Falling Housing Market?

Excerpts from:
"What's that hissing sound?"
Aug 24th 2006--The Economist print edition

A slowing, perhaps even falling, housing market spells trouble for the American economy

If you could watch just one indicator to gauge America's economic prospects over the next few years you should pick house prices. A year ago most economists thought that average prices were unlikely to fall across the nation. Now many of them have begun to worry about the consequences of falling prices for America's economy. Figures out this week from the National Association of Realtors show that average home prices barely rose over the past year, compared with annual growth of around 15% in mid-2005. In some parts of the country, prices are already falling (see article). Adjusted for inflation, the average home is worth less than it was a year ago.

The housing boom has been the main engine of America's economic growth in recent years. Indeed, it is the main reason why the American economy held up better than expected after the stockmarket bubble burst at the start of the decade. Since 2000 the real wages of most American workers have barely budged, yet surging house prices have allowed consumers to keep spending. Over the past five years the total value of American homes has increased by more than $9 trillion, to $22 trillion. These gains helped to offset both the slide in share prices and feeble wage growth.

This is the biggest bubble in American history: in real terms home prices have risen at least three times as much as in any previous housing boom. In the past average nationwide house prices have experienced year-on-year declines for the odd, isolated month, but they have not fallen on a sustained basis since the 1930s. However, most states have seen prices drop at some time in the past three decades. Since the housing market is looking bubbly in more states than ever before, prices could simultaneously fall in enough places to give America its first nationwide price decline since the Great Depression.
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The boom has lifted the economy in three ways: it has boosted residential construction; it has made people feel wealthier and so encouraged them to spend more; and it has allowed home-owners to use their property as a gigantic cash machine, taking out money by borrowing against their capital gains. Merrill Lynch estimates that the three together accounted for more than half of America's total GDP growth last year. Counting construction, finance and estate agency, the housing boom has also been responsible for one-third of all jobs created since 2001. If house-price rises level off, GDP growth could dip below 2% in 2007. If prices fall, expect a steeper slowdown.

Ben to the rescue?
If house prices do slide, the Federal Reserve will probably slash interest rates so as to save the economy from recession. But the Fed's ability to do this would be limited if inflationary pressures remain strong. And it would surely be wrong for the Fed to support the property market when a slowdown in spending is part of the rebalancing America needs to increase its saving rate. The Fed saw off a fall in spending at the start of this decade after share prices tumbled. To do the same again could damage the long-term health of the economy.

The tech bubble left behind a modern capital stock that continues to yield productivity gains. In contrast, the investment stimulated by a property boom does little to boost long-term growth. Expensive houses merely redistribute wealth to home-owners from non-home-owners. Worse still, the boom has diverted resources away from productive sectors and caused households to save less, exacerbating America's economic imbalances. It is surely better for Americans to start saving in the old-fashioned way by spending less of their income rather than relying on rising asset prices. The party has been fun; but it has to end.

Economics Overview

This week, The Economist published an overview of the previous weeks economic headlines. Here are the overviews:

Economic and financial indicators
The American housing market cooled further, as existing home sales dropped by 4.1% in July, to the lowest level in 2½ years. The National Association of Realtors reported that the median house price was 0.9% higher than in July last year, marking the smallest year-on-year increase since May 1995. Inventories of homes reached 3.9m, a record, which would take over seven months to clear at July's pace of sales.

A weak housing market is dampening the spirits of America's consumers. Sentiment eroded faster than expected, according to the University of Michigan's August index of consumer confidence, which fell to 78.7 from 84.7 in July.

Confidence also dipped in Germany, where the ZEW economic-sentiment indicator, based on a survey of analysts and institutional investors, fell to –5.6, far below its historical average of 35. The Ifo index of business sentiment fell, too, but by less than expected, to 105.0 from 105.6.

Imports to the euro area have increased by 13% in the year to June, a sign of healthy consumption; exports have risen by 8%. Nonetheless, the euro area's merchandise trade balance swung from deficit in May to a surplus of €2.0 billion ($2.5 billion) in June. Meanwhile, new industrial orders in the euro area declined by 2.5% in the same period.

Emerging-Market Indicators
South Africa's GDP grew at an annual pace of 4.9% in the second quarter, or by 3.6% compared with the same quarter a year ago. This was faster than expected—and faster than the central bank, which fears inflation, might have hoped.

Taiwan's economy grew by 4.6% in the year to the second quarter. Chile's GDP grew by 4.5% over the same period.

Fruit Fly Insomniacs

"It’s Not Just Apes; Fruit Flies Are Our Cousins, Too"
August 22, 2006 — By James Gorman, NYTimes

As humans age, so I’m told, they tend not to sleep as well as they once did. There are all sorts of reasons — aches and pains, worries about work, and lifelong accumulations of sins that pretty much rule out the sweet sleep of innocence.

But what about fruit flies?

Not as a cause of insomnia. What about the problems fruit flies have sleeping? Yes, Drosophila melanogaster also suffer sleep disruption when they get older. And a report on the troubled sleep of drosophila is being published in The Proceedings of the National Academy of Sciences.

This is the kind of science that makes you wonder. For instance, are the female flies suffering from hot flashes? Are the male flies getting up to go to the bathroom three or four times a night? Of course not. Fruit flies don’t have bathrooms.

Or you may wonder what troubles are keeping the flies up. They don’t have to worry about family values, illegal immigration or debt. They don’t have families or money.

And given the ubiquity of fruit and of scientific research, I’m guessing drosophila, bless their little genomes, must benefit from something close to full employment.

What I wonder is why people waste time worrying about whether we evolved from animals. But they do.

As reported over and over again, a disconcerting number of Americans doubt the fact of evolution. The country seems almost evenly divided on the matter, according to a recent report in Science. Some of the worriers concentrate on apelike ancestors, showing a lack of vision. There are stranger connections to agonize over, like drosophila and beyond. We share sleep problems with fruit flies. We have a huge amount of DNA in common with yeast.

Those are our distant cousins we consume in leavened bread, our fellow multicelled organisms undergoing dreadful experiments in the drosophila lab.

For instance, scientists have heated up the ambient temperature in fruit flies environments to see what happens. At 64 degrees Fahrenheit they live twice as long as at 84 degrees. Live hot, die young.

What does that mean for us? We really do share a lot with drosophila. As the article in the Proceedings reports, fruit flies have sleep-wake cycles that become fragmented as they age, suffering a “loss of sleep consolidation, namely increased daytime sleep and increased nighttime wakefulness in the elderly,” as Kyunghee Koh at the Howard Hughes Medical Institute and three colleagues describe it.

Sound familiar? It should. Some of the same genes related to circadian rhythms occur in humans and in flies. Mutations in some of these shared clock genes can cause sleep disorders in people.

We also share genes related to learning and alcohol sensitivity. But even these commonalities are not worth worrying about. The genes are just details. We have the same basic cell machinery — DNA, for example — with everything living. Broccoli rabe for instance, is known to have DNA. You may find it bitter, but you still share an evolutionary history with it.

The bacteria in my gut accounts for more genes than I have in my chromosomes. We not only have a lot in common with microbes, in a way that is only beginning to be understood, we are microbes.

This is fine with me. I’m delighted to be related to flies, yeast, frogs, chimps and blue-green algae. I find the serenity of algae restful and the ambition of yeast admirable. Frogs are great jumpers. Chimps have hands at the end of their feet, sort of. And fruit flies, well, I never met a fruit fly that I was ashamed to share genes with, and I certainly can’t say that about human beings.

Watch the news. Read history. Be honest, if you could pick your relatives, would you choose this species?

By the way, Dr. Koh and colleagues don’t have a cure for age-related sleep disturbance — in flies or people. But I, for one, will rest easier knowing I’m not the only one lying awake at night. My drosophila cousins are probably up too.

I wonder what flies count when they can’t sleep — paramecia?

Water Conservation

"Scientists Call for Water Conservation"
August 22, 2006 — By Associated Press via ENN

Scientists on Monday called for radical action to improve global water management, saying one-third of the world's population faces water scarcity.

A report released at the start of the World Water Week said more efficient use of the world's water resources was needed to reduce poverty and environmental damage.

The five-year study led by the Sri Lanka-based International Water Management Institute said a key priority was improving water management in agriculture in developing countries, particularly rain-fed farms on Africa's savannas.

Its recommendations including building more water storage, better irrigation systems and developing drought-resistant crops.

"The last 50 years of water management practices are no model for the future when it comes to dealing with water scarcity," said Frank Rijsberman, head of the IWMI.

"We need radical change in the institutions and organizations responsible for managing our earth's water supplies and a vastly different way of thinking about water management."

The report, drawing from the contributions of more than 700 scientists, was presented at the annual water week organized in the Swedish capital by the Stockholm International Water Institute. More than 1,500 experts from 140 countries and U.N. agencies are attending.

On Thursday, Asit Biswas, a Canadian born in India, will receive the annual $150,000 Stockholm Water Prize for helping U.N. agencies, governments and others improve the delivery of water and sanitation services.

CFCs, HCFCs & HFCs

"Ozone-Friendly Chemicals Lead to Warming"
August 21, 2006 — By John Heilprin, Associated Press via ENN

Cool your home, warm the planet. When more than two dozen countries undertook in 1989 to fix the ozone hole over Antarctica, they began replacing chloroflourocarbons in refrigerators, air conditioners and hair spray.

But they had little idea that using other gases that contain chlorine or fluorine instead also would contribute greatly to global warming.

CFCs destroy ozone, the atmospheric layer that helps protect against the sun's most harmful rays, and trap the earth's heat, contributing to a rise in average surface temperatures.

In theory, the ban should have helped both problems. But the countries that first signed the Montreal Protocol 17 years ago failed to recognize that CFC users would seek out the cheapest available alternative.

The chemicals that replaced CFCs are better for the ozone layer, but do little to help global warming. These chemicals, too, act as a reflective layer in the atmosphere that traps heat like a greenhouse.

That effect is at odds with the intent of a second treaty, drawn up in Kyoto, Japan, in 1997 by the same countries behind the Montreal pact. In fact, the volume of greenhouse gases created as a result of the Montreal agreement's phaseout of CFCs is two times to three times the amount of global-warming carbon dioxide the Kyoto agreement is supposed to eliminate.

This unintended consequence now haunts the nations that signed both U.N. treaties.

Switzerland first tried in 1990 to sound an alarm that the solution for plugging the ozone hole might contribute to another environmental problem. The reaction?

"Nothing, or almost," said Blaise Horisberger, the Swiss representative to U.N.-backed Montreal treaty. "We have been permanently raising this issue. It has been really difficult."

Horisberger, a biologist with the Swiss Agency for the Environment, Forests and Landscape, kept trying. Finally, the first formal, secret talks on the subject were held in Montreal last month.

"Saving the ozone layer by reducing CFCs and at the same time promoting alternatives was an urgent crisis in the early years of the Montreal Protocol," said Marco Gonzalez, the treaty's executive secretary, in Nairobi, Kenya. "Now there is always a need to find new substances which are safe, energy-efficient and also have minimal impact across a range of environmental issues."

The Montreal Protocol, which now has 189 member nations, is considered one of the most effective environmental treaties. Almost $2.1 billion has been spent through an affiliated fund to prod countries to stop making and using CFCs and other ozone-damaging chemicals in refrigerators, air conditioners, foams and other products.

Scientists blame CFCs for poking a huge, seasonal hole in the stratospheric ozone layer about 7 miles to 14 miles over Antarctica. Last year, the ozone hole peaked at about 10 million square miles, or the size of North America. That was below the 2003 record size of about 11 million square miles. Scientists expect the hole will not heal until 2065.

CFCs also are thinning the ozone layer over the Arctic and, to a lesser extent, globally. As the protective layer thins, more ultraviolet radiation gets through, increasing people's risk of skin cancer and cataracts and threatening more plants and animals with extinction.

Some of the replacement chemicals whose use has grown because of the Montreal treaty -- hydrochloroflourocarbons, or HCFCs, and their byproducts, hydrofluorocarbons, or HFCs -- decompose faster than CFCs because they contain hydrogen.

But, like CFCs, they are considered potent greenhouse gases that harm the climate -- up to 10,000 times worse than carbon dioxide emissions.

The Kyoto treaty's goal is to reduce carbon dioxide emissions from power plants, motor vehicles and other sources that burn fossil fuels by about 1 billion tons by 2012.

Use of HCFCs and HFCs is projected to add the equivalent of 2 billion to 3 billion tons of carbon dioxide emissions to the atmosphere by 2015, U.N. climate experts said in a recent report. The CFCs they replace also would have added that much.

"But now the question is, who's going to ensure that the replacements are not going to cause global warming?" said Alexander von Bismarck, campaigns director for the Environmental Investigation Agency, a nonprofit watchdog group in London and Washington. "It's shocking that so far nobody's taking responsibility."

"A massive opportunity to help stave off climate change is currently being cast aside," he said.

The U.N. report says the atmosphere could be spared the equivalent of 1 billion tons of carbon dioxide emissions if countries used ammonia, hydrocarbons, carbon dioxide or other ozone-friendly chemicals, rather than HCFCs and HFCs, in foams and refrigerants. Such alternatives are more common in Europe.

"This potential of not using greenhouse gases is not fully used," said Horisberger, the Swiss official. "It's because of many reasons -- technical, big commercial interests."

Industry is split over how to replace CFCs and HCFCs.

One of the biggest producers of fluorine-based refrigerants, Honeywell International Inc., says it is discontinuing its use of "the older technology, environmentally unfriendly CFC and HCFC refrigerants," and replacing those chlorine-containing chemicals with HFCs in retrofits and in new equipment.

Industry representatives cite safety and energy efficiency problems with the use of ammonia and hydrocarbons, which mainly involves propane gas.

"If there's a leak in a residential line, it can ignite -- you have a potential bomb," said Stephen Yurek, general counsel for the Air-Conditioning and Refrigeration Institute. It represents North American makers of equipment for homes, businesses and transportation.

Manufacturers also say they could not meet U.S. energy efficiency requirements that took effect this year if they used those chemicals. "The technology just isn't there," Yurek said.

A 2002 study prepared for an industry coalition that encourages use of HCFCs and HFCs says the safety measures and higher energy bills required by some alternatives would cost U.S. consumers hundreds of millions of dollars a year.

"We're saying efficiency is just as important as the refrigerant being used," Yurek said. "If it's going to increase the amount of energy used to operate a piece of equipment, you're actually worse off because you're going to be pumping more CO2 (carbon dioxide) into the atmosphere."

The Montreal Protocol has been powered by a global fund run by the United Nations and the World Bank. On average, more than $150 million is spent a year to help developing nations comply with the treaty by phasing out CFCs.

The fund pays the costs for companies to switch from CFCs to HCFCs, HFCs and other chemicals commonly used in air conditioners, semiconductors, foams, fire extinguishers, hair spray, and roof and wall insulation. The biggest beneficiaries are companies in seven countries: China, India, Venezuela, Argentina, Mexico, Romania and North Korea.

Meanwhile, consumers in the U.S. and elsewhere continue to snap up products that would cost more if HCFCs and HFCs were already eliminated. Under the Montreal treaty, industrial countries have until 2030 and developing countries until 2040 to quit using HCFCs and HFCs.

"It is true that there will be a significant growth over the next 10 years of HCFC production and consumption in the developing countries," said Lambert Kuijpers, a Dutch nuclear physicist and a lead author of the U.N. report. "This will also contribute to global warming in a so far unprecedented way, if it will occur as anticipated."

That is a touchy subject for supporters of the Montreal agreement. Few want to acknowledge anything could be wrong with a treaty that is on track to fix at least one major environmental problem.

"You have to put it into historical perspective. Hydrocarbon technology wasn't ready. ... It was still being tested in the early 1990s. And only gradually that technology became mature and became accepted," said Sheng Hsuo Lang, the fund's deputy chief officer. "In hindsight, you can say, 'Why didn't you wait?' Or you can take action right away."

The United States signed the Montreal Protocol, but has not ratified the Kyoto Treaty.

Economics Overview

This week, The Economist published an overview of the previous weeks economic headlines. Here are the overviews:

Economic and financial indicators
The euro area is booming. GDP in the single-currency block grew by 0.9% in the second quarter, its fastest pace since 2000. Germany and Spain grew at the same pace as the euro area as a whole; France was quicker, at 1.2%; Italy lagged behind a little, growing by 0.5%. The euro-area economy was 2.4% bigger in the second quarter than in the same quarter of 2005.

Japan's economy, by contrast, grew by only 0.2% in the second quarter, leaving it 2% higher than the year before. Companies sold goods from their stocks, rather than from fresh production. Exports also slowed, growing by just 0.9% in the quarter.

In America inflationary pressure eased a little. The annual rate of consumer-price inflation was 4.1% in July, compared with 4.3% in June. Core prices, which exclude those for energy and food, increased by 2.7% over the year, but the monthly gain of 0.2% was greeted with relief after four 0.3% rises in a row. The producer prices paid by companies rose by 4.2% in the year to July, but by only 0.1% compared with a month before.

The American housing market cooled further. Housing starts fell to an annual rate of 1.795m in July, the slowest pace for 20 months. Starts were 13.3% below their rate in the same month last year. Meanwhile, the National Association of Home Builders reported that its index of industry confidence was at its lowest since February 1991.

In America industrial production rose by 4.9% in the year to July. The hot weather raised the output of utilities by 2% in July alone. American industry as a whole operated at 82.4% of full capacity, 1.4 percentage points above its long-run average. The value of retail sales increased by 1.4% in July, leaving it 4.8% higher than a year before. America's trade deficit in goods and services narrowed to $64.8 billion in June, compared with $65 billion the month before. It attracted a net capital inflow of $75.1 billion in the same month. Its official creditors were net sellers of Treasury bonds and notes, but its private creditors bought $31.4 billion-worth.

In Britain annual consumer-price inflation was 2.4% in July, down from 2.5% in June. The unemployment rate rose to 5.5% in the second quarter, up from 5.2% in the first. Average earnings rose by 4.3% in the year to June.

Emerging-Market Indicators
Mexico's GDP grew by 4.7% in the year to the second quarter. Its industrial production expanded by 6.9% in the year to June, thanks to car exports and construction.

Hungary's GDP grew by 3.6% in the year to the second quarter, a disappointment after growth of 4.6% in the year to the first.

China's industrial production grew by 16.7% in the year to July, after expanding by 19.5% in the year to June. Its investment in fixed assets, such as factories and real estate, in urban areas was 30.5% greater in the first seven months of this year than in the same period of 2005. Meanwhile, consumer prices increased by just 1% in the year to July.

Ozone Hole Until 2065

The atmosphere will take up to 15 years longer than previously expected to recover from pollution and repair its ozone hole over the southern hemisphere, the United Nations' weather organization said Friday.

Thinning in the ozone layer -- due to chemical compounds leaked from refrigerators, air conditioners and other devices -- exposes the Earth to harmful solar rays. Too much ultraviolet radiation can cause skin cancer and destroy tiny plants at the beginning of the food chain.

Scientists said Friday it would take until 2065, instead of 2050 as previously expected, for the ozone layer to recover and the hole over the Antarctic to close.

"The Antarctic ozone hole has not become more severe since the late 1990s, but large ozone holes are expected to occur for decades to come," ozone specialist Geir Braathen told reporters in summarizing a new report by the World Meteorological Organization and the U.N. Environment Program. The report will be released next year.

The ozone hole, a thinner-than-normal area in the upper stratosphere's radiation-absorbing gases, has formed each year since the mid-1980s at the end of the Antarctic winter in August, and generally is at its biggest in late September.

Experts said they extended the projected recovery because chlorofluorocarbons, or CFCs, would continue to leak into the atmosphere from air conditioners, aerosol spray cans and other equipment for years to come.

But there was cause for celebration, they said, noting a decline in CFCs in the first two atmospheric layers above Earth.

"The level of ozone-depleting substances continues to decline from its 1992-1994 peak in the troposphere and the late 1990s peak in the stratosphere," WMO secretary-general Michel Jarraud said in a statement.

Less of these chemicals are used every year, he said, after 180 countries in 1997 committed to reducing CFCs under the Montreal Protocal.

"This shows that the Montreal Protocol is effective and is working," he said.

Last year, the ozone hole reached about 27 million square kilometers (10 million square miles) on September 20 -- just below its largest size in 2003 of about 29 million square kilometers (11.2 million square miles), WMO experts said.

Source: AP via CNN

Brain Evolution (HAR1)

On August 17th 2006, The Economist published an article entitled 'Man, deconstructed'. Here are some excerpts:

The human brain sets man apart. About 2m years ago it began to grow in size, and today it is about three times larger than that of chimpanzees, man's closest relative. Human intelligence and behavioural complexity have far outstripped those of its simian cousins, so the human brain seems to have got more complex, as well as bigger. Yet no study has pinpointed the genetic changes that cause these differences between man and chimp.

Now a group of scientists believe they have located some interesting stretches of DNA that may have been crucial in the evolution of the human brain.
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The researchers... found 49 regions they dubbed “human accelerated regions” (HARs) that have shown a rapid, recent evolution. Most of these regions are not genes as commonly understood. This is because they code for something other than the proteins that are expressed in human cells and that regulate biological processes. A number of the HARs are portions of DNA that are responsible for turning genes on and off.

Intriguingly, the most rapidly changing region was HAR1, which has accumulated 18 genetic changes when only one would be expected to occur by chance. It codes for a bit of RNA (a molecule that usually acts as a template for translating DNA into protein) that, it is speculated, has some direct function in neuronal development.

HAR1 is expressed before birth in the developing neocortex—the outer layer of the brain that seems to be involved in higher functions such as language, conscious thought and sensory perception. HAR1 is expressed in cells that are thought to have a vital role in directing migrating nerve cells in the developing brain. This happens at seven to 19 weeks of gestation, a crucial time when many of the nerve cells are establishing their functions.

Without more research, the function of HAR1 remains mere speculation. But an intriguing facet of this work is that, until now, most researchers had focused their hunt for differences on the protein-coding stretches of the genome. That such a discovery has been made in what was regarded as the less interesting parts of the human genome is a presage of where exciting genomic finds may lie in the future.

One Percent Doctrine

Here is an excerpt of the review for The One Percent Doctrine by Ron Suskind in The New Yorker:

In November, 2001, Suskind writes, Vice-President Dick Cheney announced that if there was "a one percent chance" that a threat was real "we have to treat it as a certainty in terms of our response." He added, "It's not about our analysis, or finding a preponderance of evidence."

Should I assume that he is talking about environmental threats? Should the United States devote more time and money towards the environmental threats that have been analyzed and highly corroborated by scientists? One would hope the threats that have been analyzed, or found to have a preponderance of evidence, would not be excluded while speculative threats are included.

Global Water Crisis

On August 16th 2006, Reuters published an article entitled 'Rich Countries Like Poor Face Water Crisis'. Here is the article via Environmental News Network:

Rich countries have to make drastic changes to policies if they are to avoid the water crisis that is facing poorer nations, the WWF environmental organisation said on Wednesday.

In a survey of the situation across the industrialised world, it said many cities were already losing the battle to maintain water supplies as governments talked about conservation but failed to implement their pledges.

"Supporting large-scale industry and growing populations using water at high rates has come close to exhausting the water supplies of some First World cities and is a looming threat for many, if not most, others," the report warned.

It suggested that agriculture in the richer countries should have to pay more for water and be held responsible more actively for its efficient use and for managing wastes, like salt, especially in intensive livestock farming.

From Seville in Spain to Sacramento in California and Sydney in Australia, the report said, water had become a key political issue at local, regional and national levels as climate change and loss of wetlands dramatically reduce supplies.

"At the rhetoric level, it is now generally accepted in the developed world that water must be used more efficiently and that water must be made available again to the environment in sufficient quantity for natural systems to function.

"Many countries also recognise that extensive -- and very expensive -- repairs are required to reduce some of the damage inflicted on water systems and catchments in the past," it said.

But it added: "Putting the rhetoric into practice in the face of habitual practices and intense lobbying by vested interests has been very difficult."

In Europe, the report said, countries around the Atlantic are suffering from recurring droughts, while in the Mediterranean region water resources were being depleted by the boom in tourism and irrigated agriculture.

In Australia, already the world's driest continent, salinity had become a major threat to a large proportion of key farming areas, while in the United States wide areas were using substantially more water than could be naturally replenished.

Even in Japan with its high rainfall, contamination of water supplies had become a serious issue.

The overall picture, the WWF said, would only get worse in coming years as global warming brought lower rainfall and increased evaporation of water and changed the pattern of snow melting from mountain areas.

The report proposed seven ways to tackle the problem:

conserving catchments and wetlands; balancing conservation and consumption; changing attitudes to water; repairing ageing infrastructure; increase charges to farmers for water use; reduce water contamination; and more study of water systems.

Related post: Water Wars

UVM's Gund Institute

Seven Days published an article today by Ken Picard entitled 'Earth Economics: UVM's Gund Institute puts a price tag on nature'. I love what the Gund Institute has accomplished thus far and I always enjoy reading about their achievements. Here is the article:

Imagine assigning a monetary value to bees pollinating a meadow. Or assessing the economic value of wetlands that provide critical habitat to endangered species and prevent coastal communities from being flooded. Right now, a logging company can put a price tag on a forest's uncut timber, and a real estate agent can assess the fair market value of undeveloped fields. But neither can measure, in actual dollars and cents, what those undisturbed ecosystems are worth in terms of the human benefits they already provide.

That ability will soon be at our fingertips. Experts at the University of Vermont's Gund Institute for Ecological Economics have launched an ambitious new project to assign monetary values to all the world's ecosystems based on the natural functions they perform -- from regulating climate to purifying water, replenishing soil to providing recreational opportunities. The science of "ecosystem services" is revolutionizing the field of conservation by giving environmentalists and land-use planners tools for factoring nature into the cost of doing business. Ultimately, they hope, it will marshal the forces of the marketplace to encourage sustainable human activities and discourage unsustainable ones.

The project is the brainchild of Robert Costanza, founder and director of the Gund Institute. In May 1997, he published a now-famous article in the journal Nature in which he argues that, because the Earth's natural life-support systems contribute to human welfare, they represent a significant portion of the world's total economic worth. Costanza estimates the combined value of the world's ecosystems at about $33 trillion per year, in current U.S. dollars. For comparison, the combined gross national product of all the world's countries totals about $18 trillion per year.

Historically, economists and environmentalists have been averse to assigning monetary values to those things often described as "God's creation," Constanza explains. The traditional business model holds that, because such resources as clean air and clean water aren't manufactured or owned by anyone and can be accessed for little or no cost, they have no monetary worth. The benefits they provide -- to companies, cities, states or countries -- are considered "externalities" that needn't be factored into anyone's bottom line.

The traditional model of environmentalism, on the other hand, holds that nature has its own intrinsic worth. Often described as "priceless," the biosphere's social, cultural and spiritual value cannot be quantified in purely economic terms. This approach assumes that it's perilous to put a monetary value on, say, Lake Champlain or Yosemite National Park, because they would then be viewed as commodities, subject to the whims of the marketplace and available for buying and selling.

Constanza isn't advocating the privatization of nature. But the problem, he points out, is that neither approach to nature adequately accounts for the fact that ecosystems are affected by human activities all the time -- usually to their detriment. Assigning an ecosystem a monetary value of zero or infinity makes it impossible to calculate its financial impact on the human economy. As Costanza puts it, "Just because it's hard to measure these things doesn't mean we should leave them out. In fact, those are just the things we should pay the most attention to."

The goal of the Gund Institute's new project, he explains, is to reframe the entire debate by capturing that economic impact so it can be factored into environmental and land-use decisions. Thanks to a recent $813,000 grant from the Gordon and Betty Moore Foundation, the Institute has begun collecting data, building computer models, and compiling scientific research from around the world to begin assigning those values. Eventually, anyone with access to the Internet will be able to pick a spot on Earth -- a tract of wilderness, a watershed, a state, even the entire planet -- and calculate the combined value of that area's ecosystem services.

Drawing from the expertise of hundreds, if not thousands, of scientists, economists and researchers around the globe, the project is not some abstract academic exercise with no real-world applications. The modeling and valuation of ecosystem services are already being used for day-to-day functions, from New Jersey to New Zealand.

Azur Moulaert, a native of Costa Rica, is manager of the Gund Institute's ecosystem services project. In his home country, he explains, operators of hydroelectric dams spend millions of dollars every few years dredging the reservoirs when their sediment levels get too high. It is therefore in the country's economic interest to encourage landowners upstream to conserve forested areas that slow sediment runoff.

In 1996 the government of Costa Rica set up a fund to pay fees to small and medium-sized landowners who conserve or replant forests in order to protect the country's water resources. Such payments also encourage the protection of that country's biodiversity and scenic beauty, which have economic values measurable in such things as ecotourism dollars.

The problem, Moulaert notes, is that the Costa Rican government currently makes the same payment to all landowners who conserve or replant forests regardless of their land's location or its long-term benefit to the watershed. The Gund Institute's ecosystem services computer model is now helping Costa Rica identify exactly which areas should be targeted for conservation. The same goes for other ecosystem services performed by forests, such as biodiversity protection and carbon sequestration, which slows the effects of global warming.

Similarly, the state of New Jersey was recently involved in a lawsuit in which the judge ruled, in effect, that natural areas have no intrinsic value and only increase in value when they are developed. The state disagreed, but didn't have a methodology to show the court exactly what those areas were worth in economic terms. In response, the New Jersey Department of Environmental Protection hired the Gund Institute to help measure the state's natural capital and quantify the value of all its ecosystem services. The recently completed project gives the state a powerful new tool for assessing the true costs and benefits of proposed developments, from strip malls to condominiums to new arboretums.

Thus far, the project planners haven't determined what should be the smallest area on which to place a value. Says Moulaert, "The price of an ivory-billed woodpecker or an endangered turtle is not in there. But the prices of their ecosystems are." Likewise, there isn't a monetary value for a hive of honeybees, though there is one for the ecosystem service of pollinating gardens and farmlands.

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Assigning a dollar value tO ecosystem services isn't a new idea, Costanza notes. In the past, most valuations of nature were based on the concept of the public's "willingness to pay." Researchers would ask people how much they'd be willing to invest in a particular service. Some ecosystem services aren't difficult to conceptualize in monetary terms. For example, people can estimate what they'd be willing to pay to hike the Long Trail or visit Adirondack Park.

But other ecosystem services are far too technical or abstract for most laypeople to assign them a meaningful value. It would be hard for residents of, say, a low-lying coastal area to fully estimate the value of a hectare of wetlands that protects them from hurricane storm surges. Even harder would be assessing the value of such services as "nutrient cycling" and "soil formation," which are beyond most people's understanding even if they indirectly benefit from them.

To tackle these and other issues, in October the Gund Institute will bring experts to Burlington from around the world to participate in a weeklong conference to discuss this valuing process. By 2007, the goal is to have mapped the entire planet and have a working computer model that anyone can access online. For an idea of what that might look like, says Costanza, "think Google Earth."

Ultimately, anyone involved in land-use planning will be able to download the Gund Institute's data and computer models, enter a zip code or other geographic description, and then calculate the current value of their own region's various ecosystem services, based on how similar ecosystems are valued. As in the human marketplace, the values of those natural areas will fluctuate based upon the abundance or scarcity of similar ecosystems.

Academically, the idea isn't as radical or controversial as it might seem, Costanza argues, since economists have long acknowledged the concept of externalities. "It's just politically controversial because you're now saying, 'Here's something that you've been getting for free. This is something you've been stealing from the public, and now you've got to pay for it,'" he adds.

And, as Moulaert points out, such modeling could also be useful for scrutinizing environmentalists' own proposed solutions to problems. For example, evaluating the ecological feasibility of biodiesel by factoring all of its benefits and costs into the equation. Likewise, such a system could be used to create "ecological tax reform," in which those human activities that benefit the ecosystem are rewarded and those that harm it are discouraged.

"Right now, people are not getting any positive benefit for the services their ecosystems are providing," Costanza notes, "and they're not paying the cost of the damages to other people's ecosystems."

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The Gund Institute was originally founded in 1991 as the Institute for Ecological Economics at the University of Maryland. In 2002, it was moved to UVM's Rubenstein School of Environment and Natural Resources and renamed the Gund Institute, after its major benefactors, the Gund family of Cleveland, Ohio.

The Gund Institute has a unique relationship with UVM, in that its faculty aren't appointed to the Institute itself but are affiliated with other departments all around the university. The goal, Costanza explains, is to "build bridges" among the various disciplines at the university, while offering classes that are largely problem-solving endeavors and not simply "ivory-tower" exercises.

For example, the Gund Institute held a two-week course entitled "Earth Inc." in which students at UVM and Vermont Law School evaluated the planet as though it were a corporation, created bylaws and articles of incorporation, then discussed the current state of the corporation's "assets" -- its air, water, forests, soil, oceans, etc. Eventually, Earth Inc. will write a shareholders' report. As Costanza told the magazine Adbusters in September 2004, if Planet Earth truly were a corporation, "We would definitely fire the CEO."

Ultimately, the ecosystem services project will provide a comprehensive cost-accounting system for such a corporation, which, unlike current economic models, is fully transparent and won't send Earth Inc. the way of Enron.

Castro The Conservationist?

Recently, National Geographic published an article by Stefan Lovgren entitled 'Castro the Conservationist? By Default or Design, Cuba Largely Pristine'. While I am uncertain of the specifics concerning communism and conservation, the general idea that slower economic growth causes less environmental degradation is an interesting predicament. The ecologist in me tends to think that current economic models for capitalism are failing to preserve finite resources. Despite the incredible force of market power, the markets are incapable of success with inaccurately valued finite resources. With this in mind, free markets have incredible capabilities--far more than communist systems--that can also preserve natural resources if set up to do so.

David Ricardo noted a deficiency with respect to valuing nature, “where she is munificently beneficent she always works gratis.” Markets must pay back nature if there is ever to be hope of obtaining a soft landing for the economic transition towards sustainability. The transition towards sustainable development will soften growth in the economy. This seems necessary if the value of natural resources and commidities is increased. However, the benefits for certain sectors of the economy focussed on sustainable energy will likely experience exponential growth. Also, the negative externalities of wasteful consumption (i.e. air pollution and asthma) will decrease.

I am very interested in what others think of sustainable development and global markets. Please send me your thoughts or feel free to post a comment. Here are some excerpts from the article:

Will Cuban President Fidel Castro be remembered primarily as a man of the people, an authoritarian tyrant—or a conservationist?
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Some experts say his environmental policies may be among his greatest achievements.

Though Cuba is economically destitute, it has the richest biodiversity in the Caribbean. Resorts blanket many of its neighbors, but Cuba remains largely undeveloped, with large tracts of untouched rain forest and unspoiled reefs (map of Cuba). The country has signed numerous international conservation treaties and set aside vast areas of land for government protection. But others say Cuba's economic underdevelopment has played just as large a role.

Since the collapse of the Soviet Union—its main financial benefactor—Cuba has had to rely mostly on its own limited resources. It has embraced organic farming and low-energy agriculture because it can't afford to do anything else. And once Castro is gone, the experts say, a boom in tourism and foreign investment could destroy Cuba's pristine landscapes.

"I think the Cuban government can take a substantial amount of credit for landscape, flora, and fauna preservation," said Jennifer Gebelein, a professor at Florida International University in Miami who studies environmental issues in Cuba.

More than 20 percent of Cuba's land is under some form of government protection. The island's wetlands have been largely shielded from pesticide runoff that has destroyed similar areas in other countries. And since Castro seized power in 1959, logging has slowed significantly. Forest cover has increased from 14 percent in 1956 to about 21 percent today.

In addition, the more than 4,000 smaller islands surrounding the main island are important refuges for endangered species. The coastline and mangrove archipelagos are breeding grounds for some 750 species of fish and 3,000 other marine organisms.

Because Cuba's tourist industry has not developed quickly in regard to reef exploitation, the reefs have been spared the fate of Florida's reefs, for example," Gebelein said. At about 1.5 million acres (600,000 hectares), the Ciénaga de Zapata Biosphere Reserve is Cuba's largest protected area and has been designated a "Wetland of International Importance" by the Ramsas Convention on Wetlands in 1971. "The Zapata Swamp is the Caribbean's largest and most important wetland," said Jim Barborak, who is based in San Pedro, Costa Rica, and heads the protected areas and conservation corridors program for Conservation International.

Originally, Cuba was in the Pacific Ocean, not the Caribbean Sea. Continental drift slowly brought the island into the Caribbean some 100 million years ago, and an astonishing variety of life emerged.

"Cuba has tremendous biological diversity," Barborak said. "The levels of plant endemism—unique species limited to Cuba—is particularly high, especially in highland ecosystems in eastern Cuba." More than half of Cuba's plants and animals, and more than 80 percent of its reptiles and amphibians, are unique to the island.

Endemic birds include the Cuban trogon, the Cuban tody, and the Cuban pygmy owl. The world's smallest bird, the bee hummingbird—which weighs less than a U.S. penny—is found there. "Important populations of many North American migratory birds, whose declining populations require international action to conserve both breeding and wintering grounds, spend much of the year in Cuba," Barborak said.

Cuba is only one of two nations with a primitive mammal known as a solenodon, a foot-long (0.3-meter-long) shrewlike creature.

The island also has a great diversity of giant lizards, crocodiles, and tortoises.

A key player in Cuba's green movement has been Guillermo García Frías, one of five original "comandantes" of the 1959 Cuban revolution. A nature lover with strong ties to Castro, García has pushed for a strong environmental ethic for a generation of scientists and government officials. "Comandante García's enthusiasm for nature conservation has been critical to the successful development of a conservation infrastructure in Cuba," said Mary Pearl, president of the Wildlife Trust in New York City.

Cubans are leaders in biological research, with thousands of graduates from the country's ten universities and institutes devoted to work in ecology. "The country has the best intellectual infrastructure for wildlife conservation in the Caribbean," Pearl said.

Economic Overview

This week, The Economist published an overview of the previous weeks economic headlines. Here are the overviews:

Economic and financial indicators
America's Federal Reserve held its benchmark interest rate at 5.25%, marking its first pause in two years of tightening. Meanwhile, productivity growth slowed: output per hour rose at an annual pace of 1.1% in the second quarter, compared with 4.3% in the first. As a consequence, unit labour costs outstripped expectations, rising by 4.2%, at an annualised rate, in the second quarter, up from 2.5% in the previous quarter.

American job growth was weaker than expected in July. Employers (excluding farms) added 113,000 jobs to the payrolls, and the unemployment rate rose to 4.8%, from 4.6% in June.

In Japan core machinery orders increased by 8.9% in the second quarter, signalling future capital spending. Bank lending rose by 2.2% in the year to July. It was the fastest increase in more than ten years.

Germany's industrial production declined by 0.4% in June, after a 1.5% gain the month before. The country chalked up a merchandise trade surplus of €13.3 billion ($16.8 billion) in June. In June 2005 the surplus was €16.7 billion.

In Britain industrial production fell by 0.2% in the second quarter, despite an increase of 0.6% in manufacturing output. The country's trade deficit in goods and services narrowed to £4 billion ($7.4 billion) in June, from £4.7 billion in May.

Emerging-market indicators
China's trade surplus reached a record $14.6 billion in July, surpassing June's total of $14.5 billion. Exports grew by 23% in the year to July.

Indonesia's central bank cut its key interest rate by half a percentage point to 11.75%, after a quarter-point trim in May and another in July. Thanks to surprisingly low inflation so far this year, it is confident it can meet its inflation target of 7-9% for 2006.

National Oil Companies

On August 10th 2006, The Economist wrote an article entitled 'Really Big Oil'. Here are some excerpts:

When activists, journalists and others speak of “Big Oil”, you know exactly what they mean: companies such as Exxon Mobil, Chevron, BP and Royal Dutch Shell. These titans have been making lots of money for their shareholders; their bosses enjoy vast pay packets; and their actions affect us all. BP's decision to shut down Prudhoe Bay, America's biggest oilfield, to repair leaking pipes is a case in point, outraging many and pushing petrol prices even higher.

Yet Big Oil is pretty small next to the industry's true giants: the national oil companies (NOCs) owned or controlled by the governments of oil-rich countries, which manage over 90% of the world's oil, depending on how you count. Of the 20 biggest oil firms, in terms of reserves of oil and gas, 16 are NOCs. Saudi Aramco, the biggest, has more than ten times the reserves that Exxon does. Those with misgivings about oil—that its price is too high, that reserves are running out, that it damages the environment, that it is more a curse than an asset for countries that produce it—must look to NOCs for reassurance.
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The easiest way to improve state oil firms' performance would be to privatise them. The authorities, no longer torn between nurturing their NOCs and milking them for all they are worth, could concentrate on maximising their oil revenue through taxes and royalties. Failing that, governments could instil a little market discipline by subjecting their NOCs to competition, either by encouraging them to expand abroad or by allowing foreign firms some access to their home territory. At least, they should grant NOCs operational autonomy, and allow them to retain and invest some portion of their earnings. The less bureaucrats interfere, after all, the more money their oil companies will generate for them to spend.

Hunting To Protect?

I haven't read such an ironic article for quite some time. Here are some excerpts from the article by Reuters via Environmental News Network

China is to auction licences to foreigners to hunt wild animals, including endangered species, a newspaper said on Wednesday.

The government would auction licences based on types and numbers of wild animals, ranging from about $200 for a wolf, the only carnivore on the list, to as much as $40,000 for a yak, the Beijing Youth Daily said.
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Hunting of animals is popular with Chinese who like to eat exotic meats or use animal parts in medicines for their perceived aphrodisiac or medicinal properties.

But the hunting licences would be available only to foreigners, given China's strict rules on gun control, the daily said.
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Proceeds from the auction would be used for wild animal protection, the report said.

Bigger, Older Universe?

CNN recently published an article entitled 'Universe bigger, older than expected'. While slightly off topic, I found it extremely interesting. This study has obviously not been highly corroborated as of yet, but it is an interesting study that could shake things up a little bit. Here is the beginning:

A project aiming to create an easier way to measure cosmic distances has instead turned up surprising evidence that our large and ancient universe may be even bigger and older than previously thought.

If accurate, the finding would be difficult to mesh with current thinking about how the universe evolved, one scientist said. A research team led by Alceste Bonanos at the Carnegie Institution of Washington has found that the Triangulum galaxy, also known as M33, is about 15 percent farther away from our own Milky Way than previously calculated.

The finding, which will be detailed in an upcoming issue of Astrophysical Journal, suggests that the Hubble constant, a number that measures the expansion rate and age of the universe, is actually 15 percent smaller than other studies have found.

Currently, most astronomers agree that the value of the Hubble constant is about 71 kilometers per second per megaparsec (a megaparsec is 3.2 million light-years). If this value were smaller by 15 percent, then the universe would be older and bigger by this amount as well. Scientists now estimate the universe to be about 13.7 billion years old (a figure that has seemed firm since 2003, based on measurements of radiation leftover from the Big Bang) and about 156 billion light-years wide. The new finding implies that the universe is instead about 15.8 billion years old and about 180 billion light-years wide.

Chiquita & Rainforest Alliance

Throughout the past 10 years or so of my life, I have tried to support companies and causes that I agree with. For instance, if given the choice between some delicious Pillsbury cookie dough or some equally delicious Nestle cookie dough, I always choose the Pillsbury.

Nestlé has been accused by supporters of the boycott of unethical methods of promoting infant formula over breast-milk to poor mothers in third world countries. One major issue is passing out free powdered formula samples to mothers in hospitals. After leaving the hospital, these mothers' breasts will have ceased to produce milk due to the substitution of formula feeding for breastfeeding. This forces the continued use of formula, which can contribute to malnutrition, and under worsened sanitary conditions with contaminated water, often leading to diarrhea (Nestle boycott)

Chiquita is another company that I have not supported financially for almost 10 years; ever since the Cincinnati Enquirer article 'Chiquita Secrets Revealed'. However, after reading an article by CNN Business 2.0 entitled 'Chiquita cleans up its act' I now believe that I should reconsider my stance. Here are some excerpts:

For more than a century, the banana producer was nobody's idea of a role model. Now it's forging new ground in corporate responsibility.

At first, Dave McLaughlin didn't tell his bosses at Chiquita that he was talking to environmentalists, much less taking their suggestions. After all, the banana company's executives so mistrusted the "greens" that meetings with them often turned into shouting matches. "They would sit at opposite ends of the table," McLaughlin says.

But what began as a dialogue between McLaughlin, then a Chiquita general manager in Costa Rica, and the nonprofit Rainforest Alliance has since cleared a path toward a companywide transformation. Starting in 1992, McLaughlin essentially used his two Costa Rican farms as test beds to rein in environmental abuses.

Those changes - and their impact on the bottom line - persuaded Chiquita in 1996 to allot $20 million to overhaul the environmental and employment standards at all of its 127 farms, which employ 30,000 workers in seven Latin American countries. With McLaughlin recently appointed Chiquita's senior director of environmental and social performance, the company is becoming a study in corporate responsibility, rather than a counterexample.
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Today all 110 of Chiquita's company-owned farms and the vast majority of its independent farms are certified by the Rainforest Alliance. Chiquita now recycles 100 percent of its plastic bags and twine and has reduced pesticide use by 26 percent.

Though the improvements in working conditions aren't nearly as dramatic, things are getting better for Latin American employees, who can now join unions. Disputes with Honduran labor unions in late November prompted Chiquita to spend two days renegotiating the workers' contracts.

Sustainability Rankings

SustainLane has a great article on the 50 largest U.S. cities and how each ranks for their overall sustainability. "Hallmarks of sustainable cities include a commitment to public health, an emphasis on creating a strong local economy, and citizens and city officials working together to make positive, thoughtful choices for the long-term benefit of the city and its residents" I found it quite interesting that I currently live in Columbus (#50) and will soon be moving either to Berkeley (near San Francisco which is #2) or Portland (#1). I highly recommend checking out this link.

Economic Overview

This week, The Economist published an overview of the previous weeks economic headlines. Here are the overviews:

Economic and financial indicators
America's GDP grew at an annual rate of 2.5% in the second quarter, down from 5.6% in the first. The Federal Reserve's preferred measure of inflation—the price index for core personal consumption expenditures—rose by 2.4% in the year to June, too fast for comfort. There was better news in the Institute for Supply Management's index of manufacturing, which gave a reading of 54.7 in July, up from 53.8 the month before. And despite a weakening housing market, construction spending grew by 0.3% in June thanks to strong non-residential building.

Industrial production in Japan increased by 1.9% in June, surpassing expectations. Output was 4.8% higher than a year before. The average price of a square metre of land rose by 0.9% from a year earlier. In Tokyo it went up by 5.4%.

In the euro area, annual consumer-price inflation remained at 2.5% in July, according to first estimates. Unemployment fell to 7.8% in June, seasonally adjusted, from 7.9% in May. In Germany, unemployment fell to 10.6%, also seasonally adjusted, on the federal labour office's measure, the lowest rate in almost two years.

Australia's central bank raised interest rates by a quarter of a percentage point to 6%, a 5½-year high. This was its second increase in four months. Annual inflation was 4% in the second quarter, pushed up by higher prices for petrol and fruit.

Emerging-Market Indicators
Industrial production expanded by 10.9% in South Korea, 6.1% in Thailand and 2.3% in Chile in the year to June. In the Philippines and Indonesia, however, industrial production contracted by 5.4% and 1.6% respectively in the year to May.

In India, annual inflation was 7.7% in the year to June, much faster than the 6.3% recorded in May. In Indonesia, consumer prices rose by 15.2% in the year to July.

Carbon Sequestration On Farms

After reading the previous post by The Economist, I felt it lacked depth on a few topics. Most notably their quote that "One popular sort [of offsetting carbon] involves planting trees, which remove carbon from the atmosphere as they grow; but this approach is now somewhat discredited, since the carbon may be released again when the trees are cut down." Has this really discredited anything? Was the science community ever under the impression that trees store, or sequester, the majority of the carbon after they die and decompose?

I have become slightly flustered recently by perspectives on global warming that fail to address the issue of pollution as a negative externality even without global warming. While I enjoyed The Economist article, I found this article by Jan Lewandrowski & Carol Jones refreshing and informative regarding the economic feasibility of carbon sequestration in agriculture. Here is the article:

Increased atmospheric concentrations of carbon dioxide and other “greenhouse” gases have contributed to the gradual rise in global temperatures over the last 50 years. Two options for reducing the amount of carbon in the atmosphere are to increase the amount of land planted with permanent grassland or forest vegetation and to reduce the frequency or intensity of tillage operations. Either option would store—or sequester—additional carbon on the affected lands. In February 2002, the White House announced a plan to reduce the growth of U.S. greenhouse gas emissions, in part by developing incentives for farm and forestland owners and operators to adopt land uses and management practices that extract carbon from the air and sequester it in soils and vegetation.

U.S. agricultural soils have lost, on average, about one-third of the carbon they contained before wide-scale cultivation began in the 1800s. Soil science studies suggest that changes in land use and land management practices could increase the carbon content of crop and grazing land soils by 104-318 million metric tons per year. Forestry studies suggest that afforestation of cropland and pasture could add another 91-203 million metric tons per year.

While the U.S. farm sector’s technical potential to store carbon is important to know, it is really the economic potential for storing carbon that is most directly relevant to policymakers. Using different incentive payment structures, ERS researchers analyzed the economic feasibility of increasing carbon levels in soils and vegetation by providing various levels of payments to convert croplands and pasture to trees, shift cropland to permanent grasses, and/or increase the use of conservation tillage systems.

At payment levels below $10 per metric ton of additional permanently stored carbon, landowners find it more cost-effective to adopt conservation tillage practices, as compared with other changes to land use and management practices. At higher payment levels, converting cropland to trees becomes more cost effective. For payments equal to $125 per metric ton of additional permanently stored carbon, farmer adoption of conservation tillage and afforestation of crop or grazing land could yield 72-160 million metric tons of carbon, enough to offset 4-8 percent of gross U.S. emissions of greenhouse gases in 2001. Converting cropland to grass did not prove to be a cost-effective option at any payment level analyzed.

The economic potential, even at the $125-payment level, is much less than the technical potential suggested by soil science and forestry studies because activities that are technically feasible are not always economically feasible. Furthermore, the share of the technical potential that is economically feasible varies greatly across activities because of the wide variation in the costs farmers would incur in adopting different carbon-sequestering land uses and practices.

Sins Of Emission

Here are exceprts from an interesting article in this weeks The Economist

The idea of offsetting carbon emissions is sound in theory, if not yet in practice.

The sale of indulgences by the Catholic church in the early 16th century, whereby people could, in effect, purchase forgiveness of past sins by handing over enough money, was condemned by Martin Luther and other reformers. Today, some environmentalists are denouncing the “offsetting” of carbon emissions in similar terms. A company that wants to declare itself “carbon neutral” calculates how many tonnes of carbon it emits, and then offsets the emissions by paying someone else not to emit that amount of carbon on its behalf. Just as Luther criticised indulgences, critics of offsetting argue that the ability to buy retrospective forgiveness for sins of emission is no substitute for not sinning in the first place.

Carbon offsets have two main purposes. One, as with indulgences, is to assuage guilt. Carbon offsetting allows consumers to quell their eco-guilt even as they jet off to distant climes on holiday, and drivers of sports-utility vehicles to argue that they have atoned for the emissions produced by their gas-guzzling cars. A second purpose is image-polishing: companies that declare themselves carbon neutral may well have public-relations as well as environmental benefits in mind.

To fulfil those purposes, carbon offsets do need to reduce carbon emissions. Existing schemes are far from perfect. One popular sort involves planting trees, which remove carbon from the atmosphere as they grow; but this approach is now somewhat discredited, since the carbon may be released again when the trees are cut down. Another problem with offset schemes is the lack of standards: can you really trust those who promise to eliminate emissions elsewhere on your behalf?
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Despite such flaws, however, the idea of carbon offsets is a good one. Establishing markets in which carbon emissions can be traded and offset is a good idea, since market forces then provide financial incentives for people to find the cheapest ways to reduce or eliminate emissions. The lack of standards is also being addressed. Various bodies are creating standards and inspection regimes that will allow buyers of carbon offsets to feel confident that they really are getting what they pay for. And many firms are embracing voluntary offsetting now in the expectation that compulsory carbon trading will soon be imposed upon them anyway.

Yet as the nascent carbon-offsetting industry starts to take shape, a new problem is emerging. Some of the non-governmental organisations that are drawing up carbon-offset standards require emissions to be cut in particular ways: after due consultation with local people, for example, or using particular favoured technologies. Such considerations are irrelevant: the only thing that should matter in offset schemes is that emissions should be cut. Politicising offsets risks discrediting an approach that deserves to be taken seriously. And that really would be a sin.

Safe Climate Act vs. Blunt

Energy and Environment Daily recently published the viewpoints of House Majority Whip Roy Blunt (R-MO) on global climate change. If he remains in power after the November elections, there will be no action on global warming for the entire 110th Congress (January 2007 to January 2009)! Here is a quick snippet:

Continued Republican House and Senate majorities would likely mean more of the same on climate. House Majority Whip Roy Blunt (R-Mo.) said he would oppose global warming mandates if Republicans control the 110th Congress. “I think the information is not adequate yet for us to do anything meaningful,” he said.

Fortunately, some (61 co-sponsors) of the House of Representatives members plan to say "yea" for the Safe Climate Act and are less ignorant of the corroboration within the scientific community regarding global warming (i.e. Intergovernmental Panel on Climate Change or Royal Society). I view this act as a positive step towards sustainable development. This link, via Grist Magazine, is a great example of how incremental policies--like the Safe Climate Act--can promote sustainable development.

EnviroMission Solar Tower

The world's first 'solar tower' is in the works for the Australian outback in the Buronga district of Wentworth Shire in New South Wales (NSW) and 25km north east of Mildura in Victoria. This 50MW tower at Tapio Station is just the beginning. Once the 200MW solar tower stations are commercialized in late 2007 or early 2008,

the energy output will represent an annual saving of more than 900,000 tonnes of greenhouse CO2 gases from entering the environment, with an outstanding Life Cycle Analysis of 2.5 years
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EnviroMission’s Solar Towers are proposed to generate electricity 24-hours a day. The power station will be at its most efficient on the hottest days when energy is most needed and peak prices are paid for electricity.

Re-radiation of heat present in the ground under the collector zone will provide the energy source during the night. This special feature enhances the commercial viability of the power station and gives EnviroMission a consistent competitive advantage over other forms of renewable energy generation(EnviroMission).

Here is an excerpt from an article by Todd Woody of CNN Business 2.0:

It's a dead-calm antipodean winter's day, the silence of this vast ranch called Tapio Station broken only by the cry of a currawong bird. Davey, chief executive of Melbourne renewable-energy company EnviroMission, aims to break ground here early next year on the world's first commercial "solar tower" power station.

"The tower will be over there," Davey says, pointing to a spot a mile distant where a 1,600-foot structure will rise from the ocher-colored earth. Picture a 260-foot-diameter cylinder taller than the Sears Tower encircled by a two-mile-diameter transparent canopy at ground level. About 8 feet tall at the perimeter, where Davey has his feet planted, the solar collector will gradually slope up to a height of 50 to 60 feet at the tower's base.

Acting as a giant greenhouse, the solar collector will superheat the air with radiation from the sun. Hot air rises, naturally, and the tower will operate as a giant vacuum. As the air is sucked into the tower, it will produce wind to power an array of turbine generators clustered around the structure.

The result: enough clean, green electricity to power some 100,000 homes without producing a particle of pollution or a wisp of planet-warming gases.

"We're aiming to be competitive with the coal people," says Davey, 60. "We're filling a gap in the renewable-energy market that has never been able to be filled before."

And although its final dimensions are still being tweaked, the 50-megawatt Tapio Station plant is just the small model: A half-mile-tall version is in the works for China, and EnviroMission is scouting sites in the American Southwest for other possible skyscraping power plants.

Illegal Externalities?

Excerpts from an article entitled 'As world warms, legal battles loom' by Reuters:

Heatwaves, droughts and rising seas are likely to spur a spate of hard-to-prove lawsuits in the 21st century as victims seek to blame governments and companies for global warming, experts say. Pacific islanders might sue to try to prevent their low-lying atolls from vanishing under the waves, African farmers could seek redress for crop failures or owners of ski resorts in the Alps might seek compensation for a lack of snow.

"If the evidence (that humans are warming the globe) hardens up, as it may well do, then it has all the ingredients of the tobacco case," said Myles Allen, of the physics department of the University of Oxford in Britain. But convincing a judge that a country or a company is liable for a fraction of a global problem caused by greenhouse gases -- the effects of which are widely disputed -- may be difficult.

"The legal profession is only now penetrating these issues," said Roda Verhaugen, co-director of the Climate Justice group which mainly advises plaintiffs. "There have been no large awards of damages but there are an increasing numbers of cases."
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The 10 warmest years since records began were all since 1990, and scientists who advise the United Nations project that rising temperatures could cause wrenching changes by 2100.
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And some damage could be more easily linked to rising temperatures than others, he said. "Sea level rise, melting of glaciers and the early flowering of plants are direct responses to higher temperatures," he said. "But other impacts, such as storm damage from hurricanes, are far more controversial." The United States is the target of most litigation because it produces a quarter of all greenhouse gases. President George W. Bush pulled out of the Kyoto Protocol in 2001, the U.N. pact meant to limit greenhouse gases. Bush said Kyoto wrongly omitted poor nations from its first goals for 2012 and would cost U.S. jobs.
Experts say companies complying with all laws in the countries where they operate may still be liable to lawsuits.

Firms in the European Union, for instance, are curbing emissions under Kyoto while U.S. firms face no mandatory caps. A European Commission official said: "EU member states' governments do certainly not take over liability for claims for industries participating in the (emissions trading) scheme even if they were to arise."

Last year, a U.S. court threw out a petition by eight states and the City of New York to order caps on carbon emissions by power generators American Electric Power Co. Inc., Southern Co., Xcel Energy Inc., Cinergy Corp. and the Tennessee Valley Authority public power system. A New York district court judge said it was a political issue for the President or Congress to decide.

The U.S. Supreme Court has separately agreed to decide whether a dozen states, three cities and several environmental groups can force the U.S. government to regulate car and truck emissions of carbon dioxide. Among other climate-related efforts, Inuit people in the Arctic have petitioned a branch of the Organization of American States to brand global warming a form of human rights abuse undermining their hunting culture.

China, WTO, & Environment

The State of the World is a grand title for an annual publication; a title that many authors or organizations would be incapable of writing about. The Worldwatch Institute is that rare organization with the ability to accurately assess the facts of so many complex issues. The 'State of the World 2006: China and India' is a wonderfully informative book. A GlobeScan survey of sustainability experts ranked these books as the "Top-rated annual publication on sustainable development." Here is an article from page 139 entitled 'China, the WTO, and the environment'

In 2004, a high-level group of Chinese and international scholars released a detailed assessment of the environmental impacts of China's 2001 accession to the WTO, covering a number of key sectors. The results, some of which are surveyed here, underline an important message: trade's impacts on the environment are not straightforward.

In agriculture, trade liberalization has meant a dramatic shift away from resource-intensive crops such as wheat and rice (since China's water and energy resources are scarce) and toward labor-intensive sectors such as vegetables and horticulture (since labor is plentiful). China is now for the first time a net importer of wheat. The result is predicted to be a lowered use of water, pesticides, and chemical fertilizers in China: a positive structural effect. Of course, the net global effect will depend on the production methods in the countries now exporting wheat and rice to China.

WTO accession has brought a dramatic expansion of aquaculture exports as investment barriers drop and domestic investment shifts from traditional agriculture to new areas. This has meant increased severity of a number of associated environmental problems: eutrophication in coastal waters, destruction of seagrass and mangroves (used as breeding grounds for marine fish stocks), and marine deposition of antibiotics and other chemicals used in aquacultural production. Aquaculture's growth is suspected of contributing to toxic red tides; while the "normal" incidence is around 10 per year, there were 10 times that many in 2003.

Trade liberalization has slashed automobile prices in China by dismantling trade and investment barriers and forcing domestic efficiencies. This, added to the increased income generated by growth from trade, has meant an explosion of automobile production, with almost 40 percent growth in 2002 and 35 percent in 2003. This threatened to greatly increase pollutants such as carbon monoxide, nitrous oxides, and particulates; in response, the government adopted stringent European Union standards for automobile emissions. The result has been a substantial drop in emissions per vehicle, but the overall drop has been undercut by the sheer numbers of increased vehicles on the road: the scale effect.

Trade liberalization has meant a vastly increased Chinese energy demand, in part the result of increased manufacturing and growing affluence. Projections see that demand more than tripling by 2030. Coal--among the most polluting fuels--will decrease in prominence but will still dominate the energy mix. The result will be a steady and significant increase in pollutants such as sulfur dioxides, nitrous oxides, particulates, and carbon dioxide: again, the scale effect at work.

WTO accession has meant a significant increase in textile production in China, as quotas in export markets were lifted. It was predicted that in the four years following WTO accession (to 2005), the production of sewage discharged from textile production would increase by 960 million tons, or 90 percent, compared with 36 percent without WTO accession. The most serious problems with this effluent are polluting dyes and increased chemical oxygen demand. Water and power use are also predicted to expand dramatically. These scale impacts will be somewhat offset by improvements in technology brought by foreign investment; pre-WTO technology in this sector was extremely wasteful and polluting by international standards.

Senator Chafee Debate

On August 4th 2006, Paul Krugman of The New York Times wrote an interesting article with his opinions on the Sierra Club and their support of Senator Lincoln Chafee, Republican of Rhode Island, for re-election. Here is part of the article entitled 'Centrism Is For Suckers':

The Sierra Club’s executive director defended the Chafee endorsement by saying, “We choose people, not parties.” And it’s true that Mr. Chafee has usually voted with environmental groups.

But while this principle might once have made sense, it’s just naïve today. Given both the radicalism of the majority party’s leadership and the ruthlessness with which it exercises its control of the Senate, Mr. Chafee’s personal environmentalism is nearly irrelevant when it comes to actual policy outcomes; the only thing that really matters for the issues the Sierra Club cares about is the “R” after his name.

Put it this way: If the Democrats gain only five rather than six Senate seats this November, Senator James Inhofe, who says that global warming is “the greatest hoax ever perpetrated on the American people,” will remain in his current position as chairman of the Senate Environment and Public Works Committee. And if that happens, the Sierra Club may well bear some of the responsibility.

Here is part of the response from Sierra Club Executive Director, Carl Pope:

The value of the Sierra Club's endorsement -- to environmentally concerned independents, Republicans, and Democrats alike -- is that it tells voters where a candidate stands on values they cherish. If a voter wants to know who the Democrat is in a race, they don't need the Sierra Club to tell them. Our job is to reward conviction, applaud leadership, and promote progress made in cleaning up the air and water and in preserving our wild lands and wildlife -- no matter which side of the aisle we find it on.

Indeed, in political races all over the country where the Sierra Club happens to be endorsing Democrats who share Lincoln Chafee's values on the environment, right-wing campaign managers have tried to blunt the power of our message by saying that we are simply "a knee-jerk arm of the Democratic party." Paul Krugman, ironically, would like us to make the jobs of these people easier.

And to set the record straight -- because of the committee seats he holds and the influence that he wields as a member of the Republican majority -- Senator Chafee has been extremely effective in stopping President Bush's polluting "Clear Skies" plan and in blocking efforts to weaken the Clean Air Act and the Endangered Species Act.

At the Sierra Club, we value performance above party affiliation. We stand up for the people who have stood up for us and for the environment. And we are proud to stand with, and behind, Senator Chafee.

Water Wars

On August 2nd 2006, Reuters published an article entitled 'Where Are the World's Looming Water Conflicts?' Five areas are discussed and I have chosen the one I found most interesting. Here is the excerpt on Egypt, Sudan and Ethiopia via the Environmental News Network.

- The Nile, the world's longest river, is the main source of water for nine countries in the Nile basin: Egypt, Sudan, Ethiopia, Kenya, Uganda, Tanzania, Rwanda, Burundi and Congo.

- Eygpt and Sudan's 1929 Nile Waters Agreement, which divided up water use, is now being challenged.

- Ethiopia, where some 80 percent of the Nile's waters originate, said last year that it wants to take more water. It accuses Egypt of blocking overseas aid for irrigation projects. Egypt says calls for change amount to a "declaration of war".

- In July 2006 a Nile Water steering committee met to discuss Ugandan and Tanzanian plans to use Nile waters in massive hydro-electric power stations and irrigation projects.

These countries have some of the fastest growing populations in the world. Their economies have many glitches, but assuming that at some point in the future they figure them out, Egypt's in trouble. As industrialization becomes more prevalent, the longest river in the world will likely become unsustainably consumed. How will Egypt respond to more polluted and less diluted water?

Opponents Of Evolution

On August 2nd 2006, The New York Times published an article by the Associated Press entitled 'Evolution Opponents Lose Kansas Board Majority'. I recommend checking it out. It got me a little flustered so here are some thoughts I have on the debate.

The evolution debate concerns the four mechanisms of evolution: gene flow, genetic drift, natural selection & mutation. I always find this debate interesting. To quote Sir John Houghton,

One of the most important statements you can make as a scientist is: I don't know. One of the most important statements you — you should be prepared to make as a believer is: I don't know.

Biology cannot prove. Evolution can only be highly corroborated through repeatable research that can be observed by different individuals.

I ask all of those who believe that evolution is 'just a theory' to stop all contradictory behavior and discontinue their annual vaccines (to fight off newly mutated viruses). After all, many microevolutionary events turn into macroevolutionary events if given enough time (i.e. it took 6,000,000 years -- or > 300,000 generations of diverging populations -- for the differences observed today between chimpanzees and humans). And yet I still manage to share blood type with many chimpanzees and not with many humans! Anyways... there should be debate about evolution, such as punctuated equilibrium vs. gradualism. However, intelligent design is not science and should not be taught in science classrooms.

One would have expected the past 147 years to have produced enormous amounts of data concerning the evolution debate, and it has. For instance, DNA has provided unrelenting support for the theory of evolution. Scientists cannot prove; however, to ignore the overwhelming evidence in support of evolution is irrational. To question the validity of evolution, you must question the reality of the evidence supporting evolution. Thus far, the objective scientific method has concluded that evolution is worthy to be considered a theory. To argue against evolution, is to argue against the scientific method.

If the debate is about the subjectivity of reality depending on the perspective or the constraints of any given methodology, then I agree that human reason is inherently flawed. However, this applies to every aspect of knowledge, including spiritual, that we consider to be real. George Berkeley once said,

Nothing seems of more importance, towards erecting a firm system of sound and real knowledge, which may be proof against the assaults of scepticism, than to lay the beginning in a distinct explication of what is meant by thing, reality, existence: for in vain shall we dispute concerning the real existence of things, or pretend to any knowledge thereof, so long as we have not fixed the meaning of those words.

The beauty of science is that we can never know it all.

Related post: 'Medicine Needs Evolution'

Unprecedented Conservation

The USA Today recently published an article by Nick Jans entitled ''A beginning' for conservation'. Unprecedented conservation will forever be part of President Bush's legacy. "Hard to believe... in the past four months -- 654,000 square miles of ocean bottom, more than twice the size of Texas -- represent, in total area, the largest act of conservation in our nation's history, and arguably the world's."

Like me, you probably missed the announcement by the National Oceanic and Atmospheric Administration (NOAA) in March that closed more than 135,000 square miles of ocean floor off the West Coast to commercial bottom trawling. Maybe, though, you caught President Bush last month designating another 140,000 square miles around the northwestern Hawaiian islands as a national monument, closed to all fishing. CNN considered it a newsworthy, though definitely second-tier, sound bite.

Now, raise your hand (no fibbing) if you caught the NOAA Fisheries proclamation in late June that protected 379,000 additional square miles of ocean floor around Alaska. Even on a slow news day, that one was branded a snoozer.

Hard to believe, considering those three closures of federal waters in the past four months — 654,000 square miles of ocean bottom, more than twice the size of Texas — represent, in total area, the largest act of conservation in our nation's history, and arguably the world's. Consider that the entire area protected by our national parks, national forests and grasslands amounts to roughly 420,000 square miles.
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And so what?

OK, so a bunch of ocean floor is getting protected. Not like we'll ever vacation there. Land-borne, oxygen-sucking critters that we are, the virtually unexplored terrain that lies far beneath the waves might as well be Mars. Why should we care?
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"People overwhelmingly said they wanted clean beaches, healthy seafood, abundant wildlife, stable fisheries and vibrant coastal communities," she says. "And in order to have those things, we need large-scale habitat protection. It's that simple."
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The Joint Ocean Commission Initiative (a merger of the Pew Oceans Commission and the U.S. Commission on Ocean Policy, which is appointed by the president and chaired by Admiral James Watkins) awarded the government a stinging rebuke in the form of a letter grade for ocean policy reform: D+.

Meanwhile, commercial fishing groups, faced with the prospect of restrictions and closures, added their voices to the fray. "When this process started, it was very contentious and polarized," says David Benton, executive director of the Marine Conservation Alliance, a commercial fishing advocacy group. "But we ended up with practical, working solutions. Industry recognized we had to step up to the plate and do the responsible thing." Oceana's amended proposals gained such wide acceptance that they were passed unanimously and endorsed by NOAA. The Hawaii closure, in which a consortium of native Hawaiian and conservation groups including Environmental Defense played a major role, was publicly embraced by President Bush.

"This is a huge step," Oceana's Ayers says. "We have a long way to go toward sustainable existence. Is it enough? No, but it's a beginning."

Benton adds, "This is a win for the environment and for the populations of animals and fish that we depend on."

To put it mildly, such sweeping acts of conservation are out of character for an administration that has given at best short shrift to environmental concerns. A cynic might say that these protections amount to a drop in the bucket of the world's oceans, and that the administration was forced into actions for which it now claims credit. While I'm hardly suggesting we baptize Dubya as a born-again greenie, the fact of these historic protections remains.

And consider the recent course of events. Environmentalists, commercial interests and government found a way to work together, declared a shared victory and practically broke into a chorus of Kumbaya. If this is a template for future conservation initiatives, in the oceans or anywhere, I say bring it on.