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.

The Last King of Africa – Robert Mugabe?

I finally got round to seeing the Last King of Scotland yesterday. I thought it was a great film not just because of its portrayal of Idi Amin but also the feckless young Scottish doctor who arrived in Uganda hoping to help out, make a difference and have a bit of adventure (preferably sexual).

 As Amin prepares him to meet his maker he makes some interesting points to the young man. He tells him in no uncertain terms that Africa is not a game or a place to come a play the altruist…it’s real….and reality is often brutal and bloody. His death was the first real thing the young doctor would experience in his life. As it happens he got away and we are left feeling that the message got through.

 Of course the film is fictional though based on the book of the same name which drew on various people and factual events to create the character of Dr Carrigan. Complete with stereotypical English diplomatic spooks, menacing local enforcers and locals with big hearts but no hope, the film almost falls over but for the fact that it’s a fair representation of life in Uganda at that time.

It’s interesting for me also becuase in recent weeks i have met 2 people from Uganda in different contexts both who struck me as being very hopeful about life, passionate about making a difference but also aware that potentially similar problems may be lurking around the corner.

So that brings me to the point of this blog…….is Robert Mugabe the last King of Africa? Watching Zimbabwe implode is not very pleasant even for the dispassionate observer. The similarities with Uganda are there though not as obvious as one might think. Certainly the paranoia is setting in, the violence is on the increase and the general population is now suffering from food and medical shortages, inflation, unemployment.

Mugabe has already used up his fall guy card – the British – with white landowners having been given short shrift over the past decade. So the only people left to get stuck into are his own…..surely he doesn’t have much time left?

 The nature of the dictator as a sociopath is well documented. Intransigence and unwillingless to listen are other unwelcome attributes. But is this just an African problem? I don’t think so. Look at Iraq, Serbia even Northern Ireland. Ian Paisley finally agreed with Sinn Fein yesterday as they sat down next to each other…..apparently “never, never, never, never” doesn’t always mean never.

 And who is running Russia right now? Surely Putin is only a few steps away from a fully paid up authoritarian….he’s just doing well economically so can afford to be beneficient at the moment.

That could change.

 Many old timers weep tears for their beloved Rhodesia but how can a country be prosperous based on the subjugation of others and the expropriation of resources? All around the world we are seeing a slow unwinding of the colonial and imperialist adventures of the last 500 years. Freedom, self determination and removal of the yolk of centralised and external authority is the story of the day. For Africa, stuck in the whirlpool of historical tribal and ethnic conflict, post colonialisation changes, grinding debt and the arms/resource trade, times are difficult.

The best thing the international community could do is to eliminate historical debts and aid at the same time under a guarantee that funds would go towards schools, hospitals and basic infrastructure.

Other than that people have to sort out their own problems in their own backyard. Human nature will no doubt continue to interfere with any positive outcomes but everywhere there are people with hope and the will to make things work.

As they say in New Zealand, she’s a hard road ahead.

A Loving Smack – To Smack or not To Smack?

We are currently enmeshed in a debate about the role of smacking in society here. A piece of legislation currently in Parliament is calling for the abolition of the right for parents to use “reasonable force” on their children. Of course how does one define reasonable force. New Zealand struggles with a culture of violence towards children (adults also) and this legilsation has been seen as a way of saying no to any kind of violence.

http://www.greens.org.nz/campaigns/section59/

Now this has seen some people get pretty steamed up about the government interferring in their “right” to discipline their children as they see fit and the middle classes will be criminalised for just giving occasional smacks which hardly qualify as violence. It’s been quite a ding dong battle with Parliament passing the legislation against general public opinion which has been against it.

I had this letter published today in the Christchurch Press,

Dear Sir,

The response to the proposed Bradford legislation has been quite revealing about attitudes towards children in New Zealand. As John Tamihere eloquently expressed children are mere chattels to be dealt with as any parent sees fit. That used to be the way husbands viewed their wives and judging by the statistics on domestic assault some still do. It is only through legislation that real social changes have been able to take root and become embedded in society.

At first this legislation can seem invasive but as Pita Sharples exhorted it’s about saying no to any kind of violence within our families. There are many non-violent ways to discipline a child. Some don’t give instant results like a sharp smack but in the long run they have better results. We need to listen more to our children and find out why they are behaving inappropriately and then deal with it. Hitting someone and then telling them you love them is a lame excuse for a lazy and angry approach. Big respect to Pita Sharples for making a stand even though he knows it’s the harder road to take.

Yours Sincerely.

So what do people here think? As Pita Sharples said “how can we hit something we love”. But some would say a short sharp smack lets children know when they have stepped over the line (i’m just saying that for balance).

Parenting is damn hard work and parents need way more help and resources to bring up their children. Such irony…one of the easiest and most pleasureable things to create and one of the hardest to look after

I feel that resorting to any kind of violence is simply reinforcing a culture where violence is used as a method of resolving disputes whether at a basic interpersonal level or a geopolitical one.

The attraction is that violence usually gets you an immediate result but the long-term consequences are usually a disaster. So what can we do? What do we need to do to make a non-violent society. I have my own ideas but i would love to hear from others on this subject.

Peace and love to all.

Parliamentary Officers – Keeping the Long View

A few weeks ago in New Zealand we celebrated the 20th Anniversary of our Parliamentary Commissioner of the Environment. This is an office of Parliament and therefore independent of the government of the day. The Commissioner reports to the Speaker of The House and the officers of the Parliament Committee.

This is an incredibly important position. Government is hamstrung at the best of times by short term considerations such as re-election and the constant sniping from the lobby brigade. The Commissioner on the other hand can afford to take a long term view and can criticise the government freely and ultimately acts as a guardian for the environment.

 The only other country to have such a position is not a country but a province of Canada. Ontario passed an Environmental Bill of Rights back in 1994 which was a very forward thinking piece of legislation and this is monitored by the Environmental Commissioner of the Environment.

 Canadians and New Zealanders both live in spaces of outstanding natural beauty and wonder. And yes we rely on the land for our food, energy and shelter but we are also aware that it cannot be pillaged without due thought for the consequences.

 These officers provide a balance to the me-now culture that dominates courtesy of a society drunk on credit and the growth imperative that follows. Whilst i am not a great fan of bureaucrats Parliament (or similar legislature) is the representation of the people and the common good and more countries could use this type of model.

 In Europe there are several Sustainable Development Commissions. Their job is to be an independent voice also and often are appointed by the Prime Minister with a mandate to be objective and critical. Of course their powers are limited to an advisory role whereas an officer of Parliament carries more weight.

 Democracy is in a fragile state these days. We don’t respect our politicians, the election process is more and more about money and people feel disenfranchised. Officers of Parliament can bring more respect as they work on behalf of the people and the institution that represents them.

 It’s time to rescue our political institutions before they become completely corporatised. Let them take the long view without interference and let’s leave short term-ism to the business sector.

How to curb excessive house price rises

Today Michael Cullen revelaed an audacious plan to apply a mortgage levy to fixed rate mortgages. This predicatably went down like a lead balloon. It’s just another tax on property owners and likely to be very regressive in nature.

House prices are expensive especially when related back to wages and rents. The question to ask is why prices have risen so much in the last 5 years. One simple explanation is increased migration. This creates demand for new housing for the new population but it is also the nature of the new arrivals that is important. Many immigrants are skilled and wealth with 60% approved last year under the business or skilled categories. Added to this was a general weakness in the NZ$ back in 2001/2002 which made NZ property look very cheap. This in turn allowed higher prices to be paid for property mainly through the auction process here which created a general revaluation of property across the board.

That revaluation in 2002/2003 lifted prices and generated a whole new group of property investors and developers. Property was suddenly on the move and a great investment. With immigration picking up again it is hard to see how prices can fall from current levels.

By imposing a mortgage levy all the government would achieve is to make people less well off leading to higher wage demands. As the imposition of stamp duty in the UK showed it is hard to restrain a property market when demand is strong.

With so much overseas capital arriving, even with the NZ% so strong (though it should be noted not so strong against A$, Eur or Stg) it is very difficult to control the property market.

One alternative is to look at the actual supply of money otherwise known as credit. There has been mention of LoanToValue ratios and attempting to control them. It may be easier to actually limit or reduce the amount of credit banks can grant, in essence saying “hey there just isn’t any more money out there”.

I will explore the issue of changing the reserve asset ratio another time but it is clear that the mortgage levy is not the answer.

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