For those following the debate on commodity market speculation and its relationship to food price volatility, these are interesting times. Recent months have seen important developments in both the US and the European Union as regulators seek to reform financial markets in a bid to reduce excessive speculation in agricultural commodities. The regulatory outcomes in these jurisdictions will influence whether we end up in a race to the top or a race to the bottom with respect to the rules that govern financial investment in agricultural commodity derivatives.
Triple Crisis Roundtable: Doha Climate Talks
Eli Epstein-Deutsch, Triple Crisis Assistant Editor
Last week, the 18th round of the United Nations Framework Convention on Climate Change (UNFCCC) kicked off in Doha, Qatar, a petroleum-rich nation with heavily subsidized fossil fuels and among the cheapest gas prices in the world. It’s perhaps a measure of the international mood that the Qatari government, among the greatest beneficiaries of the conventional energy regime, went as far as to partner behind the scenes with 350.org and other Western NGO’s to organize the first-ever legal protest march in Qatar, calling for action from Arab leaders in curbing CO2 emissions (though Qatar itself has not pledged any cuts). As leaders of major developed and emerging nations now wrangle predictably over who should bear greater responsibility for reining in the industrialized world’s ever-expanding carbon footprint, in the hope of limiting warming to the widely ratified goal of 2°C, the newest climate study to be released indicates that we are already rapidly falling behind this target. The report suggests we are on track to reach 5°C of total warming by 2100, a temperature level unseen in the biosphere that could render many coastal cities and subtropical regions uninhabitable. It remains to be seen whether the seriousness of the zeitgeist will be matched by a new seriousness in national and international politics. In the meantime, several Triple Crisis experts offer insights into various facets of our dilemma: agriculture, energy, trade and diplomacy. Please join the conversation by leaving comments on the posts below.
Alejandro Nadal, In the Wake of Kyoto’s Protocol
Frank Ackerman, Will Climate Change Crush Agriculture?: New Research Challenges Complacency
Edward Barbier, Doha, Fracking, and the Green Economy
In the Wake of Kyoto’s Protocol
Burying a corpse can be tricky. It becomes a truly difficult task when during a funeral vigil someone splashes whiskey on the dead man’s face who then stirs to rise, crying “Soul of the devil, did ye think me dead?” as in Joyce’s Finnegan’s Wake.
Something similar is happening to the Kyoto Protocol, a treaty that appears to be setting a new record in terms of unburied corpses. Killed in Copenhagen’s COP 15 in 2009, it got its death certificate in Cancun’s COP 16 in 2010. In Durban’s COP 17 there were wild rumors about resuscitating this zombie but they all turned out to be just that, rumors.
Today in Doha’s COP 18 the Kyoto Protocol (KP) continues to be paraded as a living body. Everybody inside the convention center will tell you that although the first (Annex I) commitment for greenhouse gas emission reductions expires in 2012, the other provisions remain in force. It’s true, but those binding commitments were the heart of the treaty. Thus, stricto sensu, the treaty is alive, but it has been eviscerated.
Will Climate Change Crush Agriculture? New Research Challenges Complacency
Is climate change good or bad for agriculture? As recently as the 1990s, it was widely believed that the first few degrees of global warming would boost world average crop yields and food production. Higher temperatures were expected to lengthen growing seasons in temperate regions, while more carbon dioxide (CO2) in the atmosphere would act as a fertilizer, promoting plant growth.
The research of the last decade has led to a more ominous outlook for agriculture, as Elizabeth Stanton and I explain in a new paper. Three areas of recent research challenge the older, optimistic picture of climate change on the farm: field research has reduced estimates of the carbon fertilization effect; new analyses identify a strong effect of extreme temperatures on crop yields; and in many regions, changes in precipitation and the availability of irrigation will be the limiting factor for food production.
Carbon fertilization benefits are real but limited. Some plants, including maize, sugar cane, sorghum, and millet, use a distinct style of photosynthesis and experience almost no yield gains from increased atmospheric CO2. For one major crop, cassava, increased CO2 causes sharply reduced yields. Most other crops do have higher yields at elevated CO2 levels – but research with realistic simulations of actual growing conditions has led to modest estimates of the carbon fertilization effect. William Cline has projected that 550 parts per million (ppm) of CO2 in the atmosphere (about a 40% increase over current levels) would cause a worldwide average increase of 9% in crop yields.
Doha, Fracking and the Green Economy
As governmental representatives meet in Doha to negotiate yet again a successor to the expiring 1997 Kyoto Protocol on climate change, two recent global trends may alter irrevocably such negotiations, and even affect future global warming. The first is the new shale gas and oil boom in the United States and other regions. The second is the emergence of the green economy.
As outlined in an article in the UK Guardian newspaper by Julian Borger and Larry Elliott, rapid exploitation of vast shale gas and oil deposits in the United States through new fracking technologies is changing global energy markets and future supplies. In just a few years, fracking has allowed the US to produce 30% of its gas needs, and should account for over half of domestic consumption by the early 2030s. Canada’s development of tar sands could have a similar impact on oil markets. Australia is likely to rival Qatar as the world’s major exporter of liquefied natural gas (LNG), and West Africa will also become a major supplier.
Paying Dexia's Debts: The Risks of Globalized Finance
François Chesnais, Guest Blogger
The story of Dexia Group or Dexia S.A. is that of the rise and fall in less than twenty years of a diversified financial services corporation, small by global standards but which tried to play in the first league. It is the story also of taxpayer money spent uselessly trying to salvage the bank by two governments at the very time they were axing socially important expenditures. This is why the political demand for true nationalization under citizen control put forward since 2010 by the Left and those in the no-global movement, notably Attac, has focused in particular on Dexia.
This story began in the 1990s, at the time financial euphoria was rampant on both sides of the Atlantic, with the privatization of Belgian and French financial institutions. In Belgium, privatization primarily concerned the Gemeentekrediet van België / Crédit Communal de Belgique, which had been set up in the 19th century and was still owned in part by municipalities. The bank became a retail bank and took the path of international acquisitions and mergers, notably in neighboring Luxemburg. In France, an entity named CAECL (Caisse d’aide à l’équipement des collectivités locales) established in the post-World War II period, converted into a new public corporation named Crédit Local de France, with a mandate and status permitting it to expand through acquisitions. A US subsidiary, the CLF New York Agency was set up in 1990. In 1991 a proper initial public offering took place on the Paris Stock Exchange, with a distribution of shares between the French State (25.5%), the Caisse des Dépôts (25%) and individual investors from France and abroad (49.5%).
Paying Dexia’s Debts: The Risks of Globalized Finance
François Chesnais, Guest Blogger
The story of Dexia Group or Dexia S.A. is that of the rise and fall in less than twenty years of a diversified financial services corporation, small by global standards but which tried to play in the first league. It is the story also of taxpayer money spent uselessly trying to salvage the bank by two governments at the very time they were axing socially important expenditures. This is why the political demand for true nationalization under citizen control put forward since 2010 by the Left and those in the no-global movement, notably Attac, has focused in particular on Dexia.
This story began in the 1990s, at the time financial euphoria was rampant on both sides of the Atlantic, with the privatization of Belgian and French financial institutions. In Belgium, privatization primarily concerned the Gemeentekrediet van België / Crédit Communal de Belgique, which had been set up in the 19th century and was still owned in part by municipalities. The bank became a retail bank and took the path of international acquisitions and mergers, notably in neighboring Luxemburg. In France, an entity named CAECL (Caisse d’aide à l’équipement des collectivités locales) established in the post-World War II period, converted into a new public corporation named Crédit Local de France, with a mandate and status permitting it to expand through acquisitions. A US subsidiary, the CLF New York Agency was set up in 1990. In 1991 a proper initial public offering took place on the Paris Stock Exchange, with a distribution of shares between the French State (25.5%), the Caisse des Dépôts (25%) and individual investors from France and abroad (49.5%).