All posts by Garry Peterson

Prof. of Environmental science at Stockholm Resilience Centre at Stockholm University in Sweden.
Reorganization

After Iceland’s crisis – social reorganization?

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From the Guardian After the crash, Iceland’s women lead the rescue

Icelandic women are … more likely to be thinking about how to put right the mess their men have made of the banking system than about cooking them comfort food. The tiny nation, with a population of just over 300,000 people, has been overwhelmed by an economic disaster that is threatening its very survival. But for a generation of fortysomething women, the havoc is translating into an opportunity to step into the positions vacated by the men blamed for the crisis, and to play a leading role in creating a more balanced economy, which, they argue, should incorporate overtly feminine values.

The ruling male elite is scarcely in a position to argue. The krona has collapsed; interest rates and inflation have soared; companies and households which have borrowed in foreign currency are overwhelmed by their debts and unemployment is at record levels. An exodus of young people is feared from the capital only recently held up as a centre of cutting-edge cool. Walking along Laugavegur, touted until a year or so ago as the Bond Street of Reykjavik, the gloom is palpable.

The idea that Reykjavik, an attractive, low-rise provincial place, could be a financial nerve centre on a par with the gleaming skyscrapers of Canary Wharf and Wall Street now seems utterly absurd. Over the past 10 years, however, little Iceland became a test-bed for the new economic order. Led by businessmen such as Baugur boss Jón Asgeir Jóhannesson, a nation previously best known for cod and hot springs reinvented itself as an Atlantic tiger. The Icelanders bought stakes in huge tracts of the British high street, including House of Fraser, Whistles and Karen Millen. Their banks were equally buccaneering, adopting free market reforms with gusto and moving with relish into financial engineering. The upshot: they now owe at least six times the country’s income for 2008 and have been taken into state hands.

Unlike in the UK, Iceland’s women are at the forefront of the clean-up. The crisis led to the downfall of the government and the prime minister’s residence – which resembles a slightly over-sized white dormer bungalow – is now occupied by Jóhanna Sigurdardóttir, an elegant 66-year-old lesbian who is the world’s first openly gay premier. When she lost a bid to lead her party in the 1990s, she lifted her fist and declared: “My time will come.” Her hour has now arrived – and the same is true for a cadre of highly accomplished businesswomen.

Prominent among them are Halla Tómasdóttir and Kristin Petursdóttir, the founders of Audur Capital, who have teamed up with the singer Björk to set up an investment fund to boost the ravaged economy by investing in green technology. Petursdóttir, a former senior banking executive, and Tómasdóttir, the former managing director of the Iceland Chamber of Commerce, decided just before the crunch to set up a firm bringing female values into the mainly male spheres of private equity, wealth management and corporate advice.

Ecosystem services

A diversification of French Farm policy?

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Change in agricultural policy in France.  From the Independent Farming policy: an end to French hypocrisy?

After 46 years of shovelling farm subsidies to its richer, more polluting farmers, France yesterday took a historic step towards a greener and fairer European agriculture policy.

Paris announced that from next year it would confiscate over 20 per cent of the billions of euros of European taxpayers’ money paid to its ranch-like cereals farms and divert the cash to hill farmers, grazing land, shepherds and organic agriculture.

The announcement brings to an end almost half-a-century of official hypocrisy in which French governments have talked about protecting “family farms” and “quality food” but allowed the bulk of European largesse to flow to chemical-assisted, hedge-free, cereals-ranching in northern, central and eastern France.

Regime Shifts

Icehouse to greenhouse tipping points

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icehouseA better understanding of the transition from an ice-free greenhouse to the current glaciated icehouse world suggests that there exist a tipping point dynamics due to hysteresis global ice cover dynamics. Lee Kump reflects on recent research by Liu et al in a the Science Magazine perspective Tipping Pointedly Colder:

For much of Earth history, the climate has been considerably warmer than it is today. But 33.7 million years ago, at the Eocene-Oligocene boundary, the world became trapped in the glacial state that continues to this day. Within just 200,000 years, Antarctica went from being a rather hospitable place to a polar continent buried under kilometers of ice. The transition was abrupt, but also overshot the new equilibrium with a super-glaciation–dubbed the Oi-1 climate event–that lasted a few hundred thousand years.

In an earlier study, Lear et al. (3) found evidence from deep-water sites that there was little if any cooling during the transition. This finding challenged common sense: Surely the planet needs to cool if ice sheets are to grow. Recent work on better preserved shallow-water sites by Lear and colleagues (4) and others (5), together with the results presented by Liu et al. from a geographically diverse suite of locations, shows that cooling did indeed accompany the growth of ice sheets on Antarctica.

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Simultaneous cooling at high northern and southern latitudes points strongly to a greenhouse gas reduction. It is puzzling, though, that the tropics show little cooling. Climate model simulations, including those conducted by the present authors, cool both tropics and higher latitudes when atmospheric carbon dioxide concentrations are reduced from greenhouse climate conditions.

Using a climate model, Liu et al. can only reproduce the cooling indicated by the temperature proxies when they impose a reduction in atmospheric carbon dioxide concentrations from 8 to 2 times the preindustrial level across the transition. This reduction is much larger than that previously interpreted from atmospheric CO2 proxies, from 4 to 2 times the preindustrial level. If the atmospheric CO2 proxies are correct, then the models are missing something that amplifies the climate sensitivity to changes in atmospheric CO2.

Given the strong evidence that cooling accompanied the transition into the glacial world, the playing out of the onset of Antarctic glaciation follows the script of a tipping-point climate transition. …

In thinking about the future, we must recognize that threshold behavior in one direction–like the Eocene-Oligocene boundary studied by Liu et al.–is normally accompanied by threshold behavior in the reverse direction, although the barriers to transition can differ in size (see the figure). For example, modern climate/ice-sheet models exhibit considerable hysteresis, requiring atmospheric carbon dioxide concentrations to rise well above the original initiation level to melt the Antarctic ice sheet. Future tipping behavior into a warm Eocene-like climate state may thus be delayed, but if and when it does occur, the transition will likely be abrupt.

Ecological Economics

Drinking bottled water is drinking oil

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ScienceNOW reports a new paper by Peter Gleick and Heather Cooley in Environmental Research Letters that compares the energy use of bottled and tapwater:

… From start to finish, bottled water consumes between 1100 and 2000 times more energy on average than does tap water.

Bottled water consumption has skyrocketed over the past several years. In 2007, some 200 billion liters of bottled water were sold worldwide, and Americans took the biggest gulp: 33 billion liters a year, an average of 110 liters per person. That amount has grown 70% since 2001, and bottled water has now surpassed milk and beer in sales. Many environmental groups have been concerned with this surge because they suspected that making and delivering a bottle of water used much more energy than did getting water from the tap. But until now, no one really knew bottled water’s energy price tag.

Environmental scientist Peter Gleick of the Pacific Institute, a nonprofit research organization in Oakland, California, and his colleague Heather Cooley have added up the energy used in each stage of bottled-water production and consumption. Their tally includes how much energy goes into making a plastic bottle; processing the water; labeling, filling, and sealing a bottle; transporting it for sale; and cooling the water prior to consumption.

The two most energy-intensive categories, the researchers reveal in the current issue of Environmental Research Letters, are manufacturing the bottle and transportation. The team estimates that the global demand for bottle production alone uses 50 million barrels of oil a year–that’s 2 1/2 days of U.S. oil consumption. Determining the energy required to transport a bottle isn’t as straightforward. Some bottles of water travel short distances, but others are imported from far-off countries, which increases their energy footprint. Gleick and Cooley found that drinking an imported bottle of water is about two-and-a-half to four times more energy intensive than getting it locally, often outweighing the energy required to make the bottle.

All told, Gleick estimates that U.S. bottled-water consumption in 2007 required an energy input equivalent to 32 million to 54 million barrels of oil. Global energy demand for bottled water is three times that amount. To put that energy use into perspective, Gleick says to imagine that each bottle is up to one-quarter full of oil.

Cities, Ecological Management, Scenarios

Weaving ‘Protective stories’ to secure urban green areas

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Henrik Ernstson and Sverker Sörlin‘s article Weaving protective stories: connective practices to articulate holistic values in the Stockholm National Urban Park, (2009 Environment and Planning A).  Is described in a Stockholm Resilience Centre press release ‘Protective stories´ help secure urban green areas:

Despite strong exploitation pressure, a diverse urban movement of civil society organizations in Stockholm has managed to provide narratives able to explain and legitimize the need to protect urban green areas. Through ‘protective stories´ that interlaces cultural history and conservation biology, activists have managed to link areas previously considered disconnected and justifying the need for a better, overall protection of the areas.
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Crucial for generating and keeping alive such narratives have been artists, authors and scientists and their artefacts like paintings, maps, buildings and scientific reports. While some artists are from the historical past, others have worked alongside the movement in producing artefacts towards articulating certain values. When re-printed in media, displayed at an exhibition, or published in a book, these artefacts — old or newly produced — also become agents in “telling the story” so as to put pressure on authorities and to change public opinon.

Such networks of activists, artefacts and social arenas do not possess any formal power, but they can nonetheless achieve a lot, both as a community of practice wielding power and knowledge but also through mobilizing yet more actors and artefacts to make the network grow. The protective story is kept alive at many places continously and simultaneously, says Ernstson.

General

Haurki Murakami on people and stories

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From Haruki Murakami‘s acceptance of the Jerusalem Prize for the Freedom of the Individual in Society – The novelist in wartime:

Please do allow me to deliver one very personal message. It is something that I always keep in mind while I am writing fiction. I have never gone so far as to write it on a piece of paper and paste it to the wall: rather, it is carved into the wall of my mind, and it goes something like this:

“Between a high, solid wall and an egg that breaks against it, I will always stand on the side of the egg.”

Yes, no matter how right the wall may be and how wrong the egg, I will stand with the egg. Someone else will have to decide what is right and what is wrong; perhaps time or history will decide. If there were a novelist who, for whatever reason, wrote works standing with the wall, of what value would such works be?

What is the meaning of this metaphor? In some cases, it is all too simple and clear. Bombers and tanks and rockets and white phosphorus shells are that high, solid wall. The eggs are the unarmed civilians who are crushed and burned and shot by them.

This is not all, though. It carries a deeper meaning. Think of it this way. Each of us is, more or less, an egg. Each of us is a unique, irreplaceable soul enclosed in a fragile shell. This is true of me, and it is true of each of you. And each of us, to a greater or lesser degree, is confronting a high, solid wall. The wall has a name: it is “the System.” The System is supposed to protect us, but sometimes it takes on a life of its own, and then it begins to kill us and cause us to kill others — coldly, efficiently, systematically.

I have only one reason to write novels, and that is to bring the dignity of the individual soul to the surface and shine a light upon it. The purpose of a story is to sound an alarm, to keep a light trained on the System in order to prevent it from tangling our souls in its web and demeaning them. I fully believe it is the novelist’s job to keep trying to clarify the uniqueness of each individual soul by writing stories — stories of life and death, stories of love, stories that make people cry and quake with fear and shake with laughter. This is why we go on, day after day, concocting fictions with utter seriousness.

My father died last year at the age of 90. He was a retired teacher and a part-time Buddhist priest. When he was in graduate school, he was drafted into the army and sent to fight in China. As a child born after the war, I used to see him every morning before breakfast offering up long, deeply felt prayers at the Buddhist altar in our house. One time I asked him why he did this, and he told me he was praying for the people who had died in the battlefield. He was praying for all the people who died, he said, both ally and enemy alike. Staring at his back as he knelt at the altar, I seemed to feel the shadow of death hovering around him.

My father died, and with him he took his memories, memories that I can never know. But the presence of death that lurked about him remains in my own memory. It is one of the few things I carry on from him, and one of the most important.

I have only one thing I hope to convey to you today. We are all human beings, individuals transcending nationality and race and religion, fragile eggs faced with a solid wall called the System. To all appearances, we have no hope of winning. The wall is too high, too strong — and too cold. If we have any hope of victory at all, it will have to come from our believing in the utter uniqueness and irreplaceability of our own and others’ souls and from the warmth we gain by joining souls together.

Take a moment to think about this. Each of us possesses a tangible, living soul. The System has no such thing. We must not allow the System to exploit us. We must not allow the System to take on a life of its own. The System did not make us: We made the System. That is all I have to say to you.

Adaptation, Reorganization

Habits of Resilient Organizations

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EcoTrust‘s blog/web magazine People and Place first issue is on Resilience Thinking, and features a number of articles on resilience including a interview with Brian Walker.  One interesting article proposes Six Habits of Highly Resilient Organizations:

1. Resilient organizations actively attend to their environments.
2. Resilient organizations prepare themselves and their employees for disruptions.
3. Resilient organizations build in flexibility.
4. Resilient organizations strengthen and extend their communications networks – internally and externally.
5. Resilient organizations encourage innovation and experimentation.
6. Resilient organizations cultivate a culture with clearly shared purpose and values.

The authors write:

Most companies live fast and die young. A study in 1983 by Royal Dutch/Shell found only 40 corporations over 100 years old. In contrast, they found that one-third of the Fortune 500s from 1970 were, at that time, already gone.

What differentiates success and failure, resilience and collapse? The Royal Dutch/Shell study emphasizes shared purpose and values, tolerance of new ideas, financial reserves, and situational awareness.

More recently, Ceridian Corporation collected best thinking and strategies to publish an executive briefing on organizational resilience. They highlighted the paradox that successful, resilient organizations are those that are able to respond to two conflicting imperatives:

* managing for performance and growth, which requires consistency, efficiency, eliminating waste, and maximizing short-term results

* managing for adaptation, which requires foresight, innovation, experimentation, and improvisation, with an eye on long-term benefits

Most organizations pay great attention to the first imperative but little to the second. Start-ups often excel at improvisation and innovation but founder on the shoals of consistent performance and efficiency. About half of all new companies fail during their first five years.

Each mode requires a different skill set and organizational design. Moving nimbly between them is a tricky dynamic balancing act. Disruptions can come from anywhere – from within, from competitors, infrastructure or supply chain crises, or from human or natural disasters. The financial crisis has riveted current attention, but it’s just one of many disruptions organizations must cope with daily. Planning for disruption means shifting from “just-in-time” production and efficiency to “just-in-case” resilience.

Visualization

Neo-biological art

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Artists whose work captures some of the complexity of nature.

Canadian artist and architect Philip Beesley‘s  Hylozoic Soil, an  sculpture whose shape memory alloy arms move in response to the movement of people.

Hylozoic soil

Hylozoic soil

Here is a video.

Reuben Margolin, dynamic wave sculptures.



Jen Stark‘s fractal paper sculpture:

via BoingBoing and We make money not art

Regime Shifts

Christian Robert on Black Swans

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Christian Robert, a Bayesian statistican at  Université Paris Dauphine comments on Taleb’s book the Black Swan in his blog article Of black swans and bleak prospects:

… I think that the book can be criticised solely from a statistical point of view as mostly missing the point. For instance, the notions of probable/improbable and randomness [that are constantly in use within the book] are always used in a vague sense and they thus mostly loose their meaning. (The distinction between random—that is, driven by a probability distribution—and fortuitous—that is, lacking any kind of reproducibility to be considered as a probability outcome—comes so late within the book as to be rather useless.) The extreme events that are called black swans are never analysed in terms of model shift, although they mostly correspond to cases where the background model had changed but the players were not aware of it. This somehow gives the impression that the author expects there exists a (deterministic) model that should explain even the most extreme phenomena. When considering some examples in the book like 09/11, this sounds ludicrous: the attack on 09/11 has nothing to do with randomness or a probabilistic model! Similarly, there is no discussion of the possible non-homogeneous nature of the time series leading to black swans.

…It is obviously a difficult exercise to write about popular Science without being populist and it must be almost inevitable to oversimplify one’s discourse by emphasizing a few examples over others, but I think the book overdoes it! By a fair margin. Worse, by attacking modelling tools like the Gaussian, models and modelers as a conglomerate of “charlatans”, it contributes to the anti-Scientist discourse that is unfortunately so prevalent today. Being a skeptic is commendable and scientists should never cease questioning their models, but throwing all models to the winds and using only “facts” to drive one’s decisions is not very helpful. As put by George Box (or by someone else before him), “all models are wrong, but some models are useful” and we (as statisticians) can devise tools to assess how wrong and how useful. Encouraging a total mistrust of anything scientific or academic is not helping in solving issues, but most surely pushes people in the arms of charlatans with ready answers.

via Andrew Gelman

Regime Shifts

Economist on fat tails and finance

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A special report on the future of finance in The Economist Fallible mathematical models: In Plato’s cave:

… although the normal distribution closely matches the real world in the middle of the curve, where most of the gains or losses lie, it does not work well at the extreme edges, or “tails”. In markets extreme events are surprisingly common—their tails are “fat”. Benoît Mandelbrot, the mathematician who invented fractal theory, calculated that if the Dow Jones Industrial Average followed a normal distribution, it should have moved by more than 3.4% on 58 days between 1916 and 2003; in fact it did so 1,001 times. It should have moved by more than 4.5% on six days; it did so on 366. It should have moved by more than 7% only once in every 300,000 years; in the 20th century it did so 48 times.

In Mr Mandelbrot’s terms the market should have been “mildly” unstable. Instead it was “wildly” unstable. Financial markets are plagued not by “black swans”—seemingly inconceivable events that come up very occasionally—but by vicious snow-white swans that come along a lot more often than expected.

This puts VAR in a quandary. On the one hand, you cannot observe the tails of the VAR curve by studying extreme events, because extreme events are rare by definition. On the other you cannot deduce very much about the frequency of rare extreme events from the shape of the curve in the middle. Mathematically, the two are almost decoupled.

The drawback of failing to measure the tail beyond 99% is that it could leave out some reasonably common but devastating losses. VAR, in other words, is good at predicting small day-to-day losses in the heart of the distribution, but hopeless at predicting severe losses that are much rarer—arguably those that should worry you most.

When David Viniar, chief financial officer of Goldman Sachs, told the Financial Times in 2007 that the bank had seen “25-standard-deviation moves several days in a row”, he was saying that the markets were at the extreme tail of their distribution. The centre of their models did not begin to predict that the tails would move so violently. He meant to show how unstable the markets were. But he also showed how wrong the models were.

Modern finance may well be making the tails fatter, says Daron Acemoglu, an economist at MIT. When you trade away and invest in stocks, all sorts of specific risk, in foreign exchange, interest rates and so forth, you make your portfolio seem safer. But you are in fact swapping everyday risk for the exceptional risk that the worst will happen and your insurer will fail—as AIG did. Even as the predictable centre of the distribution appears less risky, the unobserved tail risk has grown. Your traders and managers will look as if they are earning good returns on lower risk when part of the true risk is hidden. They will want to be paid for their skill when in fact their risk-weighted returns may have fallen.