Sergio Abranches

Last week, China’s National Development and Reform Commission reportedly directed seven regions to set overall emissions control targets and submit proposals for how caps should be allocated. The directive, which encompasses the cities of Beijing, Chongqing, Shanghai, Shenzhen and Tianjin and the provinces of Guangdong and Hubei, aims to establish cap-and-trade pilot projects for the country’s carbon market, meant to be in place by 2015.

The Chinese government had signaled at the COP17 climate negotiations in South Africa last December that it could adopt a more ambitious emissions reduction policy by 2015 and 2020. As part of the Copenhagen Accord, it had already committed to reducing carbon emissions intensity by 40-45 percent between 2005 and 2020.

That (albeit non-binding) commitment is reflected in the nation’s 2011-2015 five-year plan, which sets a 16-17 percent reduction target for carbon intensity.

China has never committed globally to actions that were not already a part of its ongoing domestic policies. The carbon intensity targets pledged under the Copenhagen Accord were decided internally way before Prime Minister Wen Jiabao closed a deal with the United States and other countries in Copenhagen in 2009. Now, China is poised to implement a new stage of its emissions reduction policies with fixed emissions caps.

Chinese leaders are apparently more willing to sign multilateral agreements, provided they are not a constraint on domestic policies. The way to do that is to use the Chinese planning structure to their advantage. By formulating the future stages of their policies ahead of the international agenda of negotiations, especially in the environmental realm, Chinese leaders can shift from a veto position towards a cooperative one, while maintaining complete sovereignty over domestic decision-making.

China has plenty of reasons of its own to reduce pollution, resource use and greenhouse gas emissions. It needs no outside push. The impact of land, air and water pollution on public health and well-being justifies the adoption of a more ambitious environment and climate policy. The major problem is, and will continue to be, how to balance the goals of cutting pollution and boosting efficiency with economic growth.

Carbon intensity targets pose no constraints at all on growth. Emissions can still increase while intensity decreases. China is implementing the world’s most ambitious renewable energy program, with very aggressive targets. Although solar and wind power generation are growing at staggering rates, the use of fossil fuels, particularly coal, have also increased.

This means that while China’s green energy sector is becoming very significant, its grey energy sector remains an enormous one and keeps growing, though at falling rates. The difference is that in the new Chinese policy guidelines, the gray energy sector comes with a negative sign for growth, and the green energy sector comes with a positive one. Each new plan aims at further reducing the gray sector, and increasing the green one.

The caveat is, again, the scale here. Even with downward movement at each new five-year plan, the Chinese gray economy will remain huge for decades to come. Carbon emissions associated with fossil fuel use will be on the rise well into the 2020s if not the 2030s.

Emissions caps are no guarantee that emissions will decrease faster. The experience with cap and trade systems shows they require additional measures for emissions to fall significantly. The good news is that China is also investing more in efficiency and quality improvement. Increasing the efficiency of clean energy along with energy-saving technologies can shift the economy toward more efficient patterns of energy and resource use, accelerating emissions reductions.

The best of all news is that China is abandoning the policy of growth without environmental constraints that led to the vast pollution and resource scarcity problems the country now faces. Chinese plans still aim at rates of growth far above the world average, but at the same time  they are adopting progressively greater constraints on the use of resources and fossil fuels.

(Post previously posted at National Geographic’s The Great Energy Challenge Blog)

Sergio Abranches

The BASIC countries have adopted a unified position ahead of Durban as their official negotiating stance. It points to the continuation of deadlocks on major issues that frustrated the official preparatory meetings this year.

Brazil, India, China, and South Africa met last Tuesday, November 1, in China and reached a consensus on global climate negotiations to begin later this month in Durban, South Africa. On a joint statement, the ministers of the four emerging nations said that the climate talks “should achieve a comprehensive, fair and balanced outcome” and “clearly establish the second commitment period under the Kyoto Protocol”. The ministers stated that the Kyoto Protocol is “the cornerstone of the climate regime”, and called a second commitment period as the “the essential priority” for the summit’s success. Kyoto Protocol’s first commitment period ends in 2012.

This was the last meeting of the BASIC countries before Durban, and they did little more than to reiterate positions they’d already held on the preparatory meetings that ended on a cul-de-sac. The insistence on a second commitment period for the Kyoto Protocol means in fact that only developed countries should have legal responsibility for climate change policies and binding targets for greenhouse gas emissions reductions. As minister Jayanthi Natarajan from India made clear: “India is opposed to any legally binding cuts for developing countries”. Chinese and Brazilian officials have said that much on several occasions.

There has been some friction concerning South Africa’s stance on this point. South Africa’s partners shared the perception that its government was under pressure, as the host of COP17 and its acting president, to strike a balance between the BASIC and the developed countries on the need for a more encompassing, and biding, accord reaching all major GHG emitters.

South Africa’s lead climate negotiator, Alf Wills, sought clarify his country’s standpoint on legally binding emission reduction commitments to developing countries. It is a misunderstanding “that South Africa is advocating that developing countries take on quantified emissions reduction objectives,” he said. “We have always held the position that we will meet our legal obligation to take mitigation actions consistent with our respective common but differentiated responsibilities and our respective capabilities.”

He also said that South Africa shared the view that “the current Kyoto Protocol system, which elaborates those specific legal obligations that developed countries have in a multilateral rules-based system… provides the benchmark and cornerstone for any future climate change regime or system.”

The lack of differentiation between the poorer developing countries, and the advanced emerging economies serves as a convenient shield for these larger nations from binding commitments.

Developing countries are insisting on the Kyoto Protocol on purely ideological, and economic terms. The Protocol has achieved too little on emissions reductions under its first commitment period, if anything at all. Developing nations fear the developed ones would use the lack of a legal framework after the demise of the Kyoto Protocol to shied away from their obligations. They also fear that without the KP the mechanisms for investment and financial flows it contains, such as the Clean Development Mechanism, would be abandoned.

Only Europe seems today willing to be a part of it. Other major developed countries such as Japan, Australia, New Zealand, and Canada have been announcing they would not join a second commitment period. The United States is already out of the reach of KP’s binding obligations. China, India, and Brazil want also to be out of the reach of any internationally binding emissions reduction treaty for as long as possible.

The corollary to their view on the Kyoto Protocol as the cornerstone of any future climate regime is that a new “comprehensive, fair and balanced” global climate agreement should not impose binding obligations to developing countries. In other words, this new agreement amount to extend to the U.S. binding provisions that hold for other developed countries in the Kyoto Protocol’s Annex I. But China, India, and Brazil, although leading emerging economies and major GHG emitters, should not be asked to abide by the new legal regime.

U.S. official negotiators have stated several times their country’s view that any new climate agreement would have to extend the reach of binding commitments to encompass China, India and Brazil at the very least. They admit a sort of proportionality rule based on “common but differentiated responsibilities”, but no exemption. Exemptions should be circumscribed to the poorer developing nations.

This polarization is likely to prevent diplomats in Durban from breaking the standoff that paralyzed negotiations all year long, and put the global climate talks on track again.

 Sergio Abranches

The International Monetary Fund, the World Bank and other international groups are expected to present a paper on climate finance at the G20 meeting this Friday in Washington. It recommends a sharp reduction of subsidies for fossil fuels, putting a price tag of $25 per ton on carbon emissions, and collecting a surcharge on bunker fuels to raise money for climate finance.

A draft of the paper leaked this week says the starting point should be a review of fossil fuel subsidies, amounting to $40 billion to $60 billion a year, reports Associated Press’ Arthur Max. Many of those subsidies, however, go to poorer people in less developed countries to help them, for example, to buy cooking gas. Still, subsidy reallocation in advanced and emerging economies could contribute $10 billion a year to a climate fund.

Charging $25 per ton of carbon emissions from the so-called bunker fuels (aviation and shipping) could raise $40 billion a year by 2020. Part of that would have to be earmarked to compensate poor countries for higher import costs, but about $25 billion could go toward climate change, the paper says. It also would lead to a reduction of 5 to 10 percent of the greenhouse gases emitted by aircraft and the merchant marine, the study estimates.

A charge on all carbon emissions, would lead to a 10 percent reduction of global emissions, and raise at least $230 billion. Most of that revenue should be used to reduce other taxes or compensate poor families, but allocating just 10 percent to the climate fund would meet nearly one-fourth of the goal set in Copenhagen to reach $100 billion a year by 2020.

It is a sensible proposal, attuned to the action needed to face the pressing financial problems that will be at the core of the agenda for this weekend Finance Summit. The simultaneous gathering of Finance Ministers, Central Bankers and finance experts, the Board of the World Bank and IMF governors happens amidst another round of  global financial turmoil. Climate finance is the least of their worries now, but the fact remains that G20 governments will need to have something new to say about the climate fund in a couple of months, at the Climate Summit, COP 17, in Durban, South Africa.

Last year, investment in renewable energy, energy efficiency, electric cars and other forms of green technology totaled $500 billion, including more than $200 billion in developing countries. Private capital can benefit from public finance through concessional loans or grants, that help to reduce risks and compensate higher initial costs for adoption of new technologies (AP).

Redirecting public subsidies is fully compatible with the debt and fiscal deficit reduction targets most economies will have to meet, in order to appropriately address the debt crisis that has triggered this new round of financial instability. The new green tech sectors are more dynamic and likely to generate more and better jobs than traditional industries. The Brookings Institution has recently released a study on the green economy in the U. U. showing that: it employs more workers than the fossil fuel industry; the newer “cleantech” segments produced explosive job gains and the clean economy outperformed the nation during the recession; it offers more opportunities and better pay for low- and middle-skilled workers than the national economy as a whole.

The social and climate welfare gains of subsidies directed to these industries are higher than the gains from subsidizing fossil fuels.

Brazil has suddenly realized the attractiveness of its immense wind power potential. Once deemed too expensive and small-scale, unable to meet the country’s power needs, it is now braced to grow sevenfold to 2014.

Brazil has today a dismal 1 gigawatt of wind power installed capacity. But the government’s regulatory agency has already approved an additional 6.7 gigawatts to 2014. Wind power got the largest share in the last energy auctions for new electricity capacity. Bid prices for wind were lower than those offered by gas-fired thermo projects. Wind farm bid prices have dropped 33 percent since 2009. The Brazilian regulatory agency estimates that wind farms could yield over 12 gigawatts in 2020. Experts and industry representatives have told me they expect wind farms to get a larger share of the electric power grid. They estimate that total installed capacity could almost triple from 2014 to 2020, nearing 20 gigawatts, provided the government does not hold investors back.

Several myths about wind power are falling down, and its many advantages are starting to show. The first to go was that it was far too costly. Today prices are lower than those for hydro and thermo power generation. An industry CEO told me, however, that these lower prices are in part a result of the European crisis. They could increase up to US$ .04 per Kw if the industry recovers in Europe and the United States. Even then, wind power would continue to be competitive.

Read more…

Sérgio Abranches

Economic damage costs related to extreme climate events to date in the US exceed $35 Billion, says the National Oceanographic and Atmospheric Administration – NOAA. These costs are likely to affect both the domestic and the global economies already facing a serious crisis.

Nine billion dollar disasters have occurred so far in 2011 in the U.S. Among them are the upper Midwest and the Mississippi flooding; drought, heat waves, and fires in the Southern Plains and Southwest; tornadoes in several regions; and a large winter storm impacting many central, eastern and northeastern states.

Climate extremes have led to harvest losses affecting particularly corn, soybean, and cotton crops. Food prices moved upward as supply plummeted.

The hurricane season has been very active, with nine named storms so far. Tropical storm Irene is the first to gain hurricane strenght of the 2011 Atlantic season. It has passed over Puerto Rico on Sunday. There were no reports of deaths or major injuries in Puerto Rico, but 800,000 people — half of the island’s electricity customers — were left without power by the storm, which felled trees, swelled rivers over their banks and flooded some roads, says Reuters.

Irene, with 80 mph sustained winds, is now on a path towards the Bahamas and Florida coastline. A ridge of high pressure to the north of the storm, around Bermuda, should stay in place over the next few days, forcing the storm along a west-northwest path. Irene is expected to strengthen over the next 48 hours, potentially into a Category 2 hurricane, according to NOAA

Irene is set to be the first hurricane to hit the United States since Ike savaged the Texas coast in 2008. Hurricane-force winds extended outward from the core to 50 miles and tropical storm-force winds extended out up to 205 miles.

Authorities along the U.S. Atlantic seaboard, from Miami to New York, were closely watching Irene’s possible path, with at least some computer forecast models showing it might even sweep up near New York City early next week.

President Barack Obama was briefed about Irene while on vacation at the Massachusetts island of Martha’s Vineyard, White House officials said (Reuters).

Reports from Reuters say that the storm could be the catalyst the insurance industry has been seeking in its quest for across-the-board premium increases, in what already promises to be the costliest year in history for natural disasters around the globe.

There are likely to be other economic consequences of these climate-related disasters. Some of them are already in place. Reduced crops, food inflation, higher ethanol prices, disruption of economic activity, and destruction of property and infrastructure all have a recessionary component, affecting employment, income, and both private and public expending. They hit an already slow-moving economy in the midst of a new turn of the financial crisis as shockwaves after an earthquake.

Like the extreme natural events that hit Japan earlier, disasters in the U.S. will very probably add to domestic and global economic woes. An aggravation of the U.S. economic trouble will certainly add to the troubles of the fragile global economy. The U.S. recent stop-and-go, and the financial breakdown in  the Eurozone are central elements of the present global crisis.

To make things worse, the Chinese government is highly concerned with food price inflation, mainly due to adverse climate events around the globe, and is set to reduce the pace of the domestic economy. A downturn of the Chinese economy at this moment would wipe out any hope that the global economy could recover from its present woes any soon.

Although the current crisis is a new turn of the financial crisis triggered by the subprime collapse, it has noticeable climate-related undercurrents. The crisis has not been fed only by bubbles, risk of default, and investors’ recurrent panic surges, but also by the economic consequences of extreme climate. After all, 2011 is the seventh year on a row with some major extreme climate events causing significant death tolls and economic damage.

Sergio Abranches

For the third consecutive year Brazilian sugarcane harvests will be affected by adverse climatic factors. The latest estimates from the producers’ association, UNICA, is that it will be 8.4% smaller for the season 2011-2012. Over the last three years demand for sugar has been very strong and prices even higher than ethanol’s. As a result, producers have been calibrating their production mix to yield more sugar than alcohol.

Brazilian sugarcane production will be around 510.24 million tons, 4.4% less than the previous estimate of 533,50 million tons. These estimates are 8.4% less than the actual yield of the 2010/2011 harvest of 556.95 million de tons.

Intense frost and early blossoming have reduced sugarcane productivity far more than expected. Harvesting will be anticipated, aggravating the problem leading to a six-month interval between harvests. Besides, Brazilian sugarcane plantations are getting old, loosing productivity. Adverse climate conditions, as well as uncertainty about the future prevent producers to accelerate crop renewal.

As a result there will be a shortage of ethanol for the domestic market. The price of sugar, and the fact that Brazilian sugar faces far less barriers in the global market than ethanol, lead producers to continue giving precedence to sugar over alcohol production. This has an obvious impact on ethanol prices, that are expected to rise and stay high for at least the next three years. Brazil has a significant market for ethanol. In 2010, the industry produced 3.3 million light motor vehicles (cars, SUVs and light trucks) of which 72% carried a flex fuel engine. Only 18% had gasoline engines, and slightly less than 10% were diesel vehicles. Flex fuel vehicles represented 35% of the total fleet of  light vehicles in 2009. It is estimated that in 2020 flex fuel vehicles will be 80% of the total fleet of light vehicles. Every gas station in Brazil has an ethanol pump since the 1980’s.

The price of ethanol is currently around 70% of the gas price at the pump, and it will keep rising. Consumers will start preferring to fill their tanks with gasoline only, when ethanol prices pass this threshold for the simple reason that flex fuel engines consume 30% more when running on ethanol. State owned company Petrobras sells almost 100% of the gasoline consumed in the country, and has kept gas prices to wholesalers at the same level since 2009. Gas prices increases at the pump only pushed by the 25% ethanol mix, and the margins of wholesalers and retailers. Thus, ethanol prices increase faster. This dynamics totally undermines the once successful policy to stimulate ethanol as a substitute for gasoline, and the production of flex fuel vehicles.

The Brazilian government has been responding with ineffective measures to this dilemma. It has recently been considering reducing the ethanol mix of the gasoline. A clear mistake that would represent no solution at all, and would have very negative environmental consequences: it would lead to poorer air quality in dense urban metropolitan areas that already face serious public health problems related to air pollution. Besides, it would further discourage ethanol producers.

Brazil has arduously acquired two advantages regarding biofuels, particularly ethanol, apart from the higher energy conversion rate of sugarcane, its cost advantage, and the very low to zero-carbon footprint of sugarcane ethanol production. The first one is the fact that the distribution infrastructure is already 100% adapted to use biofuels from the mills to the pump. The second one is the high and increasing share of flex fuel vehicles. With flex fuel engines and the ethanol addition in the gasoline, 40% of gasoline consumption in Brazil has already been replaced by ethanol. In the US substitution is less than 10%.

To recover the coherence of the flex fuel policy, the government should target two areas: incentives to increase the ethanol efficiency of flex fuel engines, and to research and development of second generation biofuels.

Instead the government is encouraging Petrobras to buy sugar/alcohol companies, with the expectation they’ll produce more ethanol than sugar, and lead the way to market equilibrium. Such an intervention will more likely alienate private partners because of falling profits, and lead to total control of the companies by Petrobras. The state owned company would be entering the agricultural sector, an area of activity too far away from its core business. Additionally this move will aggravate, rather than ease, market imbalances. It should rather invest to develop second generation biofuels as part of a long-term strategy to diversify its activities in the energy sector. Many oil companies are already diversifying into other non-fossil energy areas.

Brazil will have to import gasoline and ethanol to supply the growing domestic demand. Its main ethanol supplier has been the United States. Right now estimates for corn harvests in the U.S. are moving downwards because of heat waves and severe drought in the South and the Midwest. Domestic demand for ethanol is also increasing. This will reduce U.S. ethanol export capacity and push ethanol prices even higher. Importing more expensive ethanol will further aggravate the present imbalances in the Brazilian domestic market. Petrobras will also import gasoline at a price higher than it will sell to wholesalers. Its CEO, José Sérgio Gabrielli, told Brazilian journalist Miriam Leitão on a talk show at Globonews, Brazil’s largest cable all-news TV, that Petrobrás will only correct gasoline prices when the exchange rate, global oil prices, and fuel prices in the U.S. markets are in relative stability. That is unlikely to happen in the near future. Therefore gasoline prices will be kept at current low levels, and Petrobrás will continue subsidizing fossil fuels.

Consumers will move towards gas, abandoning ethanol. Air quality will worsen. The environmental advantage of flex fuel vehicles will disappear. Petrobrás discretionary expenditures will increase, harming its minority but numerous private shareholders. Ethanol producers will receive the wrong signals from the government, and continue to bet in the more predictable, less arbitrary sugar market.

This is a scenario that typically requires strategic, comprehensive, and long-term solutions through technological innovation and structural change. The government should encourage investment in productivity gains and research and development, and the diversification of biofuel sources. The government, however, seems to be able to look only through the rear-mirror, not to learn from past errors, but to repeat them.

Sergio Abranches

Moving from a high-carbon to a low-carbon economy entails replacing the global energy and industrial high-carbon infrastructure over the next decades. UN’s recent Economic and Social Survey 2011 – The Great Green Technological Transformation estimates replacement costs at $15-$20 trillion, or between one quarter and one third of global income.This is a herculean task. One that has been interpreted more as an insuperable obstacle than as a great opportunity. The cost and magnitude of the shift seems, at first glance, to be a formidable barrier. It takes diverting a large chunk of global savings and investment towards this task. If we do it as fast as science has been asking us to to, we’ll leave unexploited a wealth of high-carbon, relatively low cost resources. But look again. Using these resources represents an unaffordable climatic and environmental cost. The huge mobilization of monetary values to invest in new activities, new materials, new energy sources, new technologies could feed a long boom cycle of economic activity over several decades. Income and profit gains will more than compensate for the cost of replacement. We could start a long cycle of global growth that would add up to one of history’s longer-lasting periods of increasing prosperity.

Because climate change is a global phenomenon, the shift towards a low-carbon economy has to be a global one. It creates distributive risks and advantages. Leaders of several developing and underdeveloped nations argue that it represents a burden they cannot afford. They also say that since they’re not responsible for the GHG emissions that caused the problem, they have no obligation to act. This reasoning corresponds to the “insurmountable obstacle syndrome”. Seeing change as a hindrance impossible to overcome is self-defeating, especially when there is no viable alternative. Besides there is no opting out for anyone.

Obstacles should be viewed as motivations, not deterrents. Rich countries have the opportunity to create an investment dynamic that will by itself be a source of strong job and income creation. Developing and underdeveloped countries have what I call, after Alexander Gerschenkron, the advantages of backwardness. As the UN survey puts it, “developing countries may be able to leapfrog directly to renewable energy sources”. Instead of trying to catch up developed countries through the high-carbon path, they can shortcut to the low-carbon advanced economy.

Read full article here.

Sérgio Abranches

The early-warning satellite system for monitoring deforestation in the Brazilian Amazon, DETER, developed by the National Institute for Space Research, INPE, has detected an atypical increase in cleared forest area on March-April this year. It was the largest area cleared in this period since 2008. Compared to 2010 deforestation was 473% greater. Today, INPE has announced that deforestation in May was 146% greater than in May, 2010.

There is a clear trend towards increased land clearing. The chart shows DETER‘s figures for both periods.

Deforestation has been greater in 2011 than in 2009 and 2010. The figure for March-April 2011 is anomalously high because these months close the rainy season. The explanation for this sudden increase in land-clearing even before the dry season begins is the anticipation of the congressional approval of a new Forestry Code.

The bill reduces the mandatory forest reserve in the Amazon from 80% to 50% of the property area, as well as the extension of riparian vegetation to be preserved or restored on both margins of rivers, from 30 to 15 meters. These changes were already approved by the House. If the bill becomes a law, landholders will have to register their properties indicating the areas of mandatory protection. The bill also eliminates fines and administrative and legal proceedings against illegal deforestation until 2008. The likelihood of its approval has triggered “preemptive clearing”, a policy of “fait accomplit”, before the bill is converted into law.

The dry season in the Amazon begins in May. The  risk of intentional wildfires and land clearing is at its highest from May through to September. Fire usually comes after the electric saw and the tractor-pulled chain, two common methods of land-clearing. The most devastating one is the use of large freighter anchor chains connected to two high-power tractors that would pull every tree, and kill every animal on their way. This method easily clears near 100 hectares in a day’s work. (See a video here.) Fire has also been used to clear drier tracts of native forest. Cleaning up the rest becomes an easy task for a tractor shovel.

The chart with aggregate deforestation areas from March to May gives a clearer picture of the present trend towards higher clearing rates.

INPE has indicated that 81% of the deforested area in March-April was in the state of Mato Grosso, Brazil’s larger soybean and beef producer. In May, 35% of the cleared area was in Mato Grosso; 25% in Rondonia, where the government is building two large and controversial hydropower dams; 24% in Pará, a large beef and timber producer; 11% in the state of Amazonas; and the remaining in the states of Maranhão, Tocantins and Acre.

The state of Mato Grosso has active lobbies and political networks related to the two major traditional drivers of Amazon and Savannah (Cerrado) deforestation: soybean cultivation and cattle ranching. The pressure from soybean cultures over  the forest has been smaller for the last 5 years due to the “Soy Deforestation Moratorium” signed in 2006 by Brazilian soy industry representatives, trading companies and large producers, after major U.S. and European consumers refused to continue buying soy from illegally cleared land. This movement was triggered by a well orchestrated campaign from Greenpeace’s Brazilian branch.

A story by Bettina Barros (in Portuguese) for Valor Econômico, a Brazilian daily business newspaper, shows that the soy industry is already considering relaxation of the moratorium due to the upcoming change in the forest law. They argue that their agreement cannot ask more from producers than the law. But the fact is that the “Soy Deforestation Moratorium” did ask more than the law from producers before it became clear that the law was about to be changed.

The motive for ending the ban on soy from illegally deforested areas comes from the market. World soybean prices were quite low by the time the “Moratorium” was signed at US$ 5.50/bushel. Now they are as high as US$ 13.60/bushel.

The market has also changed. Most of the demand in the early 2000’s came from the European Union and the United States. Under the pressure of environmentalists, the media, and their consumers U.S. and EU customers have decided not to buy soy coming from deforested land, and to ask for certification of origin. Today most of the demand comes from China. Chinese buyers ask no questions. They are insensitive to what happens in their supply chain to have their food industry adequately fed.

On another recent story (also in Portuguese), Cláudio Ângelo, a senior reporter for the Brazilian daily newspaper Folha de São Paulo reported that land clearing for soybean plantation had increased by 85% in 2011 in comparison to the area cleared in 2010. He also used data from INPE, and mentioned the incentive from high global soy prices. Senator Blairo Maggi (PR-MT), one of the world’s largest soybean producers told him that prices “have never been that high for the last 70 years.”

Sergio Abranches

Over the last seven years disasters related to extreme natural events have hit all regions of the world. There was not a single year without a major disaster. A significant amount has been related to extreme weather events. Still a majority of the vulnerable countries in the developed and emerging world are not adequately investing in disaster prevention and reduction.

Several new studies are providing evidence of the relationship between rising risk of disasters and climate change. The so-called ‘problem of attribution’, i.e. of relating a series of specific events to a changing climate is becoming less relevant, given the amount of new data supporting attribution. Looking at these trends one can see that there is a decoupling between the political agenda in a great many countries, and the demands of our times. We should be changing our development patterns to adapt to higher risk of disaster and climate change instead of looking for ways to prolong the life of the old patterns.

Over the last decade the number of disasters seems to have been relatively stable, although there are indications that their intensity has increased. Mortality is down, but economic losses are up, says the new report by the United Nations on disaster risk reduction (GAR 2011). It was release at the onset of this week meeting of the UN Global Platform for Disaster Risk Reduction, in Geneva, where representatives from 175 governments, scientists, experts, and NGO’s will be seriously discussing disaster risk reduction. The Global Network for Disaster Reduction’s has simultaneously launched “Views from the Frontline”, a survey that interviewed 20,000 people in 58 different countries.

There are no natural disasters, only natural hazards, and social catastrophes. Disasters are the result of the interaction between natural phenomena, the built human environment, and the social environment. The probability of disasters is dependent on three main factors: the risk related to natural events, the degree of people’s exposure to these events, and the degree of vulnerability of exposed populations and their built environment.

The proportion of the global GDP exposed to tropical cyclones has increased from 3.6% in the 1970’s to 4.3% in the first decade of this century. The UN report warns that “the extensive risks of today can become the intensive risks of tomorrow when they accumulate in places exposed to major hazards such as earthquakes or tropical cyclones”. In other words, high frequency, low severity risks disseminated throughout most of a country’s territory could gain severity in the future as they hit a same area cumulatively. Almost 97% of the losses caused by extensive disasters (high frequency/low severity) are associated to weather-related events. Fatality is low, but infrastructure and property loss is high. They hit harder the households of low income communities.

“Extensive disaster losses and their downstream impacts on health, education, structural poverty and displacement go unaccounted for in most countries, hiding the real cost of disasters.”

Since the 1970’s the number of countries exposed to tropical cyclones has increased. Population growth, urbanization and the territorial spread of the built environment increases exposure, the risk of disasters and economic losses.

“Decisions on land use and building can push up risk significantly, especially in cities with large informal settlements and limited local government willingness or capacity to manage city expansion in the public interest.”

Disaster reporting has improved in many areas, as well as access to information. The gap between detected and reported disasters is closing. Closing this gap, apart from indicating an improving governance, increases disaster awareness and helps further advances in governance. (See the chart)

Human exposure to tropical cyclones and floods is rising rapidly. The number of people exposed to floods has jumped from 32.4 million per year, in 1970’s, to 69.4 million, in 2000’s. Economic exposure, the global GDP exposed to floods, escalated from an yearly average of US$ 36 billion to US$ 100,1 in the same period. (See the charts).

In Latin American and The Caribbean, people’s exposure more than doubled, going from 600 thousand to 1,3 million a year. Annually average exposed GDP, moved from US$ 2.5 billion, to US$ 5.4 billion.  (See the charts).

Population exposure to tropical cyclones  increased sharply from 65.9 million, in the 1970’s, to 122.5 million, in the 2000’s. Economic exposure has also increased fast, from around US$ 626 billion to US$ 1,575 billion. (See the charts).

In Latin America and The Caribbean people’s exposure was 1.1 million a year, in the 1970’s to reach 5.2 million a year in the 2000’s, a five fold change. Economic exposure was multiplied by ten, from US$ 2.3 billion to US$ 24.3 billion. (See the charts).

In spite of sharp increases on the degree of exposure and economic losses, raising the social and economic risk for these populations,  progress in governance capacity to prevent and reduce disasters has been slow.

“There is continuing difficulty integrating risk reduction into public investment planning, urban development, environmental planning and management, and social protection. Few countries reported the systematic recording of losses or comprehensive assessment of their risks. Less than half of these countries undertook, multi-hazard risk assessments and less than a quarter did so in a standardized manner.”

The UN report calls attention to the fact that whereas weather-related disasters are often characterized as a consequence of unexpected weather events, in reality they are the outcome of “an unseen but continuous accumulation of risk”.

“Disaster risks can increase or decrease over time according to a country’s ability to reduce its vulnerability and strengthen risk governance capacities.”

Progress in disaster governance has been modest overtime, especially when compared to the pace of increase of disaster risk, and losses caused by disasters. Extreme weather-related disasters have grown exponentially. Investment in preparedness, prevention, and adaptation have been slow.

The average degree of global progress in disaster governance and institutional arrangements has moved only slightly between 2007 and 2009, from 3.3 to 3.4, where the minimum is 1 and maximum 5. Advances in preparedness and response went from 3.2 to 3.4.

“Views from de Frontline”, shows that 57% of interviewees from 58 countries say disaster-caused losses have increased. But governance improvement has been far too low, only 2.4. South American countries showed the third lowest index of governance progress.

As the intensity of risk increases, the cost of risk reduction increases exponentially, whereas the probability of realizing the benefits in a given period of time decreases. (UN Global Assessment Report on Disaster Risk Reduction)

Comparing the 2009 and the 2011 surveys the Global Network for Disaster Reduction found that it shows a mixed picture: “there are reported improvements in government coordination, partnerships and planning; but overall there appears to have been little or no progress over the two-year period.” Local governance is key to disaster reduction, but not enough. Cooperation at the national level and international coalitions to help the more vulnerable populations are also indispensable.

“Whilst each country has different governance arrangements there are consistent functions and characteristics which lead to progress. For example the rights of all groups to information about risks and risk reduction measures, participation in decisionmaking, budgeting, planning and implementation must be explicitly recognised in policy, legal and institutional provisions. These must shape local government practice.” (“Views from the Frontline” – The Global Network of Organizations of Civil Society for Disaster Reduction)

Sergio Abranches

Local sustainable development 2.0, that’s how we should call what is happening in 80 municipalities of the Brazilian giant state of Pará, in the Amazon region. Pará is 1.8 times the size of Texas. These 80 towns are basically dominated by cattle-ranching and some timber production. Beef, timber, and soybean have been the main culprits for a long history of illegal logging, that has claimed about 20% of the Amazon rainforest, and 27% of Pará’s forest cover.

Until recently, local development in the Amazon has been based on small scale cooperative-based extractive activities for the production of rubber, fruit or fish. Now local development has to address large-scale production, usually for beef, soybean, and wood products exports.

Deforestation has declined sharply over the last five years, from more than 25,000 sq. Km a year to around 7,000 sq. km. Forest degradation, though, has been rampant, especially over the last three years. Degradation has two main sources. One, is selective logging for  timber production. Loggers cut the most valued species and leave those with less or no commercial value. The other is land clearing for pasture or soybean production. Loggers also cut selectively, to hide the process from common satellite detection, until it is too late for authorities to prevent full clearing.

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