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Resources and Third World Development. Sustainable Development. Attempt in recent years to understand poverty, development and environmental degradation interrelationships
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Sustainable Development • Attempt in recent years to understand poverty, development and environmental degradation interrelationships • Sustainable development seeks to achieve lasting satisfaction of human needs and improvement of the quality of life and encompasses: • Help for the very poorest who are left with no option but to destroy their environment to survive; Idea of self-reliant development with natural resource constraints • Cost effective development using different economic criteria to the traditional –i.e. development should not degrade environment
Importance of Resources in Development • All forms of production make demands on the resource base • Resources are consumed through human activities in fulfilling basic needs • Predominant view is that resources are given value in regard to functions they perform, according to levels of development and aspirations of a society • Environmental resources are viewed as stocks, often fixed, limited and non-renewable, found in nature • Debate over adequacy of resources to support societal demands • Resources must reflect human appraisal; limits no imposed by non-human environment but by human ingenuity in perceiving value
Gasoline Prices in America • In the 1950s gasoline prices were 30 cents a gallon and for this you had your oil and tire pressure checked • Today in California, shown here, gasoline prices have hit $3 per gallon; Britain $5.43, Germany $5.12, France $4.38, Japan $3.66 • Is $7 a gallon possible?
Oil as a Non-renewable Resource • US imports roughly 50% oil that it uses • One-quarter of total imports come from Persian Gulf • Easing our dependency on Middle Eastern oil producers could simplify foreign policy • Is this possible? • Where are alternative sources of oil?
Alternative Sources of Oil • Russia, second only to Saudi Arabia, produces 7mil barrels per day • Caspian republics, Kazakhstan and Azerbaijan, produce 2mil barrels per day • Latin America expected to grow by 3mil barrels per day by 2010 • Technological advances make it now cost effective to extract oil off West Africa and Gulf Coast of US • Also refine oil in Canada and Venezuela previously unusable
Fading Enthusiasm • Much of newly extracted oil will simply replace declining output from existing fields • Norwegian, second largest non-OPEC producer, fields are rapidly declining • Production in Mexico has peaked • Much of Russia’s potential lies in Siberia where country’s primitive pipelines make shipping dangerous • Nigeria-8% of oil imports to US, can produce one-third more by 2007 but conflict has discouraged this possibility • Colombia similarly has been plagued by guerilla attacks on its pipelines • This also is true in Indonesia where Exxon operations have been held up by independence movements
Biggest Obstacle: Price • Biggest obstacle to freeing ourselves from Middle Eastern oil has nothing to do with politics, chemistry or engineering • Economics is the obstacle: price is determined by global supply and demand • Any large producer can affect oil supply and thus prices • Thus Persian Gulf states 600 bil proven reserves will continue to dictate control • OPEC remains powerful force in determining price of oil
Political Economy, Price, Demand for Oil • Just as important as supply of oil is the demand—greater and greater demand keeps kicking the price upward- lack of conservation practices • Oil prices in summer 2005 expected to reach $60 per barrel and perhaps $80 or higher! • Two important demand points are China and India both of whose production is stagnating or declining • Lack of emissions controls applying to these states • Human rights concerns are being abandoned as these nations attempt to negotiate deals with “pariah” states such as Myanmar and the Sudan • Security issues important too
Declining Production • Indonesia is the only Asian member of OPEC • But relies on 1990s investment in oil and gas for production output • Populists call for Indonesia to withdraw from OPEC to save $2mil annual dues • OPEC maintains that all members must be exporters
Oil Wasting Away in Indonesia • Indonesia’s oil industry squandered resource for many years • Few new wells have been drilled and production has dropped by one-third • Unable to use windfall in oil prices to help development • Meager output has forced China and other buyers to look elsewhere: Sudan • But claim to be determined to be an exporter again (imported oil in last quarter of 2004) • Again have raised prices and cut subsidies of gasoline and diesel to cut waste (kerosene still heavily subsidized as it is used for cooking) • Passed new laws and tax policies to encourage multinational companies to invest
Promises and the Reality • While new laws and tax rules have been passed , regulations that would allow enforcement have not been issued • More seriously a 29% increase in retail gas and diesel prices still leaves both selling for under $1 per gallon • Thus subsidies still account for 1/6 of government spending in 2005 • One added problem is that few people have education and training to take jobs in Pertamina’s oil fields and refineries • Region surrounding West Java oil field is desperately poor and is known as a source of prostitutes for Jakarta’s many brothels
Pertamina and Exxon Mobil • Pertamina slow to look for new wells and multinationals are reticent to invest troubled by Bali bombing incident and other unrest • In early 2000 Exxon Mobil found large field in eastern Java drilling deeper wells that would enlarge output by 20 % • But production has yet to begin as government seeks to renegotiate greater share of revenue • To attract investment most important step is to have clear rules for contracts-transparency • Developing oil fields in Indonesia is expensive (wells are 4 miles deep), so companies reluctant to sign away too much revenue before production begins • When you combine tough production sharing terms with government uncertainty, big companies are reluctant -need better terms in harsh environments
Alternative Energies • Indeed we can reduce our dependency on oil by encouraging the development of alternative energies • Nuclear power- extremely costly and long time horizons to build plants; safety issues • Wind power- wonderful but harnessing this in sufficient scale is not feasible at this point • Best solution: ? • Rationalization
Indonesia: Natural Forest Cover Change in Indonesia, 1985 - 1997
Indonesian Deforestation • Average annual deforestation rate for 1985-1997 was about 1.7 million hectares. • In total, Indonesia appears to have lost more than 20 million hectares of forest cover in this time period-- about 17% of the forest area existing in 1985. • Hardest hit during this period were Sulawesi, Sumatra, and Kalimantan, all lost more than 20% of their forest cover. • If these deforestation trends continue (as they have since 1997), non-swamp lowland forest will disappear in Sumatra by 2005 and in Kalimantan soon after 2010.
Indonesian Deforestation • Most destruction is in Papua province, where forest concessions have been granted to 15 companies. • If 1 cubic meter is equivalent to $100, then Indonesia suffers a loss of $7.2 million per year due to illegal tree-felling • Foreign illegal logging ‘mafias’ have joined forces with crooked Indonesian cooperatives and officials to plunder Papua’s rainforests • Corruption and lawlessness were fuelling the epidemic of illegal logging in Indonesia. • Much of the illegal logging has been linked to the Indonesian Defense Forces, which by its own admission obtains 70% of its annual budget from “a range of sources”.
Chinese Efforts to Halt Desertification • A huge problem in areas of extreme aridity such as the Sahara, Kalahari, Gobi, and Taklimakan Deserts areas is desertification • According to government statistics, 42 billion trees have been planted since 1982. Last year the effort involved 560 million people. In the latest phase of the effort, announced two years ago, China plans to plant trees in an area of 170,000 square miles — just over the size of California — over a decade.
Planting Green Walls in China • In Xinjiang, this western-most province, which is home to some of the world's biggest deserts, two million acres of trees have already been planted • Jujube trees are particularly suited to the harsh climate here, able to withstand winter temperatures near minus 30 degrees while thriving in the scorching summers.
Planting China’s Green Walls • The Chinese Government reports that deserts are expanding at a rate of 3,800 square miles a year and some largest deserts appear to be merging. • During a 1950's campaign to make China a leading steel producer, part of the country's disastrous Great Leap Forward, the countryside was stripped of trees for fuel to fire backyard furnaces, causing widespread floods. • No one expects that today's tree planting efforts will have anything like these calamitous side effects, but if the campaign is not effective, the huge cost is, if nothing else, a financial disaster.
The Results of Planting Green Walls • Has tree planting on this scale done any good and what has it cost? • During sandstorm season in China wind-borne dust from the Taklimakan and Gobi deserts plays havoc with aviation in northern China for weeks, cripples high-tech manufacturing and worsens respiratory problems as far downstream as Japan, the Korean peninsula and even the western United States. • According the UN Environmental Program, the average number of sandstorms in China has grown from 5 in the 1960's to 24 in the 1990's. • To plant trees on such a vast scale, "economically and ecologically, it is a big waste of money," he said. "There is a serious problem of interests involved, and some people don't care, because it is state money."
