Seven billion

The Ultimate Rollercoaster

Fossil fuels have powered human growth and ingenuity for centuries. Now that we're reaching the end of cheap and abundant oil and coal supplies, we're in for an exciting ride. While there's a real risk that we'll fall off a cliff, there's still time to control our transition to a post-carbon future. (source: post carbon institute)



The video gives a brief and entertaining introduction to the history of our fossil fuel adiction.

Here are links to more detail on some of the issues:

Our over use of resources

Passing planetary tipping points

The end of growth

Prosperity without growth

Erosion of ecosystem services and biodiversity loss

Anthropogenic global warming (AGW)

Evidence that human activities are causing global warming

Evidence that the great majority of those qualified to make a decision support the claims of AGW

Evidence that over Earth's history carbon dioxide has been the major determinant of climate

Peak oil

Consuming the Planet

The video below is a new documentary compiled from lectures by William Rees, who is the co-creator of the Eco-Footprint concept. He is a Professor in the School of Community and Regional Planning at the University of British Columbia.

Dr. Rees has measured humanity’s use of the planet’s resources, and has concluded - not surprisingly - that humans are using more resources of the Pale Blue Dot than the planet can supply us with sustainably.

Warning To the People of Earth from Bruce Mohun on Vimeo.

For more discussion by Dr. Rees of the issue of Ecological Footprints and their implications for the world follow this link

Here are some quotes from the link above:

Humankind now seems to be the victim of a global "catch-22" of its own making. More material growth, at least in the poor countries, seems essential for socioeconomic sustainability, yet any global increase in material throughput is ecologically unsustainable.

If just the present world population of 5.8 billion people were to live at current North American ecological standards (say 4.5 ha/person), a reasonable first approximation of the total productive land requirement would be 26 billion ha (assuming present technology). However, there are only just over 13 billion ha of land on Earth, of which only 8.8 billion are ecologically productive cropland, pasture, or forest (1.5 ha/person). In short, we would need an additional two planet Earths to accommodate the increased ecological load of people alive today. (Note the quotation above was written in 1994, the current world population is close to 7 billion people.)

Links

Follow this link for a Wikipedia article on Ecological Footprings

For another take on the issue of planetary boundaries see this post on the work of the Stockholme Resilience Center.

Professor Tim Jackson discusses the econimic and social implications of growth in a finite planet at this post.

Ecosystem services and biodiversity loss are issues related to the theme of this post - see this post for details.

Here is a link to an article from the Post Carbon Institute about the End Of Growth.

Biodiversity Loss

It is clear that we are seriously damaging our planet, the Pale Blue Dot. As shown here and here this damage is occurring in nine different ways. Although Climate Change is the one most discussed, biodiversity loss is also very impoatant, as the video below briefly explains:

Biodiversity - Vancouver Film School from Vancouver Film School on Vimeo.

Our society is embedded in an environment that provides a wide range of services that are very important in maintaining our communities and our lives. These are generally called ecoystem services, which can be divided into four main categories, as shown below:

Provisioning services

• food (including seafood and game), crops, wild foods, and spices
• water
• pharmaceuticals, biochemicals, and industrial products
• energy (hydropower, biomass fuels)

Regulating services

• carbon sequestration and climate regulation
• waste decomposition and detoxification
• purification of water and air
• crop pollination
• pest and disease control

Supporting services

• nutrient dispersal and cycling
• seed dispersal
• Primary production

Cultural services

• cultural, intellectual and spiritual inspiration
• recreational experiences (including ecotourism)
• scientific discovery
Source: Wikipedia.

One of the many websites that I regularly read is Conservationbytes written by Corey J.A. Bradshore. Bradshore has dedicated his "site to highlighting, discussing and critiquing the science of conservation that has demonstrated measurable, positive effects for global biodiversity".

Bradshore published the following talk on the web site. The first few minutes discuss the video at the top of this post.

Global erosion of ecosystem services

View more webinars from Conservation Bytes.

As the reality and dangers of biodiversity loss became increasingly evident an international response was clearly required. Consequently the Millennium Ecosystem Assessment (MA) was launched in 2001. The MA has produced a range of technical reports which are summarised in the Living Beyond Our Means report.

The key messages of the report are:

■ Everyone in the world depends on nature and ecosystem services to provide the conditions for a decent, healthy, and secure life.
■ Humans have made unprecedented changes to ecosystems in recent decades to meet growing demands
for food, fresh water, fiber, and energy.
■ These changes have helped to improve the lives of billions, but at the same time they weakened nature’s ability to deliver other key services such as purification of air and water, protection from disasters, and
the provision of medicines.
■ Among the outstanding problems identified by this assessment are the dire state of many of the
world’s fish stocks; the intense vulnerability of the 2 billion people living in dry regions to the loss of
ecosystem services, including water supply; and the growing threat to ecosystems from climate change
and nutrient pollution.
■ Human activities have taken the planet to the edge of a massive wave of species extinctions, further threatening our own well-being.
■ The loss of services derived from ecosystems is a significant barrier to the achievement of the Millennium Development Goals to reduce poverty, hunger, and disease.
■ The pressures on ecosystems will increase globally in coming decades unless human attitudes and
actions change.
■ Measures to conserve natural resources are more likely to succeed if local communities are given
ownership of them, share the benefits, and are involved in decisions.
■ Even today’s technology and knowledge can reduce considerably the human impact on ecosystems.
They are unlikely to be deployed fully, however, until ecosystem services cease to be perceived as free and limitless, and their full value is taken into account.
■ Better protection of natural assets will require coordinated efforts across all sections of governments,
businesses, and international institutions. The productivity of ecosystems depends on policy choices on investment, trade, subsidy, taxation, and regulation, among others.

The report contains the following graphic illustrating the services provided by nine ecosystems. Click on the graphic for a larger and clearer view.

Our World in Crisis?

Over six nights recently I attended the Our World in Crisis? course run by Professor Jospeh Camilleri.

The course website can be found here

The course was very informative, challenging, and very well run. Thanks to Professor Camilleri for his organisation of the course and many interesting lectures and guest speakers.

The course covered the following:

Making sense of ‘our times’:

It is often said that we live in a globalising world? What does this mean? How different is today’s world from that of our parents or grandparents? Is the Modern world ushered in by the Renaissance and the revolutions of the 16th to the 18th centuries coming to an end? If so, what is taking its place?

The global financial crisis: why, where and how?

How do we explain the unprecedented growth of international finance? What factors have led to the current global financial crisis? What are the long-term implications of the crisis? What do we make of the responses of governments? Of the major international organisations? Where does the crisis leave the rich-poor divide? What are the prospects for greater international regulation?

Climate change: after Copenhagen

What are the key issues at stake in international climate change negotiations? Why are governments finding it so difficult to come to terms with the challenges posed by climate change? What are the prospects for stabilising global warming? Has Australia’s position on climate change shifted significantly since the election of the Rudd Government?

Arc of conflict: from Algeria to Afghanistan:

How do we account for the conflicts that have dotted the recent history of this part of the world? What lies behind the conflicts in the Middle East, Iraq, Iran, Afghanistan, Pakistan? How do we make sense of the relationship between Islam and the West? Are international terrorism and the ‘war on terror’ here to stay?

Conflict resolution and the dialogue of cultures:

Are the world’s major civilisations on a collision course? With the decline of the world’s colonial empires, is Western dominance coming to an end? Are we seeing the rise of new centres of power and influence? Can collision be avoided? What are the prospects for dialogue and conflict resolution? How can dialogue be approached internationally? In Australia?

The puzzle that is Australia:

How well are Australians coping with the pressures of a rapidly changing world? How well is Australia managing cultural and religious diversity at home and in its relations with Asia and the Pacific? Does multiculturalism have a future? What of our relations with the United states on the one hand and China on the other? What are the options facing Australia over the next decade and beyond?

The assignments that I produced for the course and some of the research that I conducted on the topics can be found at the links below:

Globalisation, here and here.

Assignment letter to the editor here.

My notes on the Copenhagen conference here.

Assignment on the Global Financial Crisis here.

The Political Philosophy of Malcolm Fraser here.

The Global Financial Crisis

In the second week of the Our World in Crisis? course, we investigated the Global Financial Crisis. Here is my contribution:

Introduction

Poor regulation of financial markets played a role in the development of the Global Financial Crisis, particularly in the investment decisions that were taken, but there were a range of other issues relating to investment decisions and the development of excessive liquidity that led to the market failure.


Excessive Liquidity

As Paul Krigman has noted, in the years before the global financial crisis the “ world [was] awash in cheap money, looking for somewhere to go. Most of that money went to the United States …” (Source here)


There are three main explanations for this huge amount of money in the US economy.

1. Excessively low interest rates

After the terrorist attacks on September 2001, the Federal Reserve, let by Allan Greenspan reduced interest rates fairly rapidly to historically low level of 1%. These low rates led to a housing bubble.

2. The increase in inequality in the US

Income inequality has been increasing in the US for the last thirty years. The incomes of the very wealthy have increased significantly while the wealth of the Middle and Working Classes has stagnated.

“Such enormous wealth could not be used for consumption only. There is a limit to the number of Dom Pérignons and Armani suits one can drink or wear. … So, a huge pool of available financial capital—the product of increased income inequality—went in search of profitable opportunities into which to invest.” (Source here)


3. The imbalance between deficit countries and surplus countries

Some countries manage to run a trade surplus. The main examples of surplus countries are China (and a few other East Asian countries) and Germany. Many countries operate a trade deficit. The US, UK and some European countries are examples of deficit countries.

The problems of this imbalance were recognised before the financial crisis became obvious. The Chairman of the US Federal Reserve, Ben Bernanke, described it as “the Global Savings Glut” in 2005. (Source here)

Paul Keating traces this issue back to the Asian Financial Crisis of the late 1997-8. (Source here) The IMF stepped in to try to stabilise the currencies of some South-East Asian countries. According to Keating, the Chinese Government decided that it would not be subject to such heavy handed intervention, and set about to “build its own IMF”, by establishing large foreign currency reserves.


Investing the Savings Glut

The huge amount of money generated by the three processes described above needed to be invested somewhere. Usually such funding flows would travel from the developed countries to the developing ones, but in this instance the flow was in the other direction – from the developing countries to the developed ones. Effectively poorer countries were financing the lifestyles of the richer countries.

One reason for this unusual state of affairs was the increasing inequality in the US and other western countries discussed by Milanovic. Middle class incomes had stagnated. According to Milanovic: “A way to make it seem that the middle class was earning more than it did was to increase its purchasing power through broader and more accessible credit. People began to live by accumulating ever rising debts on their credit cards, taking on more car debts or higher mortgages.” (Source here)
New investment products, such as collateralized debt obligations (CDOs), made this situation more unstable. CDOs are investments that consist of a group of assets (for example, mortgages) that are bundled together into one product. The level of risk of the different underlying assets varied, and made it difficult to determine the overall value of the product. This type of investment was generally sold by the originating bank or financial institution to another institution, which “lessened the incentive to of banks to screen borrowers carefully. This opens the credit-markets doors to poor quality borrowers. “ (Source here) This led to many NINJA loans – No Income, No Jobs, No Assets.

Wall St. bankers were involved in such risky behaviour because there was no incentive to reduce risk and every incentive to increase it. Their rewards were short term, and they could receive their bonuses and stock options, move on and when the system collapsed after they had left it wasn’t their fault. This led to “rational / irrationality” according to John Cassidy of the New Yorker magazine (Source here) . It was rational for the Wall St. bankers to do things that turned out to be irrational. As “Chuck” Prince, CEO of Citibank, said “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.” (Source here)

Poor regulation was a factor in the bad investment decisions. As John Mack, Chairman of Morgan Stanley has stated:

The financial crisis laid bare failures of risk management at individual firms across the industry and around the globe. But, more significantly from a policy perspective, it made clear that regulators simply didn’t have the tools or the authority to protect the stability of the financial system as a whole. That’s why we need a systemic risk regulator with the ability and responsibility to ensure that excessive risk-taking never again jeopardizes the entire financial system.

(Source here)

The lack of effective government regulation of the financial system (ie of a “systemic risk regulator” was an important element in the irrational investment decisions taken that led to the financial crisis, but there were a range of other reasons for the development of excessive liquidity in the financial system. It is unlikely that surplus / deficit imbalance in the world financial system will be solved by regulation. A more likely solution will be found by negotiation in international forums such as the G 20.

Crises of Capitalism