Thanks Financial Times, that was much needed

Our problems on planet earth are just too serious to allow us from not spelling out some uncomfortable truths. In this respect, with the Financial Times’ “Carbon markets create a muddle”, April 26, and the investigations that preceded it, and hopefully those that will follow, it is performing a tremendous service to all of us who believe that the climate change threat is for real and therefore require that the actions to combat it should also be for real.

The current carbon market where we sell indulgences for some fairly undefined sins in order to use the proceeds for some even less defined good deeds (after paying the brokers) will just not cut it, much less so if we leave it in the hands of blind believers or of a hypocritical environmental clergy.

PS. I here go forward a decade to now ask: What if those indulgences revenues were shared equally by all citizens?

If it is really is so serious should not then the proposals be more serious?

I assume that the scientist are 100% right in their warnings about global warming, among other because the risks of staying in bed and not doing anything about it seems to loom much larger than the risks of getting out of bed to do something.

It is about the what-to-do that I have more problems, as there seems to be a growing divergence between the seriousness of the warnings and the banality of some of the solutions offered. If it really is so serious then should that not warrant more serious responses than aspirins? If it really is so serious then sure we must beware more of those who are peddling green magical potions, just to make a buck.

A carbon-solution neutral agency is what we lack the most because, if it really is so serious then presumably we cannot afford to waste even one dollar on solutions that are not effective.

In the Financial Times, January 19, Philip Stephens, in “Business must bend with the winds of climate change” wrote about how a reputable company such as Marks and Spencer, surely run by capable and creative professionals are now doing their part against global warning… recycling unsold food into energy! The world is coming to an end… unless you drive a hybrid!

I am not that much against it but, if the threat of climate change is really so serious, should we then be going down that route of selling climate-change indulgences trading carbon emission rights?

I am not that much against it but, if it really is so serious, can we afford to excuse the developing world from doing its part just because it cannot afford it? Are we not better off enlisting the help of the developing world, now, in an early phase? If some should have the right to make a buck on protecting the environment perhaps it is the poor developing countries and so that they can then afford to pay a part of the costs, since the responsibilities for the environment should and needs always belong to all humanity, not only to the rich part of it.

Getting hold of some more serious and convincing what-to-do tasks would also help to get our many millions of pure lazybodies to get out of their beds for the environment’s sake.

PS. A decade later here is what I propose  

The Amazon

An informal letter I sent to my Executive Director colleagues at the World Bank in 2004

Dear Friends and Colleagues

Today we approved a US$505 million Programmatic Reform Loan for Environmental Sustainability to Brazil. Frankly, how could it be otherwise, when in fact we should be on our knees thanking a country like Brazil that with so many other problems commits to repaying 100% of principal plus interest of an environmental-sustainability loan that will benefit the whole world and all of us.

Honestly, I do believe the World Bank should occupy a stronger leadership in these matters from the very beginning, advocating for the cooperation of the rest of the world. If silly windmill projects can have access to carbon credits, the Brazilian environmental program to help stop deforestation should too.

For instance, if 20% of a loan like this were to be repaid by some international-support mechanism, this would not only motivate the Brazilian government to sell environmental protection locally, but it would also be a clear sign that in these matters, Brazil does not stand alone. Of course any external assistance would have to come with the clear understanding that it does not impose additional conditions on the country, as this is the best and perhaps only way to guarantee true sustainability and ownership of such programs.

This morning we had a two-hour discussion about the Development Committee agenda. Frankly, however, the issue of how the world can help in crucial global matters, as in the case of the Amazon—where the need of avoiding the very negative externalities of large deforestation have to compete with so many other urgent local needs, as well as with the rising opportunity costs of not exploiting the forests—should be a foremost issue. If it already is there—for instance hidden in a global taxation initiative—I very much welcome it but, if not, we should strive to put it there.

Last year at least 25,000 hectares were deforested in the Amazon. At a low carbon value of US$20 per hectare/year, this would indicate a value of about US$50 million a year if the program were successful at stopping deforestation. Add ten years of stopped deforestation, and the value of this would be—in approximate Kyoto terms—about US$500 million a year for the rest of the world. If this is so, how come we can spend so much time and money on expensive initiatives such as the Extractive Industry Review, and not come up with something more reasonable for the Amazon, than to have the Brazilians pay for it, 100%?

Per

Published in Voice and Noise, BookSurge 2006 and there is also an OpEd that touches on the same theme published in Spanish in Venezuela early 2004.

PS. We need to stop the Amazon from smoking… now!

Earth, the cooperative

Even if there is still confusion over the path the world is taking on environmental pollution, there is consensus at least on the following. The developed countries are doing the most polluting, the developing countries are suffering the most from this contamination, and, in the world today, there does not seem to be enough environmental space to allow the undeveloped world to catch up to the developed world.

The above statements should be enough to fuel a spirit of cooperation within this cooperative we call the Earth, and of which, like it or not, we are all indigenous.

Unfortunately, little or nothing has been done as of this date to correct the imbalance.

Some years ago we saw (or we imagined) small points of light when a series of environmental limitations were imposed through the Kyoto Protocol. There was talk of a market of “compliance with environmental standards bonds” which contemplated the possibility of transferring environmental funds from the developed world to the rest of the world.

A tree captures carbon. And thus hypothetically, a polluter in New York should plant a tree in his/her city in order to avoid a fine. However, to plant a tree in New York would be very costly, so the polluter in New York could also utilize the option of asking a Venezuelan investor to plant this tree in Venezuela instead. The investor and the polluter would then share the net cost savings. This is the essence of the idea.

There are obvious difficulties with this proposal. The assurance that the tree is actually planted in Venezuela, and that it grows and captures carbon and does not later become burning firewood, are just some of the technical challenges that need to be resolved. However, we know that if the demand for these bonds is high enough, we can be certain that the creativity of technicians would be sufficiently stimulated.

There have been some initial successes with these bonds. But to tell the truth, the main buyers have been well-intentioned institutions, and today it is difficult to envision how this market could become self-sufficient in terms of volume, without assistance. Particularly when we see how there has been a relaxing of will or an increase of laziness in terms of applying Kyoto standards—unless …

Today we are conscious of the very high taxes on gasoline and other petroleum derivatives in many parts of the world. In Europe, at a price of 26 dollars per barrel of oil, these taxes amount to more than 400% of the oil’s value. In 1998, when oil was 10 dollars a barrel, taxes amounted to over 700%.

These taxes, categorized as “environmental” since they reduce the demand for oil, have a direct negative impact on an oil-producing country such as Venezuela. However, what really bugs us is that the majority of these taxes are not at all used for environmental purposes and even when they are, adding insult to injury, it is only as a subsidy for other energy sources, furthering the discrimination of oil.

I challenge all of our rich fellow cooperative members in the developed world to set aside at least 10% of taxes collected on oil for the purchase of true Environmental Bonds.

From Voice and Noise, BookSurge 2006, and El Universal, Caracas, December 2002

Better than a hybrid

The world burns oil and coal and fouls up the environment and thereafter hopes to make up for it by planting forests that recapture the emitted carbons. It won’t, but at least it is better than doing nothing, especially if it does it right.

Currently, some of the car makers are being criticized for not doing enough developing environmental friendly hybrid vehicles. But, before they commit large amounts to that effect they should perhaps look at other alternatives… such as an “as-good-as-it-gets forest mining carbon sink”.

The Web site of a car maker announces that their best-selling hybrid vehicle costs around 4.000 dollars more than the comparably equipped standard version. In compensation the hybrid will, by giving 14 miles more per gallon of gas and if driven 20.000 miles per year, save the owner over ten years about 3.000 gallons of gas, and thereby save the environment from having about 7.3 tons of carbon converted into CO2. The technology used in these hybrids is quite creative as it harnesses in a battery some of the energy obtained when braking and thereafter uses it as efficiently as possible.

If we assume no new-technology surprises, for instance battery problems down the line, this environmental conscientious investment proposal seems reasonable for the individual US motorist in the US at current $2.20 per gallon of gas, and indeed splendid one in Europe with their over $7 per gallon… although there it clearly has more to do with saving the taxes on gas, than with the cost of the gas saved. Nonetheless in terms of the environment, the results are not that impressive and the world could do much better in terms of the social and environmental impact.

For instance there is Tanzania, an extremely poor country, with a per capita income of about 300 dollars per year, with not enough prospects to get it out of its predicaments and where much of its land is slowly but surely turning into desert, at a pace of more than 300.000 ha per year. Although there are some major mining companies operating in Tanzania and that we hope are doing their extraction in the right way, their environment is also suffering at the hands of about one million unofficial freelance miners that roam the country trying desperately to make a living.

By putting together the reasons for the hybrids and the needs of Tanzania one could then think of setting up cooperatives for these miners and turn them into reforesters, and having the whole project financed by buyers of cars. Is it feasible and sustainable? Absolutely!

If our car buyer, instead of buying a hybrid, saved four thousand dollars by buying a standard car and then would pay just 2.000 dollars to a cooperative, this amount could, after reasonable promotional and administration costs, cover the initial reforestation of about 5 ha and the carbon thereby captured would be at least 200 tons, 27 times more than the hybrid-car savings. Yes we all know that a ton of carbon saved by not converting a stable sink like petrol that has been there for millions of years is much better than a ton saved in an unstable forest that can burn or rot, but never 27 times better.

As the reforested area captures its carbon throughout the years it could also be maintained with the income obtained from selling emission-savings certificates based on the Kyoto protocol. If forest captures 4 ton CO2 per year and ha, and the value of an emission saving certificate per ton were to be $10, then there would be a yearly income for the cooperative of 40 dollars per ha during 10 years.

We do not wish to demean the efforts of any car company that invests in the research of more energy efficient cars but that does not necessarily mean it needs to sell their hybrid cars before they’re as-good-as-they can get. At this moment of scarce resources and urgent environmental needs perhaps we would all be better of if the car industry offered their consumers, in lieu of hybrid cars, the possibility to drive away in standard cars that carry on their windows bright emblems, certifying each one of them as proud financiers of 5 ha of reforestation in Tanzania, all observable live through the Web site of The First Forest Mining Cooperative of Tanzania.

Published in OGEL Vol 3 Issue 2 June 2005

Our quixotic windmills

It has been a hard year for the promoters of wind energy. Though the economic viability of the windmills has improved considerably as oil has become more expensive, they have had to fight many battles on the environmental front which must have been somewhat surprising for these valiant champions of the green. Besides the aesthetics, where people still cannot make up their mind whether they are impressive or horrendous, over the last year we have read a lot about the problems of their causing death of birds and bats. But if they thought that was it, they had better prepare themselves since there is an ongoing study that seeks to measure the impact of the windmills when and if there would be enough of them to produce 5% of the world’s electrical needs. That would signify, worldwide, hundreds of thousands of them.

From the initial results that have been privately circulated, the study has identified some new threats never even thought of before but that could become insurmountable hurdles.

The first is whether the friction produced by the wind will in itself increase global warming. 

Second, as the windmills are located in windy areas and therefore not equally distributed over the world, there is the possibility that the world could turn some degrees over its axle, a bit like the effect of the recent mega earthquake that produced the tsunami.

The final threat identified is that the windmills, by acting like some big sails, could accelerate the rotation of our planet. Luckily this final concern has already been eliminated as the calculations showed that this effect was to be neutralized by less wind impacting mountains and other places.

Nonetheless, by just posing the argument it has also opened problems of a legal nature. For example, neighboring countries might complain that the windmills are literarily taking the wind out of their sails. The final problem identified but that lies outside the scope of the current study is related to what will happen to the ecology of previously windy area when the winds are gone.

As this year we celebrate Cervantes’ Don Quixote we cannot but reflect on how the modern windmills are fighting a quixotic war on their own.

P.S. Early one morning in 2004 I met with some World Bank staff who wanted to tell me about the details of an alternative-energy project—windmills. Coming from an oil-producing country, in jest I improvised the above have-you-heard-the news-about-windmills story, and to my delight, some fell for it. Later for April Fool’s Day I sent it out to some of my knowledgeable friends. To my surprise instead of laughter, many of the answers were of a yes-this-needs-to-be-better-researched nature. Could it really be that my joke contains some truths?

Extracted from "Voice and Noise" 2006

But Global Warming's Most Inconvenient Truth is that it is a very moral issue

Robert J. Samuelson concludes in his Global Warming's Real Inconvenient Truth conclude that “The trouble with the global warming debate is that it has become a moral crusade when it's really an engineering problem. The inconvenient truth is that if we don't solve the engineering problem, we're helpless.” Of course there are a lot of engineering problems but if we abandon the morals of it all we’re not only helpless, we are doomed.

Of course we will suffer the environment chasers that only look to exploit the global warming problem to benefit their own small causes, immorally, and also as Samuelson correctly states the politicians practicing their self-serving hypocrisy, also immorally, but if we don’t know that this is all a question of being able to make a correct moral choice about how to handle the upcoming crash of trains between the scarcity of energy and the environment, then we are de-facto making the wrong moral choice that could open the doors to any sort of engineering solution, like getting rid of cows as some argue because they produce methane, or perhaps even breed them just because they do.

Much to the contrary, besides all the engineering solutions and that should of course be exploited to the hilt this is an utterly moral issue that leaves no room for amoralities. Here we have our chance as humans to show that we are made of somewhat better and superior materials and so let us take it, especially when if we prove otherwise and need to bake in other warm ovens, we will still have ample time for that.

I suggest Mr. Robertson that we urgently, place a little web camera on a small and poor village in Africa and watch those little malaria stricken kids go and get the final wood stumps to cook whatever wood stumps to cook they could find for food, and then look into ourselves for our moral answers, instead of outsourcing our morality to engineers, and not that they do not need to be moral too.

Our quixotic windmills

It has been a hard year for the promoters of wind energy. Though the economic viability of the windmills has improved considerably as oil has become more expensive, they have had to fight many battles on the environmental front which must have been somewhat surprising for these valiant champions of the green. Besides the aesthetics, where people still cannot make up their mind whether they are impressive or horrendous, over the last year we have read a lot about the problems of their causing death of birds and bats. But if they thought that was it, they had better prepare themselves since there is an ongoing study that seeks to measure the impact of the windmills when and if there would be enough of them to produce 5% of the world’s electrical needs. That would signify, worldwide, hundreds of thousands of them.

From the initial results that have been privately circulated, the study has identified some new threats never even thought of before but that could become insurmountable hurdles. The first is whether the friction produced by the wind will in itself increase global warming. Second, as the windmills are located in windy areas and therefore not equally distributed over the world, there is the possibility that the world could turn some degrees over its axle, a bit like the effect of the recent mega earthquake that produced the tsunami. The final threat identified is that the windmills, by acting like some big sails, could accelerate the rotation of our planet. Luckily this final concern has already been eliminated as the calculations showed that this effect was to be neutralized by less wind impacting mountains and other places. Nonetheless, by just posing the argument it has also opened problems of a legal nature. For example, neighboring countries might complain that the windmills are literarily taking the wind out of their sails. The final problem identified but that lies outside the scope of the current study is related to what will happen to the ecology of previously windy area when the winds are gone.

As this year we celebrate Cervantes’ Don Quixote we cannot but reflect on how the modern windmills are fighting a quixotic war on their own.

P.S. Early one morning I met with some WB staff who wanted to tell me about the details of an alternative-energy project—windmills. Coming from an oil-producing country, in jest I improvised the above have-you-heard-the news-about-windmills story, and to my delight, some fell for it. Later for April Fool’s Day I sent it out to some of my knowledgeable friends. To my surprise instead of laughter, many of the answers were of a yes-this-needs-to-be-better-researched nature. Could it really be that my joke contains some truths?

This is an extract from my Voice and Noise of 2006, but it retells a true incident on April fool's day 2003.

The Extractive Industry Review - my answer to the NGOs

A draft of the World Bank’s Management Response to the Extractive Industries Review (EIR), which refers to how the World Bank should engage itself with the oil, coal, and mining sectors in general, was discussed by its Board of Executive and the following comments reflects my very personal opinions and which I sent by e-mail in October 2004 to each one of those over 900 persons who had previously e-mailed me about it with their opinions. 

The EIR discussions ... a missed opportunity 

Friends,

I am one of the executive directors of the World Bank who recently were bombarded with your mostly similar and spam-like messages urging us to approve word by word all the recommendations that the so-called “eminent person” made in conclusion of the Extractive Industries Review (EIR).

Most of what is said in the EIR is logical and already has been considered and applied by the World Bank. Nonetheless, there were some issues and recommendations that carried more than a hint of radicalism. These extremist suggestions blind the world from finding the pragmatic solutions it so urgently needs to solve the problems of environmental degradation and adequate energy availability.

In his book, The Future of Ideas: The Fate of the Commons in a Connected World, Random House, 2001, Lawrence Lessig writes that “a time is marked not so much by ideas that are argued about as by ideas that are taken for granted.” In this respect, I had big hopes that the discussions on the EIR would help us unlock the current debate, which seems to be suffering from another bout of failure of imagination.

Unfortunately that was not to happen, since many of the really significant problems and solutions were just ignored, while minor issues were highlighted. Even the Bank management’s final response, although technically quite adequate, in using an excuse-us-NGOs-for-daring-to-disagree tone, does not put forward the differences of opinions with sufficient strength and clarity.

In this and all other respects, the real challenges still lie ahead of us. Therefore, I wish to send you herewith my thoughts on some of the issues covered by the EIR, hoping this will help to focus our energy and concerns in more productive directions. By the way, what follows are strictly personal opinions and they do not reflect any formal statement made during the discussions of the Board, as these need to be confidential to guarantee that they are never taken out of their overall procedural context. And so, in a nutshell, here is what I think of the EIR.

The high growth rates of some countries, which are undergoing the highly energy-demanding transition from bicycles to cars, are forcing the world to face two very important constraints more than ever: general energy availability, and the capacity of an already overstretched environment to absorb the carbon impact of such growth.

Instead of discussing issues such as whether the world needs to find a way to tax excessive energy consumption to promote fairer global distribution of energy use, or how to compensate for the quickly growing opportunity cost of not developing environmentally sensitive areas such as the Amazon Jungle, some very parochial NGO perspectives captured the EIR, and most of the participants just played along.

Yes, we all want clean energy, but given the urgency and magnitude of the problem, it must be clear that the world cannot afford to waste resources on unaffordable solutions. The money not spent on early prototypes of hybrid cars, or on subsidizing wind or solar-power generation plants that are not yet economically justifiable, could be much better spent on research for truly sustainable renewable energy sources, fighting poverty, or even directly paying for environmental priorities, such as keeping the Amazon intact.

Yes, the world should move away from coal and oil, especially as oil is too valuable just to produce energy. But as the price of gas has reached the unaffordable level of US $6 per Mcf (one thousand cubic feet) and is generating billions of dollars in losses for electricity generators, realities are driving the world back to coal. In this respect in particular, the recommendation of the so-called “eminent person” for the Bank to withdraw fully from coal, gas, and oil is so completely out of synch with current realities that perhaps the Bank should have done best by just ignoring it.

Although countries with annual incomes of US $30,000 per capita might survive using uneconomic environmental approaches, those with US $3,000 or less will certainly not. In this respect, the Bank should have reiterated more firmly that under no circumstances can it be allowed to cut the umbilical cord that needs to run between its efforts aiming at poverty-reduction on the one hand and economic rationality on the other.

Yes, human-rights issues are of extreme importance, and the Bank, by nature and through the quality of its people, does always give them due consideration. But to tie up the Bank and its extractive-industries (EI) operations with additional sector-specific formal rulings will only hinder reaching the acceptable balance between individual human rights and collective human rights.

Yes, the interests of indigenous groups should always be considered respectfully, but assigning special and near-veto rights to them will clearly infringe on the rights of the rest of us, who all are indigenous to this planet.

Yes, if we all agree that a holistic approach is needed, why is then the analysis of the demand side for the resources produced by the extractive industries missing? It is clear that in most cases, the share of revenues among local participants has not been adequate. But to ignore the fact that the slice of the pie to be shared locally might be too small—as many nonrenewable resources are sold at a price equal to their marginal extraction cost and therefore don’t leave much room for earnings—is not really an objective approach.

Yes, initiatives such as the Revenue Transparency Initiative might not be perfect, but they are a step in the right direction, and the Bank should pursue them always, not only in the EIR. For instance, the use of the economic surpluses created when granting patents, presumably to pay for research, should also be more transparent so as to better measure the prohibitively high prices of vital medicines. Since the treasury of most industrialized countries perceive through their gasoline taxes more fiscal income from a barrel of oil than the producer, this not only begs the question of who might really be cursed, but also whether those flows could also benefit from more transparency. Taxes collected on gasoline in the name of the environment (more than $100 billion a year on unleaded gasoline in Europe alone) of which basically nothing really goes to the environment and much of which has even been used to subsidize the coal industry could be the foundation for a real environmental global fund or, better yet a global tax program. By the way, if we are to have a global tax based on a gasoline tax, then I am of the opinion that ALL countries should pay an amount per liter consumed, albeit at rates that are adjusted for their national income per capita. (Even the poorest have the right to feel they are contributing toward a shared world cause)

Yes, there is always a need for better practices, as in gender issues, but for EIR to go to such an extreme as to single out the sector and specifically link it with issues such as rape and prostitution is unacceptable, both on moral and intellectual grounds.

Friedrich List wrote that free trade was the means through which an already industrialized country “kicks away the ladder by which it has climbed up, in order to deprive others of the means of climbing up after it.” If we were to paraphrase List, the way the “eminent person” wanted the EIR to conclude would have kicked away the ladder for many undeveloped countries, preventing their use of their natural resources.

In conclusion, it is unfortunate that these EIR discussions did not advance a more rational agenda, especially since the World Bank is one of the few worldwide institutions that could really establish a leadership role in environmental and energy issues. Nonetheless, let us not cry over spilled milk. There are so many urgent challenges and opportunities for the Bank and all of you to play a truly creative and proactive role.

For instance, in one African country, millions of small and unorganized miners who need their jobs in order to survive create severe environmental damage. The same country also suffers yearly deforestation of hundreds of thousands of acres of forest. In such a case, wouldn’t perhaps a “Forest-Growing Miner Cooperative” be a quite sensible program for the world to sponsor? Would not this make more sense as an investment vehicle for all those environmentally sensitive dollars that the rich nation’s consumers are currently willing to spend on much less worthy proposals, such as building windmills in their gardens or driving around in their hybrids?

Let us not be busybodies blocking the world from going forward. Let us instead be very busy bodies helping it to go forward … in the right direction. 

Regards,

Per

Here as it appeared in my Voice and Noise of 2006

A brief encounter with NGOs

We met in some airport facilities with an assorted group of NGOs that were all dead set against a big hydro project in a developing country. After debating the pros and cons of hydro, gas, and special environmentally friendly small energy sources such as wind and biomass, if not a truce, and most definitely not an agreement, I believe that there was at least a general consensus that most concerns and differences of opinion had been analyzed in a comprehensive way.

Comprehensive? Forget it! Early next morning we all read an official announcement of a huge project to generate energy with coal. And I believe no one even mentioned coal the night before.

An extract from my Voice and Noise, Booksurge, 2006

The Amazon

"The Amazon"

(Translated from El Universal)

Apart from knowing it as the main lung of the earth, I know little about the Amazon. Since I never believed its jungles could sustain very profitable economic activities, I never worried too much about the felling of its trees. I thought that the ecological ravages would advance with relative slowness, and if it became too serious, it could always be stopped with a little good will and some resources. I'm not so sure about that anymore.

In a recent study by Sergio Margulis, published by the World Bank, he argues that livestock in the Amazon lands is a highly profitable activity, from the private perspective. Parallel, in an article published in the Clarín, of Buenos Aires, I read that those same lands, where until recently cows grazed, are now being destined to the most profitable cultivation of Brazil, soybean; its demand has been driven by the economic growth of China.

Whether it's livestock or soy, the truth is that everything would seem to indicate that cutting the Amazon trunks is great business. Consequently, the opportunity cost of not developing the Amazon is rising, hence, the time has come, to really think about the necessary resources to protect our little planet. The challenge is immense, trapped in a world where in developed countries the short-term matters more (the financial results of the next quarter) and in the non-developed where they can only think of today and not on the next morning, when they use discount rates that are heightened by the despair of hunger and unemployment.

The Amazon threat is global and current ... President Lula recently expressed that "you cannot treat this region as if it were something of the other world, untouchable, in which people are not entitled to any benefit."

Where to start? I don’t know, but given the scarcity of resources and the immensity of the problem, a greater objectivity is essential in the economic analysis of the costs and benefits of the different energy alternatives. The economic interests of oil, coal, windmills, solar panels, nuclear plants and other energies, shamelessly twist the truths in their favor. As a result we might never have the possibility of fulfilling the implicit responsibility of that old proverb, according to which, we have not inherited the of our parents, but we have borrowed it from our children.

PS. An informal letter I sent to my Executive Director colleagues at the World Bank in 2004

El Universal

El Amazonas.

APARTE DE CONOCERLO como el principal pulmón de la Tierra, sé poco del Amazonas. Como no creía que sus selvas pudieran sustentar actividades económicas muy rentables, jamás me preocupé demasiado por la tala de sus árboles, pensaba que los estragos ecológicos avanzarían con relativa lentitud, y que, de llegar a ser demasiado graves, siempre podrían ser paralizados con un poco de voluntad y de recursos. Ya no estoy tan seguro de eso.

En un estudio reciente de Sergio Margulis, publicado por el Banco Mundial, él sostiene que la ganadería en las tierras del Amazonas es una actividad altamente rentable, desde la perspectiva privada. Paralelamente, en un artículo publicado en el Clarín, de Buenos Aires, leí que esas mismas tierras, donde hasta hace poco pastaban las vacas, están siendo destinadas al cultivo más rentable del Brasil, la soya, cuya demanda ha sido impulsada por el crecimiento económico de China.

Ya sea ganadería o soya, lo cierto es que todo parecería indicar que el talar los troncos del Amazonas es un tronco de negocio. En consecuencia, el costo de oportunidad de no desarrollar el Amazonas está subiendo, de allí que haya llegado la hora de hablar, de verdad, sobre los recursos necesarios para proteger nuestro pequeño planeta. El reto es inmenso, entrampados en un mundo donde en los países desarrollados cada día importa más el corto plazo (los resultados financieros del próximo trimestre) y en los no desarrollados donde sólo pueden pensar en hoy y no en la próxima mañana, al subir las tasas de descuento inducidas por el desespero del hambre y del desempleo.

El problema del Amazonas es global y actual... El presidente Lula recientemente expresó que "no se puede tratar esta región como si fuera algo del otro mundo, intocable, en la que la gente no tiene derecho a ningún beneficio".

¿Por dónde comenzar? No sé, pero ante la escasez de recursos y la inmensidad del problema, se hace indispensable una mayor objetividad en el análisis económico de los costos y beneficios de las diferentes alternativas energéticas. Los intereses del petróleo, carbón, molinos de viento, paneles solares, plantas nucleares y demás energías tuercen descaradamente las verdades a su favor y así jamás tendremos la posibilidad de cumplir con la responsabilidad implícita de aquel viejo proverbio, según el cual no hemos heredado el mundo de nuestros padres, sino que lo hemos tomado prestado de nuestros hijos.

El Amazonas

APARTE DE CONOCERLO como el principal pulmón de la Tierra, sé poco del Amazonas. Como no creía que sus selvas pudieran sustentar actividades económicas muy rentables, jamás me preocupé demasiado por la tala de sus árboles, pensaba que los estragos ecológicos avanzarían con relativa lentitud, y que, de llegar a ser demasiado graves, siempre podrían ser paralizados con un poco de voluntad y de recursos. Ya no estoy tan seguro de eso.

En un estudio reciente de Sergio Margulis, publicado por el Banco Mundial, él sostiene que la ganadería en las tierras del Amazonas es una actividad altamente rentable, desde la perspectiva privada. Paralelamente, en un artículo publicado en el Clarín, de Buenos Aires, leí que esas mismas tierras, donde hasta hace poco pastaban las vacas, están siendo destinadas al cultivo más rentable del Brasil, la soya, cuya demanda ha sido impulsada por el crecimiento económico de China.

Ya sea ganadería o soya, lo cierto es que todo parecería indicar que el talar los troncos del Amazonas es un tronco de negocio. En consecuencia, el costo de oportunidad de no desarrollar el Amazonas está subiendo, de allí que haya llegado la hora de hablar, de verdad, sobre los recursos necesarios para proteger nuestro pequeño planeta. El reto es inmenso, entrampados en un mundo donde en los países desarrollados cada día importa más el corto plazo (los resultados financieros del próximo trimestre) y en los no desarrollados donde sólo pueden pensar en hoy y no en la próxima mañana, al subir las tasas de descuento inducidas por el desespero del hambre y del desempleo.

El problema del Amazonas es global y actual... El presidente Lula recientemente expresó que "no se puede tratar esta región como si fuera algo del otro mundo, intocable, en la que la gente no tiene derecho a ningún beneficio".

¿Por dónde comenzar? No sé, pero ante la escasez de recursos y la inmensidad del problema, se hace indispensable una mayor objetividad en el análisis económico de los costos y beneficios de las diferentes alternativas energéticas. Los intereses del petróleo, carbón, molinos de viento, paneles solares, plantas nucleares y demás energías tuercen descaradamente las verdades a su favor y así jamás tendremos la posibilidad de cumplir con la responsabilidad implícita de aquel viejo proverbio, según el cual no hemos heredado el mundo de nuestros padres, sino que lo hemos tomado prestado de nuestros hijos.

An informal letter I sent to my Executive Director colleagues at the World Bank in 2004

"The Amazon"

Apart from knowing it as the main lung of the earth, I know little about the Amazon. Since I never believed its jungles could sustain very profitable economic activities, I never worried too much about the felling of his trees. I thought that the ecological ravages would advance with relative slowness, and if it became too serious, it could always be stopped with a little good will and some resources. I'm not so sure about that anymore.

In a recent study by Sergio Margulis, published by the World Bank, he argues that livestock in the Amazon lands is a highly profitable activity, from the private perspective. Parallel, in an article published in the Clarín, of Buenos Aires, I read that those same lands, where until recently cows grazed, are now being destined to the most profitable cultivation of Brazil, soybean; its demand has been driven by the economic growth of China.

Whether it's livestock or soy, the truth is that everything would seem to indicate that cutting the Amazon trunks is great business. Consequently, the opportunity cost of not developing the Amazon is rising, hence, the time has come, to really think about the necessary resources to protect our little planet. The challenge is immense, trapped in a world where in developed countries the short-term matters more (the financial results of the next quarter) and in the non-developed where they can only think of today and not on the next morning, when they use discount rates that are heightened by the despair of hunger and unemployment.

The Amazon threat is global and current ... President Lula recently expressed that "you cannot treat this region as if it were something of the other world, untouchable, in which people are not entitled to any benefit."

Where to start? I don’t know, but given the scarcity of resources and the immensity of the problem, a greater objectivity is essential in the economic analysis of the costs and benefits of the different energy alternatives. The economic interests of oil, coal, windmills, solar panels, nuclear plants and other energies, shamelessly twist the truths in their favor. As a result we might never have the possibility of fulfilling the implicit responsibility of that old proverb, according to which, we have not inherited the of our parents, but we have borrowed it from our children.

El Universal

Tricks, and the environment

This week we read in the papers about a report to the British Parliament by the London Geological Society. In it they issued an alert over the real possibilities of a mega volcano eruption that would cause global cooling with dramatic consequences. Why is that hot volcanoes lava emission cools, while oil emissions are supposed to warm? Is someone taking us oil-producers for a ride? 

During the week ending January 21, one liter of premium unleaded gasoline was sold at the pump in England for US$ 1.20. Out of this amount, 19cts went to the supplier, 5cts went to the distributor and 95cts went towards various taxes.

It is evident that an oil producing country like Venezuela is severely affected by these taxes which, by the way, amount to 500% of what the producer receives. If these taxes were eliminated, both prices as well as the demand for oil would be much higher.

There can be no doubt that the only reason for these discriminatory taxes is a healthy fiscal appetite. However, with an almost subtle hypocrisy, these taxes are normally explained as only being related to environmental protection.

When we observe the poverty in our country, which would at least be reduced by increased oil income, any person preoccupied with the environment, may harbor a natural conflict. Up to this moment, I have solved my own conflict by telling myself that it is logical to have high prices in an effort to minimize consumption of oil, but that it is illogical and unjust that the margins produced by the same should only accrue the taxman in the rich consumer nations.

I say ‘up to this moment’ because I just read a book written by Dr. S. Fred Singer called Hot Talk Cold Science which certainly questions current environmental credos.

Singer's credentials as an expert in environmental matters seem to be impeccable. He has a Ph.D. in physics from Princeton and is professor emeritus of environmental science at the University of Virginia. He was the first director of the US Weather Satellite Service, Director of the Center for Atmospheric and Space Physics, and Chief Scientist for the US Department of Transportation.

In his book, Singer spells out arguments, that wipe out any justification for these taxes on environmental bases. Among other things, he says:

"The gap between the satellite observations and existing theory is so large that it throws serious doubt on all computer-modeled predictions of future warming"

"Even if global warming were to occur, it would most likely lead to positive benefits overall rather than to disbenefits."

"No credible attempt has been made to define what constitutes a dangerous level of CO2; thus the goal of the U.N. Climate Treaty is arbitrary." 

In relation to the concentration of CO2, Dr. Singer details methods that in his opinion are much more feasible in economic terms than those solely based on the reduction of emissions. These methods are based on sequestering the CO2 from the atmosphere, either through reforestation or the fertilization of oceans, the latter option being the one favored by Mr. Singer. 

Dr. Singer is not alone in his appreciation. In his book he cites the Leipzig Declaration which came out of a 1995 conference which was attended by almost 100 experts. This Declaration states "In a world in which poverty is the greatest social pollutant, any restriction on energy use that inhibits growth should be viewed with caution. For this reason, we consider carbon taxes and other drastic control policies ' lacking credible support from the underlying science - to be ill advised, premature, wrought with economic danger, and likely to be counterproductive".

Why, then, do such great discrepancies exist between the opinions described above and those of other scientists with similar recognized careers? Singer puts forward his explanation: "Nearly all research is funded by government; the rationale for expending taxpayer's money is to prevent hazards to the general population. Funding agencies therefore do not look kindly on research proposals that could demonstrate environmental hazards to be not serious or even non existent."

As a citizen of an oil producing country, affected by this evident injustice, I would be more inclined to advance the possibility that the financing of such environmental studies is more motivated by the need of justifying the taxes levied on oil. In this sense, many of the environmentalists are probably unknowingly soulmates of the famous taxman, the Sheriff of Nottingham, who in Robin Hood's days taxed the poor to give to the rich - i.e. the government.

In a country like ours, so dependent on its oil income, I am surprised at the absence in our universities and other centers of investigation of courses on environmental studies which are so necessary in order to minimize damage caused us in the name of the environment by hypocritical governments of the developed world.