Saturday, January 14, 2006

Recycling: Breaking set notions over ship-breaking

There is a fine difference between a resource and waste. A waste becomes a resource when someone is willing to pay the owner to acquire it; it remains a waste if the owner has to pay someone to dispose of it. I look at the debate over ship-breaking in this article, "Breaking the set notion", published in the Hindustan Times, on 13 January 2006.

More than 150 years ago, the French economist and legislator Frederic Bastiat had written “There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.” The present debate over the decommissioned French aircraft carrier, Clemenceau, being sent to Alang in Gujarat for dismantling and recycling highlights the relevance of Bastiat’s idea of “what is seen and what is not seen”.

Clemenceau is a 265-m long ship, weighing about 26,000 tons. Recycling it could open new opportunity for Indian ship-breakers. And the environmental risks and labour safety can only be dealt with by becoming a more efficient recycler. A portion of the higher productivity and income can be used to take care of the environmental fallout, and protect the workforce.

There is a fine difference between a resource and waste. For instance, most readers of newspapers in India sell old newspapers to local vendors for reuse or recycling. But the same readers have to pay their garbage collectors to clear their kitchen wastes or scraps of paper and plastics. Therefore, a waste becomes a resource when someone is willing to pay the owner to acquire it; it remains a waste if the owner has to pay someone to dispose of it. Generally the volume and utility of the recyclable or reusable material determines the economics of whether it will remain a waste or graduate into a resource.

Ship recycling is a major component of international trade. In the Nineties, Lloyd’s of London estimated that over 7,200 ships, amounting to about 83 million gross registered tons (GRT) were recycled in the decade. Over the past two decades, India, along with Bangladesh, China, Pakistan and a few others, has emerged as one of the major players. But of late, there has been growing pressure on India to restrict this sector. Clemenceau is, of course, only the latest of the ships sent for scrapping that has to negotiate the turbulence created by western environmental groups. A year ago, there was the debate over a Danish ferry that was dismantled in Alang.

Shipyards and labour unions in rich Western countries are understandably concerned that the ship recycling sector has shifted to developing countries where labour costs are much lower. In the Nineties, the US stepped in with billions of dollars in subsidies to help its own shipyards dismantle their own navy ships. Yet by 2000, there were over 400 decommissioned US Navy ships whose fate was undecided. According to a Rand Corporation report a few years ago, the US would have needed $ 3.6 billion in 2000 to recycle these ships domestically. The cost of recycling per ton of light ship weight (LSW) could be as high as $ 680 in US. In contrast, the cost of recycling these ships in developing countries would at most be $ 170. Labour costs in rich and poor countries explain most of this cost differential. While typically, in US shipyards, labour costs range between $ 40-45 per hour, in India wages range between $ 0.25 to $ 1 per hour.

A French company was originally entrusted to clean up the asbestos from the aircraft carrier for a fee of 3 million euros. The company now says that the ship contains much more asbestos, and would have needed 6 million euros to completely remove all the asbestos. Environmental groups have seized on this claim to argue that the ship carries anything between 500 and 1,200 tons of asbestos.

There can’t be a clearer instance of the lure of subsidy uniting a company engaged in the clean-up of Clemenceau, with environmentalist groups. Both are using the loss of French jobs and Indian environmental pollution as fig leaves to cover their own financial and political interests.
Asbestos is a very useful material used for roofing as well as insulation. In its normal usage, asbestos is as safe as any other material. But it could pose a health hazard to workers engaged in removing asbestos from old equipment. But this is not rocket science, and protective gears for workers and containment strategies to hold the asbestos dust can easily be achieved.

Clemenceau could show how both the economic and environmental concerns could be taken care of. Recyclers in India have paid for the steel and other economically valuable material from the ship. And France could, at a fraction of the money it has paid to its own company, get the ship-breakers in India to adopt appropriate technologies to reduce exposure to workforce and lower environmental pollution. Both sides will benefit from such a deal.

Tuesday, January 3, 2006

China and India Move in Radically Different DirectionsThe "Project Tiger" was launched thirty years back. But, there are only a few thousand tigers in

The "Project Tiger" was launched thirty years back. But, there are only a few thousand tigers in the wild, and half of them are in India. The policy of prohibition of trade has hurt tiger conservation in India. The situation is similar in China. The officials of China are are considering harnessing a limited form of commerce for the cause of tiger conservation. At the same time, in India, the tiger crisis has expanded India’s bureaucracy.It is necessary to have a successful wildlife economy to build awareness of the value of environmental resources.This will result in the thriving of legal trade.

My article titled China and India Move in Radically Different Directions was published in Perc in Fall 2006.

NEW DELHI, INDIA—More than thirty years after the launch of "Project Tiger," the most high-profile conservation program in the world, barely 5,000 to 6,000 tigers are left in the wild, over half of them estimated to be in India.

Since the 1970s, India has enacted tough laws and mobilized huge resources to stop hunting and trading in tiger parts. But the policy of prohibition has not secured the future of tigers. "The conflict has led to emotional, seemingly intractable debates over the central question of tiger conservation in India: Can tigers and people live together?" writes Erika Check in the scientific journal

China, too, faces a tiger crisis. During Chairman Mao Zedong’s rule, tigers were considered a great pest, and people were encouraged to kill them. Today, China has only 20 or 30

tigers left in the wild. Yet the demand for tiger parts, particularly the bones, is greatest in China. Tiger bones are used to treat severe arthritis in traditional Chinese medicine, a practice that can be compared to the use of animal-based insulin in the West in the recent past.

For many years, the dominant thinking among conservationists has been that the demand for tiger parts, whether for medicine, fashion, or hunting, is the major cause of decimation of the wild tiger population. Believing that humans and wild animals cannot coexist, conservationists have sought to isolate wildlife in nature reserves, demanded prohibition on hunting and trade, and tried to prevent humans from degrading the reserves.

Reflecting this philosophy, the Convention on International Trade in Endangered Species (CITES) began restricting commerce in many animal and plant species in 1975. Project Tiger, which started in 1972, attempted to enforce a total prohibition on hunting and trade in tiger parts. In addition, it created a system of tiger reserves, beginning with nine sanctuaries, totaling 27 today.

Now, although this policy of prohibition has not worked, many loud voices call for even stricter prohibition and harsher enforcement. Some have urged the Indian government to enlist the army to protect the tigers. Supporters of such policies come from conventional conservationists in the so-called Free World, particularly in countries where tigers never roamed. The Worldwide Fund for Nature and various other wildlife and tiger conservation groups seek to capitalize on the pro-tiger sentiments in rich countries. Indeed, the tiger crisis is a source of funds and prestige for these organizations.

Countering this view has been a strong undercurrent of dissent. PERC, for example, has been at the forefront in arguing that with proper incentives, property rights, and markets, commerce could be the biggest contributor to conservation through sustainable use.

China's Emerging Policy

Ironically, although China is still a communist state, its officials are considering harnessing a limited form of commerce for the cause of tiger conservation. Chinese officials have started experimenting with radical policy options. One of these is cap-tive breeding of tigers.

Over the past decade, special tiger breeding bases have been set up under public and private management. More than 4,000 tigers are in captivity in China today, and an effort is underway to build a genetic profile of every tiger in captivity so that the number of pure subspecies can be documented and increased. This will enable breeders to meet the international demand for pure-bred tiger cubs and young adults of particular subspecies such as the South China, Siberian, or Bengal tiger.

China has about twenty tiger breeding facilities today. Most of them are small farms, but even larger ones cannot support the cost of raising tigers through tourism alone. If tigers were bred for markets, the story would be different.

An adult tiger leaves behind about 12–15 kilograms of dry bones, which could sell for US$500–$1,000 per kilogram. Most other parts of the tiger, from its whiskers to its penis, are valuable, perhaps worth another $20,000. Thus, a tiger could generate revenue of $35–40,000 to the breeder. The cost of feeding tigers could be reduced substantially by providing low-cost wildlife as feed, rather than the commercial meat that is used now. Additional revenues could come from zoos and circuses buying pure-bred subspecies.

China has created a legal domestic market for some wild-life products like ivory and musk. A computerized documentation procedure tracks them through their manufacturing and marketing to separate legal and illegal products. China could test the effectiveness of the monitoring system using authorized tiger bones from existing stockpiles and assess the possible impact on wild tigers elsewhere.

China is also experimenting with reintroduction techniques in South Africa under a public-private partnership. With the cooperation of Chinese authorities, Li Quan, director of Save China’s Tigers, has exported a few tigers to a large fenced-in wilderness area in Lohu (Tiger) Valley, South Africa. Her aim is gradually to train the tigers to hunt and rediscover their natural survival instincts. A couple of generations later, the tigers born in this reserve could be released into designated tiger reserves in China. This is a daring experiment considering that there has been only one recorded instance of a captive-bred tiger being released in the wild in India in the late 1970s; the controversy that it generated—over whether the tiger marauded villages and whether it introduced non-native tiger genes into the native tiger population—has still not been settled.

India's Failed Policy

The contrast between China and India could not be more glaring. Rather than causing a reassessment of policies, the tiger crisis has expanded India’s bureaucracy. Egged on by environmentalists, officials are calling for greatly enhancing the policing of parks and for modern equipment to identify and pursue suspected poachers. There are news reports of enlisting even the Indian army to protect the tiger.

The result of this policy has been the loss of tigers, not their protection. According to a recent official report, an estimated 112 tigers were killed by poachers between 1999 and 2003 and the figure may be many times higher, according to environmentalists. During this period, over 411 cases were filed regarding the death of tigers and seizure of tiger-related products, but not one has led to a conviction. Furthermore, the economics of poaching are extremely attractive. A dead tiger fetches between $60,000 and $160,000 at the retail markets in Southeast Asia, and a poacher may secure the help of forest villagers in tracking down a tiger for as little as $25 to $50.

If we truly value the tiger, we need to explore the tiger’s commercial potential. By harnessing the real economic value of tigers and other forest produce, we may make the tiger earn its keep, and avoid the specter of extinction of this magnificent species in the wild.

A tiger farm would dovetail very well with deer or crocodile farms, which already exist in different parts of the world. Indeed, crocodile farming is a multimillion-dollar industry, with an estimated 2 million crocodiles providing leather products each year. The countries that have facilitated commerce in crocodiles have abundant crocodiles. In contrast, India has refused to legalize crocodile farming for almost two decades, and crocodiles continue to live on the edge of extinction in Indian waters.

An integrated approach would facilitate the supply of low-cost meat to the carnivores, lowering the production costs. Such farming could transform the economies of many rural and poor communities, and the pressure on the natural environment of the forests would greatly diminish.

The tiger, which is at the top of the food chain in its ecosystem, would be at the top of the economic ladder because of its market value. Among the results we can expect from breeding tigers to reduce poaching in the wild:

* The pressure on wild tigers will go down, attracting more tourists to sanctuaries to see this majestic animal in its natural setting.
* The sale of farmed tigers will reduce the incentive for smugglers to kill wild tigers.
* Scientists and wildlife managers will improve their breeding, management, and rehabilitation methods for tiger reintroduction; forest dwellers, who have detailed knowledge of their natural surroundings, will facilitate wildlife management.
* Rural populations will change their incentives. Villagers who are often lured by smugglers into killing a wild tiger for a few dollars, will now defend their new environmental assets, because a live tiger will be more profitable to them than a dead one.
* In addition to attracting tourists through reduced pressure on wildlife, the farms can attract sportsmen through selective allocation of hunting licenses.
* As trade and marketing channels develop for both consumptive and non-consumptive use of tigers, investment in better technologies and management practices will take place. National and international brands will appear. Tourism will increase.

A successful wildlife economy will help build awareness of the value of environmental resources. The price of the tiger in the black market will collapse, and legal trade will thrive. Investment will improve the productivity of wildlife farms, and assured supply and low prices will take the pressure of the wild tigers, allowing their numbers to revive.

Nothing would help the tiger and the other resources of our forests more than giving forest dwellers a stake in the resources in their vicinity and the opportunity to make a profit from them. A legal framework for tiger breeding would help resolve the conflict between the people and animals that has contributed to the tiger’s drastic decline. Once people can profit from these resources, they will have the incentive to optimize the use of the resources. It is mostly forgotten that forest and wildlife, including tigers, are renewable.

Under such a framework, rather than being in conflict, humans and animals would both prosper. Commerce could be the most powerful ally of conservation.