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Chapter One: Global Perspectives

Areas of danger and opportunity

Globalization and the private sector

There are a number of important environmental dimensions to globalization. Stratospheric ozone depletion, climate change driven by global warming, and the worldwide spread of persistent organic pollutants are obvious examples. There is also an accelerated process of biological globalization. The increase in trade, transport and travel has created many new opportunities, both deliberate and accidental, for organisms to move around the world and invade new environments. Some of these introductions bring net benefits but many are of aggressive invasive species that upset the local ecological balance and crowd out other more desirable, useful or perhaps unique species. These changes can degrade ecosystems and lead to significant losses in biological diversity, ecosystem resilience and productivity.

A related problem is the loss in genetic diversity of many crop plants and domesticated animals under market and commercial pressures to maximize productivity and profit. Many varieties and breeds, often evolved over centuries of local selection, have desirable features that adapt them to particular local environments, resist specific diseases or environmental extremes, or give them unique features, but that do not lend themselves to mass marketing. Today, strong pressures for the globalization of agriculture are eliminating much of this traditional diversity. Yet the future of sustainable agriculture may well lie with a much greater level of adaptation to local conditions in order to maximize all forms of productivity as well as a wider range of environmental services. Excessive globalization today could destroy much of the potential for better agriculture tomorrow.

 Resource flows to developing countries


(Click image to enlarge)

Source: World Bank 1997a

 
In 1996, private foreign investment was about five times larger than overseas development assistance

Over the past 25 years, financial markets have grown and become internationally integrated. International capital flows have expanded rapidly, particularly foreign direct investment in developing and transition countries, which nearly tripled in the first six years of this decade (World Bank 1997a). The importance of the private sector in this globalization is illustrated by the fact that, in 1996, foreign exchange trading by the big investors amounted to some US$350 million million (Martens and Paul 1998), more than ten times the world's GDP of about US$30 million million (World Bank 1998). Total revenue of the top 500 companies was about US$11 million million, 50 per cent each for industry and services (Fortune 1998). Private foreign investment, concentrated in a limited number of developing countries, was about US$250 000 million, compared to overseas development assistance (ODA) of less than US$50 000 million (see graph below). These figures demonstrate the overriding importance of the private sector in the world's economy and, consequently, in environmental issues.

This massive increase in private financial flows has been paralleled by a decrease in ODA by governments leading, in effect, to a decreased capacity of public sector and multilateral agencies to deliver public goods such as environmental health. Transnational corporations, private banks and pension funds cannot be expected to cover major public health and environmental infrastructure costs. In addition, public agencies in most countries are hampered by their tremendous debt burden, and environmental agencies and activities are often among the first to be cut back in order to manage deficits and interest payments (Martens and Paul 1998). The international financial situation thus has a direct impact on the ability of countries to address important environmental and social issues.

Equally, important factors in globalization are the rise of transnational corporations and the consequent diffusion of new technologies and common work practices. The operations of these giant corporations, together with the revolution in communications technology and transportation, have enabled the growth of truly global systems of production and distribution. Globalization has been accelerated by important policy and institutional changes, including the dismantling of trade barriers and capital controls, and the creation of a multinational trade regime regulated by the World Trade Organization (WTO). Partly as a result of public pressure, the private sector is now taking an increasingly responsible attitude towards the sustainable management of the global environment. However, this will not be sufficient in itself to address all global environmental problems.

Trade

International trade has grown much faster than global GDP over the past 25 years and the international community is committed to further trade liberalization. The Uruguay Round GATT negotiations in 1994 explicitly incorporated the issue of environment into the future work programme of WTO.

The aim of the WTO Committee on Trade and Environment has since been to promote mutually-supportive trade and environment policies. Trade-driven economic growth has brought increasing wealth to many countries, and helped to finance environmental protection measures. However, trade can and does harm the environment. Where environmental issues are not incorporated in economic prices and decision-making, trade can magnify unsustainable patterns of economic activity and resource exploitation. Conflicts between trade liberalization and environmental protection have already arisen, and the disturbing and short-sighted emerging pattern seems to be that national environmental protection measures are being challenged on the grounds that they erect barriers to trade. As an example, WTO recently ruled that the United States could not discriminate against imports of shrimp caught without the use of turtle excluder devices which allow sea turtles to escape from shrimp nets (WTO 1998). Similar attempts to protect dolphins and sea birds from the effects of industrial-scale fishing practices have also been struck down (GATT 1991).

 The International Centre for Trade and Sustainable Development
 

The International Centre for Trade and Sustainable Development (ICTSD) was established in Geneva in September 1996 to contribute to a better understanding of development and environment concerns in the context of international trade. It exists to help NGOs secure information on, and communicate their concerns to, key policy-making fora on trade and development - WTO, UNCTAD, other intergovernmental organizations and national governments. At the same time, the Centre aims to increase awareness among policy-makers and trade officials of the NGO community's work on trade, development and environment. It helps those involved in environment and development work understand how the trade policy-making process operates, and what negotiations and issues it deals with, and encourages decision-makers to understand the importance of integrating sustainable development imperatives into their priorities. ICTSD's role is to facilitate cooperation and integration through objective information dissemination, policy dialogues and research support.

The Centre is governed by a small coalition of well-known organizations: Consumer Unity and Trust Society (India), Fundación Futuro Latinoamericano (Ecuador), the International Institute for Sustainable Development (Canada), the Swiss Coalition of Development Organizations and the World Conservation Union (IUCN).

Source: ICTSD 1998

 

Other international organizations, including OECD, UNEP and UNCTAD, are addressing trade and environment, and a number of new organizations have been created to further understanding of trade and environment issues, including the the International Centre for Trade and Sustainable Development (see box).

Given the expected growth in world trade in the coming decades, and the pressure for action to counter increasing environmental depredation, future conflicts seem more, not less, likely to arise. In a 1998 speech to WTO, the Executive Director of UNEP denounced the dichotomy between trade liberalization and protectionism as obsolete. The real challenge will be to ensure that future trade liberalization is pursued with a view to maximizing overall human welfare, he said. This must include effective and cost-efficient management of the environmental resources and environmental quality on which human livelihoods and human health depend (Töpfer 1998).

International debt

One of the signs of imbalance in the international economic system is the excessive level of international debts accumulated by many nations. Deteriorating terms of trade for developing countries exporting agricultural and other commodities have made it increasingly difficult for these countries to reimburse their debts. From the environmental perspective, the need to pay off these debts has driven many developing countries to sell off their natural resources, particularly timber and minerals, for whatever price they could obtain, often in environmentally-destructive ways. Export cash crops have been favoured over food production for local consumption. Environmental standards have been kept low or non-existent to help attract foreign investment. Structural adjustment programmes have required reductions in government expenditures, with the environment being one of the easiest areas to cut. The indebted countries have thus been pushed towards further environmental deterioration.

Demographic changes

 Urban population


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Source: compiled by UNEP GRID Geneva from United Nations Population Division 1997 and WRI, UNEP, UNDP and WB 1998

 
Some 61 million people are added to cities each year through rural to urban migration, natural increase within cities, and the transformation of villages into urban areas

In parallel with these changes there have been profound demographic shifts, as people have migrated, and continue to migrate, from rural to urban areas in search of work and new opportunities. Since 1950, the number of people living in urban areas has jumped from 750 million to more than 2 500 million people. Currently, some 61 million people are added to cities each year through rural to urban migration, natural increase within cities, and the transformation of villages into urban areas (United Nations Population Division 1997). Urbanization creates new needs and aspirations, as people work, live, move and socialize in different ways, and require different products and services. Urban environmental impacts and demands are also different.

By 2025, the total urban population is projected to double to more than 5 000 million people, and 90 per cent of this increase is expected to occur in developing countries (United Nations Population Division 1997). Most of the world's children born in the 21st century will grow up in cities, with their perceptions and consumption behaviour shaped by an urban environment. The innate environmental sensitivity of people raised on the land or close to nature is being lost.

The demographic shift that has not been considered or allowed, because of its political sensitivity, is the globalization of population movements. The free movement of capital is now seen as normal, and the uninhibited free trade in goods and services is the goal of governments through WTO. However, genuine globalization should also imply a third condition: that all people should be able to move freely to live and work wherever they like. This is the one change that would allow optimization of the population to environmental carrying capacity, and a rapid reduction in the economic and social disparities between countries that are so destabilizing at present. Efforts in the European Union to eliminate barriers to internal population movements are a precursor of what will be required.

Consumer culture

The global market and the purchasing power of an increasingly wealthy and urban population are driving the homogenization of lifestyles and popular culture. The late 20th century 'consumer society' can be characterized by a growing emphasis on the individual, a search for wider opportunities and experiences, a desire for comfort and autonomy, and personal material accumulation. The advent of international advertising, electronic communications and wide access to the mass media have fed a worldwide public appetite for new and more products, and for travel. Rising affluence has fuelled the 'Western' model of consumption, and its emulation all over the world. And, though developing countries still account for less than 20 per cent of global GDP, many of their people are joining the consumer society. Per capita incomes are rising, and habits of diet, mobility and resource consumption are changing to reflect industrial country patterns.

 The 1997 Carnoules Statement
 

The following is extracted from the Factor 10 Club's 1997 Carnoules Statement to government and business leaders:

'Within one generation, nations can achieve a ten-fold increase in the efficiency with which they use energy, natural resources and other materials.

The Factor 10 Club, an international body of senior government, non-government, industry, and academic leaders working out of Germany's Wuppertal Institute, believes that such a goal is within the reach of technology and, with appropriate policy and institutional changes, could be brought within the reach of economics and politics. In the process, we should see a steady improvement in the quality of life of communities, new opportunities and improved competitiveness for business, expanded possibilities for employment, and an increased potential for wealth creation and its more equitable distribution

Most significantly, we enter the new Millennium with the transition already under way. During the past few decades, economic and technological changes have resulted in a reduction in the demand for energy and some materials per unit of production. The link between growth and its impact on the environment has also been severed. Indeed, a new economy has begun to emerge, one that is more efficient and potentially more sustainable. It is marked by people producing more goods, more jobs, and more income while using less energy and resources for every unit of production

Rising levels of consumption by the rich and a doubling of the world's population over the next 40-50 years would require a factor 4 increase in food production, a factor 6 increase in energy use and at least a factor 8 growth in income. If this is to be achieved without pushing the planet beyond certain critical thresholds that we are only now beginning to understand, governments must support policies that encourage industry and society to achieve ever-greater levels of energy and resource productivity and dematerialization.

We call upon governments, industry and international and non-governmental organizations, to adopt a Factor 10 increase in energy and resource productivity as a strategic goal for the new Millennium.

Some governments and international and business bodies have already begun to move in this direction. Austria and the Netherlands, for example, adopted this strategic goal in 1995. In Germany, the national parliament (Bundestag) holds a regular enquete on material flows in the German economy, in order to establish a basis for further policy decisions. The World Business Council for Sustainable Development and the United Nations Environment Programme have jointly called for a factor 20 increase in eco-efficiency. In cooperation with the newly founded Factor 10 Institute, the Ministry of Economics in Vienna is now preparing a countrywide information campaign to help small and medium-sized businesses to design eco-intelligent products. The Canadian government has established a Commissioner for the Environment and Sustainable Development who will review government policies and programmes against sustainability criteria and report annually to Parliament. The OECD is exploring Factor 10 as a potential thrust. In the United States, the President's Council on Sustainable Development has taken an active interest in Factor 10 and eco-efficiency.'

Source: Carnoules 1998

 

This consumer lifestyle as presently practised is environmentally wasteful and inefficient, requiring large quantities of resources per capita and generating wastes that create further environmental problems when they are disposed of and released into the environment. Yet this does not have to be the case. Technological change can reduce resource use many times without lowering the standard of living. Efforts to increase environmental efficiency, reduce waste and introduce recycling are growing and spreading. It is widely recognized, at least by many NGOs and the wealthiest governments in OECD, that a tenfold reduction in resource consumption in industrialized countries is a necessary long-term target if adequate resources are to be released for the needs of developing countries (von Weizäcker and others 1995, OECD 1998). An extract from the 1997 Carnoules Declaration calling for nations to adopt this approach is reproduced in the box.

Alongside the consumer culture, the world has other value systems and lifestyles which may be less visible and invasive but which represent the rich diversity of human experience and fulfilment. Many of these are more respectful of the environment, and provide options worth considering in the move towards more sustainable forms of society. The poor are also cut off from the consumer society, which is still largely irrelevant to their struggle for existence. A lifestyle that excludes one-third of the world's population, however dominant it may appear at the moment, should not be regarded as the supreme achievement of 20th-century civilization.

Technology

Demand for technical innovation - driven by economic growth, industrialization and social development - has been met through a sharp rise in the numbers of practising scientists and engineers - a 15-fold increase in the past 50 years (Hammond 1998) and greatly increased communication within the research and development community. More than two million research papers are now published each year and the number is rising. In the industrialized economies particularly, technological innovations have led to greater efficiency in energy and materials use, with many products being reduced in size and weight through the use of lighter materials such as aluminium in place of steel, and plastics in place of metals. Improved technologies mean that recycling rates for many key raw materials have also increased. In addition, demand has shifted away from heavy goods towards less-material intensive products, consumer goods and service industries.

These trends constitute the phenomenon of dematerialization, driven in part by relative price changes and substitution (Bagnoli and others 1996), which has significantly slowed the rate of increase in the use of many (though not all) raw materials in the industrialized countries. This means that economic growth can, to some extent, be delinked from growth in resource use. Per capita use rates for steel, timber and copper, for example, have generally stabilized or even declined in the OECD countries. Resource intensity (the quantity of energy and materials required for constant economic output) has fallen by about 2 per cent per year since 1970 (Glyn 1995). In absolute terms, however, consumption of energy and most raw materials continues to rise in countries which still have population growth. Resource intensity in developing countries is still high, though there is evidence that efficiency is improving. Some Asian economies are becoming fuel-efficient at lower levels of per capita income than was the case in the developed world.

Cleaner technologies have played a critical role in many of the successes in pollution control in industrialized countries recorded since the 1970s. Flue scrubbers at power stations, waste recovery and recycling systems, and catalytic converters fitted to vehicles are now mainstream technologies in the developed countries. As regulation and compliance regimes have gradually been tightened, a major global environmental market has emerged for the environmental technologies and services required to meet these new standards.

Transport

 Numbers of motor vehicles


(Click image to enlarge)

Note: 1980 figure for North America is estimated

Source: compiled by UNEP GRID Geneva from International Road Federation 1997

 
If current rates of expansion continue, there will be more than 1000 million vehicles on the road by 2025

During the 20th century, there has been a shift away from rail and water transport in favour of road and air. The single most dramatic change has been the rise in personal mobility in developed countries, encouraged by cheap oil, affordable motor cars and lifestyles built around commuting, out-of-town shopping, dispersed families and leisure activities. Since World War II, the number of vehicles on the road has risen from about 40 million to some 680 million (International Road Federation 1997). The fastest growth is now found in the developing world, though car ownership is still low (see bar chart).

If current rates of expansion continue, there will be more than 1 000 million vehicles on the road by 2025. Transport now accounts for one-quarter of world energy use, and about one-half of the world's oil production; motor vehicles account for nearly 80 per cent of all transport-related energy. Transport is thus a major contributor to greenhouse gas emissions and urban air pollution. Transport infrastructure - roads, car parks, airports, rail lines - is also responsible for substantial land use, habitat degradation and fragmentation. The transport sector has, so far, proved highly resistant to attempted policy reforms. Improvements in fuel efficiency and vehicle emission reductions have consistently been offset or outpaced by volume growth. However, the economic costs of congestion and pollution, in terms of lost production and health care, are increasingly recognized. A recent study for the United States estimated the total annual costs of congestion (including lost productivity, wasted fuel and increased accident insurance) at US$340 per capita (FHA 1990).

Air transport is also growing very fast. Dense air traffic is now leading to long delays on some flights, particularly in Europe, and this in turn is encouraging the use of high-speed trains (see Chapter 2, Europe).


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