Food Miles – Consciousness is Growing

Barely a week passes without a new campaign in the UK around the issue of food miles and NZ produce. Though this has been thoroughly debunked by the report from Lincoln University the story continues to rumble along.

This is just the beginning of a more serious debate on the issue of environmental costs otherwise known as externalities. Food miles is just a simple way of engaging the public and media just as the phrase “think global, buy local” has always done.

We all like to support our local farmers whether in NZ, UK, France, Japan or the US. However we all like to sell as much as our produce into markets where we can achieve a better price (even after taking account of transport costs). NZ is heavily geared towards exporting and with a large productive base and small local market it is more exposed than many other larger countries.

Stepping away from the hype and hysteria we can see that the Food Miles debate is both important and necessary. Consumers should be paying the full price for the goods they buy and that includes the basic inputs of energy and matter as well as ecosystem goods and services.

Whilst food miles comes across as a marketing ploy and is somewhat simplistic in its formulation, it can be seen as the start of a serious attempt to bring Trucost pricing into the mainstream economic system. Of course it makes sense to buy your veggies from the farmer down the road but the supermarket system is all pervasive and has driven costs down so far that they have been able to get away with an international supply chain as well as shipping domestic produce many miles further than necessary.

Pricing ecosystem services in at the primary level would see a vastly different pricing mechanism: one which included the price of nutrient and effluent run off, mining run off, soil depletion, air quality processing, clean water provision and the numerous other services which have enormous economic value.

If this happens then maybe we can relax a bit as the produce in our supermarkets and farmers markets will be priced on the same basis.

Only then will we really know which is really cheaper.

Sustainable Business – Costing the Earth

I wrote this article for a business paper here in NZ about 3 years ago. I don’t think alot has changed really though the issue of Food Miles and Carbon Pricing has reared its head. Pricing the ecosystem is an emotive subject but i believe we must recognise its value in monetary terms in order to enable true economic comparisons to be made.

We know in our hearts that we need to consume less and make better. We don’t do it because we are time constrained as we slave away in our jobs to pay off huge mortgages, large rents and all the bills we have incurred in our consumption binge. If we really knew the true cost of our goods and services we may change our behaviour with increased speed.

And yet see the seething anger when petrol prices go up……we may be in position to control and destroy the planet but it may well do that to us first. Anyway this may or may not resonate. See what you think:

March 2004.

‘Greens take us back to the Dark Ages’ screams the Business Round Table. ‘Business doesn’t care about anything apart from money’ whines the Green Party. Sound familiar? This is generally what passes for debate between the official representatives of the economy and the environment. It is reminiscent of a long running stand off between a teenager and parent. Will the environment and business ever resolve their disagreements live together in sustainable harmony?
To answer this question we need to explore how the economy and the environment interact. The word economics is derived from the Greek ‘Oikonomos’ meaning household steward or home economist in modern diction. In ancient times, the household was the central functioning unit of any economy and most economic activity took place within that framework. Now the household is a place where we live and sleep but rarely do we produce anything that is identified as part of the economy, reflected by GDP. Business is now the place where most economic activity takes place and it is now the steward of the environment.
Our technological capabilities have also moved on giving us DVD recorders, microwaves, mobile phones and other similar gadgets but they are still all built from materials taken from the same source as thousands of years ago. As, John Muir, the founder of the modern ecology movement, said “When we try to pick out anything by itself, we find it hitched to everything in the universe”. In simple terms, the economy is simply a subset of the environment, and economics a framework for understanding our transactions with the environment. They are one and the same, not distinct and separate entities as often portrayed in the media.
We have become expert in transforming natures’ goods into new products to satisfy our ever increasing desire for material consumption. At the same time, the waste products from manufacturing, some 90% of actual inputs, are becoming harder to absorb and process. Whilst nature provides obvious goods in the form of wood, minerals and fossil fuels, little attention is paid to the crucial services it provides in acting as a both a source and a sink for economic activity. These services include waste processing, climate regulation, water supply and regulation, soil formation, nutrient cycling, food production, erosion control, pollination and even recreation and cultural values.
The value of these services has been largely ignored by the mainstream economics profession rather like the value of unpaid labour in the economy. A mother who goes out to work and hires a nanny to look after her children suddenly finds out the monetary value of her work in the household. Previously no value was attributed to looking after children but as soon as someone is employed formally then the value is recognized. Of course anyone who has children knows too well the value of unpaid labour in the home.

Whist ecosystem services have always had value they have never been recognized in monetary terms and therefore incorporated into the economic framework. In 1997, a study, led by Robert Costanza at the University of Maryland, attempted to value global ecosystem services. The findings estimated very conservatively the value of ecosystem services to be in the region of 2-3 times global GNP. In 2000, a study into the external costs of UK agriculture by Jules Pretty at the University of Essex, showed a value of ₤2.3bln, based on actual financial costs incurred. This equated to ₤208 per hectare of arable and permanent pasture. Again this was a conservative estimate of all agriculture related externalities.
What these and other studies have shown is that there is a real and attributable value to these services previously taken for granted. If any business has any doubt about the relevance of these costs, they should have another look at their insurance bill. Munich Re, one of the world’s largest re-insurance companies, puts the annual global costs of climate change at US$300bln by 2050. Even the Pentagon, a normally conservative institution, is recognizing the potential security issues of serious environmental changes. One thing Greens need to recognize from their side is that without security, law and order, the issue of environmental damage is likely to be an irrelevance.
Actually incorporating external costs at the company level has proved difficult. However Trucost Plc, a London based but Christchurch born company has designed an external cost calculator and an environmental rating system, which incorporates the externalized costs of any organization into their actual accounts. Initially there was strong resistance from some in the environmental movement, concerned about placing a value on nature. However, now there is an understanding that if you don’t value something then it will be treated as if it has no value. It is an unashamedly anthropocentric view to place a monetary value on nature but one which in the long run will lead to a more sustainable economy. Mainstream economics needs to acknowledge the importance of externalities and not spend so much time pouring over inflation statistics. Economics is fundamental to how society organizes itself and surprisingly can be fun and understood by anyone, as demonstrated by Diane Coyle in her recent book, “Sex, Drugs and Economics”, which succinctly analyses everyday activities in simple language.

Whilst the economics profession needs to wake up, the environmentalists must also acknowledge that expecting society to make a wholesale change of consumption habits without strong financial incentives is naïve. The only way to make them change their current ‘unsustainable’ consumption patterns is for goods and services to properly reflect the externalized costs that make them unsustainable in the first place. The true sustainable business is one which internalizes all its costs, instead of passing them to the taxpayer to pick up at some future date. Therefore, in order to create a sustainable economy, we must recognize the value of the environment in real terms. Then maybe business and the greens can redirect their energies to work out smarter and cheaper ways of living well and enjoying life.

Incoherent System

Professor Peter Brown from McGill University in Canada is here in New Zealand speaking about our dysfunctional economic system.

He’s not wrong there. He was speaking on Radio NZ but the interview never really got going. He had enough time to talk about the incoherent nature of our economic system, how GDP measures income and consumption but not well being and how triple bottom line accounting was a waste of time. Agreed!

What we need is a better connection between our biophysical system and our economic frameworks like Trucost for example.

We also need to ask ourselves some basic questions such as

- what is our economy for? speculation or sustenance.

- what size should it be? as big as possible or big enough.

Simple questions but rarely asked. The mantra of economic growth at all costs is intellectually flimsy. Its lazy thinking……..the assumption that GDP growth is all that matters is quite clearly false.

What about crime, illness, pollution? What about the increasing gap between rich and poor.

As individuals we search for coherence but as a global economy we struggle to find that because there are no tools to do so. So perhaps by becoming more coherent ourselves we will aid and enable a global coherence.

As the Mahatma said “Be the change you wish to see”.

Let’s keep asking questions of our system.

Money doesn’t grow on trees or so they say

They also say that money makes the world go round…well metaphorically it does. It oils the wheels of commerce and enables us to transact with each other and exchange our goods and services.

But how does money actually grow? There always seems to be more of it around. Who creates it?

You probably assume your local central bank does because only they can print notes and coins. That much is true but that’s only a bit of the story. Currently only 2-3% of the total money supply is created in the form of notes and coins that we keep in our wallets and purses.

The rest? Well as JK Galbriath noted the way in which most money is created is “so simple that the mind is repelled”. The private banking system simply create the balance of new money by issuing new loans.

That’s it. For those of you who thought banks lent out money you have deposited with them i’m sorry to inform you that this is not the case.

If you deposit $1000 in the bank, they now have the ability to lend out (and in the process create new money) up to $10000. Of course they charge interest on that loan which is where they make their huge profits from.

I’ll give you an example:

In New Zealand the money supply has increased 101% in the last 8 years. So the total money stock has more than doubled in 8 years!! In that time house prices have risen 143%.

But the official measure of inflation has only risen 20%. Hello…..what is going on here? Yes it is a complete mess.

It is not the central bank or government printing money and causing huge (but unmeasured inflation). It’s the private banks who are doing it! The ones who scream and shout if governments ever think about reclaiming their right to issue money interest free on behalf of their citizens.

It is one of the greatest swindles of in history.

It requires that people sit up, take notice and look hard at what is happening around them. In the US especially the system is starting to creak…..look at the housing market and the lenders that operate in it.

Please see the following sites for more information. Once you learn about this life will never be the same

US: www.monetary.org

UK: www.monetaryreformparty.org.uk

Can: www.comer.org

Aus: www.peoplesbankparty.org

As my old history teacher said read, learn and inwardly digest.

Sustainability – Where do we start?

 

Sustainability – what is it?

Sustainability is a much maligned word “full of sound and fury, signifying nothing”. Well that’s a tad harsh but the word has been dragged through the mud from the early days of “sustainable development” to the “four pillars” namely enviornment, economy, social and cultural.

Reductionism rules!

You could argue that we have a sustainable society already because we are still here…6 billion of us. That’s not a bad effort considering we started off with just two .

But when we look back at our history we see clearly the duality of our existence: misery, bloodshed, violence and despicable acts; and amazing creation, beauty, love and art. It;s hard to argue that much has changed in the last 10,000 years at least.

So where to? Can we ever become whole or will we always be engaged in a battle between the dark and light forces in our amazing universe.

I believe sustainability as a metaframework not an end in itself. It allows us to ask ourselves “what kind of society do we wish to live in?’…..if we can define that then all the other stuff will follow. The problem we have know is we start with the reduced view whether it is the environment or social issues or economic growth.

Then when it all ends in conflict we wonder why.

So where do start? Well there’s the ten commandments magna carta, uk bill of rights moving along to more modern frameworks such as the US constitution and one i quite like is the UN Declaration of Human Rights which came into being on 10 December 1948.

This was ratified by all then 58 member states which was no mean feat. The committee which prepared the initial text was chaired by Eleanor Roosevelt herself. You can view it here

www.un.org/overview/rights.html

Article 25 and 26 are of particular interest being on the issue of education and well being.

It’s well worth a read.

Article 1, Section 8 of the US consitution notes:

Congress has the power “to coin money, regulate the value thereof”……….it doesnt say banks have that power mind you.

Coming back the the topic at hand: how do we craft a society that sustains itself without the externalisation of environmental, social, cultural and economic costs.

 - Eliminating poverty (Article 25 of the UNDHR).
- Compulsory free education to 16 for all (Article 26 of the UNDHR).
- Life, Liberty and Security of Person (Article 3 of the UNDHR)
- Life, Liberty and the Pursuit of Happiness (US Declaration of Independence)

I could go on.

What is it that we want? We dont want our prisons overflowing with societal detritus. We therefore must ensure at all costs all children we bring into this world are well looked after with resources to ensure that is the case. Decent fresh food not the fossil fuel sugar laden processed rubbish churned out my the corporatised supermarkets. No wonder so many children are going round the bend…we’re poisoning them.

Safe, secure and healthy homes are vital for our children. Well resourced educational facilities are next on the list alongside decent parks and safe public spaces. Ripping poverty and its bedfellows out of our society has to start now with major expenditure….the kind normally reserved for invading other nations and killing machines.

If anyone argues “show me the money”…well it’s right there in front of you. There always has been and continues to be a huge transfer of wealth from the state to the private financial sector. It’s fact: in the UK the sum has been estimated at GBP20-40bln a year. In the US i imagine it will be a more significant sum.

Underlying all this is the question of who owns the money supply, where does the power lie.

If we dont have an idea of what we’re aiming for we will most certainly miss the target. We know we already have as levels of happiness and well being have been static for decades (sorry GDP is not going to help).

If we focus on building strong roots then sustainability will come. Right now no amount of fiddling will help. As the Declaration of Independence noted,

“whenever any form of government becomes destructive of these ends, it is the right of the people to alter it or abolish it, and to institute new government, laying its foundation on such principles and organising its powers in such form, as to them shall seem most likely to effect their safety and happiness”.

Investing in our children

There have been some interesting stories out in the last week which have made me realise we need to change our focus a little. The Unicef report showed children in New Zealand getting a raw deal, suffering violent and deprived lives. This is a ridiculous state of affairs especially in a country with strong growth over the last 10 years and 9 years of a Labour government.

The report is available here     http://www.unicef.org/publications/index_36602.html

At the same time there has been a great deal of fuss over the ethical dimensions of the NZ Cullen Fund, which pours $2bln a year of taxpayers money into the investment market to help pay for some of the increasing pension liabilities. The fund is already some $12bln in size. See below for more details

http://www.nzsuperfund.co.nz/

This is great long term investment but wait a second…..why don’t we start investing some of that money in our children. The payoff will be way bigger than the global stock markets which are prone to wild swings in an era of abundant credit. Here is a letter i wrote to the local paper

Dear Sir,

Events of the last week have shown New Zealand to be a society under severe pressure. The complete failure of the supposedly free state education system to lead young people out into the world as individuals able to make a contribution to society reflects poorly on the current Labour administration. Many parents already under financial pressure are required to increase contributions to school costs which have serious impact on the home budget. As a society we should be proud that we strive to offer education free to all our children knowing full well that investing in the future of our children is the best investment we can make. If we continue to fail in this we will pay a heavy price in the future and one which will dwarf the cost now of reducing class sizes, boosting teacher numbers, training and pay, and providing quality pre-school care to all our under fives. And yes investing in post-natal parenting classes would certainly help. No wonder many of your columnists are simply in a state of sad resignation. To see the government invest $2bln a year in the Cullen Fund to meet some future demand from an ageing population when that money should be spent now on our children is enough to drive anyone to despair. If the government does not deal with this situation right now it may as well start preparing for a vastly increased prison population and a country in social and economic disarray.

$2bln a year into better schools and better housing for children? free schooling as it should be….we are going to need all the skilled workers we can get in the future so we better start focusing in that now.

The Cullen Fund has always been a project based on ego and trying to keep up with the Aussies and their $1trln fund. All that does is drive asset prices to unrealistic levels and we know what eventually happens there.

Like charity, investment should start at home..

Do incentives work?

Research from the UK into people’s “green” behaviour demonstrates that people respond poorly to price signals and very rarely make the changes required without strong arm tactics. Recent fuel surcharges on air travel have made little difference to people’s travel plans. As our recent experiences with credit show us, people are always happy to go into debt to have what they want right now. Ecological credit is no different.

We must stop offering unlimited ecological credit if we really want to cap greenhouse gas emissions at any chosen level. Like our money supply it is currently in an acceleration phase upwards with little or no control.

Time to Limit Fossil Fuel Production

Climate Control: Managing Global Greenhouse Gas Emissions

It’s time to face the fact that climate change can only be dealt with at the global level in a similar manner to ozone depletion.

I issued the following press release today. Read the full paper at the above link.

Should we limit fossil fuel production

Monday, 5 February 2007, 11:56 am
Press Release: Sustento Should We Limit Fossil Fuel Production?NZ economist proposes global fossil fuel production quotas to stem greenhouse gas emissions.

Christchurch-based policy institute Sustento says governments must set up a global quota system urgently to control fossil fuel production.

Institute director, Raf Manji says the Sustento Framework is based on the reality that climate change is a global problem and needs to be dealt with at the global level.

“Currently efforts to reduce greenhouse gas emissions have been devolved to the national level where policy has been limited to improving energy efficiency and switching to renewable energy. This approach has not yielded major results and other policy proposals such as carbon based taxes have not found favour with either politicians or their voters.

“As the latest Intergovernmental Panel on Climate Change (IPCC) report demonstrates this policy impasse needs immediate attention,” he urges.

The Sustento Framework calls for action at the production rather than consumption level. The Framework combines a global carbon inventory with an agreed limit to global greenhouse gas emissions, and from that produces an annual production quota for fossil fuels.

“This guarantees that agreed targets will be met – unlike current consumption reduction approaches which simply hope that this will happen,” he says.

Mr Manji is aware that critics of this approach argue that producers will not like the idea of quotas but, he counters, this approach was very successful in dealing with ozone depletion via the Montreal Protocol where producers rather than consumers were targeted.

Quotas also currently operate within OPEC and informally within the IEA, which represents non-OPEC producers. In July 2006 the G8+5 met for the first time to consider climate change issues. This group alone controls 76% of global coal production, 57% of natural gas and 38% of crude oil production. G20, which is an enlarged version of the G8+5, controls 94% of coal, 73% of gas and 59% of crude oil.

“If the problem of climate change is to be taken seriously by the major nations of the world then it is likely that forums such as the G8+5 will be the place where concrete action will be possible,” he says.

In 1977 the Brandt Commission proposed an international strategy on energy.

“If we are to limit growth in greenhouse gas emissions now is the time to implement such a proposal,” concludes Mr Manji .

ENDS