Mutual Supportiveness of Trade, Climate Change and Development Objectives and Policies

With added scientific comments (rejoinders) that the forum format did not allow to be advanced.] Letter to Mr Pascal Lamy

Our question:
Thank you very much. I'm Helmut Lubbers. I work for ecoglobe, Ecology Discovery Foundation. I'm absolutely delighted to see Ms Harvey here, because she describes in much detail how economic growth everywhere, always, in every country leads to more pressure on the environment. And I believe that here in this forum, what we should actually discuss, instead of climate change, is the fact that the outspoken rationale for free trade is the development of the economy - economic growth. And I believe that this is the wrong thing to do. We should discuss about how we should reduce our economies and contract our resource use. Because, the fact is that we were 2.5 billion people in 1950.[] We are 6.7 billion now and if it continues as it does we would be 9 billion or 8.5 billion by 2050.
Then, on the other hand, we have the issue of the end of fossil fuels. And at the end of fossil fuels - some people are saying that we have already achieved, reached the plateau of production, of extraction of oil.
Then agricultural production and international trade and also the production of the goods and services that we need for basic survival will drop enourmously. I think we should prepare for that issue and then the issue of climate change will go to the back and the issue of mere survival will come to the fore.
My question is actually, how is it possible that intelligent people still believe that this earth is flat and that we could continue to keep growing, growing until we have no resources left and then - where will we end?
Because we are actually living on the accumulated resources in the earth that are being depleted irreversibly. So that's my question. How can you believe that we can continue to grow?

[ecoglobe: We failed to mention that economic growth also increases greenhouse gas emissions. The population numbers should have been left out.] [...]

Mr Pascal Lamy: "Now on the Club of Rome" issue that we consume to much of our resources and that we should drastically reduce the population of this planet, the economy, the growth - no. Three quarters of the WTO members are developing countries and I don't think their notion of survival is exactly the same as the one we heard.

[ecoglobe: Mr Lamy is correct in referring to people who certainly need better conditions. But the GDP measure of a country's economic growth is too indiscriminate to be generally applicable. The GDP lumps all positive and negative results of people's activities together. And it does not distinguish between the necessity to develop the living conditions of the poorest and the exuberance of the wealthiest. Whilst some of the increased GDP may have tricled down to the poor, there are strong signs that the indiscriminate economic growth is factually driving the poorest off their lands into the city slums.
Mr Lamy is confounding issues. Both economic expansion (growth) and population growth are increasing the depletion rates of non-renewable resources, such as land, water, minerals, forests, and a normal climate.
Mr Lamy said: "No". But the factual reality is that the planet does not care about the aspirations of people. Growth is always material, whatever clever theorizers in the discipline of economics may purport. A higher GDP means more stuff used and depleted. The end of non-renewable resources means the collapse of humanity in wars for the last crumbs of bread and the last drops of drinkable water - here and in the developing countries. ]

Ms. Fiona Harvey: "Mr Lamy, Do you think that economic growth is compatible with looking after the environment, with looking after climate change?

Mr Pascal Lamy: "Yes. I believe this is possible, provided market capitalism - which is whether we like it or not the system under which we live - internalises these constraints. You know markets work with prices. They work with costs, profits, with allocation of capital. If you look at the way "cap and trade" for instance has worked not that bad for a start. I am not saying absolutely great and there is no problem. But using market mechanisms in order to internalise these constraints and notably through the price of energy I think is absolutely crucial. Now, I am not saying it's the only solution. And there are areas where market systems are not efficient and we need to go the regulatory side. Which is by the way what we do most of the time in WTO. Many people believe we are in the business of deregulation. The reality. We are in the business of regulation, look at subsidies, barriers to trade, sanitary and phytosanitary standards and so on. The option is there. But I believe that this planet still has a huge problem of development and that we need economic growth to reduce poverty. Not in any condition, yes, we have to factor in this big systemic risk we have with the greenhouse gases. I think tackling it is doable."

[ecoglobe: Mr Lamy is mistaken. Cap and Trade has not worked at all. Because of economic growth the increase in CO2 emissions over the last ten years have been stronger than feared in the worst scenarios. The systemic risk of climate change cannot be "factored in". Internalisation - being a payment for environmental damage - does not work because we are dealing with non-renewable resources. No amount of money can restore a destroyed climate or replenish depleted resopurces.]

Ms Fiona Harvey: "If we had a global system of carbon trading and a global carbon price, would that be enough to bring market forces to bear on the problem and insure that economic growth was environmentally sustainable?

Mr Pascal Lamy: "It would help a lot. And by the way, on the logic of these questions of the border measure adjustments, I sometimes have a difficulty of understanding, how could it be that you have... Take cap and trade, for instance. How is it that you have nationally fair system of allocating emission permits and you cannot have an internationally fair system for the allocation of permits. How is it that the problems of competitiveness raise from the fact that you have a fair system at home but you could not find a fair system elsewhere? I mean f you have a fair system at home a far system is doable and there is not such a sort of discrepancy between the global economy and the domestic economies today. So I think it's something that really needs to be brought forward. "

[ecoglobe: Mr Lamy is believes in the claims of the carbon traders. Unfortunatly carbon trading does not work. and it can't work because there are severe limits to technologcal reduction of emissions.
Worst is the belief that economic growth could be "environmentally sustainable".
Growth increases the resource depletion rates and the emission rates of greenhouse gases. All so-called "immaterial", "green", "different" or other growths are either non-existent or they simply do the same under a different name. Resources are finite. Thus growth is a suicidal policy for humankind.

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Letter sent to Mr Pascal Lamy: []

ecology discovery foundation - ecoglobe Helmut E. Lubbers BE MsocSc DipEcol 14 Boulevard Carl-Vogt CH-1205 Genève / Genf Schweiz/Suisse/Svizzera Tel./tél. +41-22-3212320 helmutecoglobe.ch www.ecoglobe.org www.ecoglobe.ch   Genève/Genf, 6 October 2008 Lu/rs/wtol8o06 ecoglobe, 14 bd. Carl-Vogt, CH-1205 Genève Mr Pascal Lamy, Director-General, World Trade Organisation rue de Lausanne 1211 Geneva, Switzerland Environmental outlook and economic growth, your comments at the introductory forum, 24.9.2008 Dear Mr. Lamy, Enclosed you find a transcript of your words regarding growth and the environment, completed with comments, where necessary. Your openness and careful words are appreciated indeed. Unfortunately the provisos that you advanced do not quite correspond with environmental possibilities. On the one hand we have hard scientific evidence which tells us that the earth is being depleted at an ever higher rate because of human economic and reproductive hyperactivity. Humanity has largely overshot the earth's carrying capacity and we are seriously out of balance. Actually, with the present developments, a total collapse must be expected before long, possibly as soon as within a few generations, i.e. by the middle of this century. This is a very dark, albeit scientific outlook. On the other hand we have widespread misconceptions about the nature of economic growth and solutions that technology and ingenuity could offer. Growth is always material, since it's measured in monetary units, that represent material, predominantly non-renewable, resources. "Internalization" is a theoretical concept that aims at putting a price on "externalities" such as the damage done to nature or the noise generated by human activity, by means of "hedonic pricing" and "contingent valuation". But it remains highly debatable, how one could attribute a value to a singing bird, for instance ( see enclosure.). Non-renewable resources, however, can never be internalized, because no amount of money can compensate for resources that are lost forever. Some economists believe nature can be replaced by capital. But human-made structures cannot replicate the functions of nature. Thus one can only conclude that we must contract, instead of further expanding our economies. As a last resort many discussants advance ingenuity, technology, or even optimism, in defense of economic growth. But these cannot recreate non-renewable resources or revive extinct species. We have collated a list of arguments on page ecoglobe.ch/motivation/e/argument.htm (copy attached). We repeat that we have much appreciated your personal participation in the discussion and that the audience had a fair chance to voice ideas. Unfortunately such events do rarely allow for an in-depth discussion and search for scientifically correct positions. Hopefully you appreciate our comments. We are at your disposal if you have questions of comments regarding our arguments. Your reaction is most welcome. With kind regards,   Enclosure     Helmut E Lubbers ecological psychologist