Conversing with the Fringe

Have you read The Travels of a Tee Shirt in a Global Economy by Pietra Rivoli? Whether or not you have, you would’ve enjoyed a presentation given by Rivoli on February 24 at Fuqua School of Business. The author, a business professor at Georgetown University, spoke about free trade after following a tee-shirt from the cotton farms in Lubbock, TX, to Shanghai, China, to Washington, DC, to New York, NY, and finally to Tanzania.

While Rivoli doesn't believe free trade is necessarily a good thing, she points out that Americans have tended to view it favorably. In 2002, at the height of the globalization debate, 78% of Americans believed that international trade was very good or somewhat good for the country.

That statistic has dropped, however. More and more Americans believe that international trade is a “story of destruction”, creating systems that breed inequality and perpetuate hardship in developing countries. People struggling to survive will work for unfair wages or under harsh and unhealthy conditions just to get by.

Rivoli claims that the people who view trade unfavorably are both the “fringe” and now mainstream Americans who had previously turned a deaf ear to the problems of international trade. She argues that we should never dismiss “fringe” sentiments because they are one of the best “crystal balls”. They predict the world in 10 years and their ideas, seen as crazy today, will become standard practice. If you need convincing, look at the World Bank and IMF protestors who called attention to the pitfalls of globalization. Or look at the groups who pressured corporations like GAP and NIKE to change their supply chain management. “Fringe” demands are now the norm.

As an environmentalist who has felt like the “fringe” when arguing for the benefits of recycling or green building, I believe that the environmental message is a “crystal ball”. Environmentalists have recently made large strides in pushing some issues, like energy conservation and climate change, to the forefront of the public agenda.

But it seems that these accomplishments have only been possible in the past several years because conservationists have begun talking to diverse groups of people, namely the business community, which has historically rejected pairing economic growth with conservation.

So perhaps Rivoli’s belief in talking with a diverse set of people is actually a two-way street. It takes initiative from both groups, the business community and the “fringe” to tackle important issues. The environmental movement has certainly benefited from doing this.

Some Carbon Credits Are Just All Wet

Massive hydroelectric dam projects in China and other countries are being marketed as viable carbon credits -- but under some very faulty logic, according to an AP report released today. Let's see why.

At the heart of the problem are the credits allowed under the UN's Clean Development Mechanism (CDM), a Kyoto-approved carbon market system. Carbon markets, you might remember, assume that we're all living under a giant bubble: if one country reduces its emissions, they're making a net subtraction for everyone in the bubble. This country now gets to market its subtractions as credits to other nations that don't want to bother with reductions. Under CDM, industrialized countries can buy carbon-reduction credits from developing countries (explained nicely here). What's the problem, then?

AP rightly points out the problem of "additionality" - if you're going to build a dam anyway to generate more power, you're not making a dent in the existing carbon levels of our little globe. Now, fix an existing nasty coal plant and lower its emissions, or replace a coal plant with a cleaner energy supply -- that will. And we haven't even mentioned the ecological and cultural damages that rampant dam projects can cause.

But it's a tough call. We like carbon credits because they allow polluting companies/nations to make some difference, and sooner. We like hydro projects because they are a form of clean energy. But not all credits are alike, and many dams are built with insufficient ecological considerations. The UN says it will be improving the CDM program, so stay tuned. Meanwhile, if your company or government is buying carbon credits or portfolios, do the due diligence.


(For a satirical take on the controversy over carbon markets, check out the classic CheatNeutral. Hey, as long as there is less adultery in the world overall, I can just pay someone else to not cheat, right?)

***NOTE Jan 27, 2009: I'm sitting in a lecture by Bryan Murray of the Nicholas Institute, and someone in class just mentioned that CDM is also rather unaffectionately called "rip-offsets"...