Wednesday, April 13, 2005

India and Kyoto

The Kyoto protocol results from the flawed reasoning that there is a conflict between commerce and conservation. The Kyoto protocol would only throw the world's poor to a life of even more poverty. The usual victims of natural disasters are the poor as of their vulnerability. Contrary to the popular belief, they consume too little energy. My article titled "India and Kyoto" was published in TCS Daily on April 13th, 2005.

Among environmentalism's most fundamental flaws are the beliefs that commerce is the enemy of conservation and that energy conservation will automatically lead to a cleaner environment.

The Kyoto Protocol is the epitome of this flawed thinking. It seeks to promote energy efficiency and alternatives to fossil fuels by insisting on reductions in the emission of greenhouse gases in the industrialized world. The hope is that this will help stabilize climate.

Even Kyoto proponents, though, admit that meeting the protocol's emissions' targets will barely make a dent in humanity's greenhouse gas emissions. The agreement's only chance to have a real impact is if it leads to ever stricter emissions limits. And it seeks to do that by seducing poor countries, exempt from the first round of emissions' cuts, into supporting such limits on themselves by demonstrating that the rich world is willing to pay for its past polluting sins.

What is left unsaid is that Kyoto's policies will only trap the poor in perpetual poverty.

Kyoto supporters argue that unless energy consumption is curtailed, climate change will lead to dramatic events such as droughts or floods. And they also argue that the poor are the most vulnerable to natural calamities.

Yet the poor have always been the biggest victims of natural calamities, not because nature is biased against the poor, but because poverty makes the poor vulnerable. That is why annual tropical hurricanes kill thousands in Bangladesh, while in Florida the death toll rarely reaches double digits.

The Kyoto protocol retards the economic growth that would enable the poor to leave poverty behind and adapt better.

It may be counterintuitive but there is only one economic lesson from history: increased consumption stimulates efforts at improving productivity and efficiency, which in turn can contribute to conservation.

The Kyoto protocol seeks to reverse this relationship by focusing on reducing consumption through punitive taxes and so on, which will not ultimately help conservation goals.

What goes on in the developing world shows why.

In India, like in many other parts of the Third World, unreliable energy supplies coupled with high prices and low consumption stop us from using greener technologies rather than resort to excessive energy consumption.

Why do polluting and inefficient machines continue to be used in India? Because high taxation, coupled with a maze of bureaucratic regulations, increase the cost of doing business in India. Domestic industries are less competitive, as they must deal with trade restrictions and tariff barriers. This effectively discourages business from improving production processes or making their products cleaner and more efficient. In short, the distortion in businesses' incentives discourages the replacement of older, inefficient technologies with more modern technologies.

A vivid illustration of this phenomenon is India's automobile sector. High tariffs make imports prohibitive while high auto and fuel taxes also have stymied the domestic industry. The result is one of the lowest vehicle densities in the world, which environmentalists applaud. But by making new transportation expensive, they have forced people to persist with old vehicles well beyond their lifespan. Estimates in the United States are that the oldest 10 percent of vehicles produce 90 percent of the air pollution. India has nothing but old vehicles, so, perversely, its policies have created more environmental pollution, not reduced it.

The problems of poor and rural Indians are even more acute. Even today fewer than six in 10 of Indian households have electricity. About 150 million households rely on fuels such as firewood, dry cow dung cake and agriculture waste for cooking. These fuels are 20 times less efficient and that many times more polluting than electricity or gas. When they are used in poorly lit and unventilated rural dwellings, they contribute to one million premature deaths each year.

Not surprisingly, Kyoto does not sound convincing to the world's poor. For what this present debate over climate change has done is to divert attention from the core issue of mankind --- poverty.

Today, about one-third of the planet's population does not have access to any modern fuel, and another third consumes very little of whatever comes their way. Today, indoor air pollution, because of burning of wood, agriculture waste, and cow-dung, is the single biggest cause of chronic illness among rural populations in India, and elsewhere. But Kyoto promises to take care of their health problems decades later.

The poor are the victims not of too much energy consumption, but too little. In an open and competitive economic environment, higher consumption provides the incentive to innovate and find more efficient ways of utilising energy.

And it is energy efficiency that leads to a cleaner environment. While the poor may need -- and stand to benefit the most from -- efficiency gains, it is no coincidence that almost all the energy efficient devices have originated from wealthier countries where consumption is much higher. Open commerce encourages consumption, but ends up promoting conservation.

The poor cannot stand to be victimized by the ecological colonisers who are pushing the Kyoto protocol.