environment

3 May: How much will it cost? How will we pay back?

Posted on May 3, 2020 Leave a Comment

The first chapter of the IMF 2020 Fiscal Monitor shows that, as of 8 April, G20 countries had provided 3.5% GDP of fiscal support to respond to the pandemic. To compare, in 2009 they spent 2.1% GDP to respond to the financial crisis. In addition, G7 countries have already put forth loans, guarantees and liquidity injections amounting to over 10% GDP. It is not yet possible to estimate the full economic cost of the crisis. But we are talking in trillions of dollars. To compare, the Global Preparedness Monitoring Board said that the 2003 SARS epidemic costed $40 billions, the 2009 H1N1 pandemic $45 billions, and the 2014-2016 Ebola outbreak $53 billions. And to recall, the Commission on a Global Health Risk Framework for the Future estimated, back in 2016, that global pandemic preparedness would cost $4.5 billion per year. Yes, that’s in billions of dollars. Globally.

I always enjoy Capitalisn’t, the podcast of Georgetown Kate Waldock and University of Chicago Luigi Zingales. In this episode they discuss who is going to foot the bill. They explain how debt works, and how there are two ways to get out of it: growth and taxes. To debate tax options and their effects on inequalities, they invite Nobel prize Gene Fama, challenge his conservative views, and get him to agree that a one-off wealth tax could help pay back in a fair way.

My graph this week is Vivid Economics’ green stimulus index which shows the “green” component of stimulus funding – ie how funds go to sectors improving climate change, biodiversity, and pollution — in 11 countries. And we do not see much green.

My quote this week is from former World Bank President recently-gone-back-to-Partners-in-Health Jim Yong Kim [39’30’’]: “If we are using bazooka and nuclear options in fiscal and monetary policies, why are we using squirt guns in public health policy?”.

The (missing) human dimension of the circular economy

Posted on September 29, 2017 Leave a Comment

Last Sunday, I attended a “working dinner” on the circular economy. It was held at the Residence of the Holy See Representative to the UN, Chaired by the Vatican Minister of Foreign Affairs, and sponsored by ING. The residence of the Vatican in NYC is extra-ordinary. It was built and donated by the first 20^thcentury mayor of the city: Hugh J Grant. It is the only NYC townhouse with a built-in chapel and a bullet proofed bedroom where 3 popes have slept.

I was intrigued by the interest of the Vatican in the circular economy. That’s because I had missed the reference in Pope Francis’ Laudato Si: “We have not yet managed to adopt a circular model of production capable of preserving resources for present and future generations, while limiting as much as possible the use of non-renewable resources, moderating their consumption, maximizing their efficient use, reusing and recycling them. A serious consideration of this issue would be one way of counteracting the throwaway culture which affects the entire planet, but it must be said that only limited progress has been made in this regard.” [Emphasis added]

The circular economy proposes a growth model decoupled from natural resources. This means a shift from a linear model that “takes, makes and disposes” to a circular model that “reduces, reuses, and recycles”. The concept was born in environmental economists circles. It is connected to other, more familiar, concepts such as the sharing economy, the green economy and sustainable development. It is presented as a response to co-existing trends that contribute to environmental degradation: the increasing resources scarcity and commodity price volatility; and the growth of population and middle-class consumers.

Accenture estimates that the circular economy could generate 4.5 trillion by 2030. The first World Circular Economy Forum was held this year. And more and more businesses, mostly European so far, are embracing the concept. This means big changes to their strategies: Unilever commits to 100% recyclable packaging by 2025, Philipps moves from selling light bulbs to selling lighting as a service, Michelin leasesand retreads tires, etc.

A key question at the Vatican-hosted dinner was about the impact of the circular economy on the poor. This matters because so far the conversation has mostly happened in rich countries and focused on the environmental dimension of the circular economy. Not much has been written on its human dimension. My main message during the dinner was that circular economy advocates should not consider human wellbeing as an ex-post issue only. Rather human wellbeing should be a core element of the model where human capital wastes are considered alongside natural resource wastes. Under this broader message, here are some ideas I put on the table:

The circular economy

Should seek to optimize all resources, including human resources. That would require pricing negative human externalities (eg inequalities) so that goods and services bear the full cost of their production and consumption;
Could make certain goods and services more accessible to the poor (sharing is cheaper than owning);
Could offer jobs opportunities to young “green” entrepreneurs provided they have the skills, finances, and technology.
Would require life-long learning systems.
Could help formalize informal economic activities, in particular when digital platforms are used to share goods and services.

In short, the circular economy concept is transforming big industries into service providers, being promoted by influential political and financial actors, but missing a fully-fledged human dimension that I, for one, would like to help shape.

4 September 2015

Posted on September 4, 2015 Leave a Comment

My graph this week is by Max Roser and shows the drop in deforestation for both tropical and temperate forests from pre 1700 to 2010. Yes, some good news.

But of course this is not enough because deforestation rates are still high. Bush and Englemann’s “The Future of Forests: Emissions from Tropical Deforestation with and without a Carbon Price, 2016-2050” show that unless something is done, 289 million hectares of tropical forest — that’s the size of India — will be lost in the coming 35 years. This matters for many reasons including because deforestation is a big contributor to climate change: “burning down one square mile of rainforest releases as much carbon pollution as driving a car to the sun and back twice”. The paper goes on to show that deforestation could be avoided with an appropriate carbon price and that reducing tropical deforestation is one of the cheapest ways to reduce carbon emissions. The paper is dense but here you’ll find a summary, a (weird) video and a short interview.

And now we know how many trees there are in the world thanks to Crowther and al’s “Mapping tree density at a global scale”: 3 trillion! That is eight times more than we thought we had. [Here is a short video]. This new data and its uses have implications for forest management policies, biodiversity promotion efforts, payment for ecosystem services schemes etc. But what caught my attention was in the methodology. I am not talking about the modelling part which I tried to understand, to no avail. I am talking about the data collection part. The previous (underestimated) number was based on data collected via remote sensing, i.e., satellite imagery of forest cover. The new data use “ground truth measurements of tree density”, i.e., actual information from the land collected by many through the years, which the model then uses with remote sensing information. That reminded me of the Google Flu Trends saga: first a hyped-success story about “superior” real-time flu-tracking services using big data analytics, followed by a couple of false alerts, followed by an improved and more accurate service using big data with traditional surveillance data. “Something old with something new” seems like a good recipe for SDG progress monitoring.

My quote of the week is from Warsan Shire’s powerful poem Home: “You have to understand, that no one puts their children in a boat unless the water is safer than the land.”