Transcript 7. Regional Perspectives on Sustainable Development

Regional perspectives on
sustainable development
United Nations Environment Programme
Division of Technology, Industry and Economics
Economics and Trade Branch
Integrated assessment of traderelated policies and biological
diversity in the agricultural sector
Geneva, 14th – 15th July 2005
Professor Anthony Clayton
Sir Arthur Lewis Institute for Social
and Economic Studies,
University of the West Indies
Part 1: Jamaica’s environmental issues
Most serious: energy use, climate change, coral reefs.
 Serious: waste disposal, water management,
deforestation.


Causes: policy per se is adequate, but institutional
fragmentation and failure to implement is pervasive,
reflecting political culture.
Most serious
Energy: Jamaica depends on imported crude for > 90%
of primary energy demand. Oil prices have risen from
$10/barrel in 1998 to over $60/barrel in 2005; Jamaica
now has an import bill > $1bn/year.
 Climate change: sea level rise and more frequent
hurricanes threaten tourism, urban settlements, airports.
 Reefs: decline in live coral cover from 50% to 10%
over 3 decades, over 90% die-back in many cases.
Main cause: local over-fishing.

Responses…
efficiency – policy in abeyance.
Research on sugar → ethanol, but mainly to
salvage dying sugar industry.
 Climate change – fastest urban expansion
(Portmore) in flood plain.
 Reefs – no effective policy in place, ~ 1
good NGO, many ineffectual NGOs.
 Energy
Part 2: The role of IA
 IA requires
more time & effort, so typically
reserved for major policy decisions on
complex issues, some factors uncertain, longterm/extensive implications.
 The alternative is to make important decisions
on the basis of partial information, or without
objective assessment…
..which is what Governments actually do.
•
•
Many governments cannot deliver optimal
solutions, partly because Ministers exhibit
bounded rationality - decisions are ‘rational’
within a certain context.
Ministers want to be seen as successful and get
re-elected; so it is rational to focus on projects
with symbolic/political importance rather than
technical merit, Ministers compete for higher
office; it is rational to hoard information and
claim credit for positive developments.
Which is a recipe for policy conflicts…
Policy incoherence/conflicts have serious consequences:
• Different government agencies waste time and public
funds as they struggle to undo each other’s work.
• Governments with conflicting policies will inevitably
fail to achieve one or more of their goals.
• Policy conflicts will result in incompatible regulatory
requirements, conflicting market signals and confused,
overlapping remits for government agencies.
• This will create an ambiguous business environment,
which discourages investment.
Some examples of policy conflicts…
Cars
The Department of Transportation: encourage lighter vehicles to save fuel.
The National Highway Traffic Safety Administration: mandate extra safety
equipment for cars (thereby adding weight and increasing fuel
consumption).
The Department of Energy: keep coal rail freight rates low (to encourage
utilities to burn coal instead of oil).
Freight
The Department of Transportation: keep coal rail freight rates high (to support
the declining rail industry).
Pests
The Department of Agriculture: encourage farmers to use more pesticides.
Environmental Protection Agency: encourage farmers to use less pesticides.
Source: Business Week, 30/06/1980, cited in R Rothwell Industrial innovation and government
environmental regulation: some lessons from the past. Technovation Vol 12 No 7, 1992.
Part 3: IA for Jamaica’s key industry: tourism

Why it matters: by 2014 some 14.8% of Jamaica’s GDP (11.8%
today) will derive directly and 42.9 of GDP (36.0%) will derive
directly or indirectly from tourism, some 13.5% (10.7%) of the
workforce will be directly employed and 38.1% (up from 31.8%)
of all jobs supported by tourism.

The problem: mass tourism generates economic benefits but also
imposes a range of diverse burdens and impacts: on the
environment, on the infrastructure, on the culture and on social
relationships. These externalities can ‘blowback’. Negative
impacts resulting from inadequately planned and uncontrolled
tourism development can damage the natural or social
environment on which the success of a project depends.
Potential impacts of tourism




Environment: inadequately-treated effluents from hotels can
damage reefs and thereby contribute to beach erosion.
Social/environmental: cruise ships, golf courses etc require
large amounts of water; in a water-poor area this can cause
resentment.
Social: affluent tourists in poor countries can be the focus for
harassment, robbery or terrorism.
This can ultimately be economically self-defeating; the tourists
may depart for more pristine, safer destinations.
Vulnerability to policy incoherence
Tourism is extremely pervasive; it affects and is
affected by many other sectors - construction, airlines,
port authorities, air traffic control, police & security
agencies etc. Thus the tourism sector is particularly
vulnerable to policy deficiencies.
 A symptom of policy incoherence: a proposal for a new
tourism development in Jamaica can involve dealing
with up to 14 separate agencies.

Part 4: IA for Jamaica’s agriculture
and land-use
Economic context
Main sources of f/x
 Remittances
 Tourism
 All exports
1.4bn (rising)
1.3bn (rising)
1.2bn (rising)
Partial breakdown of export earnings
• Bauxite/alumina
64% (rising)
• Sugar
5% (threatened), ~US$90m
• Bananas
2% (threatened)
Sugar now represents < 1% GDP
Jamaica’s high-cost sugar
Jamaica’s industry is high cost (20-30c/lb), which is not
competitive. The costs are > world market price, but the
industry has been shielded by EU preferences.
 In an open market, Jamaica would have to compete
directly with major exporters such as Brazil (4c/lb),
Thailand, Australia (6.5c/lb), India (8c/lb), China and
Malawi (5.5c/lb).
 For internal (CAP reform) and external (WTO) reasons,
the EU must now reform agricultural policy, trade
preferences will be phased out.

The competitiveness gap: structural problems
600,000
500,000
500,000
1965
400,000
300,000
200,000
2003
152,165
100,000
0
Year
Between 1965-2003 output fell by 70%. Problems include soil denaturing,
pathogens, deficient infrastructure, poor labour relations, small scale.
The pending impact on Jamaica

The primary significance of the sugar industry is rural
employment, not f/x earnings. The industry still employs
>30,000 people directly, and (with bananas) maintains the
livelihoods of about 100,000, mostly in rural parishes
where other job opportunities are limited.

If the loss of EU preferences causes the collapse of the
sugar and banana industries there would be a surge in
rural unemployment; poverty and crime are likely to
increase.
The solution? Not trade preferences..
The original agreements were part commercial, part political; they
evolved into trade preferences that were supposed to be
developmental. The goals were to (a) enable ACP countries to
increase their share of the European market, (b) help ACP
countries to diversify their economies and (c) underpin
development and growth.
However, an EU 1997 green paper notes that:
 ACP share of EU markets fell from 6.7% (1976) to 3% (1998).
 Just 10 products accounted for 60% of ACP exports to the EU.
 Per capita GDP in sub-Saharan countries with preferences grew
by just 0.4% per annum from 1960 - 1992, compared with 2.3%
for developing countries as a whole.
The long-term cost of preferences
The trade preferences may have had the unintended effect
of encouraging countries to persist in economic
activities in areas in which they had no real competitive
advantage, discouraged diversification, allowed overmanning and inhibited restructuring…
….thereby postponing the inevitable accommodation to
market reality to the point where the adjustment will
now be more painful.
Perceived costs and benefits
Everyone sees the social and economic cost of
losing an industry like sugar…
 No-one sees the opportunity cost of keeping an
industry like sugar. What could we do instead? Are
there higher-value uses for the land, more
profitable activities for the people? Could the
financial support from the EU be used to invest in
sunrise activities, rather than dying ones?

There are many options…
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Modernize, mechanize, concentrate production, shed
labour, reduce costs.
Focus on fuel production e.g. ethanol (if oil > $35/b).
Diversify into higher value-added downstream products
& derivatives e.g. Xantham gum, feedstock chemicals.
Diversify into other, higher value-added agriculture, e.g.
nutraceuticals (flavonoids etc).
Re-deploy land & people into e.g. housing, light
industry, tourism development.
Await the inevitable.
Managing the transition
“I'm all for
progress; it's
change I don't
like.”
Mark Twain (18351910)
Thank you !