Recasting an economy for the earth
Treating the environment as part of the economy has produced an economy that is destroying its natural support systems. But in Eco-Economy, LESTER R. BROWN is optimistic as he describes how to rework the existing structure to make it compatible with the earth's ecosystem. Here, wind farms replace coal mines, hydrogen powered fuel cells become the new engines and cities are designed for people, not cars. Exclusive extracts from the book that is being released today at the Delhi Sustainable Development Summit 2002.
Restructure or decline... A fossil fuel-based, automobile centered and throwaway economic model will not work for the world.
Learning from China
THE flow of startling information from China helps us understand why our economy cannot take us where we want to go. Not only is China the world's most populous country, with nearly 1.3 billion people, but since 1980 it has been the world's fastest-growing economy expanding more than fourfold. In effect, China is telescoping history, demonstrating what happens when large numbers of poor people rapidly become more affluent.
As incomes have climbed in China, so has consumption. The Chinese have already caught up with Americans in pork consumption per person and they are now concentrating their energies on increasing beef production. Raising per capita beef consumption in China to that of the average American would take 49 million additional tons of beef. If all this were to come from putting cattle in feedlots, American-style, it would require 343 million tons of grain a year, an amount equal to the entire U.S. grain harvest.
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In 1994, the Chinese government decided that the country would develop an automobile-centered transportation system and that the automobile industry would be one of the engines of future economic growth. Beijing invited major automobile manufacturers, such as Volkswagen, General Motors, and Toyota, to invest in China. But if Beijing's goal of an auto-centered transportation system were to materialize and the Chinese were to have one or two cars in every garage and were to consume oil at the U.S. rate, China would need over 80 million barrels of oil a day slightly more than the 74 million barrels per day world now produces. To provide the required roads and parking lots, it would also need to pave some 16 million hectares of land, an area equal of half the size of the 31 million hectares of land currently used to produce the country's 132-million-ton annual harvest of rice, its leading food staple.
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Although it has almost exactly the same amount of land as the United States, most of China's 1.3 billion people live in a 1,500-kilometer strip on the eastern and southern coasts. Reaching the equivalent population density in the United States would require squeezing the entire U.S. population into the area east of the Mississippi and then multiplying it by four.
Interestingly, the adoption of the western economic model for China is being challenged from within. A group of prominent scientists, including many in the Chinese Academy of Sciences, wrote a white paper questioning the government's decision to develop an automobile-centered transportation system.
They pointed out that China does not have enough land both to feed its people and to provide the roads, highways, and parking lots needed to accommodate the automobile. They also noted the heavy dependence on imported oil that would be required and the potential air pollution and traffic congestion that would result if they followed the U.S. path.
If the fossil-fuel-based, automobile-centered, throwaway economy will not work for China, then it will not work for India with its 1 billion people, or for the other 2 billion people in the developing world. In a world with a shared ecosystem and an increasingly integrated global economy, it will ultimately not work for the industrial economies either.
China is showing that the world cannot remain for long on the current economic path. It is underlining the urgency of restructuring the global economy, of building a new economy an economy designed for the earth.
A monumental undertaking
CONVERTING our economy into an eco-economy is a monumental undertaking. There is no precedent for transforming an economy shaped largely by market forces into one shaped by the principles of ecology.
The scale of projected economic growth outlines the dimensions of the challenge. The growth in world output of goods and services from $6 trillion in 1950 to $43 trillion in 2000 has caused environmental devastation on a scale that we could not easily have imagined a half-century ago. If the world economy continued to expand at 3 per cent annually, the output of goods and services would increase fourfold over the next half-century, reaching $172 trillion.
Building an eco-economy in the time available requires rapid systemic change. We will not succeed with a project here and a project there. We are winning occasional battles now, but we are losing the war because we do not have a strategy for the systemic economic change that will put the world on a development path that is environmentally sustainable.
In an eco-economy, mature industrial economies with stable populations can operate largely by recycling the materials already in use.
Although the concept of environmentally sustainable development evolved a quarter-century ago, not one country has a strategy to build an eco-economy to restore carbon balances, to stabilize population and water tables, and to conserve its forests, soils, and diversity of plant and animal life. We can find individual countries that are succeeding with one or more elements of the restructuring, but not one that is progressing satisfactorily on all fronts.
Nevertheless, glimpses of the eco-economy are clearly visible in some countries. For example, 31 countries in Europe, plus Japan, have stabilized their population size, satisfying one of the most basic conditions of an eco-economy. Europe has stabilized its population within its food-producing capacity, leaving it with an exportable surplus of grain to help fill the deficits in developing countries. Furthermore, China the world's most populous country now has lower fertility than the United States and is moving toward population stability.
Among countries, Denmark is the eco-economy leader. It has stabilised its population, banned the construction of coal-fired power plants, banned the use of nonrefillable beverage containers, and is now getting 15 per cent of its electricity from wind. In addition, it has restructured its urban transport network; now 32 per cent of all trips in Copenhagen are on bicycle. Denmark is still not close to balancing carbon emissions and fixation, but it is moving in that direction.
Other countries have also achieved specific goals. A reforestation program in South Korea, begun more than a generation ago, has blanketed the country's hills and mountains with trees. Costa Rica has a plan to shift entirely to renewable energy by 2025. Iceland, working with a consortium of corporations led by Shell and Daimler Chrysler, plans to be the world's first hydrogen-powered economy.
So we can see pieces of the eco-economy emerging, but systemic change requires a fundamental shift in market signals, signals that respect the principles of ecological sustainability.
Unless we are prepared to shift taxes from income to environmentally destructive activities, such as carbon emissions and the wasteful use of water, we will not succeed in building an eco-economy.
Restoring the balances of nature is a huge undertaking. For energy, it depends on shifting from a carbon-based economy to a hydrogen-based one. Even the most progressive oil companies, such as BP and Royal Dutch Shell, that are talking extensively about building a solar/hydrogen energy economy are still investing overwhelmingly in oil, with funds going into climate-benign sources accounting for a minute share of their investment.
Reducing soil erosion to the level of new soil formation will require changes in farming practices. In some situations, it will mean shifting from intense tillage to minimum tillage or no tillage. Agro-forestry will loom large in an eco-economy.
Restoring forests that recycle rainfall inland and control flooding is itself a huge undertaking. It means reversing decades of tree cutting and land clearing with forest restoration, an activity that will require millions of people planting billions of trees.
Building an eco-economy will affect every facet of our lives. It will alter how we light our homes, what we eat, where we live, how we use our leisure time, and how many children we have. It will gives us a world where we are a part of nature, instead of estranged from it.
History's greatest investment opportunity
RESTRUCTURING the global economy so that economic progress can be sustained represents the greatest investment opportunity in history. As noted in Chapter 1, the conceptual shift is comparable to that of the Copernican Revolution in the 16th Century. In scale, the Environmental Revolution is comparable to the Agricultural and Industrial Revolutions that preceded it.
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The Industrial Revolution has been under way for two centuries, although in some countries it is still in its early stages. At its foundation was a shift in sources of energy from wood to fossil fuels, a shift that set the stage for a massive expansion in economic activity. Indeed, its distinguishing feature is the harnessing of vast amounts of fossil energy for economic purposes. While the Agricultural Revolution transformed the earth's surface, the Industrial Revolution is transforming the earth's atmosphere.
The additional productivity that the Industrial Revolution made possible unleashed enormous creative energies. It also gave birth to new life-styles and to the most environmentally destructive era in human history, setting the world firmly on a course of eventual economic decline.
The Environmental Revolution resembles the Industrial Revolution in that each is dependent on the shift to a new energy source. And like both earlier revolutions, the Environmental Revolution will affect the entire world.
There are differences in scale, timing, and origin among the three revolutions. Unlike the other two, the Environmental Revolution must be compressed into a matter of decades. The other revolutions were driven by new discoveries, by advances in technology, whereas this revolution is being driven more by our instinct for survival.
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One big difference between the investments in fossil fuels and those in wind power, solar cells, and geothermal energy is that the latter will supply energy in perpetuity. These "wells" will not run dry. If the money spent on oil in one year were invested in wind turbines, the electricity generated would be enough to meet one-fifth of the world's needs.
Investments in the infrastructure for the new energy economy, which would eventually have to be made as fossil fuels are depleted, will obviously be huge. These include the transmission lines that connect wind farms with electricity consumers, and the pipelines that link hydrogen supply sources with end-users. To a substantial degree, the infrastructure for the existing energy economy the transmission lines for electricity and the pipelines for natural gas can be used in the new energy economy as well. The local pipeline distribution network in various cities for natural gas can easily be converted to hydrogen. For developing countries, the new energy sources promise to reduce dependence on imported oil, freeing up capital for investment in domestic energy sources. Although few countries have their own oil fields, all have wind and solar energy. In terms of economic expansion and job generation, these new energy technologies are a godsend ... .
There are also abundant investment opportunities in the food economy. It is likely that the world demand for seafood, for example, will increase at least by half over the next 50 years, and perhaps much more. If so, fish farming output now 31 million tons a year will roughly need to triple, as will investments in fish farming. Although aquaculture's growth is likely to slow from the 11 per cent a year of the last decade, it is nonetheless likely to be robust, presenting a promising opportunity for future investment ... .
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In this new economy, some companies will be winners and some will be losers. Those who anticipate the emerging eco-economy and plan for it will be the winners. Those who cling to the past risk becoming part of it.
Lester R. Brown is President, Earth Policy Institute, a non-profit, interdisciplinary research organisation based in Washington D.C.. He is also the founder and former president of the Worldwatch Institute . He is the recipient of numerous prizes including the MacArthur "Genius Fellowship", the United Nations Environment Prize and Japan's Blue Planet Prize.
Eco-Economy: Building an Economy for the Earth, Lester R. Brown, Orient Longman, 2002, Rs. 350.
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