The Economics of Climate Chaos

Karl Williams

July 2008

It’s one thing to calmly read statistics about climate chaos but a completely different experience to hear the frightening stories from the disaffected.

In the remote north-eastern Thai province of Nan, listening to a 60-year-old café proprietor relate how the climate has changed in her lifetime, visions of a freaky future of climate chaos hit me in a way that no peer-reviewed scientific forecast would ever do.

In this woman’s entire childhood, summer temperatures had never risen above the low thirties, but now the mercury hits 40 and beyond most summers. Moreover, whereas the monsoonal rain season used to last for a good five months, now it’s usually about three. Such changes haven’t progressed gradually, but have exhibited wild gyrations that are evident in the very landscape.

While wealthier residents of Bangkok can today still mask these unsettling climate changes with a casual adjustment of their air conditioner, those in the countryside are forced into a personal concern with what they’re suspecting is just the beginning of climate chaos spinning out of control.

Yet the economic reason why we’re rushing headlong into the abyss is not hard to fathom. Without fully costing the consequences of our use of fossil fuels, we effectively provide a set of subsidies to keep on wreaking environmental destruction.

Looking on the positive side, we have real hope in the form of the elegantly straightforward geoist principles of applying natural resource charges which would force each polluter to pay for the consequences of their actions and hence provide a stiff disincentive against further polluting.

Come for a stroll through a traditional Thai house to experience how things were once more sustainable and sensible …. when artificially cheap fossil fuels were not available. Although such traditional houses were then made out of teak wood (now scarce and very expensive), many modern substitutes can be found for these and other customary materials. The point is that these houses incorporated a multitude of passive solar design elements – well before that term was ever coined in the English-speaking world.

To protect against the relentless tropical heat, our house is surrounded by deep shady verandahs, and blinds on the western verandah are lowered to shield against the low, hot western sun. The house has also been aspected to take into account the prevailing breeze, with large openings front and rear to allow the all-important flow-through ventilation. The floorboards are polished to offer a cool sensation to the feet – hey, take off your shoes in the house, you Western barbarian! The high, pitched ceilings allow the hot air to rise, and the open plan design encourages air to move and cool.

Before underpriced oil, traditional villages had to live within their sustainable means. Firewood was used sparingly because it had to be hauled on human or donkey backs from the surrounds. True Cost Economics, geoist style, will encourage through appropriate technology the careful use of scarce or polluting resources. But now there’s little to slow down the plunder, with roads (largely constructed through cheap petrochemicals) and motorized vehicles allowing distant forests to be scoured for firewood. That is, if those forests haven’t already been clearfelled.

What is it about wicker baskets that make them so appealing? You’ll never catch this red-blooded Aussie male weaving baskets or crocheting doilies, but I have to admit that handicrafts seemed to be based on an insightful knack of knowing what charm on some strange subconscious level. We came across a group of elderly basket-weavers doing their lovely stuff, but unfortunately they were doing it for practically nothing except the love of the communal activity. Plastic bags have penetrated into the remotest of villages, and the oldies can’t compete against these throwaways, as the litter flutters by.

Natural resource charges based on the damaging inputs (carbon taxes on petrochemicals and their greenhouse gases) and outputs (charges based on biodegradability and toxicity to groundwater) would offer the village elders hope.

Similarly, underpriced oil has allowed vast acreages to be farmed, not to mention the unsustainable populations to go with it. Farmers have actually benefitted little from this, as land prices have risen to capture the productivity bestowed by oil.

A comfy overnight train journey brought us to the big smoke of Bangkok, where we struck a different set of problems caused by underpriced fuels whose paltry taxes don’t vary on the basis of pollutants. As my trusty Lonely Planet guidebook said “The World Health Organisation estimates that particulate matter in Bangkok is 2.5 times higher than acceptable standards. The primary culprits are emissions from vehicles, mainly diesel vehicles, which comprise less than 10% of the cars in the metropolitan area but contribute approximately 89% of emissions of particulate matter. Even the cleaner cars play a role as the sheer numbers of vehicles on the road in the city each day creates a critical mass of emissions. (Despite government moves to clean up the air) there are still fleets of old trucks and buses on the road, including the city’s bus transit system, which cough up clouds of asphyxiating black smoke and also shower the city with fine dust particles.”

Water pollution is a nationwide problem but is front and centre in Bangkok as its canal system is inching and oozing its way to becoming a sewer system. The costs and benefits of economic expansion and population growth is invariably measured in financial terms, as the desperately-needed accounting practice of Triple Bottom Line Accounting (a variation of True Cost Economics inasmuch as it means expanding the traditional reporting framework to take into account environmental and social performance in addition to financial performance) has somehow slipped into the background.

If authorities *had* measured the environmental and social costs of transforming Bangkok from its former position of “Venice of the East”, then visitors would be greeted with an entirely different city.
But today, the neoclassical beancounters have filled in most of Bangkok’s canals as they don’t transport its economic units of production (i.e. people) quickly enough. There’s no attempt to measure the environmental and social costs of turning charming canals into stinking, murky open drains, while the disaffected population wonder why the driving forces behind the redevelopment of their city is making it less and less liveable.

It was due to a combination of my fiancée’s famous wristlock and my low pain threshold that we ventured south to Thailand’s beaches, the sort of tourist trap that I’ve always avoided. But it was cold comfort in making Andrea eat her words as I was proved right – the famed southern coast and islands have been overrun and almost ruined by property developers. Stay tuned for a special article on this very phenomenon. Needless to say, natural capital is being ruined for lack of natural resource charges, with the very thing that gives a place its tourist appeal (and land its higher prices) being ruined by uncontrolled over-development.

A classic case in point is prawn farms. We had to hitch motorbike lifts to get to one of the last stretches of remote coastline, only to occasionally encounter the brown fecal murk that emanates from these beachside prawn cages, not to mention the rapid spread of disease and parasites.. It’s only logical that the input of tonnes of feed must result in some sort of output, but with such externalities foisted onto the surroundings being part and parcel of the whole neoclassical madness, there’s little or no questioning unless the affected party has political clout. With land values starting to accelerate with the prospect of the tourist dollar, it won’t be long before the lobbyists of interest property developers puts the prawn farmers out of business.

It’s always interesting watching the local fishing boats bring in their catch, but we weren’t surprised to find the same greed and shortsightedness as elsewhere. Most of the fish were way undersized, and apparently getting smaller and smaller as the last stocks are plundered by ever more desperate fishermen. The by-catches (the fish that weren’t intended to be caught) aren’t thrown back nowadays, as the fishermen can get paid small amounts by prawn farmers who use by-catches as fishmeal.

According to the November 2006 issue of Science, all current fish and seafood species are projected to collapse by 2048, with 13 of the world’s 17 fisheries being depleted or in serious decline, and the other 4 already over-exploited. With sonar targeting, this mass destruction is becoming ever more efficient. We once thought that the oceans were endless and “oceanic”, but commercial fishing has wiped out 90% of the world’s large fish populations and dead zones now extend thousands of square kilometres in area. Fish, coral and mammals are dying while algae, bacteria and jellyfish are growing unchecked as the whole food chain is drastically disrupted.

Can our lemming-like rush towards marine devastation get worse? It seems so. Today we’re witnessing how governments are subsidising the destruction of the marine environment to new levels of lemming-like lunacy. All over the world, fishermen large and small are engaged in a heroic battle with reality.

In Italy, Spain, Portugal, France and Japan in particular, they’re blocking roads, picketing fuel depots, throwing missiles and turning over cars in an effort to hold it at bay. The oil is running out and governments, they insist, must do something about it. Like subsidising them to burn the “last days of ancient sunlight” (a telling description I love to use) even faster in order to exhaust threatened fish species more effectively.

Playing on the peculiar sentimentality many cultures often hold towards a marine livelihood, the fishermen warn that if something isn’t done to help them, thousands could be forced to scrap their boats and hang up their nets. It’s an appalling prospect which governments should greet with heartfelt indifference as their subsidy-lifelines are pulled in.

While we presently don’t have proper natural resource charges (carbon taxes) on oil to curtail our reckless consumption habits, the good old law of supply and demand has come to the rescue. That is, the effect of Peak Oil (supply) coupled with the industrial expansion of China and India (demand) has boosted oil prices that might just, for unintended reasons, stand between us and runaway climate change.

However, while petrol prices should rightly have increased, the proceeds should have accrued to the public purse rather than to the pockets of Big Oil and the princes of the House of Saud.

In Thailand and further east, this might be the only factor which offers a glimmer of hope to the world’s marine ecosystems. No East Asian government was prepared to conserve the stocks of tuna; now one-third of the tuna boats in Japan, China, Taiwan and South Korea will stay in dock for the next few months because they can’t afford to sail. It might be the best news that fisheries have had for years. If these industries collapse, we can all shout three cheers!

It would, of course, be better for everyone if these unsustainable practices could be shut down gently through the phasing in of the well-signposted governance of sustainable and fully costed fishing licenses. But the reality of plummeting fish stocks and scarce oil seems to be more than human nature can bear, so the strident demands to subsidise the extinction of what remains only becomes louder.

It’s also likely that consumers and shallow populist media will protest against rising fish prices, but the fact is that up until now we’ve effectively been paying prices subsidised by the cost of ruined marine ecosystems and the climate chaos resulting from the massive quantities of diesel required to power fishing fleets. In any case, rising seafood prices would have occurred before too long with the headlong rush to fish extinction.

This vandalism seems to be effectively spun by their lobbyists, who nowadays euphemize the perpetrators as “the fishing community”. They make two demands, which are taken up by politicians in coastal regions all over the world: they must be allowed to destroy their own livelihoods, and the rest of us should pay for it. Over seven years, European taxpayers alone will be giving this industry E3.8bn (European Commission, 2006. The European Fisheries Fund 2007-2013.).

Some of our taxes are used to take boats out of service and to find other jobs for fishermen but, as George Monbiot noted in detail in Kept Afloat on a Tide of Cash the rest is used to equip boats with new engines and new gear, to keep them on the water, to modernise ports and landing sites and to promote and market the catch.

At least farmers can argue – often falsely – that they are the “stewards of the countryside”. But what possible argument is there for keeping more fishermen afloat than the fish population can bear, and at taxpayers’ significant expense?

The best conventional policy we’ve seen to date are government undertakings to help fishermen adopt greener methods. This is merely death by a thousand cuts, delaying the decline of the industry and allowing it to defy ecological limits for as long as possible. More commonly fishing policies are a shining example of commercial stupidity and short-termism, helping an industry to destroy its long-term prospects for the sake of immediate profit. They look on today’s Profit & Loss Statement, preferring not to look at next year’s P&L and refusing to believe there exists a Balance Sheet which keeps account of our natural assets and their steady exhaustion.

Why can’t we see this insanity for what it is? Why does every lobbyist uphold that past privileges allowing unsustainable destruction have morphed into a legal right, at taxpayers’ expense, to do so in perpetuity?

They endlessly bang on about their need to support their families without ever mentioning how the continuation of their activities will ensure that their children have nothing to inherit. Geoists well know the power of the land speculation lobby (Real Estate Institute and Housing Industry Association), but the fishing lobby seems to be making a big attempt to match them in the way they denounce the scientists who make the absurd proposition that fish stocks decline if they are hit too hard!

If this is a prelude of how human beings will engage with the environment as we approach the End Game, I fear we’ll be up the proverbial creek without a paddle.

Leave a Reply

*
*

https://prosper.org.au/2008/11/06/the-economics-of-climate-chaos/