Global Stressors on Water Quality and Quantity (Zimmerman et al 2008 ES&T 42(12) 4247–4254)
The Gulf of Mexico is one of the most studied coastal hypoxic zones in the world, but it is not the only one. The number of these zones has greatly increased, primarily due to agricultural expansion and intensification (one of the many ways that agriculture has been driving ecological regime shifts). The authors compare changes in coastal hypoxia in the Gulf of Mexico to that found in the Baltic Sea, which has also been suggested to have undergone a regime shift. The authors conclude:
… there has been a system-wide response to the combination of organic buildup in the sediments and higher nitrogen loading, which has increased the area of hypoxia generated for a given nitrogen load and has increased the opportunity for hypoxia to develop. The results discussed above demonstrate that the average [nitrogen] loading of the 1980s would result in a hypoxic zone that is twice as large in the past decade.
…Hypoxia has well-documented catastrophic consequences to the benthos, including animals with multiyear life spans, and creates large areas without commercial quantities of shrimp and fish. The changes in the Mississippi River-influenced continental shelf over the last 30–40 years should be considered to a shift to an alternate state in the sense that (A) the threshold for hypoxia development has been exceeded on a continuing basis and the size of the hypoxic zone has increased and may be approaching its maximum size, given physical constraints on shelf geometry (e.g., width, depth, and length); and (B) the return to a previous system state is more difficult the longer that the current level of nutrient loading is stable or increasing.
… respiratory demand in the sediments remains a legacy influencing water quality of the eutrophied continental shelf in the northern Gulf of Mexico. …The goal of reducing the size of the hypoxic zone to 5000 km2 thus becomes more difficult to achieve for every year without a significant reduction in nutrient loading. Each year without reducing the nutrient loading rates means that it will take longer to realize the Action Plan goal, because the legacy of accumulated organic matter and its respiratory demand increases with time.
Economist Joesph Stiglitz writes about how he thinks societies should shift their incentive structures to encourage investment in the sources of economic growth. On Comment is free he writes How to combat scarcity in an age of plenty:
At the core of America’s success is technology, symbolised by Silicon Valley. The irony is that the scientists making the advances that enable technology-based growth, and the venture capital firms that finance it were not the ones reaping the biggest rewards in the heyday of the real estate bubble. These real investments are overshadowed by the games that have been absorbing most participants in financial markets.The world needs to rethink the sources of growth. If the foundations of economic growth lie in advances in science and technology, not in speculation in real estate or financial markets, then tax systems must be realigned. Why should those who make their income by gambling in Wall Street’s casinos be taxed at a lower rate than those who earn their money in other ways? Capital gains should be taxed at least at as high a rate as ordinary income. (Such returns will, in any case, get a substantial benefit because the tax is not imposed until the gain is realised.) In addition, there should be a windfall profits tax on oil and gas companies.
Given the huge increase in inequality in most countries, higher taxes for those who have done well – to help those who have lost ground from globalisation and technological change – are in order, and could also ameliorate the strains imposed by soaring food and energy prices. Countries, like the US, with food stamp programmes, clearly need to increase the value of these subsidies in order to ensure that nutrition standards do not deteriorate. Those countries without such programmes might think about instituting them.
Two factors set off today’s crisis: the Iraq war contributed to the run-up in oil prices, including through increased instability in the Middle East, the low-cost provider of oil, while biofuels have meant that food and energy markets are increasingly integrated. Although the focus on renewable energy sources is welcome, policies that distort food supply are not. America’s subsidies for corn-based ethanol contribute more to the coffers of ethanol producers than they do to curtailing global warming. Huge agriculture subsidies in the US and the European Union have weakened agriculture in the developing world, where too little international assistance was directed at improving agriculture productivity. Development aid for agriculture has fallen from a high of 17% of total aid to just 3% today, with some international donors demanding that fertiliser subsidies be eliminated, making it even more difficult for cash-strapped farmers to compete.
Rich countries must reduce, if not eliminate, distortional agriculture and energy policies, and help those in the poorest countries improve their capacity to produce food. But this is just a start: we have treated our most precious resources – clean water and air – as if they were free. Only new patterns of consumption and production – a new economic model – can address that most fundamental resource problem.
A recent Economist article poses the question Does freer farm trade help poor people? Given the ideological slant of the Economist, it is unsurprising that the article concludes yes. The interesting aspect of the article discusses two World Bank research papers that indicate that the way in which agricultural trade is regulated has major consequences.
The links between trade, food prices and poverty reduction are more subtle. Different types of reform have diverse effects on prices. When countries cut their tariffs on farm goods, their consumers pay lower prices. In contrast, when farm subsidies are slashed, world food prices rise. The lavishness of farm subsidies means that the net effect of fully freeing trade would be to raise prices, by an average of 5.5% for primary farm products and 1.3% for processed goods, according to the World Bank.
These effects are still much smaller than recent food-price spikes, but would they, on balance, help or hurt the poor? In crude terms, food-exporting countries gain in the short term whereas net importers lose. Farmers are better off; those who buy their food fare worse. Although most of the world’s poor live in rural areas, they are not, by and large, net food sellers. A forthcoming study* of nine poor countries by M. Ataman Aksoy and Aylin Isik-Dikmelik, two economists at the World Bank, shows that even in very rural countries, such as Bangladesh and Zambia, only one-fifth of households sell more food than they buy. That suggests the losers may outnumber winners.
But things are not so simple. The authors point out that net food buyers tend to be richer than net sellers, so high food prices, on average, transfer income from richer to poorer households. And prices are not the only route through which poverty is affected. Higher farm income boosts demand for rural labour, increasing wages for landless peasants and others who buy rather than grow their food. Several studies show this income effect can outweigh the initial price effect. Finally, the farm sector itself can grow. Decades of underinvestment in agriculture have left many poor countries reliant on imports: over time that can change.
The World Bank has often argued that the balance of all these factors is likely to be positive. Although freer farm trade—and higher prices—may raise poverty rates in some countries, it will reduce them in more. One much-cited piece of evidence is a study† by Thomas Hertel, Roman Keeney, Maros Ivanic and Alan Winters. This analysis simulated the effect of getting rid of all subsidies and barriers on global prices and trade volumes. It then mapped these results on to detailed household statistics in 15 countries, which between them covered 1 billion people. Fully free trade in farm goods would reduce poverty in 13 countries while raising it in two.
But lately the bank seems to be taking a different line. Robert Zoellick, the bank’s president, claims that the food-price crisis will throw 100m people below the poverty line, undoing seven years of progress. His figure comes from extrapolating the results of a different study** by Mr Ivanic and Will Martin, another World Bank economist. This study analyses the effects of more expensive staple foods on poverty by examining household surveys in nine countries. In seven cases, higher food prices meant more poverty. (Dani Rodrik, a blogging Harvard economist, was one of the first to highlight the tension between these studies.)
In fact, the bank’s results are not as contradictory as they seem. The two studies are based on different sets of countries: only Peru, Zambia and Vietnam appear in both. And the gloomy analysis measures only the effect of pricier staple foods, whereas the other examines freer trade in all farm goods. Such trade brings broader benefits: even if higher prices for staples exacerbate poverty in some countries, at least in the short term, the effect may be outweighed by increased demand for other farm exports, such as processed goods, as rich countries cut tariffs.
These subtleties suggest two conclusions. First, the bank, and others, should beware sweeping generalisations about the impact of food prices on the poor. Second, the nature of trade reform matters. Removing rich-country subsidies on staple goods, the focus of much debate in the Doha round, may be less useful in the fight against poverty than cutting tariffs would be. The food-price crisis has not hurt the case for freer farm trade. But it has shown how important it is to get it right.
These papers only assess trade rather than agricultural practices. I would add that the ecological fit of agriculture to the place in which it is practiced will also have substantial impacts on the potential for a regions ability to escape from poverty. Increases in agricultural production that damages other ecosystem services that are important for local people’s livelihood, such a fisheries, fuelwood, flood regulation, or water quality, can do more damage than good.
As part of its interesting Food Chain series, the New York Times writes Food Is Gold, So Billions Invested in Farming about how investment funds are pouring billions of dollars into agriculture. One investment bank has estimated that investments in agricultural commodities has increased over 3X, from $70 billion at the start of 2006 to $235 billion in April of 2008, with roughly half of this growth being due to appreciation and half to new investment (for more details see Financial Times on agricultural funds and why food prices are rising?). However, money is now moving from investments in commodity futures into actual agricultural infrastructure:
Huge investment funds have already poured hundreds of billions of dollars into booming financial markets for commodities like wheat, corn and soybeans. But a few big private investors are starting to make bolder and longer-term bets that the world’s need for food will greatly increase — by buying farmland, fertilizer, grain elevators and shipping equipment.
Part of the article is reminiscent of the TechnoGarden scenario of the MA, in which rich companies invest in the underdeveloped African agriculture infrastructure. The article states:
Emergent is raising $450 million to $750 million to invest in farmland in sub-Saharan Africa, where it plans to consolidate small plots into more productive holdings and introduce better equipment. Emergent also plans to provide clinics and schools for local labor.
One crop and a source of fuel for farming operations will be jatropha, an oil-seed plant useful for biofuels that is grown in sandy soil unsuitable for food production, Ms. Payne said.
“We are getting strong response from institutional investors — pensions, insurance companies, endowments, some sovereign wealth funds,” she said.
The fund chose Africa because “land values are very, very inexpensive, compared to other agriculture-based economies,” she said. “Its microclimates are enticing, allowing a range of different crops. There’s accessible labor. And there’s good logistics — wide open roads, good truck transport, sea transport.”
However, unlike the TechnoGarden scenario, this investment seems focussed on increasing yields of food and fuel, rather than producing multiple ecosystem services. Consequently, such investments attempts to increase yields by practicing intensive agriculture are likely to lead to negative impacts on other people and ecosystems using water, and potentially leading to local or regional ecological regime shifts (see our paper Gordon et al 2008).
Also, many of these investments are not aimed at increasing agricultural yield on the ground, but hedging against inflation risk, and providing market power for large funds to leverage investments in other financial instruments, such as options, derivatives and other more complicated packages. This coupling of financial markets, to the already coupled food, fuel, and climate systems means that the systemic consequences of these investments are likely to be unexpected and novel.
From the April 26th New York Times, Environmental Cost of Shipping Groceries Around the World, discusses the complexities of global food trade. Its great efficiency, the hidden subsidies to transport, and the politics of carbon footprint calculations:
Cod caught off Norway is shipped to China to be turned into filets, then shipped back to Norway for sale. Argentine lemons fill supermarket shelves on the Citrus Coast of Spain, as local lemons rot on the ground. Half of Europe’s peas are grown and packaged in Kenya. …
Increasingly efficient global transport networks make it practical to bring food before it spoils from distant places where labor costs are lower. And the penetration of mega-markets in nations from China to Mexico with supply and distribution chains that gird the globe — like Wal-Mart, Carrefour and Tesco — has accelerated the trend.
But the movable feast comes at a cost: pollution — especially carbon dioxide, the main global warming gas — from transporting the food.
Under longstanding trade agreements, fuel for international freight carried by sea and air is not taxed. Now, many economists, environmental advocates and politicians say it is time to make shippers and shoppers pay for the pollution, through taxes or other measures. …
Some of those companies say that they are working to limit greenhouse gases produced by their businesses but that the question is how to do it. They oppose regulation and new taxes and, partly in an effort to head them off, are advocating consumer education instead.
Tesco, for instance, is introducing a labeling system that will let consumers assess a product’s carbon footprint.
Some foods that travel long distances may actually have an environmental advantage over local products, like flowers grown in the tropics instead of in energy-hungry European greenhouses.
“This may be as radical for environmental consuming as putting a calorie count on the side of packages to help people who want to lose weight,” a spokesman for Tesco, Trevor Datson, said. …
Some studies have calculated that as little as 3 percent of emissions from the food sector are caused by transportation. But Mr. Watkiss, the Oxford economist, said the percentage was growing rapidly. Moreover, imported foods generate more emissions than generally acknowledged because they require layers of packaging and, in the case of perishable food, refrigeration. …
The problem is measuring the emissions. The fact that food travels farther does not necessarily mean more energy is used. Some studies have shown that shipping fresh apples, onions and lamb from New Zealand might produce lower emissions than producing the goods in Europe, where — for example — storing apples for months would require refrigeration.
But those studies were done in New Zealand, and the food travel debate is inevitably intertwined with economic interests.
Agriculture are argueably is the human activity that has the largest impact on the world, impacting many ecosystem services. However, most farmers have minimal financial incentive to enhance ecosystem services other than crop yield. WRI Earthtrends reviews the evidence that Expanding Agriculture and Protecting Ecosystems: Can Payments to Farmers Accomplish Both?
How can farmers be encouraged to reduce these negative side-effects, while also meeting the growing demand for food and fiber?
Paying Farmers for Ecosystem Services
Farmers constitute the largest group of natural resources managers in the world–agriculture accounts for over 40% of global employment. The concept of paying farmers for the ecosystem services they provide, thereby creating a financial incentive for environmental protection, is an approach generating increasing support worldwide. In fact, the FAO’s State of Food and Agriculture Report 2007 provides an in-depth analysis of this concept, highlighting its great potential as well as existing challenges.
Farmers can generate enhanced environmental services in three main ways:
* Changing methods of production
* Diverting current agricultural land to other uses
* Avoiding future conversion of new land to agriculture
Examples of Payment Systems around the World
The demand for environmental services has been increasing over recent decades, both due to greater awareness of their value and to their increasing scarcity. Consequently, many industrialized countries have already implemented programs providing farmers with payments for environmental services. In the United States, for example, farmers can elect to receive annual rental payments for retiring farmland from crop production for 10 to 15 years, thereby enhancing soil conservation. Similarly, farmers in the United Kingdom can receive compensation payments for adopting less intensive farming practices.
One of the most notable programs in the developing world was established in Costa Rica in 1996. To enhance forest environmental services (i.e. carbon sequestration, watershed protection and biodiversity protection), land and forest owners receive compensation payments for reforestation, sustainable forest management and forest protection. The program is financed via a fossil fuel sales tax and revenues from hydroelectric companies, among other sources. Similarly, China’s “Grain for Green” program pays farmers to plant forests on sloping and degraded lands.
Policy Design Issues and Challenges
Environmental payment schemes have great potential but must overcome several implementation challenges. A successful approach must create a mechanism for measuring and valuing a service, identify how and where to enhance services most cost-effectively, and decide which farmers to compensate and how much to pay them. In some situations, it may make sense to use alternative policy approaches, such as reforms to reduce agricultural market distortions or command-and-control regulations. No matter what strategy is adopted, the FAO emphasizes that poverty implications must be kept in mind. Most of the world’s poor people live in rural areas and are dependent upon agriculture and their natural resource base for survival–any plan to implement payments for environmental services will have both positive and negative impacts for the poor that must be considered.
Nutrient overenrichment of waters by urban, agricultural, and industrial development has promoted the growth of cyanobacteria as harmful algal blooms (1, 2). These blooms increase the turbidity of aquatic ecosystems, smothering aquatic plants and thereby suppressing important invertebrate and fish habitats. Die-off of blooms may deplete oxygen, killing fish. Some cyanobacteria produce toxins, which can cause serious and occasionally fatal human liver, digestive, neurological, and skin diseases (1-4). Cyanobacterial blooms thus threaten many aquatic ecosystems, including Lake Victoria in Africa, Lake Erie in North America, Lake Taihu in China, and the Baltic Sea in Europe (3-6). Climate change is a potent catalyst for the further expansion of these blooms.
Rising temperatures favor cyanobacteria in several ways. Cyanobacteria generally grow better at higher temperatures (often above 25°C) than do other phytoplankton species such as diatoms and green algae (7, 8). This gives cyanobacteria a competitive advantage at elevated temperatures (8, 9). Warming of surface waters also strengthens the vertical stratification of lakes, reducing vertical mixing. Furthermore, global warming causes lakes to stratify earlier in spring and destratify later in autumn, which lengthens optimal growth periods. Many cyanobacteria exploit these stratified conditions by forming intracellular gas vesicles, which make the cells buoyant. Buoyant cyanobacteria float upward when mixing is weak and accumulate in dense surface blooms (1, 2, 7) (see the figure). These surface blooms shade underlying nonbuoyant phytoplankton, thus suppressing their opponents through competition for light (8). Cyanobacterial blooms may even locally increase water temperatures through the intense absorption of light. The temperatures of surface blooms in the Baltic Sea and in Lake IJsselmeer, Netherlands, can be at least 1.5°C above those of ambient waters (10, 11). This positive feedback provides additional competitive dominance of buoyant cyanobacteria over nonbuoyant phytoplankton.
Global warming also affects patterns of precipitation and drought. These changes in the hydrological cycle could further enhance cyanobacterial dominance. For example, more intense precipitation will increase surface and groundwater nutrient discharge into water bodies. In the short term, freshwater discharge may prevent blooms by flushing. However, as the discharge subsides and water residence time increases as a result of drought, nutrient loads will be captured, eventually promoting blooms. This scenario takes place when elevated winter-spring rainfall and flushing events are followed by protracted periods of summer drought. This sequence of events has triggered massive algal blooms in aquatic ecosystems serving critical drinking water, fishery, and recreational needs. Attempts to control fluctuations in the discharge of rivers and lakes by means of dams and sluices may increase residence time, further aggravating cyanobacteria-related ecological and human health problems.
Simon Donner writes about his new paper Corn-based ethanol production compromises goal of reducing nitrogen export by the Mississippi River (Proc. Natl. Acad. Sci. USA, 10.1073/pnas.0708300105) on his weblog maribo:
A new paper by my colleague Chris Kucharik and I looks at the new US Energy Policy, will calls for growing more corn to produce ethanol, will affect the “Dead Zone” in the Gulf of Mexico. For a quick summary, see Reuters, the CBC or AFP.
The Mississippi dumps a massive amount of nitrogen, largely in the form of the soluble ion nitrate, into the Gulf each spring. It promotes the growth of a lot of algae, which eventually sinks to the bottom and decomposes. This consumes much of the oxygen in the bottom waters, making life tough for bottom-dwelling fish and creatures like shrimp. The Dead Zone has reached over 20,000 km2 in recent years.
The primary source of all that nitrogen is fertilizer applied to corn grown in the Midwest and Central US. Reducing the Dead Zone to less than 5000 km2 in size, as is suggested in US policy, will require up to a 55% decrease in nitrogen levels in the Mississippi.
The new US Energy Policy calls for 36 billion gallons of renewable fuels by the year 2022. Of that, 15 billion can be produced from corn starch. Our study found meeting those would cause a 10-34% increase in nitrogen loading to the Gulf of Mexico.
Meeting the hypoxia reduction goal was already a difficult challenge. If the US pursues this biofuels strategy, it will be impossible to shrink the Dead Zone without radically changing the US food production system. The one option would be to dramatically reduce the non-ethanol uses of corn. Since the majority of corn grain is used as animal feed, a trade-off between using corn to fuel animals and using corn to fuel cars could emerge.
Bananas are one of the world’s main food crops (4th in economic value) with over 100 million tons being produced per year, most of these bananas are a consumed in the tropics, but 15% are exported and are key exports of many poor countries. Daniel Kurtz-Phelan in the New York Times Book Review on Peter Chapman‘s book Bananas: How the United Fruit Company Shaped the World:
For much of the 20th century, the American banana company United Fruit dominated portions of almost a dozen countries in the Western Hemisphere. It was, Peter Chapman writes in “Bananas,” his breezy but insightful history of the company, “more powerful than many nation states … a law unto itself and accustomed to regarding the republics as its private fiefdom.” United Fruit essentially invented not only “the concept and reality of the banana republic,” but also, as Chapman shows, the concept and reality of the modern banana. “If it weren’t for United Fruit,” he observes, “the banana would never have emerged from the dark, then arrived in such quantities as to bring prices that made it available to all.”…
Throughout all of this, United Fruit defined the modern multinational corporation at its most effective — and, as it turned out, its most pernicious. At home, it cultivated clubby ties with those in power and helped pioneer the modern arts of public relations and marketing. (After a midcentury makeover by the “father of public relations,” Edward Bernays, the company started pushing a cartoon character named Señorita Chiquita Banana.) Abroad, it coddled dictators while using a mix of paternalism and violence to control its workers. “As for repressive regimes, they were United Fruit’s best friends, with coups d’état among its specialties,” Chapman writes. “United Fruit had possibly launched more exercises in ‘regime change’ on the banana’s behalf than had even been carried out in the name of oil.”