Tag Archives: globalization

Energy intensity convergence

In climate change discussions, energy intensity is the amount of energy required to produce a dollars worth of GDP.  While there are big differences in energy intensity around the world.  Generally poor countries are more energy intensive than rich, and the US, Canada and Australia are more energy intensive than Europe and Japan.  A recent graph from the Economist illustrates how energy intensities are falling and converging, unfortunately at a slower rate than economic growth, meaning that energy use, and hence CO2 emissions, continue to grow.

From the Economist:

Cyber-Environmental Politics?


Google and renewable energy? Hackers, deforestation and carbon emission rights? This might sound like an odd mix of events, but something is definitely in pipeline. Global environmental change and rapid information technological change have for a long time been viewed as parallel, and decoupled global phenomena. A number of events in the last month indicate that this is likely to change. Just consider the following events:

GoodMorning! Full Render #2 from blprnt on Vimeo.

Internet giant Google recently got an approval in the US, to buy and sell energy. This happens after the company’s explicit ambition to become one of the major players in renewable energy. According to the New York Times: “The company’s Green Energy Czar Bill Weihl said the company was fully committed to accelerating the development of renewable energy technologies that can prove more cost-effective than coal power, as a means of both curbing carbon emissions and trimming its own giant energy bill”.

In addition, computer hackers seem to have found a new pool of resources to steal from – emissions trading. As reported by Wired recently, hackers have been successful in stealing millions of dollars by launching “a targeted phishing attack against employees of numerous companies in Europe, New Zealand and Japan, which appeared to come from the German Emissions Trading Authority”. A similar attack was assumed in Brazil in December 2008 when hackers managed to get in to the government logging databases. The impacts? Illegal harvest of 1.7 million cubic meters of timber, according to Wired.

One final example is of course the ongoing bashing of the IPCC, and the now infamous e-mail hack of UK climate scientists. An interesting follow up is this op-ed in The Australian, arguing that the Internet is allowing climate change skeptics to gain traction. One of the more thought-provoking quotes from the article states:

The `climate consensus’ may hold the establishment — the universities, the media, big business, government — but it is losing the jungles of the web. After all, getting research grants, doing pieces to camera and advising boards takes time. The very ostracism the sceptics suffered has left them free to do their digging untroubled by grant applications and invitations to Stockholm.

See also John Bruno of climateshifts.org, who asks “Who is orchestrating the cyber-bullying?”.

Are moving into an era of cyber-environmental politics? I’m pretty sure that we are.


chinaphotoIn a New Yorker article – the promised landEvan Osnos about African merchants living in China. He also narrates an Audio Slide Show about the economic, social, and religious life of African migrants in Guangzhou.  On his blog he writes:

Prof. Adams Bodomo is a Ghanaian linguist at the University of Hong Kong and one of the first scholars to write in English about the African community in Hong Kong and Guangzhou.

… As Bodomo and other scholars see it, immigration, like other byproducts of prosperity, is an unfamiliar issue in China. For most of its history, China was so poor that hardly anyone but missionaries or marauders wanted to stay. China’s posture toward foreigners was erratic; it oscillated between the xenophobia that produced the Great Wall to the zealous overture of the Beijing Olympics. But China is still ambivalent about people settling down permanently, and Bodomo sees that as a the big question about whether these communities survive.

There is also a podcast interview with Osnos.

Networks without borders?

Cloud computing presents challenges for national regulation – both for censorship, accounting, and privacy.  From the Economist Computers without borders:

Data Islandia, a local company, is trying to establish the island as a vault for a growing pile of data that firms must retain in order to comply with all kinds of regulations. It has a compelling pitch. With its cool climate, abundant geothermal energy and secure remoteness, Iceland appears to be a prime location for data archives.As often, however, truth is stranger than fiction. In a way, Data Islandia is erecting borders in the cloud: it intends to store European data according to European regulation and American bits according to American rules. What is more, to keep the data safe during transport, they are picked up with a data scooter (in essence a container filled with disk drives) and taken to Iceland by aeroplane as though fibre-optic links had never been invented.

This illustrates the political tensions that will arise with the cloud. In one way it is the ultimate form of globalisation: vast virtualised computer systems and electronic services know no borders. Yet governments are likely to go to great lengths to avoid losing even more control.

Illegal logging, black globalization, and undercover environmentalists

Black globalization is an evocative name for how multi-nationals and mafias can blur together by using violence and global trade to avoid regulation, certification, and quality control. In the New Yorker article The Stolen Forests Raffi Khatchadourian writes about the global trade in illegally logged timber, and how an environmental NGO, the environment investigation agency, collects data to document illegal logging and encourage law enforcement.

Chances are good that if an item sold in the United States was recently made in China using oak or ash, the wood was imported from Russia through Suifenhe. Because as much as half of the hardwood from Primorski Krai is harvested in violation of Russian law—either by large companies working with corrupt provincial officials or by gangs of men in remote villages—it is likely that any given piece of wood in the city has been logged illegally. This wide-scale theft empowers mafias, robs the Russian government of revenue, and assists in the destruction of one of the most precious ecosystems in the Northern Hemisphere. Lawmakers in the province have called for “emergency measures” to stem the flow of illegal wood, and Russia’s Minister of Natural Resources has said that in the region “there has emerged an entire criminal branch connected with the preparation, storage, transportation, and selling of stolen timber.”

A fifth of the world’s wood comes from countries that have serious problems enforcing their timber laws, and most of those countries are also experiencing the fastest rates of deforestation. Until a decade ago, many governments were reluctant to acknowledge illegal logging, largely because it was made possible by the corruption of their own officials. As early as the nineteeneighties, the Philippines had lost the vast majority of its primary forests and billions of dollars to illegal loggers. Papua New Guinea, during roughly the same period, experienced such catastrophic forest loss that it commissioned independent auditors to assess why it was happening; they determined that logging companies were “roaming the countryside with the self-assurance of robber barons; bribing politicians and leaders, creating social disharmony and ignoring laws in order to gain access to, rip out, and export the last remnants of the province’s valuable timber.” In 1998, the Brazilian government announced that most of the country’s logging operations were being conducted beyond the ambit of the law.

In 2001, experts with the United Nations in the Democratic Republic of Congo coined a phrase, “conflict timber,” to describe how logging had become interwoven with the fighting there. The term is apt for a number of other places. In Burma, stolen timber helps support the junta and the rebels. In Cambodia, it helped fund the Khmer Rouge, one of the most brutal rebel factions in history. Charles Taylor, the former President of Liberia, distributed logging concessions to warlords and a member of the Ukrainian mafia, and the Oriental Timber Company—known in Liberia as Only Taylor Chops—conducted arms deals on his behalf. The violence tied to Taylor’s logging operations reached unprecedented levels, and in 2003 the U.N. Security Council imposed sanctions on all Liberian timber. (China, the largest importer of Liberian timber, tried to block the sanctions.) Shortly afterward, Taylor’s regime collapsed. An American official told me that the U.S. intelligence community “absolutely put the fall of Taylor on the timber sanctions.”

Shipping containers and world trade

The BBC is planning to follow and report on the progress of a container around the world for a year.  They have painted a container and bolted a GPS transmitter to allow is readers to follow its progress around the world on their map (as I write this the container full of whiskey in Scotland).

The BBC named their project The Box after The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger an interesting book on the history of containerization and its effect on globalization by Marc Levinson (here is a book review from Ethan Zuckerman and an essay by Witold Rybczynski).

I read the book earlier this year and enjoyed it.  I would have liked more economic history and statistics in the book, but its main problem was that people mocked me when I told them I was reading a book about containers. However, containers have become an essential part of global trade and of its rapid growth.

Trends in world trade of total merchandise, intermediate goods and other commercial services, from 1988-2006 (100=1988).  From WTO\'s World Trade Report 2008.
Trends in world trade of total merchandise, intermediate goods and other commercial services, from 1988-2006 (100=1988). From the WTO’s World Trade Report 2008.

Below are some maps of parts of global trade.  They give a bit of an idea of where such a container is likely to move between.

Structure of world trade of between 28 OECD countries in 1992. The size of the nodes gives the volume of flows  in dollars (imports and exports) for each country . The size of the links stands for the volume of trade between any two countries. Colors give the regional respectively memberships in different trade organisations: EC countries (yellow), EFTA countries (green), USA and Canada (blue), Japan (red), East Asian Countries (pink), Oceania (Australia , New Zealand) (black).  From Max Planck Institute for the Study of Societies.
Structure of world trade of between 28 OECD countries in 1992. The size of the nodes gives the volume of flows in dollars (imports and exports) for each country . The size of the links stands for the volume of trade between any two countries. Colors give the regional respectively memberships in different trade organisations: EC countries (yellow), EFTA countries (green), USA and Canada (blue), Japan (red), East Asian Countries (pink), Oceania (Australia , New Zealand) (black). From Max Planck Institute for the Study of Societies.

World trade imbalance web for the years 1960 and 2000. Directed network of merchandize trade imbalances between world countries. Each country appears as a node and the direction of the arrow follows that of the net flow of money.  (Serrano et al 2007).
World trade imbalance web for the years 1960 and 2000. Directed network of merchandise trade imbalances between world countries. Each country appears as a node and the direction of the arrow follows that of the net flow of money. (Serrano et al 2007).

The book – The Box – includes lots of interesting history of the container system, and how as a system it lead to innovations, efficiencies, and had many unintendend consequences.  One example, is that it made many old ports obsolete which reshaping many city centres (over decades), but also the creation of new ports and the changes in container ships they triggered – caused ongoing shifts in global trade patterns.

One key cycle of change was a postive feedback between ship size and port attributes. Because the fuel consumption of a ship does not increase proportionately to the number of containers a ship can carry – containers ships have become bigger and bigger – which has had the effect of focusing trade into ports that can handle the large ships and the trade volume.  These big ports then lead to the construction of more bigger ships. Wikipedia lists the world’s busiest container ports – the top are Singapore, Shanghai, Hong Kong , Shenzen, and Busan.  This concentration of big ships in big ports has had the effect of making world trade unexpectedly (for economic theory) “lumpy.”  Paul Krugmann explains:

[Economic theory suggests] a country like China should export a wider range of products to a small country, like Ecuador, than it does to a big country, like the US. Why? Because Ecuador, being small, probably has fewer industries that are cost-competitive with Chinese exports. In fact, however, China seems to export a wider range of stuff to bigger economies.

A possible explanation is the lumpiness of transport costs: there are more container ships heading from China to US ports than to Ecuadorian ports, so that it’s worth sending over a bigger range of stuff. It’s like the reason there are fewer food choices in supermarkets on St. Croix (where we spent our last vacation) than in New Jersey — there’s just one boat with groceries coming over every once in a while, so you can’t keep, um, arugula in stock.

Reading the Box also makes it clear that while higher fuel prices will reshape trade patterns and probably boat designs, neither global trade patterns nor transportation costs will return to those of the 1960s or 1970s.  This is due to huge improvements in logistics that have radically dropped the labour cost for shipping goods long distances, and this has also decreased fuel costs.

The rapid expansion of skills in logistics is a hidden environmental efficiency of the moden world economy – in that it allows things to be moved around for less cost than earlier in history.  However as occurs with most increases in efficiency, modern society undoes the environmental advantages of efficiency by using the cost saving to simply move more stuff for the same amount of money.

Logistics makes at least parts of the world “flatter.” And the ease of making these connections appears to make it easier to spread tools and ideas as well as goods.  The World Bank claims that countries with the most predictable, efficient, and best-run transportation routes and trade procedures are also the most likely to take advantage of technological advances, economic liberalization, and access to international markets.  While countries with higher logistics costs are more likely to miss the opportunities of globalization.  The World Bank ranks countries using a logistics performance index which measures the ease with which the country connects to the global economy.  Singapore, Netherlands, and Germany are at the top as the most accessible; while Rwanada, East Timor, and Afghanistan are at the bottom of the rankings.

Of course, novel solutions also produce novel problems.  Discarded containers litter landscapes worldwide (finding uses for them has become a standard architecture project), container ports are centres of environmental and biotic pollution, and the ease of using containers is also useful for smuggling.

And at least my impression from reading The Box, was that containerization has not finished trasnforming the world economy.

P.S. Ethan Zuckerman also has a long post Mapping a connected world discussing containers and world trade.

A giant pool of money flows into global agriculture

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.