North-South trade and the distribution of environmental goods and burdens:

Transcription

1 Quo vadis, MFA? ; Wuppertal Institute; 9th-10th October, 2003 North-South trade and the distribution of environmental goods and burdens: a biophysical perspective Fritz Hinterberger, Stefan Giljum (), Nina Eisenmenger (IFF) Page 1

2 Structure of presentation Background: International trade and MFA Main research questions Trade & distribution issues Two main hypotheses The concept of the physical trade balance Empirical data: EU-15 and Latin America Economic consequences of current specialisation General principles for sustainable trade Policy measures and instruments Page 2

3 Background / Starting point Trade and environment Increasing number of studies (science, international organizations, NGOs) Mostly economic (monetary) approach, or Focus on specific sectors, questions of technological transfer, product groups ( green products ) Increasing scale identified as a central problem, but very few studies with systemic (economic/environmental) approach explaining environmental problems as result of biophysical metabolism Page 3

4 Background / Starting point Physical accounting Increasing number of country studies Little data availability concerning resource flows in international trade (in particular in North-South context) Open methodological questions (calculation of indirect flows) Few examples analysing international trade within a coherent economy-environment framework (monetary and biophysical trade data) Page 4

5 Research questions Effects of globalisation on the international distribution of environmental goods and environmental burden? Relative de-materialisation versus re-materialisation through specialisation in globalised economy? Global patterns of capital intensive versus resource intensive trade? Consequences of further international trade liberalisation for sustainable development on a global level? Policy recommendations to contribute towards sustainable trade between North and South? Page 5

6 Trade & distribution of economic benefits Classical trade theories (Ricardo, Heckscher-Ohlin et al.): comparative advantage as central notion? free trade as win-win situation between trading partners Still today: dominant paradigm in WTO, World Bank, IMF, etc. ( trade-for-development agenda ) Critics: Smith: exploitation of country-side through different levels of wages and profits Prebisch, Singer: deterioration of terms of trade Emmanuel et al.: unequal exchange through diff. wage levels Wallerstein, Frank: capitalist world system (core & periphery) Ecological Economics: free capital mobility & absolute (dis)advantage; non-constant returns to scale; development trap Page 6

7 Trade & environmental distributioni Free trade supporters: Economic growth increased taxes increased environmental protection Structural, technology and product effects more important than increase in scale Different standards natural, but no migration towards pollution havens (environmental costs marginal) Possible unequal env. distribution between rich and poor countries compensated by economic gains Page 7

8 Trade & environmental distributionii Free trade critics: Global race to the bottom versus polarisation of environmental standards between North and South (different patterns of structural change) Scale effect outsets all other effects Neglecting irreversible processes (economic gains cannot replace lost natural capital) South provides resources for widening global development gap (no catching-up in socio-economic development) World System Theory: Core nations ensure stable access to cheap resources from periphery (WTO rules and international commodity markets) Page 8

9 Hypothesis I Increasing pressures on global environmental capacities Export sector: one of the fastest growing economic sectors, global physical exports: growth by a factor of 20 between 1950 and 2000 (factor 90 in monetary terms) Technological progress (faster and cheaper extraction) Global demand for local resources No regional/national consumption limits No EKC for comprehensive environmental indicators (material use, CO 2 emissions, etc.) Page 9

10 Hypothesis II Increased polarisation between rich and poor in terms of environmental goods vs. burdens (and income) Rising income inequalities between and within world regions Economic development in the South: globalisers versus absolute losers Tendency of increased resource flows from South to North Re-location of environmentally harmful industrial production towards Southern countries ( peripherialisation ) Page 10

11 The basic concept of MFA Economy-wide material flow accounting and analysis (MFA) Source: EUROSTAT, 2001 Page 11

12 Physical trade balance (PTB) Simple PTB: Direct resource flows Comprehensive PTB: Direct flows plus indirect flows associated to imports and exports Page 12

13 Different types of PTBs Materials: abiotic and biotic materials, fossil energy carrier in terms of their mass Land areas (ecological footprints): land areas appropriated by production of imports and exports Energy: energy contents of imported and exported products Emissions and pollution: Balance of Embodied Emissions in Trade (BEET) Environmental Terms of Trade as an index of (direct and indirect) environmental pressures of exports to imports Page 13

14 Methodologies: LCA vs. Input-Output Analysis Simple PTB of direct environmental pressures: national or international statistics Comprehensive PTB including indirect environmental pressures: assessment of shifts of environmental burden (Simplified) LCA: ecological rucksacks (Wuppertal Institute), product level, main problem: lack of data for manufactured products Input-Output Analysis: sectoral level, calculation of direct and indirect production inputs (material, energy, land) or emissions (see presentation of Hinterberger & Giljum) Page 14

15 International trade and growth in scale World Exports, , Volume units, logarithmic scale World exports: Growth of Factor 20 in physical units? increasing resource extraction Log. scale Volume indices, 1950=100 Manufactures Mining products Agricultural products? increasing environmental pressures (material- & land intensity; transport, etc.) Source: WTO, 2002 Page 15

16 Empirical results PTB of direct material flows for the European Union I EU: large physical trade deficit: 750 million tons (1989) 940 million tons (1999) around 20% of direct material input Imports: dominated by fossil fuels and raw materials EU-15 physical imports by product group and world regions, Abiotic manufactured products Abiotic raw materials and semi-manufactured products Fossile fuels and distillation products 100 Wood and paper products 50 0 OECD Former Sov. Union and East. Eu. Asia (excl. Japan) Africa Latin America Crops and textiles, animal products Source: Giljum and Hubacek, 2001 Exports: larger share of manufactured products and agricultural products Page 16

17 Empirical results PTB of direct material flows for the European Union II EU-15 imports and exports in monetary and physical terms by world regions, Latin America trillion EURO million tons Africa Asia (excl. Japan) Former USSR & Eastern Europe OECD -100 Imports Exports Balance -250 Imports Exports Balance Price in EURO per ton of EU-15 import and export, by world regions, 1999 Imports Exports Former Soviet OECD Union and Eastern Europe Asia Africa Latin America Total trade Source: Giljum and Hubacek, 2001 Page 17

18 PTB of direct material flows for Chile Physical trade balance of direct material flows for Chile, million tons Imports Exports Balance (Im-Ex) Source: Giljum, forthcoming High increase in physical exports 80% resource intensive products: mining (copper!), fruit planting, forestry, fishery In last 15 years: even higher growth rates for imports (fossil fuels, 70% of total imports in 2000) close link between GDP growth and fossil fuel consumption End 1990s: Chile no longer net resource exporter Page 18

19 PTB for Chile including estimated indirect material flows Physical trade balance of direct and estimated indirect material flows for copper exports and fossil fuel imports, Chile, million tons Imports Exports Balance (Im-Ex) Source: Giljum, forthcoming Large deficit due to extremely high material requirements for production of concentrated copper Inclusion of indirect environmental pressures imperative for an evaluation of international trade activities Page 19

20 International trade: Southern extractors Latin America: physical exports from primary sectors, Source. Muradian and Martinez-Alier, 2001 Increasing exports Page 20

21 International trade: Southern extractors Latin America: revenues per unit of weight of exports from primary sectors, Source. Muradian and Martinez-Alier, 2001 at falling prices Page 21

22 Conclusions: empirical results European Union: Monetary flows: balanced, concentrated within OECD region Growing physical trade deficit, especially with Southern regions Latin America: Trend towards higher exports of resource-intensive products at falling prices Empirical results support the hypotheses of 1. increasing overall environmental pressures from international trade activities 2. increasing ecologically unequal exchange between world regions 3. price regime: developed countries accumulate economic benefits of trade Page 22

23 Price trends for primary commodities Real falling commodity prices Specialisation trap for raw material exporters: Stabilisation of export revenues only through increase in export volumes? Rising environmental pressure Development problems: Extraction enclaves Dominance of TNCs No development of internal markets Source. World Bank, 2003 Page 23

24 Principles for sustainable trade Trade can increase welfare, if framework of international trade system is fair and balanced Free trade is not considering multidimensional goals of a sustainable development growth should be only one of a set of goals (causing high resource extraction in South and overconsumption in North) Reduction of inequalities as main principle for future design of trade system (economic, environmental, social dimension) WTO: tendency to increase inequalities, reforms urgently needed (democratic participation, transparency, definition of new goals) Sustainable trade: main goals: improving living conditions of marginalised parts of world population; securing environmental and social conditions for future generations Page 24

25 Politische Handlungsmöglichkeiten 1. Reducing natural resource use Internalisation of negative external environmental (and social) costs (natural capital depletion tax, fair trade initiatives) rising prices, North: incentives for efficient use (North), South: increased revenues, decreased or increased extraction? Setting of physical reduction targets (e.g. material extraction certificates) within multinational environmental agreements (Kyoto etc.) 2. Removal of perverse subsidies 3. Abolishing Southern discrimination through tariffs 4. Diversification of Southern export sectors Page 25

26 Politische Handlungsmöglichkeiten 1. Reducing natural resource use 2. Removal of perverse subsidies Economically distorting and environmentally destructive (agricultural sectors, fishery, transport) high impact on trade dynamics Hinder development and market success of alternative, smallscale, resource efficient solutions 3. Abolishing Southern discrimination through tariffs 4. Diversification of Southern export sectors Page 26

27 Politische Handlungsmöglichkeiten 1. Reducing natural resource use 2. Removal of perverse subsidies 3. Abolishing Southern discrimination through tariffs Key sectors for the North (agriculture, textiles) heavily protected Tariffs 4 times higher for Southern products exported to North Income loss of 100 billion US $ annually (World Bank) Equal market access (for trade-driven development strategy) Positive economic effects, positive environmental effects? 4. Diversification of Southern export sectors Page 27

28 Politische Handlungsmöglichkeiten 1. Reducing natural resource use 2. Removal of perverse subsidies 3. Abolishing Southern discrimination through tariffs 4. South: diversification of export sectors Vertical: rising value added of export products Horizontal: development of manufacturing and service sectors Removing trade barriers in North (manufactures) Short-term protection and subsidies in South ( Asian Tigers ) Redefining role and responsibilities of Multinationals: mining, agriculture, forestry Page 28

29 MOSUS: Trade and environment I Comprehensive quantification of current level of resource use in Europe Including indirect resource requirements associated with imported products - ecological rucksacks (materials, energy, land) on sectorally disaggregated level Environmental IO analysis: allocation of resource inputs to domestic final demand and exports in all countries along international product chains Dependence of European economy on imports from other world regions? International structural change (past and future)? Environmental consequences of specialisation? Page 29

30 MOSUS: Trade and environment II Environmental policy measures and international trade Strategies and instruments to increase eco-efficiency (resource productivity) in Europe: Innovation and technological change through IPP, energy taxes, material input taxes, tradable permits, reform of subsidy system, environmental agreements between industries Implications for international trade flows in both monetary and physical terms in all countries represented in the model Resource extraction and export from developing countries?? Structural change towards more diversified economic structures Dematerialisation of international trade? Page 30

31 MOSUS: Trade and environment III Presenting policy suggestions Responding to environmental changes Reconciling key goals of the European Union Sustainable Development Strategy: Long-term economic development Promotion of international trade Reduction of anthropogenic pressures on the environment Page 31

32 Further research Methods: Links between environmental pressures and environmental impacts meaningfulness of pressure indicators for policy use Links between biophysical aspects and economic development in North and South: which indicators? Data: Improvement of data situation comprehensive picture of environmental consequences of globalisation process Policy: North: natural resources in the era of knowledge-based society; paths towards absolute dematerialisation South: alternative SD-oriented development strategies incl. trade aspects; impacts of Northern dematerialisation? Page 32

33 The end..thank you! More information: Page 33