN 1970 A PACKET OF 20 CIGS COST 38 CENTS OF WHICH 18 CENTS WERE PAID IN
TAXES
• IN 2011 A PACKET OF 20 CIGS COST $5.62 OF WHICH $2.35 WERE PAID IN TAXES
• THREE YEAR TOTAL ECONOMIC COST 2009 – 2012 ATTRIBUTED TO SMOKING:
+$133 BILLION DIRECT MEDICAL CARE FOR ADULTS
+$156 BILLION PERIODIC ILLNESS COSTS ON LOST WORK TIME

EXTERNAL COSTS CAUSED BY GLOBAL
INDUSTRIALISATION SINCE 1800
• FIRST INDUSTRIAL REVOLUTION IN BRITAIN
1700s – TO EUROPE & “NEW WORLD”
(DOMINIONS) – JAPAN- MATURED INTO THE
“DEVELOPED” ECONOMIES.
• SECOND INDUSTRIAL REVOLUTION IN ASIA IN
LATE 20TH CENTURY – “DEVELOPING “
ECONOMIES
• BOTH REVOLUTIONS HAVE BEEN “NON-
LINEAR” – STOPS AND STARTS IN GROWTH

IN THE BEGINNING
• COALFIELDS IN SHROPSHIRE SUPPLIED COAL FOR IRON PRODUCTION FIRST HALF 1700s
• ALSO FIRST HALF - 4 WATER POWERED BLAST FURNACES AT EDGE OF COALFIELD LINKED TO
FORGES, FURNACES & MILLS
• 1709 SMELTING IRON ORE USING COKE INSTEAD OF CHARCOAL AS FUEL. BY 1750s 9 BLAST
FURNACES AT COALBROOKDALE
• 1780s ONE THIRD OF BRITAIN’S PIG IRON & IRONMASTERS BEGAN TO EXPERIMENT
• APPLICATION OF THE STEAM ENGINE:
1. RECYCLING WASTE WATER
2. BLOWING AIR INTO BLAST FURNACES
3. HAULING COAL FROM PITS
• 1800 INDUSTRIAL CENTRE WITH 200 STEAM ENGINES
• INNOVATION OF COKING COAL SPREAD
• MASS PRODUCTION OF WROUGHT IRON FOR CONSUMER & INDUSTRIAL PRODUCTS
• CAST IRON FOR BIG ENGINEERING
• STEELS RAILS FOR RAILWAYS
• COAL USED IN MALT,GLASS, BRICKS, POTTERY, TOBACCO PIPES, LIME & TAR
• 1979 THE FOUNDATION DEEP COAL MINES WERE CLOSED BECAUSE UNECONOMIC.

INDUSTRIALISATION’S “NEW CLASS”
• NEW CLASS OF ENTREPRENEURS, NEW CLASS OF
SKILLED TRADESMEN, AND THE ARISTOCRATS,
THE “COLLIERS”.
• PERIODIC INDUSTRIAL DISPUTES LED TO RIOTS.
• LIVING CONDITIONS:
+COTTAGES SMALL BUT WELL BUILT &
HAPHAZARDLY LOCATED.
+DEATH RATE 22 PER 1000 STATIC THEN DECLINE
FROM 1870s.

THE INDUSTRIAL CITY
“ THE PEOPLE OF THE INDUSTRIAL CITY WERE NOT BEAUTIFUL . NOR WERE THEIR
DWELLINGS. NOR, A COMMONPLACE POINT, WERE THE PROCESSES BY WHICH
THE GOODS WERE MADE. THESE ALL BUT UNIFORMLY INVOLVED MUCH SMOKE
AND GRIME. COAL HAD TO BE DUG AND WASHED; IRON ORE HAD TO BE
SMELTED; LOCOMOTIVES HAD TO BE FIRED; STEAM ENGINES HAD TO BE
FUELLED; THESE WERE ALL NECESSARYEVEN FOR PROCESSES THAT WERE
OTHERWISE CLEAN. SO ALMOST ALL INDUSTRIAL OPERATIONS NURTURED AND
SPREAD FILTH. AMIDST THAT VALUABLE MODERN CONCERN OVER THE EFFECT OF
INDUSTRIAL GROWTH ON THE ENVIRONMENT FEW NOTE THAT THE COURSE OF
INDUSTRIAL PROGRESS HAS INVOLVED A REMARKABLE AND STEADY MARCH
FROM THE FOULS PROCESS TO THE RELATIVELY PURE ONE – FROM DIRTY COAL
TO CLEAN GAS, OIL AND ELECTRICITY; FROM BELCHING STEAM ENGINES TO
CLEANER INTERNAL COMBUSTION ENGINES AND THE WHOLLY ANTISEPTIC
ELECTRIC MOTOR, THE ULTIMATE POWER PLANT OF WHICH IS FAR MORE
CAREFULLY MONITORED FOR POLLUTION THAN THE MULTITUDE OF CHIMNEYS IT
REPLACED….THE EARLY PROCESSES FIRMLY ESTABLISHED THE REPUTATION OF
THE INDUSTRIAL CITY AS A DIRTY PLACE.”
(J.K. GALBRAITH. 1977)

LONDON’S COAL SMOKE
• “…(LONDON IS)THE ONLY CITY IN THE WORLD THAT COMPROMISED
SOCIAL AMENITY TO PRIVATE CAPITAL ACCUMULATION, BUT TODAY -
WITH THIS EQUATION SEEMINGLY TILTED INEXORABLY TOWARDS
PRIVATE CAPITAL OVER SOCIAL WELLBEING – HALF THE WORLD’S
POPULATION LIVE IN CITIES WHOSE AIR IS UNFIT TO BREATHE.”
(A.J. C. MAYNE. 2007)
• ALL INDUSTRIAL CITIES IN EUROPE AND NORTH AMERICA WERE
SUBJECTED TO THE FOUR D’s OF THE COAL AND OTHER POLLUTANTS
THEY BURNED:
+ DISRUPTION
+DEPRIVATION
+ DISEASE
+ DEATH
• ALL OF THESE ARE NOW MEASUREABLE – TO SOME EXTENT – AS
EXTERNAL COSTS

LONDON 1870: POLLUTION AND
SQUALOR UNDER RAIL VIADUCT

LONDON’S THICK, FOUL SMELLING,
YELLOW-BROWN COAL SMOKE
• DECEMBER 1813 – SMOG SMELLING OF TAR.
UNKNOWN DEATHS AND SICKNESS
• DECEMBER 1873 – COAL TAR SMOG. 40%
INCREASE IN DEATHS
• JANUARY 1880 – COAL TAR SMOG. INCREASE IN
DEATHS RECORDED
• FEBRUARY 1882 – AS ABOVE
• DECEMBER 1892 – AS ABOVE
• NOVEMBER 1948 – AS ABOVE

LONDON’S KILLER SMOG DECEMBER
1952
A SMOG CAUSED BY HOUSES BURNING COAL FIRES, REACHED A HEIGHT OF 200
METRES FOR 4 DAYS. ITS MEASURED POLLUTION WAS:
1. 1000 TONNES OF SMOKE PARTICLES
2. 2000 TONES OF CARBON DIOXIDE
3. 140 TONNES OF HYDROCHLORIC ACID
4. 14 TONNES OF FLUORINE COMPOUNDS
5. 3370 TONNES OF SULPHUR DIOXIDE - CONVERTING TO SULPHURIC ACID
6. 4000 ATTIRIBUTABLE DEATHS BUT MORE LATER
7. THOUSANDS HAD BREATHING PROBLEMS
8. CATTLE ASPHYXIATED IN SMITHFIELD MARKETS
9. TRAVEL DISRUPTED FOR WEEKS
(NOTE: EAST END WORST AFFECTED WHERE H0USES WERE CROWDED TOGETHER)
10. NO COSTINGS DONE AT THE TIME AND VERY LITTLE COMPENSATION PAID

NELSON’S COLUMN IN LONDON’S
KILLER SMOG 1952

LONDON REGARDED AS WORST
SMOG CITY IN EUROPE TODAY

MODERN WORLD CITIES
• UNITED KINGDOM CLEAN AIR ACTS 1956 & 1968 BANNED “BLACK SMOKE” & ORDERED FACTORIES TO GO TO
SMOKELESS FUEL. CCONVERSION WAS SLOW & PAINFUL.
• U.K. COAL MINES SHUT DOWN IN 1979. PROTESTS FROM MINE OWNERS & NEAR CIVIL WAR IN MINING TOWNS.
• AS THE INDUSTRIAL REVOLUTION ADVANCED INTO A “POST INDUSTRIAL ERA” IN THE DEVELOPED ECONOMIES,
BENEFICIAL EXTERNALITIES WERE CREATED IN THE FORM OF IMPROVEMENTS IN: WATER QUALITY, SEWAGE
TREATMENT, AIR QUALITY, EDUCATION & TRANSPORT.
• INCREASING REAL INCOMES ALLOWED THE CREATION OF SUBURBAN FRINGES ON OLD CITIES. CENTRES FOR
SHOPPING & RECREATION CREATED NEW TRADES. THESE WERE “WHITE COLLAR” SERVICE JOBS. THE OLD
POPULATION CENTRES WERE GRADUALLY DESERTED AND THEN “GENTRIFIED” FOR PROFESSIONALS ETC.
WORKING IN THE COMMERCIAL CENTRES OF THE OLD CITIES. THIS CREATED A NEW CLASS OF “COMMUTERS”
FROM THE SUBURBS.
• IF PUBLIC TRANSPORT WAS CHEAP, GOOD QUALITY & CONVENIENT IT WAS USED. IF NOT RELIANCE WAS PLACED
ON THE PRIVATE MOTOR VENICLE – WHICH CREATED A NEW FORM OF POLLUTION IN URBAN CENTRES.
• 29 MILLION VEHICLES IN THE UNITED KINGDOM IN 2001, TYPICAL OF OTHER DEVELOPED COUNTRIES, PUT INTO
THE AIR:
1. 1.7 MILLION TONNES OF NITROUS OXIDE
2. 3.7 MILLION TONNES OF CARBON MONOXIDE
3. ALONG WITH OTHER INDUSTRIES, 1.2 MILLION TONNES OF PARTICULATES & VOLATILE ORGANIC MATERIALS.
• MANY OF THE DEVELOPED WORLD’S POLLUTING INDUSTRIES ARE MOVING TO ASIA, MAKING IT THE ENGINE
ROOM OF A SECOND INDUSTRIAL REVOLUTION AND BRINIGING WITH IT THE EXTERNALITIES CAUSED BY
POLLUTANTS. THE PARADIGM FOR THIS PROCESS IS CHINA.

CHINA’S INDUSTRIAL REVOLUTION
• THE MOST RELIABLE INDICATOR OF EXTERNALITIES OF
THE POLLUTING INDUSTRIES IS DEATHS & ILLNESSES.
• POLLUTION MEASURED BY AIR QUALITY INDEX
(NOTES)
• NO GOVERNMENT STATISTICS ARE AVAILABLE ON
DEATHS DUE TO AIR POLLUTION IN CHINA, BUT LIKE
THE EARLIER STAGES OF FIRST INDUSTRIAL
REVOLUTION THEY ARE PROBABLY HIGH.
• THE WORLD HEALTH ORGANISATION’s “GLOBAL
BURDEN OF DISEASE” ESTIMATES AIR POLLUTION
CAUSED 1.2 MILLION PREMATURE DEATHS IN CHINA,
IN 2010.

WORLD COAL PRODUCTION SINCE
1800 (MILLION TONS)
1800 11.6 -
1850 81.4 602% GROWTH
1900 683.0 739.1% GROWTH
1950 1,818.0 166.2% GROWTH
2000 5,100.0 180.5% GROWTH
2012 7,864.5 54.2% GROWTH
(NOTE:EVERY TONNE OF COAL BURNED = 2.85 TONNES OF
CARBON RELEASED. HERE IT STAYS FOR A LONG TIME.
GOLD “CURLIE” POINTS TO YOUR BEST CALCULATION ON
PRESENT STORED CARBON FROM ABOVE PRODUCTION
FIGURES)

CHINA vs. EUROPE IN
INDUSTRIALISATION
• IN THE BEGINNING OF THE 1800s CHINA AND
WESTERN EUROPE WERE ABOUT EQUAL IN
ECONOMIC AND CULTURAL DEVELOPMENT.
• THE GAME CHANGER IN THE FIRST INDUSTRIAL
REVOLUTION WAS ABUNDANT SUPPLIES OF COAL
CLOSE TO INDUSTRIAL CENTRES, IN EUROPE.
• STEAM POWERED RAILWAYS AND SHIPS MOVED
GOODS , MACHINERY & IMMIGRANTS QUICKLY &
CHEAPLY FROM ONE CENTRE TO ANOTHER: RAILWAYS
MILEAGE INCREASED FROM 4715 IN 1840 TO 353,860
IN 1890.

COAL PRODUCTION BY “BIG FIVE”
MINING COUNTRIES (2012)
MILLION TONNES
CHINA 3,650
UNITED STATES 922
INDIA 606
EUROPEAN UNION 581
AUSTRALIA 431
BIG FIVE TOTAL 6190
GRAND TOTAL 7865
BIG FIVE % OF TOTAL 80.9%

WORLD COAL vs. GOVERNMENT
INTERVENTIONS
• THERE IS NOW A MASSIVE BODY OF EVIDENCE THAT
COAL BURNING IN THE INDUSTRIALISATION OF THE
WORLD SINCE 1800 HAS CREATED HIGH SOCIAL
COSTS.
• THERE IS NOW MOUNTING EVIDENCE THAT THE
SHEER AND MOUNTING QUANTITY OF COAL BEING
BURNED IS CORRELATED WITH CLIMATE CHANGE.
THIS PROPOSITION IS STILL NOT PUBLICLY ACCEPTED
BY MANY POLITICAL LEADERS AND THE SCIENTISTS
WHO SUPPORT THEM. THIS HAS BEEN THE SCENARIO
THUS FAR. AND, IN KEY STRATEGIC ELEMENTS, IT
FOLLOWS THE PARADIGM ESTABLISHED BY THE U.S.
TOBACCO INDUSTRY FOR THE LAST 50 YEARS.

WORLD COAL CONT.
• IN 1957 U.S. COAL PRODUCTION WAS 21% OF WORLD PRODUCTION. IN
2012 IT WAS DOWN TO 11.7%, BUT COAL PRODUCTION HAD DOUBLED
FROM 492 MILLION TONNES TO 922 MILLION TONNES. EFFICIENT
PRODUCTION TECHNIQUES & TRANSPORTHAVE MADE THE INDUSTRY
THE MOST EFFICIENT IN THE WORLD. THIS RECORD GIVES THE
AMERICAN COAL COUNCIL A STRONG CASE TO LOBBY IN U.S. CONGRESS.
EVEN SO THE WORLD MARKET IS GOING THROUGH A REASSESSMENT OF
FUTURE SUPPLY &DEMAND, DEMAND MAY BE DIMINISHING. WE WILL
LOOK AT THE FINANCIAL CONSEQUENCES OF THIS IN A LATER LECTURE.
• THE COAL INDUSTRIES OF CHINA AND INDIA HAVE BEEN ADEPT, SO FAR,
AT DEVELOPING POLITICAL COUNTERMEASURES TO RESIST OR SLOW
DOWN AN INEVITABLE GOVERNMENT DIRECTED SLOWDOWN IN COAL
PRODUCTION – GIVEN THE VERY OBVIOUS SOCIAL COSTS IT IMPOSES ON
THE POPULATIONS OF THESE COUNTRIES

WORLD CRUDE OIL PRODUCTION
1980 - 2012
THOUSANDS OF BARRELS PER DAY
1980…..59,420.56
1990…..60,404.45 NEGLIGIBLE GROWTH
2000…..66,263.68 9.7 % GROWTH
2012…..74,643.65 12.6% GROWTH

OIL DEMAND & INTERNAL
COMBUSTION ENGINE
• THE TECHNOLOGICAL INNOVATION OF THE INTERNAL COMBUSTION ENGINE
TRANSFORMED THE TRANSPORT & DISTRIBUTION SYSTEMS OF THE DEVELOPED
ECONOMIES
• USING CHEAP OIL GROWTH WAS ACCELERATED IN THE MOVEMENT OF PEOPLE,
TRADE GOODS & CAPITAL AROUND THE WORLD.
• GOVERNMENTS WERE REQUIRED TO INVEST HEAVILY IN ROADS & TRANSPORT
INFRASTRUCTURE BUILDINGS & MAINTENANCE.
• GOVERNMENTS HAD TO HEAVILY TAX ECONOMIES TO RECOUP THESE COSTS.
• TRANSPORT DEMAND RESHAPED THE 20TH CENTURY CITY.
• ADVANCES MOST RAPID & PERVASIVE IN U.S.
• IN FIRST HALF OF 20TH CENTURY U.S. WEALTH & POWER BUILT AROUND THE
PETROL BURNING MOTOR VEHICLE
• U.S. GREENHOUSE GAS EMISSIONS FOR OIL FUEL BURNING IN 2007:
+36% OF ALL EMISSIONS
+29% OF ALL EMISSIONS CAME FROM COAL BURNING
+65% OF ALL EMISSIONS CAME FROM OIL & COAL BURNING

ECONOMIC PRODUCTIVITY &
GROWTH
“ IN THE LONG RUN, THEN, SOCIAL AND ECONOMIC GOALS ARE NOT
INHERENTLY CONFLICTING BUT INTEGRALLY CONNECTED.
COMPETITIVENESS TODAY DEPENDS ON THE PRODUCTIVITY WITH
WHICH COMPANIES CAN USE LABOUR, CAPITAL AND NATURAL
RESOURCES TO PRODUCE HIGH QUALITY GOODS AND SERVICES.
PRODUCTIVITY DEPENDS ON HAVING WORKERS WHO ARE
EDUCATED, SAFE, HEALTHY, DECENTLY HOUSED AND MOTIVATED
BY A SENSE OF OPPORTUNITY. PRESERVING THE ENVIRONMENT
BENEFITS NOT ONLY SOCIETY BUT COMPANIES TOO, BECAUSE
REDUCING POLLUTION AND WASTE CAN LEAD TO A MORE
PRODUCTIVE USE OF RESOURCES AND HELP PRODUCE GOODS
THAT CONSUMERS VALUE. BOSTING SOCIAL AND ECONOMIC
CONDITIONS IN DEVELOPING COUNTRIES CAN CREATE MORE
PRODUCTIVE LOCATIONS FOR A COMPANY’S OPERATIONS AS
WELL AS NEW MARKETS FOR ITS PRODUCTS. “
(MICHAEL E. PORTER. “ON COMPETITION”)

LECTURE 4
DEALING WITH INDUSTRIALISATION’S
EXTERNAL COSTS:
A HISTORY & POSSIBLE FUTURES

“ THE EASY NOTION THAT THERE IS A SINGLE SOLUTION
TO THE WORLD’S ECONOMIC AND CLIMATIC
PROBLEMS IS, THUS, A DANGEROUS ONE. YET THERE
IS SYNERGY, THOUGH A SUBTLE ONE, BETWEEN THE
TWO ISSUES. IN THE MIDDLE OF A FINANCIAL CRISIS
SEEN AS EMANATING FROM WALL STREET, A
DEMONSTRATION OF LEADERSHIP WOULD HELP
BURNISH ‘BRAND AMERICA’ . COMBATING CLIMATE
CHANGE, WHICH DEMANDS TECHNOLOGICAL AND
FINANCIAL RESOURCES OF THE SORT THAT ONLY
AMERICA HAS, OFFERS THE RIGHT SORT OF
CHALLENGE.”
(‘THE ECONOMIST’. NOVEMBER 8TH – 14TH 2008)

AS WE HAVE SEEN IN THE PREVIOUS LECTURE THERE IS THE PRESENCE NOW IN
MANY MAJOR POPULATION CENTRES OF THE WORLD, TOXIC AIR BEING
BREATHED BY ITS INHABITANTS. ULTIMATELY, POLITICAL PRESSUREWILL LEAD TO
ACTION BY GOVERNMENTS TO CURB THE BURNING OF CARBON PRODUCTS. BUT
AS WE HAVE SEEN FROM THE AMERICAN CIGARETTE INDUSTRY, GOVERNMENTS
TEND TO BE INEFFECTUAL IN THIS ROLE, FOR A VARIETY OF REASONS. HOWEVER
CORPORATE MISBEHAVIOUR NOW ALLOWS VICTIMS RECOURSE THROUGH THE
LAW COURTS AND CORPORATIONS WILL NEED TO MEASURE RISKS OF BEING
HELD TO ACCOUNT, FOR LARGE COMPENSATION PAYOUTS. WHEN THE SCIENCE
OF LINKING CAUSE AND EFFECT IN CLIMATE INDUCED CATEGORIES EVENTUALLY
CATCHES UP. THERE WILL COME A TIME WHEN INDIVIDUAL FIRMS WILL BE HELD
TO ACCOUNT FOR INVOLVEMENT IN CLIMATE CHANGING ACTIONS OR
INACTIONS . GOVERNMENTS THEN MUST MAKE A POLITICAL CHOICE: SHOULD
AN OFFENDING INDUSTRY OR FIRM BE COSSETTED SIMPLY BECAUSE OF ITS
TAXATION OR BRIBE POTENTIAL , OR SHOULD IT BE ASKED TO ACCOUNT TO THE
PEOPLE WHO ELECTED THE GOVERNMENT TO PROTECT THEIR INTERESTS. THE
CIGARETTE INDUSTRY SHOWS THAT IT WILL USE EVERY AVAILABLE MEASURE TO
PROTECT ITS INTERESTS.

WATER POLLUTION: CASE STUDY OF
LONDON IN 1800s
• AS THE INDUSTRIAL CITIES OF EUROPE WERE EXPANDED BY
IMMIGRATING RURAL LABOURERS, HOUSING NEEDED TO BE
FOUND.
• SHODDY DORMITORIES WERE PROVIDED IN SOME CITIES.
• AT BEST, IN CITIES LIKE LONDON, HOUSES WERE BUILT WHICH
WERE CRAMMED INTO TERRACES, SHODDILY BUILT AND
UNSANITARY, CHARACTERISED BY: SMALL BACK YARDS, WITH
OUTSIDE TOILETS; OR BACK TO BACK WITH COMMUNAL TOILETS.
• IN ONE RECORDED CASE IN THE EAST END 17 MEMBERS OF
DIFFERENT FAMILIES LIVED IN A SPACE 5 METRES X 4 METRES.
• OUTSIDE TOILETS WERE NOXIOUS & PERIODICALLY EMPTIED BY
“NIGHTSOIL CARTERS”. IN THE POORER DISTRICTS THE CARTERS
SIMPLY DUMPED THEIR LOADS IN LARGE PILES NEAR THE HOUSES.
• THIS CONTAMINATED THE EARTH & FOUND ITS WAY INTO THE
WATER SUPPLY & THEN THE THAMES RIVER

WATER POLLUTION LONDON 1800s
CONT.
• OF THE 70,000 HOUSES IN LONDON IN THE MID
19TH CENTURY:
+24 % HAD THEIR OWN WATER
WELLS
+76% HAD “STAND PIPES” DRIVEN
INTO THE WATER TABLE, TO
SUPPLY THEIR WATER FOR 3 DAYS A
WEEK.

WORKERS HOUSING IN LONDON IN
1800s

INTERIOR OF WORKERS HOUSE IN
LONDON

BIRTH OF LONDON’S SEWAGE SYSTEM
• 1858 THE “BIG STINK” IN THE THAMES RIVER,
CLOSED THE HOUSE OF COMMONS & FORCED
PARLIAMENT TO LEGISLATE FOR A SEWAGE
SYSTEM.
• 1859-1865 SAW 16O KILOMETRES OF
“INTERCEPTOR” SEWERS CARRYING RAW
SEWAGE TO THAMES ESTUARY, WHERE
DUMPED.
• INTERCEPTOR SEWERS WERE FED BY 21,720
KILOMETRES OF MAINS AND “HOUSEHOLD
FEEDER” PIPES.

EARLY “INTERCEPTOR” SEWAGE
TUNNEL IN LONDON

LONDON’s 50 YEAR SOCIAL COST OF
INADEQUATE WATER & SEWAGE
• 1831-1832. OUTBREAK OF CHOLERA KILLED 7000
LONDONERS.
• 1849. CHOLERA EPIDEMIC INFECTED 30,OOO & KILLED
15,000.
• 1800-1850. TUBERCULOSIS WAS MAIN CAUSE OF
PREMATURE DEATHS BUT NO STATISTICS
• 1800 – 1890.OCCASIONAL SMALL-POX OUTBREAKS
• 1866. CHOLERA OUTBREAK CONFINED TO AREAS STILL
DEPENDENT ON WELLS & STANDPIPES.
• MEDICAL SCIENCE INADEQUATE FOR DISEASE CONTROL
• NO GOVERNMENT LIABILITY ACCEPTED

LONDON’s ENGINEERING SOLUTION
TO WATER & SEWAGE PROBLEM
• 1869. A FILTRATION PLANT FOR RIVER THAMES
• THREE EMBANKMENTS TO SPEED RIVER FLOW & DISPOSE PUTRID MUD
• 1950. POLLUTED RIVER MUD PROBLEM AGAIN.
• 1964-1974. BIG EXPANSION OF SEWAGE NETWORK BROUGHT FISH &
BIRDS BACK TO THAMES.
• 1928 – 2010. STATISTICS SHOW LONDON’S AIR TEMPERATURE HAS RISEN
& MAY RISE BY ANOTHER 6%. AT SAME TIME LONDON HAS SUNK 15
FEET SINCE ROMAN TIMES. THIS INCREASES RISK OF MAJOR FLOODS,
BUT NOT PUBLICLY TAKEN UP BY INSURANCE COMPANIES.
• 2011. 30 MILLIMETRES OF RAIN CAUSED A DUMP OF 450,000 TONNES OF
SEWAGE INTO THAMES.
• AUTHORITIES NOW ADMIT THAT 50 TO 60 TIMES PER YEAR SEWERS
DUMP EFFLUENT INTO THAMES FROM ABOVE AVERAGE RAINFALL
CAUSING SIGNIFICANT FISH KILLS
• MORE PLANS NOW FOR A 32 KILOMETRE “SUPER-SEWER” FOLLOWING
THE THAMES RIVER TO COLLECT STORM SEWAGE AND DUMP IT AT SEA.

LONDON’S $8 BILLION “SUPER
SEWER”

DDT EXPERIENCE IN U.S.: CHEMICAL
WATER & AIR POLUTION
“WHAT SETS THE NEW SYNTHETIC INSECTICIDES APART IS
THEIR ENORMOUS BIOLOGICAL POTENCY. THEY HAVE
IMMENSE POWER NOT MERELY TO POISON BUT TO ENTER
INTO THE MOST VITAL PROCESSES OF THE BODY AND
CHANGE THEM IN SINISTER AND OFTEN DEADLY WAYS.
THUS WE SHALL SEE, THEY DESTROY THE VERY ENZYMES
WHOSE FUNCTION IS TO PROTECT THE BODY FROM
HARM, THEY BLOCK THE OXIDATION PROCESS FROM
WHICH THE BODY RECEIVES ITS ENERGY, THEY PREVENT
THE NORMAL FUNCTIONING OF VARIOUS OTGANS, AND
THEY MAY INITITIATE IN CERTAIN CELLS THE SLOW AND
IRREVERSIBLE CHANGE THAT LEADS TO MALIGNANCY.”
(RACHEL CARSON. 1962)

D.D.T. CONT.
• FIRST SYNTHESISED IN 1874
• DEVELOPMENT DID NOT OCCUR UNTIL OUTBREAK OF WORLD
WAR II, 1939.
• MILITARY USED IT TO CONTROL MALARIA AND TYPHUS IN
TROPICAL/SUB-TROPICAL WAR ZONES. USED EVERYWHERE BY
MILITARY AND AERIAL SPRAYED
• 1945. MADE AVAILABLE TO U.S. FARMERS AS PESTICIDE
• 1955. WORLD HEALTH ORGANISATION (W.H.O.) PUT AT CENTRE OF
MALARIA ERADICATION PROGRAM. THIS WORKED
SPECTACULARLY IN THE BEGINNING. THEN DDT MOSQUITOS AND
OTHER PESTS BEGAN TO SHOW RESISTANCE
• 1969. W.H.O. ENDED USE AFTER “ADMINISTRATIVE CONCERNS”

D.D.T. CONT.
• USAGE OF DDT ROSE RAPIDLY UNTIL 1996,
12 MILLION KILOGRAMS. UP TO 90% WENT
ON SPRAYING OF COTTON. REMAINDER
WENT ON OTHER HIGH-VALUE CROPS
• RACHEL CARSON’s “ SILENT SPRING”
IMPRESSED PRESIDENT KENNEDY. HE
INITIATED ACTIONS LEADING TO BAN IN 1972
ON AGRICULTURAL USE.

D.D.T. CONT.
• SINCE 1972 U.S. GOVERNMENT GUARDED ON DECLARING
TOXICITY OF DDT.
• NATIONAL PESTICIDE INFORMATION CENTRE (NPIC) HAS
PRODUCED A FACT SHEET INDICATING DDT WAS HIGHLY
TOXIC, BUT HAD GREAT DIFFICULTY IN ESTABLISHING A
CAUSE & EFFECT RELATIONSHIP BETWEEN DDT USE &
HEALTH IMPACTS - A COMMON PROBLEM WITH
POLLUTANTS.
• THIS HAS ENCOURAGED A PUSH-BACK TO RENEW DDT
USAGE TO ELIMINATE MALARIA AND OTHER DISEASES EG:
MICHAEL CRICHTON’S BOOK “STATE OF FEAR”: “ THE BAN
ON DDT MAY HAVE KILLED MORE PEOPLE THAN HITLER.”

HYPOTHESIS: DDT IS A CAUSE OF
REPRODUCTIVE BIRTH DEFECTS.
• N.P.I.C. CONCLUSION IS THAT SCIENTISTS
HAVE NO DATA.
• U.S. ENVIRONMENTAL PROTECTION AGENCY
CONCLUDES THAT DDT EXPOSURE DAMAGES
THE HUMAN REPRODUCTIVE SYSTEM

HYPOTHESIS: DDT CAUSES CANCER
• NPIC CONCLUSION IS THAT THERE IS
INADEQUATE EVIDENCE
• “LANCET” (MEDICAL SCIENCE JOURNAL)
CONCLUDES: EPIDEMIOLOGICAL STUDIES
SHOW DDT CAUSES: LIVER, PANCREAS AND
BREAST CANCERS.

FACT: DDT HALF LIFE IN SOIL
• NPIC CONCLUSION: 2 TO 15 YEARS
• U.S. AGENCY FOR TOXIC SUBSTANCES AND
DISEASE REGISTRY’s CONCUSION: 22 DAYS TO
30 YEARS DEPENDING ON SOIL CONDITIONS

CHLOROFLUOTOCARBONS &
HALONS:GLOBAL ATMOSPHERIC
IMPACTS
• CHLOROFLUOROCARBONS (CFCs) AND
HALONS ARE SYNTHETIC CHEMICALS
EXISTING AS GASES & LIQUIDS.
• THEY CONTAIN CHLORINE, FLUORINE &
CARBON
• FIRST MANUFACTURED BY DUPONT IN 1930
UNDER THE BRAND NAME OF “FREON”.
• IN EARTH’S ATMOSPHERE THEY HAVE A FULL
LIFE OF 60 – 100 YEARS.

CFC & HALON ATMOSPHERIC
IMPACTS
• IN THE TROPOSPHERE(LOWEST & DENSEST
ATMOSPHERIC REGION) (6 – 10 KILOMETRES
IN HEIGHT).
• EARTH’S WEATHER IS MADE HERE.
• CFCs REMAIN STABLE HERE
• IN THE STRATOSPHERE (NEXT ATMOSPHERE)
(8 KILOMETRES AT THE POLES – UP TO 50
KMs ELSEWHERE)

CFC & HALON IMPACTS IN
STRATOSPHERE
• HARMFUL ULTRAVIOLET LIGHT FROM THE SUN
BREAKS DOWN CFCs INTO CHLORINE & BROMINE
ATOMS.
• THESE ATOMS CARRY OUT A LARGE-SCALE ATTACK
ON OZONE MOLECULES IN EARTH’S OZONE LAYER.
• OZONE LAYER IS THAT PART OF THE STRATOSPHERE
WHICH ABSORBS SUN’s ULTRAVIOLET LIGHT.
• FIVE OF THE MOST COMMON CFCs ARE ALL HIGH-
RATING OZONE DESTROYERS.
• U.S. ENVIRONMENTAL PROTECTION AGENCY RANKS
CFCs AS HAVING A GLOBAL WARMING POTENTIAL.

CFCs & HALONS CONT.
• HALONs FIRST USED AS FIRE SUPPRESSANTs IN
WORLD WAR II AIRCRAFT ALTHOUGH THEIR
TOXICITY WAS KNOWN.
• POST-WAR USAGE SPREAD: CIVILIAN AIRCRAFT;
OTHER MILITARY USES; COMPUTER ROOMs,
SWITCHBOARDs, LABORATORIES, MUSEUMs,
WHERE WATER & POWDER SUPPRESSANTS
COULD NOT BE USED; AND COOLANTS IN
INDUSTRIAL, HOME, MOTOR VEHICLE
REFRIGERANTS, FOAMING AGENTS, AND
PROPELLANTS IN AEROSOL CANS.

CFCs & HALONs: OZONE DEPLETION
EFFECT
• IN 1970s, EXPERIMENTS SHOWED CONCENTRATIONS
OF CFCs IN THE AIR OVER THE ARCTIC AND
ANTARCTIC. NASA DEVELOPED IMAGING &
MEASUREMENT OF EARTH’s OZONE LAYER& FOUND
STRONG SEASONAL REDUCTIONS IN THE LOWEST
OZONE LAYERS OF THE ARCTIC AND ANTARCTIC.
• FOR ONCE THE GLOBAL SCIENTIFIC COMMUNITY
ACTED DECISIVELY - FROM 1981.
• 1985 VIENNA CONVENTION SET UP MONITORING &
DRAFT SCIENTIFIC ASSESSMENTS.

NASA PICTURE OF 2011 ARCTIC
OZONE HOLE

MONTREAL PROTOCOL ON
SUBSTANCES THAT DEPLETE OZONE
LAYER: 1987• THIS SET A 50% REDUCTION IN USE OF CFCs AND HALONs BY 1999,
WITH 1986 USED AS BENCHMARK YEAR
• 1989 MEETING OF MONTREAL. ACCELERATED TARGET TO 89% BY
1999.
• R&D STEPPED UP TO FIND ALTERNATIVES.
• MAJOR RECYCLING TO EXTRACT CFCs FROM SCRAPPED
APPLIANCES.
• CFC MARKET SHRANK DRAMATICALLY FOR THE NON-SIGNERS OF
THE MONTREAL PROTOCOL, BUT STILL 38,000 TONNES OF CFCs
SOLD – CHINA, INDIA, SOUTH KOREA
• ALSO 5.8 MILLION TONNES OF CFCs STILL EXIST IN
REFRIGERATORS, AIR CONDITIONERS, AEROSOL CANS & OTHER
PRODUCTS – TO BE EMITTED IN NEXT FEW YEARS UNLESS
DESTROYED.

CFCs AND GREENHOUSE EFFECT
IT WAS ALSO REPORTED IN 1975 THAT CFC’s
CHEMICAL COMPOSITION GAVE IT A
GREENHOUSE EFFECT STRONGER THAN
CARBON DIOXIDE

ASBESTOS POLLUTION: WORST TOXIC
MATERIAL IN GLOBAL
INDUSTRIALISATION
• ASBESTOS IS A SILICATE MINERAL CONSISTING
OF LONG, THIN FIBRE CRYSTALS.
• ITS MINING & USAGE GOES BACK 4500 YEARS TO
FINLAND – USED IN COOKING POTS, FOR
WEALTHY HOUSEHOLDS.
• AT BEGINNING OF INDUSTRIAL REVOLUTION
MINED IN U.S. FOR INSULATION
• 1866: USED AS BUILDING INSULATION
• 1950s: USED IN PIPES, CEILINGS, LAWN
FURNITURE, BRICKS, GASKETS, FIREPROOF
WALLS,ROOFING.

TOXICITY OF ASBESTOS
• FIRST REVEALED IN MINING TOWNS IN U.K.
• 1924: FIRST DIAGNOSIS OF ASBESTOSIS IN
U.K.
• 1930s: STUDIES FOLLOWED & U.K.
REGULATED VENTILATION IN WORKPLACES
USING ASBESTOS.
• 1931: TERMINAL MESOTHELIOMA RELATED
TO ASBESTOS
• 1940s: U.S. FOLLOWED U.K.

TOXICITY OF ASBESTOS CONT.
• ONSET OF WORLD WAR II BROUGHT EXTENSIVE USE OF ASBESTOS
IN SHIPS TO RETARD FIRES IF BOMBED, TORPEDOED OR MINED
• 4.3 MILLION AMERICANS INVOLVED IN SHIPBUILDING – 14 OUT
OF 1000 DIED FROM MESOTHELIOMA & MANY MORE FROM
ASBESTOSIS
• 1989: U.S. ENVIRONMENTAL PROTECTION AGENCY INTRODUCED
“ASBESTOS BAN & PHASE OUT RULE” TO ELIMINATE ASBESTOS.
RULE WAS OVERTURNED IN COURT WHEN CHALLENGED BY FIRM
“CORROSION PROOF FITTINGS”.
• LIMITS WERE THEN SET FOR WORKPLACES BY U.S. OCCUPATIONAL
HEALTH & SAFETY ADMINISTRATION.
• COLLAPSE OF TWIN TOWERS ON 9/11 RELEASED 1000 TONS OF
ASBESTOS INTO NEW YORK AIR.

TOXICITY OF ASBESTOS CONT.
• DEATHS FROM ASBESTOS NOW STARTING TO
MOUNT
• 2010: ENVIRONMENTAL WORKING GROUP
ACTION FUND ESTIMATES EPIDEMIC OF
10,000 DEATHS PER YEAR IN U.S. FROM
ASBESTOSIS & MESOTHELIOMA
• BUT STIL THE U.S. E.P.A. HAS NOT BANNED
ASBESTOS & BUILDING WORKERS STILL PUT
AT RISK.

PUSHBACK BY ASBESTOS LITIGATIONS
• NOW A MASSIVE U.S. LITIGATION INDUSTRY WHERE 730,000 LITIGANTS SUING 8400
DEFENDANTS.
• 1999: U.S. COST OF LITIGATION WAS $250 BILLION AND MANY CLAIMS SETTLED OUT OF COURT.
• IN THE NEXT 40 YEARS A FURTHER 700,000 CLAIMS WILL BE MADE AT A COST TO COMPANIES OF
$500 BILLION.
• ALL UP COST OF ASBESTOS USAGE IS PUT AT $1 TRILLION WHEN ALL CASES ARE BROUGHT.
• IT HAS LESSONS FOR CLIMATE CHANGE CLAIMS WHEN THEY COME IN THE FUTURE – ASSUMING
A CONTINUATION OF A ROBUST RULE OF LAW:
1. THERE NEEDS TO BE A PROCESS IN PLACE WHICH ENABLES THE U.S. E.P.A. TO STEP AROUND
THE ARMIES OF LOBBYISTS PROTECTING POLLUTING INDUSTRIES IN WASHINGTON.
2. A ROBUST SET OF LAWS WILL ENABLE VICTIMS TO SEEK REDRESS THROUGH THE COURTS,
AGAINST POOR MANAGERS.
3. BUT THE COST OF THIS APPROACH MAY BE TOO HIGH FOR ECONOMIES TO BEAR.
4. FILINGS FOR BANKRUPTCY ARE NOW COMMON IN ASBESTOS LITIGATION CASES, WHEN BAD
EXECUTIVE DECISIONS MADE BY LONG DEAD MANAGERS ARE SUBJECTED TO PUNITIVE
DAMAGES.

SYSTEMIC RISK OF “CATASTROPHIC”
CLIMATE EVENTS
• WE WILL EXPLORE THE CONCEPT OF RISK – AND IN PARTICULAR
“SYSTEMIC RISK” OF MAJOR CLIMATE EVENTS CAUSING HEAVY
ECONOMIC & SOCIAL COSTS.
• INSURANCE INDUSTRIES AND INDUSTRY IN GENERAL HAVE SO FAR
MANAGED TO WEATHER INDIVIDUAL AND NATURAL DISASTERS & PAY
OUT CLAIMS.
• THE LESSONS FROM THE THREE CASE STUDIES IN THIS LECTURE SUGGEST
THAT INDUSTRY IS RELUCTANT TO DEAL WITH CATASTROPHIC
MANAGEMENT ERRORS WHICH LEAD TO HEAVY SOCIAL COSTS, OFTEN
WITH CONNIVING GOVERNMENTS. NO LONGER CAN GOVERNMENTS
IGNORE THE POWERLESS OF THE LONDON SLUMS, THE RURAL WORKERS
WHO WERE SPRAYED WITH DDT BEFORE THEY ENTERED THE DDT
SPRAYED CROPS, THE INDUSTRIAL WORKERS WHO CONTRACTED
ASBESTOSIS AND MESOTHELIOMA IN U.S. FACTORIES. THE LESSON OF
THE 21ST CENTURY, ALSO, IS THAT, IN AN ERA OF THE RULE OF LAW, THE
PAYOUTS TO VICTIMS CAN BE CATASTROPHIC FOR THE PERPETRATORS.

LECTURE 5
THE PALE BLUE DOT
THE INTERGOVERNMENTAL COMMITTEE ON
CLIMATE CHANGE
“ CLIMATE CHANGE 2014: IMPACTS,
ADAPTATION AND VULNERABILITY”

INTRODUCTION
IN THE NEXT 5 LECTURES WE WILL STUDY
CLIMATE CHANGE IN DEPTH.
UNDERLYING THIS ARE 2 CRITICALLY
IMPORTANT CONCEPTS USED IN ALL
PHYSICAL & SOCIAL SCIENCES:
1. RISK.
2. PROBABILITY

INTRODUCTION CONT.
• IT IS VERY IMPORTANT FOR YOUR UNDERSTANDING OF
THE REST OF THE COURSE THAT YOU ACQUIRE A GOOD
UNDERSTANDING OF THE 2 CONCEPTS.
• “CLIMATE CHANGE INVOLVES COMPLEX INTERACTIONS
AND CHANGING LIKELIHOODS OF DIVERSE IMPACTS. A
FOCUS ON RISK, WHICH IS NEW IN THIS REPORT,
SUPPORTS DECISIONMAKING IN THE CONTEXT OF
CLIMATE CHANGE, AND COMPLEMENTS OTHER ELEMENTS
OF THE REPORT. PEOPLE AND SOCIETIES MAY PERCEIVE OR
RANK RISKS AND POTENTIAL BENEFITS DIFFERENTLY,
GIVEN DIVERSE VALUES AND GOALS.”
(IPCC. 31 MARCH 2014)

IPCC DEFINITION OF RISK
“ THE POTENTIAL FOR CONSEQUENCES WHERE
SOMETHING OF VALUE IS AT STAKE AND WHERE
THE OUTCOME IS UNCERTAIN, RECOGNIZING
THE DIVERSITY OF VALUES. RISK IS OFTEN
REPRESENTED AS PROBABILITY OF OCCURRENCE
OF HAZARDOUS EVENTS OR TRENDS
MULTIPLIED BY THE IMPACTS IF THESE EVENTS
OR TRENDS OCCUR. RISK RESULTS FROM THE
INTERACTION OF VULNERABILITY, EXPOSURE,
AND HAZARD. IN THIS REPORT ‘RISK’ IS USED
PRIMARILY TO REFER TO THE RISKS OF CLIMATE
CHANGE IMPACTS.”

CLIMATE CHANGE & ECONOMIC RISK
WHEN FINANCIAL/ECONOMIC RISKS ENTER THE
PROCESS OF ASSESSING OVERALL RISK WE
ENTER A COMPLEX NEW DIMENSION – A PLACE
WHERE FINANCIAL AND ECONOMIC DECISIONS
FINALLY DETERMINE THE RESPONSE TO CLIMATE
CHANGE.
RISK IN THE MODERN WORLD OF MONEY,
CAPITAL, AND ECONOMIC DECISIONMAKING IS
A MANY-LAYERED THING, REFLECTING THE
MANY-LAYERED COMPLEXITY OF MODERN
ECONOMIES.

CONT.
IN THE CONTEXT OF CLIMATE ISSUES IN AUSTRALIA, THE
IPCC REPORT RAISES SOME PROFOUND QUESTIONS.
SOME EXAMPLES ARE GIVEN BELOW:
1. HOW WILL THE INSURANCE INDUSTRY FACTOR IN THE
STEADILY RISING REAL COSTS OF PAYMENTS FOR
DAMAGE IN SPECIFIC AREAS CAUSED BY STORMS, HAIL,
FLOODS AND BUSHFIRES? (EG: ‘MORAL HAZARD’ OF
UNDER-INSURED & UNINSURED)
2. HOW WILL GOVERNMENTS DEAL WITH THE STEADILY
RISING REAL COSTS OF DAMAGE TO ROADS & OTHER
INFRASTRUCTURE.
3. HOW WILL INVESTORS ASSESS THE RISKS OF
INVESTMENT IN BUILDINGS & OTHER ASSETS.

CONT.
FINANCIAL/ECONOMIC RISK ALSO WORKS AT OTHER LEVELS. THESE ARE
LONG TERM STRATEGIC DECISIONS MADE BY THE PRODUCERS OF THE
POLLUTANTS IDENTIFIED BY CLIMATE SCIENTISTS AS BRINGING ABOUT
CLIMATE CHANGE – MAINLY THERMAL COAL AND PETROLEUM. IN
FUTURE LECTURES WE WILL EXAMINE THE WAYS IN WHICH PRODUCERS
OF THESE PRODUCTS STILL HAVE ENORMOUS MARKET AND POLITICAL
POWER TO PRESERVE THE STATUS QUO, THERE ARE MANY FACTORS
WHICH WILL MOVE THE LEADERS IN THESE INDUSTRIES AWAY FROM
THERMAL COAL AND PETROLEUM PRODUCTION, TOWARDS INNOVATION
IN ALTERNATIVE ENERGY SOURCES: EG. FROM THERMAL COAL TO
NATURAL GAS. NEVERTHELESS, THE HISTORY OF NOXIOUS INDUSTRIES
SHOWS THAT THEY SURVIVE IN PLACES WHERE THE RULE OF LAW AND
REGULATION IS WEAK. BUT THE HISTORY OF ASBESTOS LITIGATIONALSO
SHOWS THAT THE LEGAL SYSTEM CAN BE DEVASTATING ON FIRMS THAT
MAKE TOXIC PRODUCTS.

DEFINITION OF RISK CONT.
IN TODAY’S HIGHLY COMPLEX AND
INTEGRATED GLOBAL ECONOMY WE PROJECT
THE IPCC RISK ASSESSMENT OF CLIMATE
CHANGE IN THE CASE OF AUSTRALIA INTO
THE REALM OF FINANCIAL/ECONOMIC RISK.
BY THEIR NATURE, CLIMATE CHANGE
INDUCED MISFORTUNES WILL EXACT THEIR
CONSIDERABLE TOLL ON COMMUNITIES AND
REGIONS IN BLOOD AND TREASURE.

RISK CONT.
IN LECTURE 6 WE WILL EXAMINE THE FINANCIAL AND
ECONOMIC RISKS EMANATING FROM THE IPCC
CONCLUSIONS ABOUT AUSTRALIA, IN THREE CASE
STUDIES:
1. CLIMATE CHANGE AND INCREASED
FREQUENCY/INTENSITY OF FLOOD DAMAGE IN
AUSTRALIA (IPCC ASSESMENT IS “HIGH CONFDENCE”)
2. CLIMATE CHANGE AND INCREASED INTENSITY OF
BUSHFIRES IN AUSTRALIA (LINKAGE BETWEEN FIRES AND
FLOOD INTENSITIES NOT STUDIED BY IPCC)
3. CLIMATE CHANGE AND WORLD DEMAND FOR THERMAL
COAL

RISK CONT. : IPCC COMMUNICATION
OF THE DEGREE OF CERTAINTY IN
ASSESSMENT FINDINGS
“ THE DEGREE OF CERTAINTY IN EACH KEY
FINDING OF THE ASSESSMENT IS BASED ON
THE TYPE, AMOUNT, QUALITY AND
CONSISTENCY OF EVIDENCE (E.G. DATA,
MECHANISTIC UNDERSTANDING, THEORY,
MODELS, EXPERT JUDGMENT) AND DEGREE
OF AGREEMENT. THE SUMMARY TERMS TO
DESCRIBE EVIDENCE ARE: LIMITED, MEDIUM,
OR ROBUST; AND AGREEMENT: LOW,
MEDIUM OR HIGH.”

IPCC AND RISK CONT.
“ CONFIDENCE IN THE VALIDITY OF A FINDING
SYNTHESIZES THE EVALUATION OF EVIDENCE
AND AGREEMENT.
LEVELS OF CONFIDENCE INCLUDE FIVE
QUALIFIERS: VERY LOW, LOW, MEDIUM,
HIGH, AND VERY HIGH.”

IPCC AND RISK CONT.
“THE LIKELIHOOD, OR PROBABILITY, OF SOME WELL-DEFINED OUTCOME HAVING
OCCURRED OR OCCURING IN THE FUTURE CAN BE DESCRIBED QUANTITATIVELY
THROUGH THE FOLLOWING TERMS:
*VIRTUALLY CERTAIN: 99-100% PROBABILITY
*EXTREMELY LIKELY: 95-100% PROBABILITY
*VERY LIKELY: 90-100% PROBABILITY
*LIKELY: 66-100% PROBABILITY
* MORE LIKELY THAN NOT: >50-100% PROBABILITY
*ABOUT AS LIKELY AS NOT:33-66% PROBABILITY
*UNLIKELY: 0-33%
*VERY UNLIKELY: 0-10%
*EXTREMELY UNLIKELY: 0-5%
*EXCEPTIONALLY UNLIKELY: 0-1%
UNLESS OTHERWISE INDICATED, FINDINGS ASSIGNED A LIKELIHOOD TERM ARE
ASSOCIATED WITH HIGH OR VERY HIGH CONFIDENCE. WHERE APPROPRIATE ,
FINDINGS ARE ALSO FORMULATED AS STATEMENTS OF FACTS WITHOUT USING
QUALIFIERS.”

LECTURE 6
ANALYSIS OF IPCC CLIMATE CHANGE 2014:
THREE CASE STUDIES OF MEDIUM TO HIGH
RISK, CLIMATE- DRIVEN EVENTS OCCURING
IN AUSTRALIA

CASE STUDY NO. 1
CLIMATE CHANGE AND THE INCREASED
FREQUENCY /INTENSITY OF FLOOD DAMAGE
IN AUSTRALIA
(IPCC RATED THIS AS “HIGH CONFIDENCE” OF
OCCURRENCE)

TABLE 1: INSURANCE PAYOUTS
AUSTRALIA. 2002 – 2011. ($MILLION)
2002 67
2003 195
2004 - 2005 526
2006 678
2007 2998
2008 - 2009 1160
2010 - 2011 7345
TOTAL 2002 - 2011 12969

NOTES TO TABLE 1
1. THE INSURANCE PAYOUTS ARE FOR “STORM, HAIL, CYCLONE,
FLOOD AND WIND.”
2. SOURCE: INSURANCE COUNCIL OF AUSTRALIA.
3. INSURANCE PAYOUTS ARE ONLY PART OF THE COSTS OF THE
INCIDENTS ON WHICH THE PAYOUTS WERE MADE. THESE COSTS
ARE ESTIMATED BELOW, WITH THE ASSUMPTIONS SPELLED OUT.
4. THE WELL DOCUMENTED QUEENSLAND FLOODS OF 2010/11
WERE ASSESSED IN DETAIL TO ESTABLISH THE TOTAL FINANCIAL
AND ECONOMIC IMPACTS OF THE INCIDENTS LISTED IN TABLE 1.
FROM THIS A MULTIPLIER WAS CALCULATED TO ESTABLISH A
TOTAL FINANCIAL AND ECONOMIC IMPACT FOR ALL THE
INCIDENTS COVERED IN TABLE 1. WHEN THIS MULTIPLIER IS
APPLIED TO THE TOTAL IN TABLE 1 IT YIELDS A GRAND TOTAL OF
$117,675,000,000 (ie: THE $13 BILLION BECOMES NEARLY $118
BILLION FOR THE SAME PERIOD)

HOW THE GRAND TOTAL OF $117.7
BILLION WAS CALCULATED
1. LOSSES TO AGRICULTURE CALCULATED BY
A.B.A.R.E.S.:
+LOSS TO GRAIN SORGHUM CROP:$30M.
+LOSS TO FRUIT & VEGETABLES:$225M.
(NOTE: “IBIS WORLD” SET THESE AT $1.6 BILLION,
BUT WE TOOK THE ABARES FIGURE)
2. ROAD AND RAIL OPERATORS’ LOSSES DUE TO
DAMAGED ROADS: $467 MILLION
(SOURCE: “IBIS WORLD”)

GRAND TOTAL CALCULATIONS CONT.
3. LOSSES TO COAL EXPORTS: $25 BILLION
(SOURCE: A.B.A.R.E.S.)
4. REPAIR OF 90,000 KILOMETRES OF DAMAGED LOCAL
ROADS: $27 MILLION.
(SOURCE: SYDNEY MORNING HERALD).
5. REBUILD DAMAGED, DESTROYED GOVERNMENT
BUILDINGS, MAJOR ROADS, BRIDGES, RAIL LINES: $10
BILLION.
(SOURCE: “IBIS WORLD”)
6. 7000 INSURANCE CLAIMS & INCREASING:$500MIL.
(INSURANCE COUNCIL OF AUSTRALIA)
TOTAL IMPACT: $36.2 BILLION

SOURCE: QUEENSLAND COMMISSION OF INQUIRY INTERIM REPORT (2011)
1. 500,000 SQUARE KILOMETRES OF QUEENSLAND WERE FLOODED.
2. SUGGESTED PROXIMATE CAUSE:
“… A STRONG LA NINA EVENT TOOK PLACE IN THE PACIFIC OCEAN, IN LATE
2010…COUPLED WITH THE EFFECT OF THE LA NINA EVENT, AUSTRALIA
ALSO EXPERIENCED UNCHARACTERISTICALLY PERSISTENT MONSOONAL
RAINFALL DURING 2010 AND BEGINNING 2011…”
3. THE MAIN STRATEGIC ISSUES ASSOCIATED WITH QUEENSLAND FLOODS
SEEM TO BE:
+COASTAL CREEKS AND RIVERS REGULARLY FLOOD DURING
MONSOONAL RAIN.
+WHEN HEAVY MONSOONAL RAIN IS COMBINED WITH WEATHER
EVENTS IN THE PACIFIC OCEAN THERE ARE HEIGHTENED RISKS OF
CATASTROPHIC FLOODS.
+EACH CATASTROPHIC FLOOD LEADS TO CATASTROPHIC FINANCIAL
AND ECONOMIC LOSSES.

IF WE TAKE THE 2010/11 FLOODS AS THE
BENCHMARK FOR THE CALCULATION OF EACH
FLOOD ETC. IN AUSTRALIA FOR WHICH THERE
HAS BEEN AN INSURANCE PAYOUT THEN THE
TOTAL IMPACT MAY BE CALCULATED THUS:
+ THE STATISTICS ABOVE GIVE US FOR
QUEENSLAND FLOODS: TOTAL COST IMPACT =
RATIO OF TOTAL INSURANCE PAYOUTS: TOTAL
CALCULATED COSTS = 1: 15.7.

WHO BEARS THE COSTS ?
• TOTAL LOSSES TO ALL INDUSTRIES, WHICH
WAS BORNE BY THE INDUSTRIES WAS $35
BILLION.
• TOTAL COSTS OF REPAIR AND
RECONSTRUCTION OF THE STATE’S
INFRASTRUCTURE WAS $ 10 BILLION, WHICH
WAS BORNE BY THE TAXPAYER
• INSURANCE PAYOUTS WERE $1 BILLION

COLLATERAL DAMAGE
• INSURANCE COMPANIES ARE FORCED TO REASSESS
INSURANCE RISKS AFTER EACH OF THESE EVENTS,
USUALLY LEADING TO INCREASED PREMIUMS. FOR
EXAMPLE, IN QUEENSLAND THE AVERAGE
HOUSEHOLD FLOOD INSURANCE RANGES FROM
$8200 TO $19,000. THIS IN TURN LEADS TO MANY
HOUSES NOT CARRYING FLOOD INSURANCE – A
“MORAL HAZARD” TO BE PAID BY GOVERNMENTS
AND CHARITIES IN THE EVENT OF FLOOD DAMAGE.
• THERE ARE LITTLE OR NO OPTIONS FOR QUEENS
LAND TO ECONOMICALLY MITIGATE RISK, SO IT MUST
CARRY THE RISK – AND PASS THIS ON TO THE
TAXPAYER.

TOTAL COST IMPACT OF
FLOODS,WINDS,STORM, HAIL &
CYCLONE: AUSTRALIA.
• ESTIMATED COST 2002 TO 2011: $117.7 BILLN
• PROJECTED COST 2012 TO 2021: $130 BILLN

CASE STUDY NO. 2
CLIMATE CHANGE AND INCREASED INTENSITY
OF BUSHFIRES IN AUSTRALIA
(NOT DIRECTLY ASSESSED BY IPCC, BUT
COLLATERAL RISK FROM ABOVE AVERAGE
RAINS FOLLOWED BY ABOVE AVERAGE DRY
SPELLS – A UNIQUELY AUSTRALIAN
PHENOMENON)

THE IPCC DID NOT DIRECTLY IDENTIFY BUSHFIRES
AS HIGH RISK EVENTS RELATED TO CLIMATE
CHANGE. HOWEVER, IT IS NOW WELL
ESTABLISHED THAT ABOVE AVERAGE RAINFALL
FOLLOWED BY ABOVE AVERAGE DRY SPELLS – A
TYPICAL AUSTRALIAN CLIMATIC PHENOMENON
– WILL CREATE CONDITIONS OF HIGH BUSHFIRE
RISK DUE TO THE ACCUMULATION DRY BUSH
FUEL IN HIGH RISK AREAS. (GOVERNMENT OF
AUSTRALIA, CLIMATE COUNCIL. THE CRITICAL
DECADE: EXTREME WEATHER. 15 APRIL 2013)

INSURANCE PAYOUTS IN AUSTRALIA
FROM BUSHFIRES, 2002 – 2011 ($ M.)
2003 2004 2005 2006 2007 2008 2009 2010 2011 2002-
2011
43 684 NIL 41 44 NIL NIL 1274 NIL 39 2125

INSURANCE PAYOUTS CONT.
SOURCE OF TABLE:INSURANCE COUNCIL OF
AUSTRALIA
NOTE: THE VICTORIAN FIRES OF 7 FEBRUARY
2009 HAVE BEEN USED AS OUR BENCHMARK
FOR THIS CASE STUDY.

VICTORIAN BUSHFIRES FEBRUARY
2009 (“BLACK SATURDAY”)
• ON 7 FEBRUARY 2009 TEMPERATURES IN
VICTORIA REACHED 47 DEGREES C., AND
NORTH WESTERLEY WINDS GOT TO 100
KILOMETRES PER HOUR (KMH.) GUSTING TO
120 KMH. THIS FOLLOWED A HEATWAVE
WHICH BEGAN EARLY DECEMBER 2008,
WHICH HAD BEEN PRECEDED BY 2 YEARS OF
DROUGHT WHICH HAD COMPLETELY DRIED
OUT THE BUSH GROWTH OF PREVIOUS
YEARS.

VICTORIAN BUSHFIRES CONT.
• ON WEDNESDAY 28 JANUARY AN ARSONIST
STARTED A FIRE IN CENTRAL GIPPSLAND.
• ANOTHER FIRE BEGAN IN BUNYIP STATE
FOREST ON 4 FEBRUARY.
• ON “BLACK SATURDAY” 7 FEBRUARY THE
BUNYIP FIRE JUMPED CONTAINMENT LINES,
STARTING THE MAJOR BUSHFIRES OF THAT
DAY, WHICH CONTINUED UNTIL MID-MARCH.

VICTORIAN BUSHFIRES COST
• THE VICTORIAN GOVERNMENT’S BUSHFIRE ROYAL COMMISSION WHICH FOLLOWED SET A TOTAL
COST AT $4.4 BILLION, WHICH INCLUDED $1.2 BILLION FOR INSURANCE PAYOUTS, AND AN
UNKNOWN AMOUNT FOR GOVERNMENT DEATH COMPENSATION PAYOUTS.
• WHEN THE COMPLETE TOLL IS TAKEN INTO ACCOUNT,BELOW, IT WILL BE SEEN THAT THIS IS A
(POLITICALLY MOTIVATED?) GROSS UNDERSTATEMENT OF COST:
1. 4500 square kilometres of Victoria burned
2. 173 persons killed
3. 414 persons injured
4. 7562 persons displaced
5. 3500 structures destroyed
6. 15,000 livestock destroyed
7. 57,600 tonnes of crops destroyed
8. 69,925 hectares of crops, pastures, cultivated timber destroyed
9. 98,932 hectares of parklands destroyed
10. 55 businesses destroyed
11. Electricity,communications and infrastructure destroyed
(SOURCE:VICTORIAN DEPARTMENT OF INNOVATION, INDUSTRY AND REGIONAL DEVELOPMENT.
2010)

VICTORIAN BUSHFIRES COST CONT.
• THE ROYAL COMMISSION DID NOT TAKE INTO ACCOUNT:
1. AGRICULTURAL INDUSTRY LOSSES ESTIMATED AT $250
MILLION (USING SAME METHODOLOGY AS QUEENSLAND
FLOODS)
2. ONE SUCCESSFUL LAWSUIT TOTALLING $500 MILLION,
WHICH HAS SET PRECEDENTS FOR FURTHER LAWSUITS –
CONSERVATIVELY AT $600 MILLION. A LOT OF PEOPLE
WERE KILLED.
3. INFRASTRUCTURE, BUSINESSES, PARKLANDS DESTROYED
AT COST OF $250 MILLION (ROUGH ESTIMATE)
ADD ROYAL COMMISSION TOTAL OF $4.4 BILLION
GRAND TOTAL COST: $6.0 BILLION

TOTAL BUSHFIRE IMPACT, AUSTRALIA,
2002 - 2011
• USING THE VICTORIAN BUSHFIRE COST
IMPACT MULTIPLIERS WE ARRIVE AT A TOTAL
BUSHFIRE IMPACT FOR AUSTRALIA, 2002 –
2011 OF ABOUT $10 BILLION
• ALLOWING FOR COST INFLATION, INCREASED
LAWSUITS, AND GREATER FREQUENCY AND
SEVERITY OF BUSHFIRES WE ESTIMATE
COSTS, 2012 – 2021 AT $20 BILLION.

THE AFTERMATH OF BLACK SATURDAY

CASE STUDY NO.3
CLIMATE CHANGE AND WORLD DEMAND FOR
THERMAL COAL

THERMAL COAL AND
INDUSTRIALISATION
• THE WORLD SUPPLY OF THERMAL COAL HAS BEEN VERY MUCH
TIED TO THE ADVANCE OF INDUSTRIALISATION.
• FOR EXAMPLE, THE STATISTICS IN LECTURE 3 SHOWED THAT
WORLD COAL PRODUCTION INCREASED FROM 11.6 MILLION
TONNES IN 1800 TO 683 MILLION TONNES IN 1900. THIS WAS DUE
TO THE OPENING UP OF COAL DEPOSITS IN EUROPE AND
AMERICA TO MEET THE NEEDS OF THE RAPIDLY EXPANDING
INDUSTRIAL CENTRES, RAILWAYS AND SEA TRANSPORT.
• FROM 1919 TO 1939 COAL DEMAND DEMONSTRATED ITS
SENSITIVITY TO STRUCTURAL CHANGES IN THE INDUSTRIES
WHICH USED THERMAL COAL: FIRST THE EXPANSION OF HYDRO-
ELECTRIC POWER; AND SECOND THE GREAT DEPRESSION WHICH
REDUCED INDUSTRIAL PRODUCTION

THERMAL COAL AND
INDUSTRIALISATION CONT.
• BY 1950 WORLD THERMAL COAL PRODUCTION
WAS NEARLY DOUBLE THAT OF 1900.
• AT THIS TIME THE UNITED STATES EMERGED AS
THE LARGEST GLOBAL PRODUCER OF THERMAL
COAL, TO FEED ITS RAPIDLY EXPANDING
INDUSTRIES.
• AS THE WORLD’S LARGEST SUPPLIER, IT SET THE
PRODUCTION (AND POLITICAL) CRITERIA FOR
THE REST OF THE WORLD.

GLOBAL THERMAL COAL INDUSTRY
STRATEGY OF THE UNITED STATES
INDUSTRY
• “DESPITE ITS OBVIOUS IMPORTANCE IN
AMERICAN INDUSTRY, BITUMINOUS COAL
HAS LONG BEEN REGARDED AS A ‘SICK’
INDUSTRY, VACILLATING BETWEEN GLUTS
AND SHORTAGES, PROVIDING UNSTABLE
PROFITS AND UNCERTAIN EMPLOYMENT.”
(JAMES B HARDING. “THE STRUCTURE OF
AMERICAN INDUSTRY”. 1961)

GLOBAL COAL INDUSTRY STRATEGY
• GIVEN THE WIDESPREAD GLOBAL DISTRIBUTION OF COAL
SEAMS, THE ENTRY TO THE INDUSTRY IN BOOM TIMES IS
RELATIVELY EASY, WHERE OPEN CUT MINES CAN BE
STARTED WITH RELATIVELY SMALL INVESTMENTS –
ASSUMING MACHINERY AND TRANSPORT ARE
ECONOMICAL, AND GOVERNMENT APPROVAL HAS BEEN
OBTAINED. EXIT IS NOT SO EASY WHEN GLOBAL DEMAND
FALLS AND PRICES DECLINE.
• EASY ENTRY ALLOWS SMALL INVESTORS TO ENTER THE
MARKET ON BORROWED CAPITAL USING THE COLLATERAL
OF ASSESSED COAL RESERVES VALUED AT BOOM PRICES.
DIFFICULTIES OCCUR FOR THESE PRODUCERS WHEN
GLOBAL DEMAND FALLS AND PRICES DECLINE.

CONT.
• INCREASES AND DECREASES IN DEMAND HAVE BEEN EITHER
CYCLICAL (BASED ON CYCLES IN WORLD COMMODITY MARKETS)
OR STRUCTURAL (BASED ON WORLD DEMAND FOR ELECTRIC
POWER, AND THE EMERGENCE OF ALTERNATIVE FUELS, OR
RENEWABLE ENERGY SOURCES)
• EXAMPLES OF STRUCTURAL SHIFTS IN DEMAND FOR THERMAL
COAL OCCURRED WITH THE RAPID POST-WAR RISE IN ELECTRICITY
PRODUCTION.
• IN THE 1950s AND 1960s ELECTRICITY DEMAND IN DEVELOPING
COUNTRIES WAS INCREASING UP TO 10 % PER YEAR. NEW POWER
STATIONS WERE BUILT NEAR STABLE SUPPLIES OF CHEAP
THERMAL COAL. THEY PERSISTED WITH THIS TECHNOLOGY UNTIL
IT BECAME RELATIVELY OBSOLETE, AS ALTERNATIVE SOURCES OF
FUEL WERE FOUND: NATURAL GAS, NUCLEAR, OIL AND
RENEWABLES.

CONT.
• THE INDUSTRIAL REVOLUTION IN ASIA, AND CHINA IN PARTICULAR,
EMBRACED THERMAL COAL FIRED POWER STATION BECAUSE OF LARGE
UNDEVELOPED COAL DEPOSITS. THIS BOOSTED COAL PRODUCTION AND
TRADE TO UNPRECEDENTED LEVELS. IT ALSO CREATED TOXIC AIR AND
WATER QUALITIES IN MAJOR INDUSTRIAL CENTRES AROUND ASIA.
• ASIAN COUNTRIES ARE NOW REASSESSING FUTURE ENERGY NEEDS
BASED ON CHEAP COAL, AND LOOKING FOR ALTERNATIVE SOURCES OF
FUEL. THIS SUGGESTS THE END OF THE LAST BIG SURGE IN DEMAND FOR
THERMAL COAL.
• MANY LONG TERM PROJECTIONS TO 2050 SUGGEST THAT THERMAL
COAL WILL FUEL LESS THAN 15% OF ENERGY PRODUCTION.
• MEANWHILE OVER-SUPPLY ON WORLD MARKETS WILL FORCE DOWN
COAL PRICES, FORCING SMALLER MINES TO LIMIT PRODUCTION OR
SHUT DOWN. WITH LOANS BASED ON INFLATED ASSET PRICES, THE
SMALLER MINERS MAY BE IN FINANCIAL TROUBLE.
• THUS MARKET FORCES ARE LIKELY TO DRIVE DOWN GLOBAL THERMAL
COAL BURNING.

OTHER RISK AREAS:CORAL REEF
SYSTEMS IN AUSTRALIA
YOUR NOTES FOR LECTURE 5 ON PAGE 28 SHOW:
“KEY RISK: SIGNIFICANT CHANGE IN COMMUNITY
COMPOSITION AND STRUCTURE OF CORAL REEF SYSTEMS
IN AUSTRALIA (‘HIGH CONFIDENCE’)
ADAPTATION ISSUES&PROSPECTS:
• ABILITY OF CORALS TO ADAPT NATURALLY APPEARS
LIMITED AND INSUFFICIENT TO OFFSET THE DETRIMENTAL
EFFECTS OF RISING TEMPERATURES AND ACIDIFICATION.
• OTHER OPTIONS ARE MOSTLY LIMITED TO REDUCING
OTHER STRESSES (WATER QUALITY, TOURISM, FISHING)
AND EARLY WARNING SYSTEMS, DIRECT INTERVENTIONS
SUCH AS ASSISSTED COLONIZATION AND SHADING HAVE
BEEN PROPOSED BUT REMAIN UNTESTED AT SCALE.”

GREAT BARRIER REEF OUTLOOK
REPORT, 2014
(SOURCE: AUSTRALIAN GOVERNMENT, GREAT BARRIER REEF
MARINE PARK AUTHORITY)
BASIC STATISTICS:
• COVERS 346, 000 SQ. KMs. NEARLY ALL PROTECTED
• VISITED BY 44% OF AUSTRALIANS
• GROSS REGIONAL PRODUCT OF $5.6 BILLION
• EMPLOYS 69,000 PERSONS
• ANNUAL COMMERCIAL FISHERIES CATCH OF 7900 TONNES
• TOTAL POPULATION IN THE COASTAL AREAS OF THE REEF
ARE EXPECTED TO INCREASE FROM 620,000 IN 1991 TO
1,500,000 IN 2036.

OUTLOOK REPORT 2014 CONT.
• “CORAL REEFS ARE THE CORNERSTONE OF THE GREAT
BARRIER REEF ECOSYSTEM AND ITS EVOLUTIONARY
HISTORY…THE OVERALL AVERAGE HARD CORAL
COVER IN THE REGION IS ESTIMATED TO HAVE
DECLINED FROM 28 (IN 1986) TO 13.8 PER CENT AND
THE RATE OF DECLINE HAS INCREASED
SUBSTANTIALLY IN RECENT YEARS…IT IS LARGELY THE
RESULT OF A COMBINATION OF CYCLONES, CROWN OF
THORNS STARFISH OUTBREAKS AND MASS
BLEACHING, WITH ELEVATED NUTRIENTS, SEDIMENTS
AND PESTICIDES IN LAND-BASED RUN-OFF LIKELY TO
HAVE AFFECTED RECOVERY IN INSHORE AREAS.”

• “ OVER THE PAST DECADE THE REGION
EXPERIENCED A SERIES OF EXTREME
WEATHER EVENTS, INCLUDING FLOODS AND
SIX CATEGORY 3 OR ABOVE CYCLONES.
COMBINED WITH THE CONTINUING POOR
CONDITION OF KEY PROCESSES SUCH AS
SEDIMENTATION AND NUTRIENT CYCLING,
THIS HAS CAUSED THE OVERALL HEALTH OF
THE GREAT BARRIER REEF ECOSYSTEM TO
DETERIORATE SINCE 2009.”

• “ SEA TEMPERATURE IS INCREASING. WHILE
OTHER ENVIRONMENTAL CONDITIONS (FOR
EXAMPLE CLOUD COVER AND WIND)
SHORTENED PERIODS OF ELEVATED
TEMPERATURE COMPARED TO THE LATE
1990s AND EARLY 2000s, THE TREND OF
INCREASING TEMPERATURES PLACES THE
ECOSYSTEM AT SERIOUS RISK IN THE
FUTURE”

COUNTING THE COSTS: CLIMATE
CHANGE AND COASTAL FLOODING
• CLIMATE COUNCIL REPORT. 2014
• “ULTIMATELY, STABILISING THE CLIMATE IS
NECESSARY TO REDUCE THE LEVEL OF RISKS
FROM COASTAL FLOODING. RAPID AND DEEP
CUTS IN GREENHOUSE GAS EMISSIONS ARE
CRITICAL HERE IN AUSTRALIA AND AROUND
THE WORLD TO STABILISE THE CLIMATE.”

LECTURE 7
DEALING WITH THE CLIMATE IMPACTS OF
INDUSTRIALISATION (1): CARBON MARKETS

THE PLAN
“ THE GOVERNMENT’S INTENTION IS TO IMPLEMENT THE CARBON
POLLUTION REDUCTION SCHEME IN 2010. THE NATURE OF THE
PROBLEM REQUIRES ACTION, AND IT IS IN AUSTRALIA’S NATIONAL
INTEREST TO DEVELOP A COMPREHENSIVE SCHEME SUITED TO
OUR NATIONAL CIRCUMSTANCES IN PARALLEL WITH
INTERNATIONAL DISCUSSION. EMISSIONS TRADING DESIGN HAS
BEEN CANVASSED EXTENSIVELY IN RECENT YEARS AND THERE IS
VALUE IN PUTTING IN PLACE A CLEAR LEGISLATIVE FRAMEWORK
WITH WHICH BUSINESS AND CONSUMERS CAN PLAN FOR THE
FUTURE. EXCESSIVE DELAY WOULD PROLONG A PERIOD OF
INVESTMENT UNCERTAINTY.”
( AUSTRALIAN DEPARTMENT OF CLIMATE CHANGE. CARBON
POLLUTION REDUCTION SCHEME. GREEN PAPER. JULY 2008)

THE REALITY TODAY
• AUSTRALIA HAS NO CREDIBLE CARBON
POLLUTION REDUCTION SCHEME.
• AUSTRALIA HAS NO DEPARTMENT OF CLIMATE
CHANGE.
• AUSTRALIA HAS AN ENVIRONMENT MINISTRY
CHARTERED WITH THE POLITICAL PROTECTION
OF AUSTRALIA’S FOSSIL FUEL INDUSTRY.
• AUSTRALIA HAS A POLITICAL LEADERSHIP
WHICH GIVES NO CREDENCE TO CLIMATE
IMPACTS ARISING FROM THE USE OF FOSSIL
FUELS IN GLOBAL INDUSTRIALISATION.

TODAY’S GLOBAL CONTEST
A TRILLION DOLLAR GLOBAL PETROLEUM AND COAL
TRADING SYSTEM WITH THE ECONOMIC POWER TO BUY
& SILENCE SCIENTISTS, LOBBY POLITICIANS, AND SUBORN
GOVERNMENTS.
VS.
LARGE AREAS OF THE GLOBE IN THE NEW INDUSTRIAL
REGIONS WHERE THE AIR IS TOXIC, DRINKING WATER
POISONED, ARABLE LAND IS POISONED & WHERE THE
IPCC HAS PRESENTED A 1558 PAGE SCIENTIFIC REPORT
WHICH SHOWS THAT THIS INDUSTRIALISATION IS
ALTERING GLOBAL CLIMATE IN SERIOUSLY NEGATIVE
WAYS, APART FROM KILLING AND SICKENING MILLIONS
OF PEOPLE.

PRIVATE COSTS VS. SOCIAL COSTS
• A CONSTANT THEME IN THE LECTURES SO FAR HAS BEEN THAT
INDUSTRIAL FIRMS HAVE RARELY CARRIED THE FULL SOCIAL COSTS OF
THEIR ACTIVITIES- UNLESS COMPELLED TO DO SO BY LAW, WHICH HAS
BEEN RARE.
• THIS IS PARTLY BECAUSE THE CALCULATION OF THESE COSTS HAS BEEN
VERY DIFFICULT.
• THE ECONOMIST ROBERT COASE IN 1961 ARGUED THAT UNLESS
“EXTERNAL” (SOCIAL) COSTS ARE “INTERNALISED” (PICKED UP) BY THE
INDUSTRIAL FIRMS, INEFFICIENCIES WILL OCCUR IN THE ECONOMY
• COASE DEMONSTRATED THIS BY THE EXAMPLE OF A CHEMICAL
COMPANY CREATING DOWNSTREAM POLLUTION OF A RIVER WHEN IT
PUMPS OUT WASTE WATER TO SAVE COSTS. THE EXTRA PROFITS IT
EARNS BY DOING THIS ENCOURAGES OTHER FIRMS TO SET UP PLANTS
NEARBY , TO IMPROVE THEIR PROFITS.
• THE COMBINED EXTERNAL COSTS RISE SHARPLY, EVENTUALLY
INCREASING COSTS TO GOVERNMENT, AS PUBLIC HEALTH COSTS ETC.

THE SOCIAL COSTS OF THE ASIAN
INDUSTRIAL “MIRACLE”
IN THE 20TH CENTURY AS MANY PRODUCTION PLANTS
IN THE INDUSTRIALISED WEST CAME UNDER
INCREASING PRESSURE BY GOVERNMENTS AND THE
PUBLIC TO BRING IN TECHNOLOGY TO CHECK
POLLUTION AND OTHER EXTERNALITIES PRODUCING
SOCIAL COSTS, THEY MIGRATED – FIRST TO LESS
REGULATED AREAS IN THEIR REGION, AND THEN TO
ASIA, AS TRANSPORT COSTS CAME DOWN, WAGES
WERE LOWER AND EMPLOYMENT LESS REGULATED.
THESE MOVEMENTS OFF-SHORE CREATED THEIR OWN
SOCIAL COSTS – UNEMPLOYED WORKERS WITH
REDUNDANT SKILLS WHO HAD TO BE FOUND WORK
OR PAID A DOLE. (eg: bangladesh. See notes)

GEORGE STIGLER ON ROBERT COASE’S
HYPOTHETICAL CHEMICAL PLANT
• WHO WAS GEORGE STIGLER?
• “ONE OF THE MOST TENDENCIOUS QUESTIONS IN
ECONOMICS HAS BEEN: WHEN SOCIAL AND PRIVATE
COSTS DIVERGE APPRECIABLY , WILL COMPETITION LEAD
TO CORRECT AMOUNTS (AND PRICES) OF GOODS? WILL
NOT THE CHEMICAL PLANT UNDER COMPETITION SELL AT
A PRICE WHICH DOES COVER THE COSTS OF
POLLUTION,SO ITS COSTS WILL BE TOO LOW AND ITS
OUTPUT TOO LARGE (WITH GIVEN DEMANDS FOR
CHEMICALS)”:
• TRANSLATE THIS + developing economies vs. developed
economies moving offshore + redundant labour, capital
etc. in developed economies means waste & inefficiency
in these economies unless trade - offs.

“OPTIMAL EFFICIENCY” IS SOCIAL
COSTS = PRIVATE COSTS
• MOST “HEAVY” INDUSTRY HAS VERY HIGH
INVESTMENT COST WHEN MOVING
TOWARDS PRODUCTION PROCESSES THAT
ARE POLLUTION FREE.
• THE PARADIGM CASE IS “CLEAN COAL”
TECHNOLOGY. (EXPLAIN)

AUSTRALIAN ELECTRICITY.THE “GOOD
SLAVE” TURNS ON ITS MASTERS
• WHERE WOULD THE WORLD BE WITHOUT CHEAP
ELECTRICITY?
• IN 1912 MY DAD (AGE 10) WON A SCHOOL PRIZE
“OUR GOOD SLAVE ELECTRICITY”. THE GOOD SLAVE
HAS BECOME A MONSTER. THIS IS TRUE FOR MANY
COUNTRIES INCL. AUSTRALIA.
• 77% OF ELECTRICITY IN AUSTRALIA IS PRODUCED BY
BURNING CHEAP AND PLENTIFUL COAL.
• BUT IN AUSTRALIA IT COSTS FROM 3 TO 5 CENTS TO
PRODUCE 1 KILOWATT HOUR OF ELECTRICTY.
• IN THE U.S. IT COSTS 1.37 CENTS – 2.40 CENTS PER
KWH.

AUSTRALIAN ELECTRICITY CONT.
• THE AUSTRALIAN TAXPAYER HAS TO PAY FOR AN
ELECTRICITY SUBSIDY SO THAT ELECTRICITY PRODUCERS
CAN RECOUP THEIR COSTS ($450 MILLION IN 2006)
• RAPID POST-WAR GROWTH IN ELECTRICITY
CONSUMPTION DUE TO: POPULATION GROWTH ; RURAL
ELECTRIFICATION; INCREASED PER CAPITA CONSUMPTION
VIA APPLIANCES; THE RISE OF HEAVY INDUSTRY.
• DEMAND WAS MET BY BUILDING POWER PLANTS BASED
ON CHEAP COAL . NOW OBSOLETE. DISTRIBUTORS NOW
UNCOUPLED FROM PRODUCERS AND HAVE MONOPOLY
POWERS IN THEIR SPECIFIED TERRITORIES.

CONCEPT OF THE CARBON TRADE:
KYOTO PROTOCOL
• 1997. KYOTO PROTOCOL: INTERNATIONAL TREATY ENFORCED 2005.
• ANNEX 1 COUNTRIES (DEVELOPED) WERE ASSIGNED LEGALLY BINDING TARGETS FOR
REDUCTIONS OF EMISSIONS ON 6 GREENHOUSE GASES, SO THAT OVERALL, GREENHOUSE GAS
WOULD BE REDUCED BY 5.2% BETWEEN 1990 AND 2012.
• U.S. DID NOT RATIFY & THEREFORE NOT BOUND.
• BEFORE 2007 ELECTION A HOWARD/RUDD CONSENSUS THAT AN EMISSIONS TRADING SCHEME
(ETS) BE IMPLEMENTED
• LABOR WON AND RUDD/TURNBULL CONSENSUS FOR IMPLEMENTATION OF A CARBON
POLLUTION REDUCTION SCHEME.
• TURNBULL TORPEDOED BY ABBOTT WHO TRENCHANTLY OPPOSED TRADING (E.T.S)
• GILLARD ROLLED RUDD & LED A MINORITY GOVERNMENT WITH GREENS HELP AFTER FIRST
HUNG PARLIAMENT IN 70 YEARS, WITH GREENS INSISTING ON A FIXED CARBON PRICE TO
PRECEDE A FLOATING E.T.S
• THE FIXED PRICE WAS WRITTEN INTO THE CLEAN ENERGY BILL OF FEBRUARY 2011 WHICH THE
ABBOTT OPPOSITION CALLED A “CARBON TAX” – GAINED ENORMOUS SUPPORT FROM MINING
& HEAVY INDUSTRY & WON THE 2013 ELECTION WITH “REPEAL OF THE CARBON TAX” AT THE TOP
OF THE AGENDA.
• REPEALED IN 2014 IN AN ATMOSPHERE OF HIGH FARCE IN THE SENATE.

CARBON TRADING: BUSINESS
MODELS (1). CAP-AND-TRADE
• IN CAP-AND-TRADE SYSTEMS CARBON EMISSIONS ARE
LIMITED TO PRE-DETERMINED CEILINGS. THESE ENTITLE
FIRMS TO RECEIVE EMISSION CREDITS OR PERMITS
• IF ONE FIRM EMITS MORE CARBON DIOXIDE THAN THE
CEILING AMOUNT IT CAN PURCHASE ANOTHER FIRM’S
PERMITS IF THEY ARE UNUSED – BECAUSE THEY ARE
OPERATING BELOW THE EMISSION CEILING. EUROPE
ADOPTED THE CAP- AND- TRADE BUSINESS MODEL IN
JANUARY 2005.
• EUROPE IS THE WORLD EXPONENT ON PERMIT TRADING
SCHEMES: OTHER FORMS OF AIR POLLUTION; FISHING
STOCKS (VERY EXTENSIVE); WATER RESOURCE
MANAGEMENT; WATER POLLUTION CONTROL; LAND USE
CONTROLS.

CARBON TRADING: A CYNIC’S VIEW

CARBON TRADING BUSINESS MODELS
(2): OFFSET EXCHANGES
• KYOTO RAN INTO TROUBLE WITH THE EMERGING INDUSTRIAL GIANTS
OF ASIA & ELSEWHERE. THEIR POSITION WAS THAT INDUSTRIAL
DEVELOPMENT OUTWEIGHED ALL OTHER CONSIDERATIONS, INCL.
REDUCTION OF EMISSIONS (SEE PREVIOUS LECTURES FOR
CONSEQUENCES IN CHINA ETC.)
• KYOTO COMPROMISED BY CREATING THE CLEAN DEVELOPMENT
MECHANISM (C.D.M.):
1. A DEVELOPED COUNTRY INVESTOR CAN RECEIVE EMISSION CREDITS –
CERTIFIED EMISSION REDUCTION (C.E.R.) IF THE INVESTMENT IS IN A
PROJECT WHICH REDUCES CARBON EMISSIONS IN A DEVELOPING
COUNTRY WHICH IS NOT A KYOTO SIGNATORY.
2. THE C.D.M. REGIME EXPIRED IN 2012: 7507 PROJECTS WERE
REGISTERED , AND 1.5 BILLION INDIVIDUAL C.E.R. PROJECTS CERTIFIED.
AUSTRALIA HAD 67 PROJECTS ON THE CDM REGISTER (MOSTLY
FORESTRY PROJECTS)
3. THE AFRICA CARBON FORUM IS THE GLOBAL MARKET PLACE FOR
BUYING AND SELLING CDMs (See flyer)

CAP-AND- TRADE IN THEORY AND
PRACTICE: COASE THEOREM
• PROPERTY RIGHTS
• COASE THEOREM STATED
• COASE THEOREM DEPENDS ON BRIBERY
• CASE 1 DIAGRAM.POLLUTER HAS RIGHT TO
POLLUTE
• CASE 2 DIAGRAM. POLLUTEE HAS RIGHT TO
NO POLLUTION

CAP-AND-TRADE: THE U.S.
EXPERIENCE
• FIRST EVALUATED BY COMPUTER MODELLING BY U.S.
ECONOMISTS BETWEEN 1967 AND 1970 TO PROVE THAT
THE LEAST COST SOLUTION TO THE REDUCTION IN
POLLUTION ARISING FROM INDUSTRIES WAS A TRADE IN
POLLUTANTS INCL. CARBON.
• CLEAN AIR ACT 1977 WHERE EMISSION CERTIFICATES
USED TO DEMONSTRATE WORKINGS OF MARKET-BASED
EMISSION CONTROL
• 1990. REVISED ACT TO COVER U.S. ACID RAIN PROGRAM
(TO ELIMINATE TOXIC SULPHUR DIOXIDE & NITROUS
OXIDE). TOOK 5 YEARS TO BECOME LAW & STOPPED 5
MILLION TONS BEING RELEASED INTO ATMOSPHERE.

CAP-AND-TRADE: E.U. EXPERIENCE
PHASE 1
• E.U. SYSTEM STARTED IN 2005, 15 E.U. MEMBERS PARTICIPATING
• UNIT OF EXCHANGE (“EUROS”) A NON-RENEWABLE PERMIT = 1 TONNE
OF CARBON DIOXIDE EQUIVALENT OF GREENHOUSE GAS EMISSIONS.
• PERMITS BEGAN JANUARY 2005
• A NEW MARKET – AN OVER-ALLOCATION OF PERMITS BY GOVT. TO
POLLUTERS (MOSTLY ELECTRICITY GENERATORS)
• OPENING PRICE 7 EUROs
• 7 MONTHS LATER AUGUST 2005 PRICE 30 EUROs BECAUSE OF
COMMODITY SPECULATORS’ PROFIT TAKING (explain SPECULATION)
• SEPTEMBER 2005 PRICE FELL TO 20 EUROs –MANY SPECULATORS QUIT
MARKET
• 2007. PRICE WAS ZERO EUROs. BECAUSE OVER-ALLOCATION OF
PERMITS (POLITICS & MARKET HAD A DIFFERENT DEFINITION OF
“EMISSION” TO OFFICIAL ONE USED IN THE EMISSIONS TRADING
SCHEME TRANSACTIONS LOG)REMAINING SPECULATORS TOOK MAJOR
LOSSES. FINANCIAL SECTOR WEAKENING ALSO?

CAP- AND-TRADE: E.U. EXPERIENCE
PHASE 2
• COMMENCED 2008 UNTIL 2012.
• PRICES STABILISED AT 15 TO 22 EUROs
• MARCH 2011. PRICES COLLAPSED TO 1 TO 5 EUROs
• FACTORS IDENTIFIED AS CAUSING REDUCTION:
1. REDUCED OUTPUT IN ENERGY-INTENSIVE SECTORS
CAUSED BY RECESSION - LESS ABATEMENT
REQUIRED – LESS PRICE PAID FOR CARBON
EMISSIONS
2. MARKET EXPECTATIONS FOR POSSIBLE FUTURE
PRICES REVISED DOWNWARDS AS RESULT OF
RECESSION (explain)

CAP-AND-TRADE:E.U. EXPERIENCE
PHASE 3
• MAJOR CHANGES STARTING JANUARY 2013:
1. TO COVER 43% OF ALL EMISSIONS
2. ESTABLISH E.U. WIDE EMISSIONS CAP
3. CENTRALISED E.U. TRANSACTION LOG TO REPLACE NATIONAL
LOGS WHICH WERE SUBJECT TO FRAUD IN PHASES 1 & 2.
(EMAIL PHISHING AVOIDED 5 BILLION EUROS IN V.A.T.)
4. AUCTION 50% OF PERMITS (explain)
5. A COMMON AUCTION PLATFORM (explain). (Auction revenues
to be distributed to Member States)
6. BENCHMARKING FOR FREE PERMITS TO INSTALLATIONS
7. END FREE PERMITS TO POWER PRODUCERS
8. BY 2020 REDUCE EMISSIONS BY 20% ON 1990 LEVELS
9. CURRENT PRICE AROUND 4 EUROs per tonne and falling as
recession deepens

CAP-AND-TRADE: U.S. EXPERIENCE
• BEGINNING IN FEBRUARY 2007 5 WESTERN STATES ESTABLISHED
WESTERN CLIMATE INITIATIVE (ARIZ., CAL., NEW M., OREGON,
WASHINGTON) TO REDUCE CARBON EMISSIONS IN 2020 BY 15%
BELOW 2005
• JULY 2008. MONTANA & UTAH JOINED, AND CANADIAN
PROVINCES, B.C. MANITOBA, ONT. & QUEB.
• SEPTEMBER 2008: INITIATIVE REPORTED DESIGN
RECOMMENDATIONS FOR A CAP-AND- TRADE PROGRAM.
STARTING 2012
• INTIATIVE WAS WRECKED BY A PERFECT STORM: RISE OF
POLITICAL RIGHT, POLITICAL LOBBYING BY INDUSTRY, ECONOMIC
RECESSION CONSTRAINING BUSINESS & GOVT.
• 2010 OBAMA PUSHED DEBATE ON CAP-AND-TRADE
• U.S. CLEAN ENERGY AND SECURITY ACT DEFEATED IN SENATE
• 2013. ONLY B.C., CALIF., AND QUEB., REMAIN IN INTIATIVE

CAP-AND-TRADE: CHINA EXPERIENCE
• 2012. CHINA LARGEST CARBON POLLUTER – 9.9
BILLION TONNES
• TOOK STEPS TO REDUCE CARBON BY 2020 TO 45%
BELOW 2005 LEVEL
• E.U. DONATED 5 MILLION EUROs TO ESTABLISH PILOT
TRADING SCHEMES: BEIJING; TIANJIN;
CHONGQING;HUBEI. EACH CITY HAS LOCAL
EXCHANGE TO TRADE CARBON CREDITS
• PLANS TO TRANSITION FROM LOW-END- HIGH-
CARBON INDUSTRIES TO LOW CARBON HIGH END
• POSSIBLE JOINT VENTURE WITH U.S. FOR CARBON
TRADING?

CAP-AND-TRADE: QUO VADIS
AUSTRALIA?
• 2007 RUDD GOVERNMENT CARBON POLLUTION REDUCTION
SCHEME CONSENSUS WITH TURNBULL OPPOSITION SQUASHED
WHEN ABBOTT BECAME LEADER, DEFEATING BILL IN THE SENATE.
• GILLARD GOVT. APPOINTED A MINISTER FOR CLIMATE CHANGE &
ENERGY EFFICIENCY TO MANAGE CARBON PRICING MECHANISM
AS PART OF A “CLEAN ENERGY FUTURE”.
• THE ABBOTT OPPOSITION’S ELECTION CAMPAIGN
CHARACTERISED CARBON EMISSIONS LEGISLATION AS A “PYTHON
SQUEEZE” AND A “WRECKING BALL” ON THE ECONOMY:
“I AM GIVING YOU THE MOST DEFINITE COMMITMENT ANY
POLITICIAN CAN GIVE THAT THIS TAX WILL GO . THIS IS A PLEDGE
IN BLOOD.” IN LECTURE 8 WE LOOK AT HOW THIS PLEDGE WAS
REDEEMED AMID HIGH FARCE IN THE SENATE

GLOBAL CARBON EMITTERS 2012
COUNTRY TOTAL EMISSIONS
BILLON TONNES
CHINA 9.9
UNITED STATES 5.2
EUROPEAN UNION 3.7
INDIA 2.0
RUSSIA 1.8
JAPAN 1.3
SOUTH KOREA 0.6
AUSTRALIA 0.4
TOTAL WORLD 34.5

GLOBAL CARBON EMITTERS 2012
• IT WILL BE CLEAR FROM THE ABOVE TABLE THAT
THE BIG 3 CARBON EMITTERS ACCOUNT FOR
54% OF THE TOTAL & NEED A TOTAL JOINT
COMMITMENT TO REPAIR THE PRESENT FLAWED
TRADING SCHEMES FOR A GLOBAL TRADING
SCHEME
• MEANWHILE THE CLEAN DEVELOPMENT
MECHANISM IS EXPANDING. IN 2012 TRADE IN
EMISSION REDUCTION PERMITS WAS $77.5
BILLION.

WORLD COAL INVESTMENT,
PRODUCTION AND TRADE
(SEE NOTES)

LECTURE 8
DEALING WITH THE CLIMATE IMPACTS OF
INDUSTRIALISATION (2): REGULATION,
TAXATION, LEGISLATION (PASSED AND
FAILED) AND OBFUSCATION

OBFUSCATION 0R SQUEEZING THE
SQUEEZY PYTHON
THE EXISTENCE OF THE CARBON TAX BECAME
THE CENTRAL PLANK IN THE ABBOTT
OPPOSITION’S ELECTION CAMPAIGN,
BEGINNING IN 2012. THIS INCLUDED VERY
INFLAMMATORY STATEMENTS ABOUT THE
CARBON TAX ACTING AS A “PYTHON
SQUEEZE” AND “WRECKING BALL” ON THE
ECONOMY. (See Liberal Election policy)

SQUEEZING THE PYTHON: A
SHAKESPEAREAN FARCE IN ONE ACT

THE PLAY TAKES PLACE IN FAIRYLAND:
(“MIDSUMMER NIGHTS DREAM”)

SCENE 1: ENTER SIR JOHN FALSTAFF
(PALMER) & FELLOW BOOZER,
BARDOLF (GORE) (HENRY V)

FAIRYLAND MORNING HERALD.JUNE
27, 2014
“ CLIVE PALMER’S DOUBLE ACT WITH GORE MAY HAVE
APPEARED IMPROMPTU BUT THE FORMER US VICE-
PRESIDENT’S ROAD TO CANBERRA BELONGED MONTHS
EARLIER…GORE HAD LAST MINUTE DOUBTS ABOUT
STANDING NEXT TO PALMER AS HE BACKED THE
ABOLITION OF AUSTRALIA’S PRICE ON CARBON, BUT WAS
EVENTUALLY CONVINCED THE ADVANCES STILL MERITED
HIS PRESENCE…LATE ON WEDNESDAY NIGHT IN A DINING
ROOM IN PARLIAMENT HOUSE, GORE AND PALMER TOOK
CENTRE STAGE AT AN INTIMATE DINNER FOR ABOUT 20
PEOPLE…THE DISCUSSION TURNED TO CLIMATE CHANGE
OFTEN…ELSEWHERE IN THE BUILDING, GOVERNMENT
STRATEGISTS WERE REDOING THEIR POLITICAL
CALCULUS.”

SCENE 2: A BROADCASTING CAVE IN
FAIRYLAND. 25 JUNE. ENTER PUCK
(TONY JONES)

AFTER A PRE-RECORDED INTERVIEW
WITH PALMER
“ CLIVE PALMER HAS PUNCHED A HOLE IN THE ABBOTT
GOVERNMENT’S LEGISLATIVE AGENDA BY PLEDGING
HIS BAND OF NEW SENATORS WILL OPPOSE SOME OF
ITS SIGNATURE ENERGY AND CLIMATE POLICIES.
IN HIS DUET TODAY WITH CLIMATE WARRIOR AND
FORMER US VICE PRESIDENT AL GORE, CLIVE PALMER
ANNOUNCED CONDITIONAL SUPPORT FOR
SCRAPPING THE CARBON TAX, BUT HE ALSO
DEMANDED THAT THE GOVERNMENT ESTABLISH AN
EMISSIONS TRADING SCHEME AND DECLARED HE
WOULD BLOCK PLANS TO ABOLISH GREEN ENERGY
INITIATIVES.”

QUOTES FROM PALMER DURING THE
INTERVIEW.
• “AUSTRALIA HAS GOT AN OPPORTUNITY TO SET A STANDARD
WHICH CAN ACT AS A CATALYST FOR THE WHOLE WORLD.
• WE’LL MOVE AN AMENDMENT AND THAT AMENDMENT WILL
ENSURE THAT THE REMOVAL OF THE CARBON TAX REQUIRES THAT
ALL PRODUCERS OF ENERGY IN THIS COUNTRY ARE REQUIRED BY
LAW, NOT BY CHOICE, TO PASS ON TO ALL CONSUMERS OF
ENERGY THE SAVINGS FROM THE REPEAL OF THE CARBON TAX.
• DIRECT ACTION IS A WASTE OF MONEY.
• IN VOTING AGAINST THE ABOLITION OF THE CLIMATE CHANGE
AUTHORITY, PALMER UNITED SENATORS WILL MOVE AN
AMENDMENT TO ESTABLISH AN EMISSIONS TRADING SCHEME.
THIS SCHEME WOULD ONLY BECOME EFFECTIVE ONCE
AUSTRALIA’S TRADING PARTNERS ALSO TAKE ACTION TO
ESTABLISH SUCH A SCHEME.”

SCENE 3: EARLY 26 JUNE. A SMILING
DOGBERRY (TONY ABBOTT) EMERGES
FROM CHIEFTAIN’S CAVE

(DOGBERRY IS FROM “MUCH ADO
ABOUT NOTHING”)
“…THE MINOR PARTY’S FOUR UPPER HOUSE
VOTES WOULD SUPPORT THE ABOLITION OF
THE FIXED PRICE, SUBJECT TO JUST ONE
CONDITION – A GUARANTEE THAT THE
PACKAGE WOULD CONTAIN LEGISLATED
ASSURANCES OF CHEAPER ELECTRICITY FOR
HOUSEHOLDS.”

SCENE 4: 26 JUNE, FLOOR OF REPS.
EMOTIONAL GROUP HUG WITH GREG
HUNT & COLLEAGUES

SCENE 4 CONT: IT IS JUST BEFORE
ADJOURNMENT IN THE REPS.
THE GOVERNMENT HAS SUCCESSFULLY PASSED:
1. CLEAN ENERGY LEGISLATION (CARBON TAX
REPEAL) BILL 2013.
2. TRUE-UP SHORTFALL LEVY
(GENERAL)(CARBON TAX REPEAL)BILL 2013.
3. TRUE-UP SHORTFALL LEVY (EXCISE)
(CARBON TAX REPEAL) BILL 2013.

SCENE 5: INTERLOCUTOR FROM
FAIRYLAND MEDIA GROUP: MARK
KENNY (FESTE – 12TH NIGHT)

SCENE 5: CONT.
“LOOKED AT THROUGH THIS LENS, TWO KEY
MINISTERS KNOWN TO BELIEVE IN VIGOROUS
INTERVENTIONS TO ADDRESS CLIMATE
CHANGE COME TO MIND. TURNBULL AND
ENVIRONMENT MINISTER GREG HUNT.”

END ACT 1: KEEP TUNED TO
FAIRYLAND FOR MORE

U.S. ROADBLOCKS TO CHANGE IN
CLIMATE POLICY
1. ROADBLOCK OF RICH, WELL-ESTABLISHED AND POLITICALLY
ENTRENCHED SET OF INDUSTRIES RELIANT ON CHEAP COAL &
COAL USE - IN POWER GENERATION IN PARTICULAR – USING
THE FULL ARRAY OF LOBBYING CONGRESS TO DEFEAT CARBON
REDUCTION BILLS:
+ENLISTING ADVOCATES AMONG RIGHT WING
REPUBLICANS
+TARGETTING CONGRESSIONAL MODERATES (BOTH SIDES)
WITH NEGATIVE MEDIA –
ESPECIALLY USING “SHOCK JOCKS”)
+$70 MILL. SPENT ON LOBBYING ETC.
+FORMAL CREATION OF SPECIALIST LOBBIES (EG: SO-
CALLED “ENERGY RESEARCH CONSULTANCIES”)
(CLASS TO THINK OF AUSTRALIAN PARALLELS)

U.S. ROADBLOCKS CONT.
2. THERE IS A GROWING PERCEPTION IN THE
U.S. THAT THE COUNTRY AND CHINA MIGHT
GET TOGETHER TO HAMMER OUT
COOPERATIVE PROTOCOLS AT PRESIDENTIAL
LEVEL AND LEVERAGE LEGISLATIVE ACTIONS
ON THESE TO OVERCOME RESISTANCE IN
BOTH COUNTRIES. OTHER ENLIGHTENED
WORLD LEADERS WOULD FOLLOW.

“MODERN POLITICS IS AT BOTTOM, A
STRUGGLE NOT OF MEN BUT OF
FORCES”AN IRREVOCABLE COMMITMENT HAS BEEN MADE BY CONSERVATIVE
AUSTRALIAN & STATE GOVERNMENTS TO COAL BURNING
INDUSTRIES TO REMOVE ALL IMPEDIMENTS TO PROFITABILITY &
SURVIVAL:
• ABOLITION OF THE CARBON TAX REQUIRING UNKNOWN
CONCESSIONS TO PALMER.
• A CLEVER PROMOTIONAL ELECTION CAMPAIGN VIA MURDOCH
MEDIA, LISTING 250 COMPANIES ALLEGEDLY ADVERSLY IMPACTED
BY POLLUTION LEGISLATION TO SUPPORT ABOLITION OF CARBON
TAX. (See downloads)
• A VAGUE ELECTION PROMISE TO REPLACE THE CARBON TAX WITH
“DIRECT ACTION”, WHICH WOULD REDUCE GREENHOUSE GAS
EMISSIONS BY 5% IN 2020. IT WAS NOT CLEAR WHICH ELEMENTS
OF THE ECONOMY WOULD CARRY THE BURDEN OF DIRECT
ACTION.

REGULATION OF CARBON EMISSIONS
(“DIRECT ACTION?”). U.S. & CANADA
1. UNITED STATES BENCHMARK CASE.
• 1970. U.S. CLEAN AIR ACT REQUIRES E.P.A. TO REGULATE “AIR
POLLUTANTS” (…ANY AIR POLLUTION AGENT OR COMBINATION
OF AGENTS). DEFINED SOCIAL COSTS WHERE AIR POLLUTANTS
ENDANGER PUBLIC HEALTH OR “WELFARE”. DID NOT ADDRESS
CLIMATE CHANGE SPECIFICALLY.
• 1980s. U.S. PUBLIC AWARE OF CLIMATE CHANGE.
• 1992. GEORGE BUSH SNR. GETS CONGRESS TO COMMIT TO U.N.
CONVENTION ON CLIMATE CHANGE: COMMITTING TO POLICY
CHANGE.
• 1997. U.S. SIGNED KYOTO PROTOCOL BBUT SENATE CONDEMNS
PERCEIVED BIAS AGAINST DEVELOPED ECONOMIES (STANDARD
RIGHT WING WHINGE ABOUT U.N. INITIATIVES).
• 1998 – 2003. HUNDREDS OF BILLS UNSUCCESSFUL AGAINST
SENATE ATTITUDE TO KYOTO.

U.S. HISTORY OF CLIMATE CHANGE
REGULATION. CONT.
• 2003. GEORGE W BUSH INSTRUCTS EPA TO LOOK FOR PUBLIC-
PRIVATE PARTNERSHIPS TO FIND TECHNICAL FIX FOR
GREENHOUSE GAS EMISSIONS (GHG). ENTER “CLEAN COAL”.
• MID-2000s. THE WESTERN CLIMATE INITIATIVE (LECT.7). NOW
NEARLY DECEASED.
• 2009. 2 FINDINGS MADE BY EPA ON CLEAN AIR ACT
INTERPRETATION (12 VOL. TECHNICAL SUPPORT):
+ 6 KEY WELL-MIXED GASES “THREATEN PUBLIC HEALTH &
WELFARE” INCL. FUTURE GENERATIONS – CARBON DIOXIDE,
METHANE, NITROUS OXIDE,
HYDROFLUROCARBONS,PERFLUROCARBONS,SULFUR
HEXAFLUORIDE.
+COMBINED EMISSIONS OF THESE WELL-MIXED GASES FROM
NEW MOTOR VEHICLESCONTRIBUTE TO GREENHOUSE GAS
POLLUTION “WHICH THREATENS PUBLIC HEALTH & WELFARE”

U.S. HISTORY OF CLIMATE CHANGE
REGULATION CONT.
• 2 JUNE 2014. EPA PRODUCED A 375 PAGE “CLEAN POWER PLAN
PROPOSED RULE” CUTTING CARBON POLLUTION FROM POWER
PLANTS ACROSS U.S. – THE LARGEST SOURCE OF GREENHOUSE
GAS EMISSIONS IN THE U.S. – REDUCING EMISSIONS BY 30% TO
2005 LEVELS. EACH STATE COULD OPT FOR ITS OWN REDUCTION
STRATEGY: CAP&TRADE OR RENEWABLES.
1. BUSINESS BACKLASH IMMEDIATELY: POWERFUL CHAMBER OF
COMMERCE – REDUCE GDP BY $50 BILL PER YEAR, STOP 220,000
NEW JOBS, COST CONSUMERS $550 BILL PER YEAR.
2. U.S. NATURAL RESOURCE S DEFENSE COUNCIL: CREATE 250,000
NEW JOBS IN RENEWABLES INDUSTRY & CUT ENERGY BILLS
3. EPA REPLIED: NEW INVESTMENT OF $8 BILL, SAVE 6,600 LIVES, &
$50 BILL IN HEALTHCARE COSTS.

THE INESCABLE CONCLUSION IS THAT A NEW
POLICY BENCHMARK IS BEING SET IN THE
U.S. –DESPITE ENTRENCHED OPPOSITION –
TO GRADUALLY PHASE OUT COAL FIRED
POWER PLANTS.
THIS WILL HAVE A HUGE IMPACT, WORLD
WIDE.

REGULATING GREENHOUSE GAS
EMISSIONS IN CANADA
( SEE NOTES)

AUSTRALIAN CLIMATE COUNCIL’S
CONCLUSIONS FOR AUSTRALIA.
• “AUSTRALIA’S ELECTRICITY SECTOR IS AGEING,
INEFFICIENT, UNPREPARED AND REQUIRES URGENT
REFORM. THE ELECTRICITY SECTOR ACCOUNTS FOR
33% OF AUSTRALIA’S GREENHOUSE GAS EMISSIONS –
THE SINGLE BIGGEST SOURCE OF EMISSIONS. BY 2020
45% OF AUSTRALIA’S COAL-FIRED POWER STATIONS
WILL BE OVER 40 YEARS OLD.
• COAL-FIRED POWER WILL STRUGGLE TO COMPETE
ECONOMICALLY WITH OTHER SOURCES OF
ELECTRICITY AS THE WORLD MOVES TO LIMIT
EMISSIONS.”

CLIMATE COUNCIL CONCLUSIONS
CONT.
• “THE SHIFT TO RENEWABLE ENRGY IS
UNDERWAY, INCLUDING IN SOME OF THE
LARGEST ECONOMIES OF THE WORLD.
• THERE ARE SUBSTANTIAL OPPORTUNITIES
FOR AUSTRALIA IN RENEWABLE ENERGY,
WHICH IS ALREADY LOWERING THE COST OF
ELECTRICITY.
• AUSTRALIA MUST ACT NOW TO PREPARE ITS
ENERGY SECTOR FOR THE FUTURE.”

TAXATION OF CARBON EMISSIONS
A CARBON TAX IS AN ENVIRONMENTAL TAX ON
THE CARBON CONTENT OF FUELS (COAL,
PETROLEUM AND NATURAL GAS). THE TERM
CARBON TAX COMES WITH OTHER LABELS:
ECOLOGICAL TAXES, CLIMATE CHANGE LEVIES,
EMISSION TAXES AND GREEN TAXES. A CARBON
TAX IS ONE MORE ECONOMIC INSTRUMENT
AVAILABLE TO GOVERNMENTS TO TACKLE THE
BASIC PROBLEM CREATED BY THE CLIMATE
IMPACTS OF INDUSTRIALISATION – THEY CAUSE
A “FAILURE OF THE MARKET”

CLIMATE CHANGE & FAILURE OF THE
MARKET
• IN COAL INDUSTRY TERMS, THE SUPPLY CHAIN FROM
MINE TO FACTORY/POWER PLANT, IS OPERATED AT A
COST TO THE COMMUNITY, WHICH IS NOT REFLECTED
IN THE MARKET PRICE – THE “HIDDEN SUBSIDY” TO
THE INDUSTRY IDENTIFIED BY ROBERT COASE IN
LECTURE 7. FUNDAMENTAL TO MODERN ECONOMICS
IS THAT “THE MARKET” AND ITS PRICES WERE THE
BEST INDICATORS OF ECONOMIC EFFICIENCY.
HOWEVER IF MARKET PRICES AND EXCESS PROFITS
ARE EARNED BY IMPOSING POLLUTION COSTS ON THE
COMMUNITY THEN THE MARKET HAS FAILED. A TAX
ON PRODUCTION – A CARBON TAX – WOULD
EQUALISE PRIVATE PROFITS AND SOCIAL BENEFITS.

HOW EFFECTIVE IS A CARBON TAX IN
RECOUPING SOCIAL COSTS?
1. WHEN A CARBON TAX IS AIMED AT STABILISING A
MARKET FAILED BY CLIMATE CHANGE IT CAN HAVE
POSITIVE EFFECTS BY REDUCING CARBON EMISSIONS
AND ENCOURAGING SHIFTS TO RENEWABLES. IN THE
SHORT RUN IT MAY PUT SOME POWER COMPANIES OUT
OF BUSINESS.
2. SETTING CARBON TAXES REQUIRES DETAILED SOCIAL
COST-BENEFIT STUDIES WHICH MAY LACK GOOD
INFORMATION.
3. IF THERE ARE VACUUMS, THEN POLITICIANS SET
TARGETS WHICH THEY CONSIDER ACCEPTABLE TO PUBLIC
– BASED OFTEN ON DODGY SCIENCE & SPIN DOCTORING

HOW EFFECTIVE A CARBON TAX?
CONT.
4. WHEN A CARBON TAX IS FINALLY SET , IT IS ALMOST IMPOSSIBLE
TO ESTABLISH A VALID CAUSE & EFFECT BETWEEN AMOUNT OF
TAX & IMPACT ON CARBON REDUCTION.
5. AT THE INTERNATIONAL LEVEL (KYOTO) THE ONLY EFFECTIVE WAY
OF SETTING AN ARBITRAY TARGET IS IN QUANTITATIVE TERMS
(EG: 5% BY 2020). THEN COUNTRIES MUST IMPLEMENT IT.
6. BUREAUCRACY REQUIRED TO ADMINISTER A CARBON TAX IS
IMMENSE: LEGALITY OF TAXES, POLLUTION MEASUREMENT
LEGALITIES, INSPECTION & PENALTIES.
7. EVEN SOPHISTICATED ENVIRONMENTAL POLICING AUTHORITIES
LIKE U.S. EPA HAVE HAD A LONG BATTLE TO REGULATE CARBON
EMISSIONS.

CARBON TAXES IN BRITISH COLUMBIA
• INTRODUCED 1 JULY 2008 AT C410 PER
TONNE, REACHING $30/TONNE IN 2012.
CAUSAL EFFECTS HAD CAVEATS. CARBON TAX
MADE REVENUE NEUTRAL BY RETURNING
MONEY AS INCOME TAX CUTS TO PERSONS &
BUSINESSES. NO NEGATIVE IMPACT ON GDP.
EMISSIONS DECLINED BY 9.9%

CARBON TAXES IN IRELAND
INTRODUCED A CARBON TAX IN 2012, CALLED
A VEHICLE REGISTRATION TAX WHICH WAS
PARTLY EMISSIONS BASED. NO EVALUATION
GIVEN ON IMPACT – IF ANY.

CARBON TAXES IN FINLAND
INTRODUCED A CARBON TAX IN 1990. IT IS
CURRENTLY 18.05 EUROS PER TONNE.NO
EVALUATION IS AVAILABLE ON ITS IMPACT.

CARBON TAX IN SWEDEN
INTRODUCED A CARBON TAX IN 1991. IT WAS
$150 PER TONNE ON ALL EMISSIONS EXCEPT
POWER. INDUSTRIAL EMISSIONS WERE
PRICED AT $75 PER TONNE. TWO OUTCOMES
ARE REPORTED ON:
1. A BIG INCREASE IN BIOMASS, ESPECIALLY
FOR HEATING..
2. A CONTRIBUTOR TO ANNUAL GROWTH IN
GDP OF 2.8%.

CARBON TAX IN GREAT BRITAIN
HAS SOMETHING CALLED A “CLIMATE CHANGE
LEVY.”IT IS NOT BASED ON QUANTITIES OF
GREENHOUSE GAS EMISSIONS, BUT
KILOWATT HOURS. IT IS VERY DIFFICULT TO
COMPREHEND, LET ALONE EVALUATE.

CARBON TAX IN COLORADO
INTRODUCED A CARBON TAX LEVY ON
ELECTRICITY GENERATION OF $7 PER TONNE,
OF WHICH $1.33 IS PASSED ON TO
HOUSEHOLDS.

CARBON TAXES IN OTHER COUNTRIES
• SOUTH AFRICA
• CHINA
• INDIA
• JAPAN
• SOUTH KOREA
• TAIWAN
• EUROPEAN UNION
• DENMARK
• FRANCE
• NORWAY
• SWITZERLAND
• COSTA RICA

LECTURE 9: GEOPOLITICS OF CLIMATE
CHANGE

WATER
“ WATER IS A DIVINE GIFT TO MANKIND. A SWEDISH WATER
EXPERT ONCE DESCRIBED WATER AS A ‘CHAMELEON,
CONTINUOUSLY REAPPEARING IN NEW ROLES IN THE
ENVIRONMENT’. IT IS A UBIQUITOUS RESOURCE WHICH IS
AN ABSOLUTE NECESSITY OF ALL LIFE. IT IS AN ESSENTIAL
ELEMENT OF THE ECONOMIC, ENVIRONMENTAL,
AESTHETIC, SOCIAL HEALTH OF THE STATE. IT IS USED FOR
HUMAN CONSUMPTION, SANITATION,
WASHING,BATHING, AND AGRICULTURAL ORRELIGIOUS
RITUALS,AND FOR ECONOMIC PURPOSES SUCH AS
AGRICULTURE, LIVESTOCK, INDUSTRY, TOURISM AND
TRANSPORTATION. IT KINDLES A NATION’S ECONOMIC
DEVELOPMENT WHICH IS INDISPENSABLE FOR ITS
SECURITY AND PEACE…

WATER CONT.
…WATER RESOURCES ALSO FORM AN INTEGRAL PART OF
THE ECOSYSTEM , FOR WETLANDS, COASTAL AREAS,
MANGROVES,AND MORE IN GENERAL FOR HUMID,
ARID AND SEMI-ARID AREAS. WATER IS CHEAP AND IS
OFTEN TAKEN FOR GRANTED, ESPECIALLY IN WATER-
ABUNDANT AREAS AND CONSEQUENTLY IT IS
MISUSED AMOUNTING TO SERIOUS IMPLICATIONS.
AN EXAMPLE OF THAT KIND IS, OVER-EXTRACTION OF
WATER FOR INDUSTRIAL USE WHICH AFFECTS THE
GENERAL WATER LEVELS, IMPINGING NOT ONLY THE
ECOSYSTEM, BUT ALSO AGRICULTURE IN THE AREA
AND POTENTIALLY THE ACCESS TO SAFE DRINKING
WATER.”

THE GRAND NEXUS
• WATER RESOURCES SECURITY
• ENERGY RESOURCES SECURITY
• FOOD RESOURCES SECURITY

GEOPOLITICS
• TERM FIRST USED BY A SWEDISH LAWYER,
RUDOLF KJELLEN, IN EARLY 20TH CENTURY TO
DESCRIBE INTENSE RIVALRY BETWEEN THE
EUROPEAN COLONIAL POWERS, FOR GLOBAL
GEOGRAPHIC AREAS OF INFLUENCE ON THE
LAND,SEA AND AIR.
• IN THE EARLY 21ST CENTURY IT HAS COME TO
MEAN THE IMPACTS OF GEOGRAPHY ON
GLOBAL POLITICAL & ECONOMIC STRATEGIES OF
COUNTRIES AROUND THE WORLD (INCL. FIRST
CLIMATE WAR?)

IMPACTS ON THE GRAND NEXUS BY
THREE INTERACTING TRENDS
• POPULATION GROWTH & CHANGE
• URBANISATION OF REGIONAL POPULATIONS
AS PEOPLE MOVE AWAY FROM
AGRICULTURAL & PASTORAL INDUSTRIES
• CLIMATE CHANGE

GRAND NEXUS = GLOBAL TRENDS
CREATES A COMPLEX PHYSICAL, ECONOMIC AND
SOCIAL SYSTEM
=
PRODUCES PROFOUND CHANGES TO THE 21ST
CENTURY
=
THE MANAGEMENT CHALLENGE OF GEOPOLITICS
AT INTERNATIONAL LEVEL

GRAND NEXUS 1: WATER SECURITY
WATER SECURITY MEANS ACCESS TO SAFE
DRINKING WATER AND SANITATION, AND
WILL, AT SOME TIME IN THE FUTURE, BE
EXTENDED TO SAFE WATER FOR FOOD
PRODUCTION & PROTECTION OF THE
ENVIRONMENT.

GRAND NEXUS 2: FOOD SECURITY
FOOD SECURITY MEANS AVAILABILITY AND
ACCESS TO SUFFICIENT, SAFE AND
NUTRITIOUS FOOD TO MEET THE NEEDS FOR
AN ACTIVE AND HEALTHY LIFE. (EG: CHINA)
(transparencies)

GRAND NEXUS 3: ENERGY SECURITY
ENERGY SECURITY MEANS UNINTERRUPTED
ACCESS TO CLEAN, RELIABLE AND
AFFORDABLE ENERGY SERVICES FOR
COOKING, HEATING, LIGHTING,
COMMUNICATIONS AND PRODUCTIVE
ENTERPRISES AT A MARKET PRICE WHICH IS
AFFORDABLE, AND A SOCIAL IMPACT WHICH
IS NEGLIGIBLE, IN THE WAY OF POLLUTION
ETC.

POPULATION BY WORLD REGION,
2000 & 2025 (MILLIONS)
AREA 2000 2025 (LOW)
WORLD TOTAL 6017 8004
ASIA TOTAL 3545 4316
CHINA 1367 1558
INDIA&PAK. 1312 1822
JAPAN 126 126
REST OF ASIA 524 810
MIDDLE EAST 260 272
AFRICA 778 1365
EUROPE(EXCL USSR)513 659
USSR & SATELL. 287 283
AMERICAS 821 1064
OCEANIA 29 45

POPULATION OF CHINA & THE GRAND
NEXUS
ASIA’S POPULATION WILL GROW BY 771 MILL. FROM 2000 TO 2025, OR AN
EXTRA 31 MILLION PER YEAR. OF THE TOTAL GROWTH CHINA WILL
CONTRIBUTE 191 MILLION. BY 2025 779 MILL ARE PLANNED TO LIVE IN
URBAN CENTRES. (notes)
THE GOVT IS TRYING VERY HARD TO MAINTAIN FOOD SELF SUFFICIENCY.
70% OF CHINESE DIET IS GRAIN: 733 MILL TONNES/YR. WILL NEED TO BE
PRODUCED TO ACHIEVED DIETARY NORMS OF ADVANCED ASIAN
COUNTRIES. THIS ALSO REQUIRES 105 MILL TONNES MEAT. THIS
REQUIRES AGRICULTURAL GROWTH RATES WELL ABOVE CURRENT
LEVELS.
BUT WATER IS THE CRITICAL FACTOR. WATER SUPPLY PER HEAD IS ONLY 25%
OF WORLD AVERAGE,EXCEPT DRY WEST &NORTH WEST WHERE IT IS
ONLY 10%. CHINA IS EXPECTED TO LOSE THOUSANDS SQUARE KMS. OF
FARMLANDS DUE TO DESERTIFICATION. DAMMING OF BIG RIVERS HAS
CAUSED ENVIRONMENTAL DAMAGE & INDUSTRIAL POLLUTION IS
DAMAGING FARM LAND & WATER.

POPULATION OF INDIA, PAKISTAN,
BANGLADSH & GRAND NEXUS
OF THE TOTAL POPULATION GROWTH BETWEEN 2000 AND 2025, THE
ABOVE WILL CONTRIBUTE 510 MILLION. THE WORLD BANK STATES:
“SLOW AGRICULTURAL GROWTH IS A CONCERN FOR POLICYMAKERS AS
SOME TWO-THIRDS OF INDIA’S PEOPLE DEPEND ON RURAL
EMPLOYMENT FOR A LIVING. CURRENT AGRICULTURAL PRACTICES ARE
NEITHER ECONOMICALLY NOR ENVIRONMENTALLY SUSTAINABLE &
INDIA’S YIELDS FOR MANY AGRICULTURAL COMMODITIES ARE LOW.
POORLY MAINTAINED IRRIGATION SYSTEMS AND ALMOST UNIVERSAL
LACK OF GOOD EXTENSION SERVICES ARE AMONG FACTORS
RESPONSIBLE. FARMERS’ ACCESS TO MARKETS IS HAMPERED BY POOR
ROADS, RUDIMENTARY MARKET INFRASTRUCTURE, AND EXCESSIVE
REGULATION.”
THEY ARE ALSO RATED AS “WATER STRESSED”
INDUSTRIAL POLLUTION OF WATER WHEN ADDED TO THE ABOVE PLACES
THE ABOVE IN SOME DIFFICULTY IN MAINTAING THE GRAND NEXUS.

POPULATION OF JAPAN & THE GRAND
NEXUS
JAPAN IS THE MOST INDUSTRIALLY ADVANCED COUNTRY IN ASIA,
AND ONE OF THE LEAST WELL ENDOWED WITH WATER, FOOD
PRODUCTION AND ENERGY RESOURCES. JAPAN HAS A NARROW
SURFACE AREA, RAPID RUN-OFF & PRECIPITATION COMBINED
WITH HIGH POPULATION DENSITIES. THIS RESULTS IN PERIODIC
WATER SHORTAGES & A PER HEAD WATER CONSUMPTION WHICH
IS HALF THE WORLD AVERAGE. WHILST A STRONG POLICY OF
STORING UP TO 50% OF ANNUAL NEEDS, TWO-THIRDS GOES TO
INEFFICIENT IRRIGATION. ON A MERE 56,000 SQUARE
KILOMETRES, 50 % OF JAPAN’S FOOD IS LOCALLY PRODUCED –
BUT HEAVILY SUBSIDISED SMALL FARMS. 70% OF JAPAN’S
ELECTRICITY GENERATED BY FOSSIL FUELS & 22% NUCLEAR. WITH
TECHNOLOGY IT HAS MANAGED A BALANCE IN THE GRAND
NEXUS. A WORLD LEADER IN TECHNOLOGY FOR CLIMATE
CHANGE?

POPULATION OF MIDDLE EAST & THE
GRAND NEXUS
WATER SCARCE AREA OF WORLD. EXPLOITS 75%
OF RENEWABLE RESOURES FOR INEFFICIENT
IRRIGATION. REDUCTION IN POVERTY WILL
INCREASE PER CAPITA WATER CONSUMPTION.
GEOPOLITICS OF WATER AVAILABILITY PLAYS
IMPORTANT ROLE IN MIDDLE EAST ( NILE,
TIGRIS-EUPHRATES,JORDAN).MUCH
MISMANAGEMENT, EXCL ISRAEL(notes).
FURTHER DRYING UP OF REGION WITH CLIMATE
CHANGE CATASTROPHIC CONSEQUENCES.

“ARAB SPRING”: FIRST CLIMATE WAR?
THESIS: CONFLUENCE OF CLIMATE EVENTS, FOOD SHORTAGES (WHEAT) & POLITICAL UNREST =
MIDDLE EAST “ARAB SPRING” ESP. EGYPT:
1. ONLY 6-18% WORLD WHEAT TRADED ACROSS NATIONAL BORDERS.
2. 2010 – 2011: WINTER DROUGHT CHINA, HEAT & DROUGHT/FLOODS –
UKRAINE,RUSSIA,CANADA, AUSTRALIA = GLOBAL WHEAT SHORTAGES = PRICE RISE FROM
$157/TONNE TO $326/TONNE (JUNE 2010 – FEB. 2011)
3. TOP 9 WORLD WHEAT IMPORTERS MIDDLE EAST HAD “ARAB SPRINGS” (SPEND 35% INCOME
ON FOOD) ESP. EGYPT WHICH IMPORTS ONE THIRD OF CALORIC INTAKE AS WHEAT.
4. 2009: 800,000 SYRIANS (FARMERS, HERDERS,RURAL FAMILIES) REFUGEES
5. MASSIVE MIDDLE EAST DROUGHTS FORECAST FOR NEXT 25 YEARS.
6. ONE – FIFTH OF ARAB STATES’ BUDGETS HAVE TO BE SPENT ON FUEL & FOOD SUBSIDIES
INSTEAD OF HEALTH & EDUCATION.
IS THIS ANOTHER JARED DIAMOND THESIS OF 5 STAGES OF SOCIETAL COLLAPSE? (book)
• ENVIRONMENTAL DAMAGE
• CLIMATE CHANGE
• HOSTILE NEIGHBOURS
• FRIENDLY TRADING PARTNERS
• THE SOCIETY’S RESPONSE TO ENVIRONMENTAL PROBLEMS

WHERE DID THOSE FIRST 800,000
SYRIANS GO AFTER 2009?

POPULATION OF AFRICA & THE
GRAND NEXUS
AFRICA’S PER CAPITA AVAILABILITY OF WATER
RANGES FROM “WATER SCARCITY” TO
“ABSOLUTE SCARCITY”. BETWEEN 2025 AND
2030, SOME 75 MILLION PEOPLE IN AFRICA
WILL BE LIVING IN ABSOLUTE SCARCITY. 24
TO 70 MILLION WILL HAVE TO MOVE OFF THE
LAND WITH SEVERE POLITICAL TENSIONS.
WITH 587 MILLION MORE PEOPLE THE
GRAND NEXUS IS LIKELY TO BREAK. (notes)

COUNTRIES IN THE SPREADING SAHEL

POPULATIONS OF EUROPE, USSR &
AMERICAS & GRAND NEXUS
1. TECHNOLOGICAL LEADERS IN EFFICIENT
WATER USE AFTER JAPAN (CF: ENERGY
EFFICIENCY ALSO)
2. EX-USSR INEFFICIENT USE OF WATER
(DRYING UP OF ARAL SEA) FOR IRRIGATION.
ALSO DRYING UP OF CENTRAL ASIA.
3. SOME CITIES IN U.S. WATER STRESSED.

AUSTRALIA & THE GRAND NEXUS
• LAND MASS: 7,682,000 SQ KMS
• DIVERSE CLIMATE
• DESERT: MORE THAN 50% OF LAND MASS
• SUFFICIENT RAINFALL FOR AGRICULTURE: <30%
• FLOOD & DROUGHT
• MURRAY –DARLING: 1.1 MILL SQ KMS. HOLDS
35,000 GIGALITRES; 40% OF AUSTRALIA’S
FOOD;25% CATTLE; 50% SHEEP;50% CROPLAND;
75% IRRIGATED LAND

AUSTRALIA’S OTHER AREAS OF
DIVERTIBLE FRESH WATER
DIVISION SQ.KMS. MILL.MEGL.
N.EAST COAST 451,000 22.9
S. EAST COAST 274,000 14.7
TASMANIA 68,200 10.9
NTH. WEST 547,000 22.0
GULF CARPENT. 641,000 13.2

DISCUSSION 1.
DO YOU BELIEVE THE BASIC PREMISE IN THE
ATTENBOROUGH FILM THAT COMPUTER
MODELS ARE SHOWING THAT MAN-MADE
ACTIONS ARE BRINGING ABOUT CLIMATE
CHANGE?

INDUSTRIALISATION AND GLOBAL CLIMATE CHANGE

INDUSTRIALISATION AND GLOBAL CLIMATE CHANGE

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