Essay

Perils and Prospects of Unifying the Policy Discourse Surrounding Sustainability, Climate Change, Economic Development, and Poverty

There’s a question I want to raise, something that’s been niggling at the back of my mind for a while, something I’ve changed my opinion on over and over again. 


There is a movement amongst some policy makers to unite the policy discourse surrounding climate change with economic development, low-carbon energy policy, national security, business risk management and sustainability practices, and poverty alleviation.

Earlier this year for example, DECC Minister Ed Miliband said during testimony to Parliament’s Environmental Audit Committee, “we know that the issues of poverty and climate change are interlinked in the sense that climate change is now one of the big causes of poverty.”

[(Cringe) Leaving aside the climate science issues with that statement;]

Helen Clark (Head UNDP) at LSE said , “I think the most likely source of new funding for development will be climate finance which stems from a new climate agreement. When it is reached… the least developed and lowest income countries in particular do need significant support above and beyond existing ODA to meet the costs of adaptation and climate change let alone to embark on a low carbon development path… We see climate change not only as a very serious environmental challenge but as a very serious developmental challenge to climate change.”


It’s pretty clear where policy makers might have gotten these ideas.  To the untrained ear (or one that’s not thought about meaning carefully enough-- academic language must be carefully considered, you understand, it’s easily mistaken), it sounds like academic experts might be suggesting this.  

Lord Stern, for example, made the following comments at a press conference on migration and natural disaster risk management in Copenhagen,

“diversification of human activities.. -- different jobs in family & community, diversification of economic activities, large amount of economic development exactly is about this kind of diversification, people get better forms of education they do different forms of jobs… underlines just how important economic development and dealing with risk are.

“We should see these things as intimately related: economic development, diversification, risk management,  are all part of the same story that’s why the stress on the way and which prevention is integrated into the development story in this set of ideas is important.”


Question: after reading those statements do you think Lord Stern is saying we should integrate development policy and climate change?  


I did at first.  Diversification of economic activities prevents economic shocks from having too much of an effect on an economy.  For example, most developing countries are largely dependent upon exports of commodities (raw materials), if all of a sudden ethanol was no longer believed to be a low-carbon fuel (but you say, it isn’t-- again we’re leaving science at the door for the moment) the economies of (list several african countries) would take a serious hit-- demand declines, the price drops, farms go out of business, employment declines, people can’t repay loans, they go into debt, perhaps children are sent to work or taken out of school to work, down the line that means less human capital present in an economy with opportunity cost to overall growth.  

In the last few links in that chain, consider the child who’s taken out of school and doesn’t reach a certain grade level. Let’s say that happens to 100 families.  And let’s say that three years later, when those kids would have been in school the school doesn’t hire a teacher because those 100 kids won’t be needing an education.  A would be teacher is unemployed and doesn’t demand health care, which impacts the health care she would have demanded from a clinic, the clinic has less revenue.

So could we say that corn prices effect health care? Sure.  Should we say that corn prices effect health care?

Ha-Joon Chang makes this point at a recent lecture at LSE:  reducing poverty does not an industrialization make.  Thus, it was a disservice to the development agenda to equate it with the Millennium Development Goals, the purpose of which are to alleviate poverty. Develop a country, reduce poverty.  Right?

He says:

“There are many different elements in the MDGs, as they are known, especially as each goal has a number of targets that span across different sub-issues. For example under goal seven you have 3-4 different targets… so they are a lot more complex than what you see. But looking at them you realize that most of them are basically about reducing poverty and improving education and health. This is obvious for goals one to six, but goal seven, environmental stability, if you look at the targets under that you see that a lot of it is about health. One of the targets is improving access to safe drinking water, another target is increasing access to improved sanitation.  Noble those these goals and targets may be, in my view, their sum total does not amount to development.”

The problem is that the MDG’s mostly focus on standard of living programs:  improving health care, education, and access to clean water, sanitation, and housing.  These things are reduced when you increase, broadly speaking, per capita GDP.  But poverty alleviation does not make industrialization, which Chang says, is what development is.

Think about the backlash against micro-finance lately.  There are more and more academic studies being published that say that well actually, we should think twice before funding more micro-finance programs because it doesn’t reduce poverty.  

Did micro-finance ever claim to reduce poverty to begin with?  Or was that an inference, an assumption?  Micro-finance does effectively manage poverty, provide an income so maybe in a generation or two a family can move up the income ladder.  Micro-finance in the short term makes life more stable for poor families but it won’t make them middle class.  

Is this the kind of policy disappointment we’re likely to encounter if we integrate the climate, poverty, and development policy agendas?

What we’re talking about here is correlations versus causations.  Yes, addressing standard of living, the amount and quality of human capital in an economy is correlated with economic development, but unless that economy is industrialized to a certain level there’s nothing to do with kids who complete the tenth grade and eat regular meals and don’t get infections because they are now drinking clean water.  

So what Lord Stern says, about economic diversification and risk management and climate change makes sense, but he’s not said we should think of climate adaptation and mitigation and low-carbon development paths as economic development policy.  

What he has said is that increased migration due to increased instances of natural disasters needs to be assessed, economies need to be diversified so that when there’s a drought and the maize doesn’t grow, the agriculture sector doesn’t take as large of hit, and thus a national economy wouldn’t take as large of a hit.  These are all important aspects of development and sustaining development as it is impacted by climate change.


 Policy perceptions and the metrics:


Now I understand that the factors Stern talks about are inter-linked.  And there are many businessman and financiers who recognize that sustainable business must invest with a long-run view, which will yield, over time, more efficient spending and low-carbon production processes, which include more flexible working hours and thus happier and more efficient workers, who work harder, ultimately adding to overall profit.  Those links are not made by everyone-- particularly the general public that isn’t focused on the sustainability discourse.  

In order to makes these links obvious, so that everybody gets the message-- that sustainability is economics, is class, is low-carbon, is development-- and we go more quickly and efficiently into a low-carbon way of life, should we be linking sustainability, climate change, poverty, and development policy?

An easy next step is to revalue the economy as the Commission on the Measurement of Economic Performance and Social Progress (hence forth the Stiglitz Commission) recommends, or as Herman Daly and more recently Tim Jackson have suggested.  Ask this of businessmen and risk managers and they are divided.  Those more closely aligned with green finance say that revaluing investment is necessary.  Others say that the focus on CSR strategies across industries and the demand for socially responsible businesses-- indeed the rise of social enterprise-- means that we will get all the benefits of economic revaluation without actually having to rethink growth metrics and national accounting.  

But I don’t know if I buy that.  CSR wasn’t inherent in capitalism until people demanded it, because the market, left to itself, is inefficient.  And some even argue that the market tends toward inefficiency and even failure because its metrics focus on growth and profit.  Or is that just our perception of growth and profit-- if we change our perceptions about what levels of growth and profit are necessary and sufficient, will sustainable business practices themselves be sustainable?

In other words, is this a mind game we can play with ourselves or do we actually have to change the metrics too?  Changing the metrics does present a formidable challenge because estimating things like welfare and environmental degradation are hard. The process involves finding quantifiable proxies (challenging in and of itself) like rain fall, kilometers of tech cable installed, or number of species present in a square kilometer, and then possibly introducing a weight. Additionally, proxies and their weights would vary by culture. As the Stiglitz Commission report points out:   

But messing around with the metrics is something no one is willing to do because it’s hard--which actually isn’t a good enough excuse. Because something is hard, doesn’t mean it isn’t worth doing.

Tim Jackson, for example offers a way of tinkering with Macroeconomic metrics (GDP) in Appendix 2 of his book, Prosperity Without Growth.  (below) Jackson’s biggest tweak to GDP is with Investment, where he adds an energy variable to the production function, and offers a range of different energy types with varying investment variables.

The Stiglitz Commission report doesn’t give equations like Jackson’s work does, but instead provides a clearer and more comprehensive framework with which to conceptualize the complexities of putting together a metric. The report makes several references to the work from the Brundtland Commission and green profit/GDP measures that governments and companies have used in micro cases.

But changing the metrics could work, especially if it was explicitly subject to frequent review, much in the way the EU ETS is before the beginning of each phase.  An idea of the next period’s expectations could be defined and then revamped in the year before the implementation.  The EU ETS has done this for allowances by sector before phase II and phase III.  Thus, a working example exists.

A final point needs to be made: it is ridiculous to think that economic metrics hadn’t ought to evolve along with societal and philosophical norms.  As societies evolve, their ideas about what works and what doesn’t change, the same can be so with economics.  But the future of economics is best left for another post.


Communicating the challenges, goals, and arguments:

Another aspect of this unification dialogue is this: communicating that things are interconnected while making certain that people understand that one aspect doesn’t cause another, and that science isn’t exaggerated.  Short of making statistics and econometrics obligatory in schools, how do we solve this problem?  Make communications courses obligatory for PhDs.  

One young climate scientist I spoke with recently works in the Met Office (UK government’s national weather service), and told me that it was quite an awakening for her when she started her job and was assigned to speak with board members of large companies about climate change.  For her, it was like learning a new language.  

PhD courses should come with a pass/fail communications module to show scientists how to put things in terms business people will understand.  Or journalists-- how many times has the media caused a panic because some journalist got the implications of science wrong?  The media is always looking for the sensational and maybe we need to think about that. 

Lord Stern even mentioned at a lecture at LSE recently that he thought that in light of mass natural and social science journalism fail, academics ought to make themselves more available to  journalists to make certain they understand the ins and outs of research.  And this goes for both think tanks and universities.  Curiously, the New Economics Foundation, one of that strongest academic voices for revaluing the economy is never available for press interviews. But I digress.

And what is the role of the press-- to inform and be informed obviously-- but is it more than that?  In every country the press has an important role in shaping the conversation society has.  But weak regulation and too much focus on profit has lead to a media now focused on infotainment.  Living in Britain, with publicly funded media allows the press to remain partly focused on “boring” topics but that information remains available.  

The point is this: government has a role in media and media has a role in governance and a responsibility to government, and both have a responsibility to citizens. Most notably, the kind of involvement I’m talking is media’s participation during the second World War in a government agenda to inspire behavioural change by setting out moral standard.

I want to very softly and very carefully suggest that propaganda isn’t necessarily a bad word.  I want to suggest that media complicity in shaping a public agenda wouldn’t and shouldn’t necessarily be without oversight.  That oversight would come in the form of an internal dialogue within media outlets, within individual journalists, in consideration of a public agenda and overall public good.  The implication of this is perhaps introducing more ethics and philosophy components to journalistic study.


Conclusion

Uniting a policy dialogue tightly enough to drive effective social change deserves consideration, and sooner rather than later because we must make gHg emissions cuts on (ahead) of the schedule suggested by the UNFCCC process.  The MDGs, an example of policy discourse unification on this scale, are behind schedule.  Policy by correlation and not causation hasn’t worked.  Do we risk adaptation and mitigation to climate change by tightening the policy discourse? By not tightening the policy discourse?


The trouble I think is best summed up by Alistair McIntosh, in his book “Hell on High Water”

 

Please leave your thoughts, I’d love to discuss this.