Putting an economic value on environmental costs, viable?

In the previous post, we talked about how development could be natural. However, not everything that occurs naturally are good. Things seem to go wrong when economic values are attached to the resources. For instance, rubber trees used to be of little economic value before people knew how to collect latex. Thereafter, capitalists start destroying natural forested areas to make way for rubber tree plantations. Introducing and using biofuels as a major energy source will only increase value of certain crops (first and second generation mainly), exacerbating artificial selection. In the past, humans may not have realised the possible environmental nor social consequences of human activities thus values of a product only comprise of commercial marketable value. Today, externalities such as social and environmental costs can be calculated and included in official financial accounts via costs of ecosystem services as people increasingly see the importance of sustainable development. Including socio-environmental costs into the capitalist system is a great idea since it has always been missing in the capitalist equation. Hence, the increasing attention given to biofuels can be attributed to this new holistic accounting method. However, there are a few problems associated with it. How do we know if the environmental values are ‘correct’? Are we able to accurately to translate socio-environmental values such as ‘lesser carbon footprint’ into economic values that can be included in the calculation of traditional economic accounts? Putting aside the technical problems, let us take a look at the practical problems. Is it actually viable to capitalise on the social and environmental aspect of anything? In the capitalist world, there has to be revenue, costs and self-interested capitalists who strive to maximise profits. Social and environmental costs can be calculated but private firms are not interested as the benefits (revenue) are non-excludable. In other words, firms will be incurring higher costs which benefit the society as a whole and not oneself. There is no incentive for a capitalist, whose primary aim is to maximise profits, to include such costs. In other words, traditional economic and capitalist ideas are still deeply ingrained in the international market. Then why are biofuels gaining so much attention from the LDCs such as Malaysia and Indonesia who wants to become major biofuels powers?Even though biofuels are often marketed as environmentally friendly fuels, capitalists are intrigued by other characteristics of biofuels – renewability and low costs of production. Being renewable means that it will never run out unlike coal or fossil fuels, so producers worry less about volatile prices of biofuels. On top of that, unlike other renewable resources, biofuels can be assimilated into the current energy supply chain with minimal technical adjustment hence have much lower costs comparted to renewable energy such as hydroelectric, wind or nuclear energy where power plants and infrastructure has to be built from scratch. In other words, socio-environmental accounting has little significance in affecting the biofuels market, which essentially still is driven by traditional economic factors. 

Technological advancement, natural?

Technological advancement, domination of nature, all natural processes? Recently I did a research on biofuels and there are a few interesting ideas I have come across, which i will discuss in the span of a few weeks from today onwards.
First generation biofuels (corn) are biofuels that can be both food crops and biofuels, second generation biofuels (jatropha) are those which are not of any other commercial use and third generation biofuels are genetically modified oil-producing algae. (Generations of Biofuels - Energy from waste and wood, 2015) Biofuels are of course, resources of nature and they can be signs of mankind dominating nature. Third generation biofuels are clearly dominated by us because they are ‘creations of mankind’. Others argue that domination started before that. Plants are commonly seen as the basis of life as it is the source of energy for almost all living things on earth. Yet we are using these resources for our own consumption in a way that population size and survival of these species are human-dependent. In other words, domination starts when we start planting crops consciously, thereby replacing natural selection with artificial selection through manipulation of nature to suit our own needs. Does that mean discovering fire and creating tools back in the Stone Age are evidences of domination of nature? Or are they simply our means of survival? Darwin would say that technology is a tool mankind used to out compete other species (survival of the fittest). Evolution will not happen without domination – it is a natural process. Today, it seems like we dominate other species more than we are supposed to such that these species are no longer 'natural'. However if domination and evolution are natural processes, human domination of other species, domination of evolution or even nature can simply be argued to be the work of nature herself. Hence every artifact we have on earth today – cars, societies, economies, technological development, economic development, they are all a result of natural processes? 

Biofuels

This post is a response to the following readings: 

Are biofuels pro-poor? Assessing the evidence

Prospects of biodiesel from Jatropha in Malaysia

The readings seem to be skeptical about the sustainability of biofuels as an alternative source of energy. For instance, the conclusion of the article talking about Japtropha in Malaysia mentioned “Japtropha is claimed: not to compete with food…” and the article about biofuels being anti-poor even stated that biofuel policies is ‘a crime against humanity’

The idea of biofuels being carbon neutral, being a renewable source of energy, even its name make it seem like a promising solution to energy security issues in the light of climate problems we are facing today.

However biofuels cause problems such as food security (first generation biofuels) and worsening of environmental problems (second generation biofuels) which are difficult to address. Thus the question is: Is this trade-off worth it?

If we take this question to a global scale where fossil fuels are depleting rapidly, the trade-off would be worth it as food security is not undermined. Moreover, biofuels are relatively more environmentally-friendly compared to fossil fuels. Today, we produce more than enough food for everyone in the world – the problems lies in food distribution. Hence, allocating some food crops to biofuels can in fact reduce food wastage. I admit this is a very naïve idea but I believe if detailed analysis was done and policies are put in place, there will be minimal price spikes in the agricultural markets. Idealistically, an effective system that collects wasted food to be used as biofuels would make the world go round.

However if we were to take it to a national scale, biofuels may not be the answer to countries with poor food security and limited arable land. Nations that lack food security usually are underdeveloped (and are reliant on primary sectors) hence may be more encouraged to dive into this new prospective market without proper policies in place to ensure food security and minimize environmental degradation.

Even with sound policies in place, there are still risks in biofuels investments as these biofuels would mainly be exported out for energy consumption in developed countries, who are pumping capital to fund research efforts to deal with the energy crisis. Technology such as fracking or third generation biofuels could be seen as a better alternative to the conventional biofuels which have a shorter lifespan.

Biofuels has been around for a long time and yet it has never gained popularity. Albeit there has been technological improvements (second generation and the upcoming third generation), biofuels are still not as sustainable as it claims to be and it is closely linked to food markets, which is an important yet volatile market by nature. Hence, biofuels should not be the answer to our impending energy crisis as there are many other alternatives we can turn to. 

Are obese people causing environmental problems?

Agricultural activities are major drivers of climate change. For instance, The U.S. food system contributes nearly 20 percent of the nation's carbon dioxide emissions. Usage of fertilisers and pesticides releases pollutants and greenhouse gases into the environment. Not forgetting the costs of food distribution.

The idea that over-consumption of food is causing environmental problems seems like a legitimate one. Since people consume more food, more are produced to satisfy their demands hence obese people generally will have a larger footprint. Especially since population in increasing exponentially, over-consumption of food would be major problem of tomorrow even if it is not today.

However we can argue that it is over-production of food that caused environmental problems – not consumption. Since food is a basic necessity, nations would like to be self-sufficient instead of importing food from other nations. In the world where free trade is encouraged, governments have to take protectionist measures in the forms of subsidies, food storage for surpluses, etc. to ensure that food products produced by their nation remains competitive in the global market. As such, the ‘invisible hand’ will no longer be able to work its magic, resulting in too many producers in the market, contributing to the problem of food wastage. A report estimated that a third of food produced in the world is never consumed, and these unconsumed food results in an array of other environmental issues.

With the noble notion of solving world hunger, many different food product markets such as GMOs have been introduced due to technological innovation. Food industries are more productive than before, yet world hunger persists due to unequal distribution of food resources. Are technology introduced for the sake of using technological production methods? Or is it simply a ploy of the large firms. For instance, Golden rice is pegged as a solution for Vitamin A deficiency. However, there are many other sources of vitamin A such as sweet potatoes, which delivers around 150% more tonnes of food per hectare than Golden rice and 15 times the beta carotene of the best performing Golden rice variety. Some markets in agriculture exists as large firms manipulate poor farmers to continuously purchase seeds that are unable to reproduce. Usage of pesticides and fertilisers have improved food crops in terms of quality and quantity but has adverse effects on the environment and human health. Simply put, why would you consume something even pests are avoiding? What are the chemicals they put in the pesticides that deters pests and most importantly, how are these chemicals affecting our body? The answers to this question could become an industrial secret, or are unfound. Yet our farmers are using these products as there are insufficient scientific proof that these products are harmful (or rather there is not much funding given to such research).

In general, the markets in agriculture have failed, and are not operating at which the ‘invisible hand’ would guide them to. Paradoxically, it is not due to increased demand for food products, but increased supply driven by rich firms and even the governments.