Monday’s map returns

Land Grab. From the Guardian:

Rich governments and corporations are triggering alarm for the poor as they buy up the rights to millions of hectares of agricultural land in developing countries in an effort to secure their own long-term food supplies.

Click on the map to enlarge.

What the credit crunch means for development

Although there’s no consensus on whether we’re heading for a 2-3 year recession or a much longer period of deflation a la Japan in the 1990s (c.f. Nouriel Roubini on V, U and L shaped recessions), four implications for development are already clear.

First, donor countries are going to be facing a dramatically different situation in their public sector budgets from next year. With the US Treasury’s $700 billion bailout plan now approved by Congress, the incoming US Administration will face a budget deficit of up to a trillion dollars next year, rather than $300 bn as planned.  Other donors will find their budgets constrained too – by falling growth, lower tax revenues and probably also higher public debt.  In the UK, for example, public borrowing next year is likely to have to rise from an expected £43 bn to £100 bn or more.

All this means that governments will have less to spend – so we should start worrying now about what that means for development assistance.  While it remains to be seen whether those governments that have committed to spending 0.7% of national income on aid will row back on those commitments, it now looks much likelier that for example climate adaptation costs will come out of aid budgets, rather than being additional to 0.7% – as they should be.

This shift will be compounded by the second implication of the credit crunch: change in public attitudes.  So far, the full impacts of the financial crisis have yet to hit the real economy in developed countries.  But when they do, they will accelerate a switch that we can already see, towards more priority on issues that are ‘close to home’, and less on global issues like development and climate change.

Third, the financial crisis will obviously hit growth in developing countries.  Monday’s stock market falls hit developing country exchanges hardest: the benchmark MSCI emerging markets index, for example, fell 11% as investors fled for safety.  Meanwhile, the debate about whether developing countries in Asia and Africa have ‘decoupled’ from developed countries seems to be ending, with the conclusion that developing country growth is not immune from a downturn in the wider global economy.

And fourth, a reduction in commodity prices for the duration of the global downturn (however long that may be) as demand for them falls.  As I’ve mentioned, futures prices for grain crops are already falling; we can expect that trend to be supported by falling energy prices, which will reduce some of the pressure on food that’s come via fertiliser prices, transport costs and demand for crops as biofuels.

That said, let’s be clear: the fall in commodity prices due to a global downturn does not mean that we’re out of the woods for good on high food and fuel prices. As Javier Blas notes in the FT today, the downturn also means that necessary investment in increasing supply will be put off.  As soon as we’re out of the dowturn and demand starts going up again, we’ll discover that there’s been no shift in the underlying supply fundamentals – and hence that the stagflation drivers we were all worrying about until the credit crunch really began in earnest are just waiting where we left them.  Let’s hope policymakers use the current easing as a moment of opportunity to start getting long term policy frameworks in place to manage high commodity prices a bit better than we did over the last two years.

The global fertiliser crisis

Although all the attention lately has been on food prices and the effect of their sharp rise for inflation, development and security, the rises seen on food have been as nothing compared to some of the increases seen on fertilisers over the same period.

A briefing by Andrew Dorward and Colin Poulton, published in June by the Future Agricultures consortium, gives chapter and verse.  Between May 2006 and May 2008, here’s what prices did for selected key foods and fertilisers:

Cotton – up 29%

Beverages – up 41%

Wheat – up 61%

Maize – up 108%

Rice – up 185%

Urea (a key nitrogen fertiliser) – up 160%

DAP (a major phosphate fertiliser) – up 318%

The underlying causes cover both sides of the supply / demand line.  On the demand side, there’s the basic fact that the need for fertilisers is soaring as a result of higher food prices and demand for crops as biofuels. 

On the supply side, energy costs are a huge factor (especially in the case of nitrogen fertilisers); some fertiliser exporters (like China) have imposed export controls; and in the background, there are capacity limits to increasing production, especially for phosphates – a point that has the peak oil crowd already thinking hard about the concept of peak phosphorus.

None of this, needless to say, is good news for farmers, who according to the paper find themselves hit twice: once on the affordability of fertilisers when purchasing them, and then again (given food / fertiliser price differentials) on their profitability when using them. 

Dorward and Poulton argue that in the short term, it’s still worth developing country governments’ while to subsidise fertiliser use, even if the rates of return are lower – and that donors need to step up fast with additional financing (a proposal that the World Bank signalled its openness to in its ten point plan on food).  Dorward, Poulton and the Bank all agree that the question of getting them to the right place – fast – is as important as the question of who picks up the bill.

In the longer term, the paper suggests, the focus needs to be on more integrated soil fertility management with greater use of organic materials [i.e. compost and manure] together with smarter use of inorganic fertilisers – an area of work that the big agricultural research institutes like CIMMYT are already focusing on heavily.  Moving towards more integrated soil fertility management already makes sense for reasons of environmental sustainability.  If fertiliser prices fail to fall in the longer term, these areas of research are also going to be one of the critical front lines in feeding 10 billion of us.

Burn Up

[youtube:http://www.youtube.com/watch?v=zY__KBYJjMM]

Freed from the nice-guy constraints of being Josh on the West Wing, Bradley Whitford was clearly having a grand old time as a Machieavellian oil industry lobbyist in Burn Up on BBC2 last week; Neve Campbell and Rupert Penry-Jones (from Spooks) completed the ensemble cast for a production that cost the BBC $15 million to make.  Watch it if you haven’t already – if you live in the UK, you’ve got until 10.29pm on Wednesday 30th July to stream or download both episodes via the BBC’s Iplayer (if you download, you then have 30 days to watch them).

It was a riot – above all because, notwithstanding that this was a political thriller, the scriptwriter (Simon Beaufoy of The Full Monty fame) had really done his homework on climate change and energy policy (a task in which he was helped by Joe Smith from Open University, who co-edited Do Good Lives Have to Cost the Earth? with Andrew Simms).

So we were treated to climate summits with delegates negotiating square bracketed text through the night as the US and OPEC countries raise flags to object to use of the word ‘mandatory’; China playing it both ways, cutting a deal with the EU for carbon sequestration before dropping them like a stone when the US offers free nuclear power instead (agonised British head of delegation: “the Chinese have stitched us up!”); and even – ta da! – the sight of climate negotiators agreeing a climate framework based on per capita convergence, with proper terminology and everything. 

However (spoiler alert: stop reading now if you plan to watch it), all of this then falls apart when ‘moderates’ in the US delegation (“Withdraw that proposal, Tuvalu, or kiss your AIDS funding goodbye”) are replaced by even nastier military-industrial-spook types, who – it later transpires – have a Secret Plan, the gist of which is that the US is deliberately allowing climate change to happen on the basis that if it will damage the US, it will really screw China.

As prospects for a global deal recede, oil company CEO Rupert Penry-Jones (who has had a Damascene conversion to the path of climate righteousness after watching an Eskimo set herself on fire in protest at global warming, and then seeing methane hydrate plumes catching fire in holes in the Arctic pack ice as positive feedbacks start to kick in) decides to start playing real hardball: so he leaks secret geological data from Saudi Arabia to environmentalists (and thence the media), which shows that – ta da ! – Peak Oil is upon us.  The film closes with snippets of media reporting of the massive economic crash that follows, and the prospect of something called the ‘third energy age’.

Only thing is, it’s not entirely clear why Penry-Jones has abandoned his earlier view that to tell the world that the oil peak is already passed would be a Very Bad Idea on the basis that it would (a) cause economic Armageddon, (b) kill thousands if not millions and (c) cause World War Three.  I was sort of with Bradley Whitford’s evil lobbyist when he suggested that allowing the news to leak out ve-e-ery gradually might be a better approach.  Leaking the news of Peak Oil being already behind us also looks to me like as much of a recipe for tar sands, liquids from coal and all US corn going to biofuels as it does a recipe for solar, wind and the ‘third energy age’. 

But hey.  Top marks to the Beeb for definitely the edgiest (and most politically accurate) climate drama we’ve seen so far.  Eat your heart out, The Day After Tomorrow.

Obama: global emissions reduction of 80 per cent by 2050

It’s been his campaign’s policy since October last year, but in case you needed reassurance, here’s what Obama’s July 15 speech on foreign policy had to say about energy security (one of five national security priorities – the others being “ending the war in Iraq responsibly; finishing the fight against al Qaeda and the Taliban; securing all nuclear weapons and materials from terrorists and rogue states; … and rebuilding our alliances to meet the challenges of the 21st century”):

One of the most dangerous weapons in the world today is the price of oil. We ship nearly $700 million a day to unstable or hostile nations for their oil. It pays for terrorist bombs going off from Baghdad to Beirut. It funds petro-diplomacy in Caracas and radical madrasas from Karachi to Khartoum. It takes leverage away from America and shifts it to dictators.

This immediate danger is eclipsed only by the long-term threat from climate change, which will lead to devastating weather patterns, terrible storms, drought, and famine. That means people competing for food and water in the next fifty years in the very places that have known horrific violence in the last fifty: Africa, the Middle East, and South Asia. Most disastrously, that could mean destructive storms on our shores, and the disappearance of our coastline.

This is not just an economic issue or an environmental concern – this is a national security crisis. For the sake of our security – and for every American family that is paying the price at the pump – we must end this dependence on foreign oil. And as President, that’s exactly what I’ll do. Small steps and political gimmickry just won’t do. I’ll invest $150 billion over the next ten years to put America on the path to true energy security. This fund will fast track investments in a new green energy business sector that will end our addiction to oil and create up to 5 million jobs over the next two decades, and help secure the future of our country and our planet. We’ll invest in research and development of every form of alternative energy – solar, wind, and biofuels, as well as technologies that can make coal clean and nuclear power safe. And from the moment I take office, I will let it be known that the United States of America is ready to lead again.

Never again will we sit on the sidelines, or stand in the way of global action to tackle this global challenge. I will reach out to the leaders of the biggest carbon emitting nations and ask them to join a new Global Energy Forum that will lay the foundation for the next generation of climate protocols. We will also build an alliance of oil-importing nations and work together to reduce our demand, and to break the grip of OPEC on the global economy. We’ll set a goal of an 80% reduction in global emissions by 2050. And as we develop new forms of clean energy here at home, we will share our technology and our innovations with all the nations of the world.

It’s a much more progressive target than the G8 was able to come up with: at Hokkaido, the most leaders could manage was “at least 50%”.  It’s more in line with the IPCC, too, which says that to limit temperature increase to between 2.0 and 2.4 degrees C, the 2050 reduction needed is between 50 and 85 per cent: so assuming you want 2.0 rather than 2.4, and adding in the rate of sink failure as well, we should certainly be looking at closer to an 85 than a 50 per cent reduction by 2050 (see page 15 of this). 

And lest you wonder, yup, he’s talking about 80 per cent below 1990 levels, rather than the 2000 levels (which would be a lot less demanding).  Here’s his campaign’s full energy policy brief.