Two Podcastic Perspectives on Wealth

[peristaltor.livejournal.com]

Last February, NPR's Planet Money examined a unique strategy by Ecuador's government to preserve its Yasuni National Park, an isolated and wild place reached best by hours in a canoe. This is one of those places with amazing biodiversity, with more tree species in a hectare than most more northern countries have within their borders.

The problem threatening the Yasuni? It has oil, and President Correa, seeing the destruction other Latin American countries have suffered for oil exploration/extraction, wanted to avoid a similar fate for his most wild of national places. His solution: ask for money to preserve the park as is.

Seriously. Planet Money interviews those seeking to preserve the park by asking for money:

As payment for preserving the wilderness and preventing an estimated 410 million metric tons of fossil fuel-generated carbon emissions from entering the atmosphere, Correa has asked the world to ante up in the fight against global warming. He is seeking $3.6 billion in compensation, roughly half of what Ecuador would have realized in revenues from exploiting the resource at 2007 prices. The money would be used, he says, to finance alternative energy and community development projects.

Sadly, the podcast to which I linked is an update. That $3.6 billion wasn't forthcoming, so Correa has no choice but to allow for some extraction. The park will undoubtedly suffer as a result.

The same week I heard that PM podcast, though, I also heard Seth and Justin over at the Extraenvironmentalist interview filmmaker John Dennis Liu in Episode #65: Restoring Function.

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This Plateau sounds fascinating. Essentially, this is glacial dust (loess) from Himalaya erosion over thousands of years. It is also the seat of the Han Chinese civilization that spread out to become the most common ethnicity in that country today.

Why, then, was it a barren wasteland? Liu notes that, while the area has been farmed for millennia, the agricultural practices used slowly eroded the ecosystem to the point where the hydrological cycle was broken. The constant tilling had killed the soil biota to the point where the soil would not retain any water, so farmers were starving and the soil was blowing in sometimes massive storms that affected everyone downwind. Once it fell, it settled where it was not appreciated, such as in the Yellow River.


Visitors watch water gushing from the section of the Xiaolangdi Reservoir on the Yellow River, during a sand-washing operation

The Chinese government took an unusual step. They calculated these downwind and downstream costs, then added up the economic benefit the farmers on the Plateau contributed to the Chinese economy. The answer was extremely negative; the agricultural output was dwarfed by the impact the degraded ecology had on other parts of the country.

Here's the situation in a nutshell, according to Mr. Liu's article "Restoring Land and Hope in China" in New Agriculturalist magazine:

We have been documenting China's Loess Plateau since 1995. When we got there we found a fundamentally degraded ecosystem. . . .

Work began initially in the Loess Plateau due to a silt problem. Erosion of the deep Loess soils was clogging the Yellow River with 600 million tons of soil every year. This had such downstream implications that it was decided that rehabilitation upstream, to lower erosion rates, would be less expensive. We had to control soil erosion from the slopes and this was coupled with action against desert encroachment in the north. If you don't fight it on every side it will overwhelm everything. You cannot just garden around the edges.

The Chinese government shut down the meager sorgum and corn crop farming. They gave the citizen food and jobs, first teaching them the basic goals the government ecologists had in mind. Those that were degrading the system the most were, well, prevented from continuing the degradation and given the job of policing the area to prevent others from engaging in this same activity.

The result? Judge for yourself.


Loess Plateau before restoration.


Loess Plateau after restoration.

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Liu points out that China took an unusual step. It could. China is one of the few nations large enough to have an ecological disaster affect so many others within its borders. While economists call the negative effects of economic production "externalities", for China—a central government responsible for the whole of its economy—there are no such externalities, just cost shifts from one area to the other. Liu goes further, stating in the Extraenvironmental podcast that there are no such things as externalities at all. It's just a phrase economists coined to at least acknowledge the damage some activities had on other parts of the economy. It is a fiction, though, since really one cannot ignore the economic damage of any given activity without considering the negative impact it has elsewhere. One author quoted Liu from his movie:

The products and services that we derive from [functional ecosystems] are derivatives. It's impossible for the derivatives to be more valuable than the source. And yet in our economy now, as it stands, the products and services have monetary values, but the source—the functional ecosystems—are zero. So this cannot be true. It, it's false. So we've created a global institution . . . economic institutions and economic theory based on a flaw in logic. So if we carry that flaw in logic from generation to generation we compound the mistake. -John D. Liu [38:44]

(I underlined and edited.)

In his EE interview, Liu suggested we have to "Naturalize the Economy" rather than exploit the ecology for economic gain. We have to return to what author John Michael Greer called The Wealth of Nature: Economics as If Survival Mattered. And nature cares not one whit for money. Money is, in fact, just an artifact, valued only by people. Money is not a measure of anything other than what people who issue and most widely use it value. If the people who issue money don't value functional ecosystems, they can put a price on destruction. Which is, as Liu points out, what happened on the Plateau.

Sadly, as David Graeber points out in his book Debt, money is just a way to move wealth from one place to another, to de-localize an economy. As long as the near-sustenance farmers on the Loess could sell even a meager portion of their crops for money to buy other things, they would continue and even accelerate the soil's degradation. China was big enough to realize this could not continue.

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Which brings us back to Ecuador. Rafael Correa could not convince the international community to preserve the oxygen generator, the carbon sequester that is the Yasuni National Park. Why? Unlike most of Ecuador, the international community is addicted to oil, and has priced that precious goo beyond all efforts aimed at ecology preservation. If the US gives Ecuador money (which it didn't), it removes future reserves from extraction and thus raises the price of future oil. The US cannot put a price on losing such reserves from the market, since doing so would be to admit that they were addicted to the stuff.

And thus, the market works. Back to Graeber: "Money always has the potential to become a moral imperative unto itself. Allow it to expand, and it can quickly become a morality so imperative that all others seem frivolous in comparison. For the debtor, the world is reduced to a collection of potential dangers, potential tools, and potential merchandise." (David Graeber, Debt: The First 5,000 Years, Melville House Printing, 2011, p. 319.) Since Ecuador is poor, they are reduced to the status of debtor, and forced to sell their most valuable assets to raise themselves and their people out of poverty.

The perversion of this logic can be found in the Loess Plateau. As Herbert Stein put it in the economic law that bears his name, "Any system that can't go on forever, won't." China recognized this, and is taking steps to avoid future dust storms and clogged rivers, as well as increasing the agricultural production of the Plateau itself.

Our own US and western world's addiction to petroleum (and other ancient carbon fuels) can't go on forever either; every drive miles to the next frivolous destination has exactly the same effect as tilling barren soil. Without facing this hard fact, though, places like the Yasuni will continue to fall.

That hard truth, though, is impossible to relate to economists who dismiss any symptom of unsustainable practices with words like "externality."

Comments

[badlydrawnjeff.livejournal.com]

Our own US and western world's addiction to petroleum (and other ancient carbon fuels) can't go on forever either; every drive miles to the next frivolous destination has exactly the same effect as tilling barren soil. Without facing this hard fact, though, places like the Yasuni will continue to fall.

That hard truth, though, is impossible to relate to economists who dismiss any symptom of unsustainable practices with words like "externality."

I admit to being confused/amused by the lessons you took from this. On one hand was an area that has resources we need - this is not a question of "addiction" or anything like it, but a simple fact of the real world around us. While we can applaud the Ecuadorian President for at least thinking outside of the box in terms of how to handle what he feels is a delicate situation, I think it's probably more worth criticism that he's trying so desperately to keep wealth from his country and keep a necessary resource out of the hands of those who need it. The damage to the lands would be much less than the benefit in getting the oil out, and the continued fantasy of alternative fuels being able to take care of our needs in 2013 is shameful for a world leader to be pushing.

This mirrors the ANWR situation quite well, not to mention many anti-fracking activists.

Meanwhile, here's China, a nation that actually did the math and figured out that the benefits didn't outweigh the costs and acted accordingly. Instead of shaming the world for their need (not addiction, not desire) for oil, we should be shaming them for not doing the math and figuring out that the oil is worth retrieving in places like Alaska and Ecuador.

[foolsguinea.livejournal.com]

Suddenly a right-winger drops talk of rights and ownership (or lack thereof) in favor of the entitlement of "need"--indeed, the insatiable, bottomless, unsustainable "need" of the mob.

Conservatism and respect for others' property goes out the window when you want someone else's stuff.

[badlydrawnjeff.livejournal.com]

I don't see where I'm doing that. It's frankly unjust for the government to control large swathes of land and resources.

[allhatnocattle.livejournal.com]

why? Where is it that gov't doesn't control large areas of lands and resource?

[badlydrawnjeff.livejournal.com]

I'm not sure if such a place exists, unfortunately.

[allhatnocattle.livejournal.com]

Then it must be that governments typically domain over land and resource.

[fizzyland.livejournal.com]

How is it unjust?

[meus-ovatio.livejournal.com]

Because democracy is an illegitimate form of government and the United States has no legitimacy to it and I guess Jeff just thinks its all bollocks.

[kylinrouge.livejournal.com]

All land should be in private ownership. We can call the people who work there serfs.

[badlydrawnjeff.livejournal.com]

It's the government actively withholding resources from populations that need them.

[brother-dour.livejournal.com]

After that comment, I can't help but wonder what your thoughts are on the police power of government.

I'm also wondering what you think of Garrett Hardin.

[badlydrawnjeff.livejournal.com]

After that comment, I can't help but wonder what your thoughts are on the police power of government.

Much too broad and strong.

I'm also wondering what you think of Garrett Hardin.

I don't know too much about him, except that his fears of overpopulation had a nice Chicken Little ring to it.

[peristaltor.livejournal.com]

Why is it unjust for a government to do this, but somehow "just" for private citizens/corporations to do this? I didn't vote for Exxon.

[badlydrawnjeff.livejournal.com]

What right does a government have to keep resources from its citizenry?

[peristaltor.livejournal.com]

. . . resources we need - this is not a question of "addiction" or anything like it, but a simple fact of the real world around us.

It's both. We have built a mechanized economy that will stop if it runs out of fuel. Yes, we need fuel for our machines. We didn't have to build that kind of economy, though; that was by choice. Look at European countries who chose to tax fuels quite a bit more; their fuel economy is better, and therefore more resilient to supply shocks.

By contrast, we gave tax breaks to exploration/exploitation companies in the hopes of getting the stuff cheaper. Many states (like my own) have mandates to exclude gas sales from normal retail tax revenue. Just as an addict has a choice on whether or not to try the hard stuff, we chose to rely on the gooey stuff.

The difference between ANWR and Ecuador might be the sheer diversity of species, if not the sequestration the natural forest provides. Not much solescence up north.

I think it's probably more worth criticism that he's trying so desperately to keep wealth from his country. . . .

"From?" No, at first he was trying desperately to keep wealth in his country, in the ground where it belongs. The fact that he couldn't reveals the pressures the addicts can exert in tapping new supply. If he could have kept that wealth below the forest for even a decade, I predict supply would be so low that his country could demand a premium for the reserves, forcing the extractors to take what today would be considered outrageous steps to protect the environment around it.

With crude prices so low, it just wouldn't pencil out to provide those protections now, as it was demonstrated just about everywhere oil has been extracted in Latin America.

[badlydrawnjeff.livejournal.com]

It's both. We have built a mechanized economy that will stop if it runs out of fuel. Yes, we need fuel for our machines. We didn't have to build that kind of economy, though; that was by choice. Look at European countries who chose to tax fuels quite a bit more; their fuel economy is better, and therefore more resilient to supply shocks.

I don't know why you'd look to Europe as a positive model in that regard. Punitive taxes on things they don't like don't help their fuel economy, it just weakens the position of the citizenry.

"From?" No, at first he was trying desperately to keep wealth in his country, in the ground where it belongs.

It doesn't belong in the dirt, it belongs in cars and planes and plastics. Technological progress is a good thing.

[peristaltor.livejournal.com]

Punitive taxes on things they don't like don't help their fuel economy, it just weakens the position of the citizenry.

Or strengthens. If the citizenry cannot afford suburbs, they don't economically suffer when the cost of fuel makes their homes unaffordable.

Technological progress is a good thing.

Shades of grey, actually. Some progress is a good thing. The US, though, has used a powerful technology (cheap transportation) to divide itself into ever-growing class differences and unsustainable communities. This the addiction thing I mentioned; when the fuel is no longer cheap, these lifestyles are no longer possible, and that becomes a problem.

Before you jump all over my mention of "class differences," consider what happens when people who grew up with a strong racial and social divide—whites with lots of money living in the gated 'burbs, blacks and others in the cities, the poor where ever they can eek out a living—suddenly find themselves forced to live as their ancestors once did, side by side with the racial and social minorities they don't really like. It could be a good thing, true; it could also be explosive.

[badlydrawnjeff.livejournal.com]

Or strengthens. If the citizenry cannot afford suburbs, they don't economically suffer when the cost of fuel makes their homes unaffordable.

If the citizenry cannot afford suburbs, they won't be in suburbs anymore. This is not an issue of taxes, but of basic market economics. Of course, if the citizenry can afford suburbs, but the government has made the tax structure as such where the suburbs are unattainable, that's a problem of policy.

The US, though, has used a powerful technology (cheap transportation) to divide itself into ever-growing class differences and unsustainable communities.

This is outright ridiculous. Is technological progress a good thing? Yes. Is technological progress 100% positive? Of course not. Is technological progress the cause of "class differences and unsustainable communities?" That's absolutely laughable. Those are, again, mostly the fault of policies put in place independent of technology, thanks to attempts at central planning, taxation-as-behavior-modification, and so on. Technology, more often than not, is the great equalizer in the areas where government has caused great problems.

This the addiction thing I mentioned; when the fuel is no longer cheap, these lifestyles are no longer possible, and that becomes a problem.

When the fuel is no longer cheap, a better alternative comes into play. It must, as a basic market point. And as it will impact all prices, and thus have to impact all wages, the net result will not be lawless disaster, but rather societal adjustment as it always has every other time there's been a shock to the system when it comes to technology and resources.

Humans are not "addicted" to oxygen. Society is not "addicted" to oil.

Before you jump all over my mention of "class differences," consider what happens when people who grew up with a strong racial and social divide—whites with lots of money living in the gated 'burbs, blacks and others in the cities, the poor where ever they can eek out a living—suddenly find themselves forced to live as their ancestors once did, side by side with the racial and social minorities they don't really like. It could be a good thing, true; it could also be explosive.

I'm hesitant to even dive into this one for any number of reasons, but if you think technology is segregating us as opposed to knocking down those walls, I can't even see your point of view to address it, never mind refute it.

[foolsguinea.livejournal.com]

"It doesn't belong in the dirt, it belongs in cars and planes and plastics. Technological progress is a good thing."

And that's exactly what's not happening here. If we expend fossil fuels manufacturing lots of present-day technology, we will not have them later to manufacture tech two generations of invention down the line.

[airiefairie.livejournal.com]

and the continued fantasy of alternative fuels being able to take care of our needs in 2013 is shameful for a world leader to be pushing.

And the continuous reliance on fossil fuels is not?

I do not know about shameful, but what about being a necessity?

[badlydrawnjeff.livejournal.com]

And the continuous reliance on fossil fuels is not?

I don't know of a single person who thinks fossil fuels are a long term option. We all know we're going to have to switch out eventually. The time is not now, however - the alternatives aren't ready, aren't reliable, and aren't affordable yet.

To pretend those last three things aren't true as a leader of a nation? Shameful might be kind.

[airiefairie.livejournal.com]

I am not entirely sure what shame, or any other irrational feeling, has to do with the fact that someone is realising that reliance on fossil fuels is both economically and environmentally unsustainable in the long term, and is attempting to take relevant steps on the issue while they still have the capability of doing so without necessarily causing more harm than they would have, if they wait for the last minute to react to the emerging situation.

[badlydrawnjeff.livejournal.com]

Except he's not thinking long term. He's throwing a Hail Mary in hopes that something might come up while leaving necessary, valuable resources in the ground for ideological rather than economic reasons, hiding behind poor environmental logic to get there.

He should be smart enough to know, as well, that the battle for alternative fuels is not going to be waged in Ecuador.

[peristaltor.livejournal.com]

The time is not now, however - the alternatives aren't ready, aren't reliable, and aren't affordable yet.

Or—here's a thought—they might never be ready, reliable, or affordable. If this proves to be the case, exactly when would be good time to taper off on the petroleum habit?

[badlydrawnjeff.livejournal.com]

An example: if electric vehicles never get better, eventually they're still going to be the best option. This does not mean we should switch to them en masse now, or pretend that electric is the best option for the majority and start punishing petroleum use to get people on board.

You might be pessimistic that a viable, affordable option will ever come to be. I'm not. Even so, oil is cheap and plentiful now, and will be for decades to come. To wring one's hands, especially as a leader of a nation, and pretend otherwise is shameful.