Beware of Stern warnings

Nicholas Stern's report on climate change, focuses on reducing emission today, and therefore exposes its political agenda, rather than its economic concern. The present generation cannot help the future by restraining its consumption today. In a free society, increased consumption today triggers the chain of exploration and innovation that will prepare the future generation to deal much better with their present. I look at the key aspects of the Stern Report, in "Beware of Stern warnings" in the Hindustan Times, on 28 December 2006.

During the colonial era, religious missionaries would often try to scare the local population with impending damnation, and then offer possible salvation if the people accepted the wisdom of their Book. Sir Nicholas Stern, the high-powered British bureaucrat and economist, seemed to be on a similar mission to India recently. Only, he predicted economic losses, natural disasters and disease and then offered salvation in the Stern Review on the economics of climate change. Just as the earlier generation of missionaries who clothed political ambition in religious sermons, Sir Stern sought to cover the political agenda with apparently humanitarian economic concerns. But his stern economic warnings are unlikely to find many takers in the harsh political reality of India today.

The Stern Review is a huge exercise undertaken to highlight the potential hazards of global warming in the next 100 years, and the economic cost of actions taken today. The report predicts that there is a 50 per cent chance that the average temperature could rise by 5 degree Celsius, leading to a loss ranging from 5 per cent to 20 per cent of GDP each year. Stern suggests that an average price of 1 per cent of current world GDP could help stabilise the CO2 level in the atmosphere at 450 ppm. Of course, this 1 per cent translates into a whopping $ 600 billion today!

The report paints a grim picture for India, from disturbances in the monsoon pattern, leading to droughts and floods, loss of agriculture production to coastal displacement of population, melting of glaciers to spread of diseases like malaria. This doomsday scenario is then sweetened by the possibility of a larger share of the global climate fund. The scare-mongering is handy in mobilising armchair activists and the chattering classes who are always looking for causes to support. Money, of course, is an attractive magnet for policy makers.

But there is a small problem — the people and their poverty. Parts of India regularly experience floods or droughts, either water or mosquito-borne diseases. For these people, battling such situations is a tragic reality. And the only thing they hope are fruits of basic development — bijli, sadak, pani — with which they can equip themselves to face their adversities.

Coastal populations in India are not vulnerable because they are on the coast; they are vulnerable because they are mostly poor. Their problem is not too much consumption, but too little. Economic development helps the poor by equipping themselves to deal with vagaries of nature. The Stern report fails this test, because it holds the poor, and not their poverty, as the cause of their vulnerability.

About half of Indian homes today don’t have any electricity, and many who do have the connections, don’t enjoy the benefits. It will be politically suicidal for any Indian leader to promote the virtues of low energy consumption to the Indian masses.

Setting country level caps on emission is central to the Stern report, because without an agreement on the caps, setting the target of atmospheric CO2 at 450 ppm by the end of the 21st century would be impossible. Equally, without the caps, carbon trading can hardly take off at the global level.

The Stern report relies heavily on the notion that carbon taxes and carbon trading will generate enough revenue to finance large-scale clean energy projects in India and developing countries. So the report suggests that rich countries make a high emission reduction commitment today, of 60 to 80 per cent by mid-century, and countries like China and India begin to adopt some caps on emission by 2030.

Now, any discussion of emission quota necessarily raises the issue of equity. Should emission quotas be set at the national or per capita level? Should countries accept a common level of quota? Such questions are minefields and very difficult to come to an agreement on at any international forum. More interestingly, the underlying philosophy of the Stern report is that the future generation needs to be saved by the present. This reflects a level of arrogance on the part of the authors. There is nothing in human history to suggest that civilisation a hundred or a 1,000 years hence will be any less capable than we are today in relation to the past millennium.
So the Stern report may already be quite superfluous in achieving the objective of stabilising the proportion of CO2 in the atmosphere. Technological innovations, driven by open and competitive markets, nurtured within rule of law and respect for property rights, are already contributing to a reduction in the ecological footprint of civilisations. Economic progress typically means producing more out of less; this is the core of efficiency and productivity gains.

Advances in methane, hydrogen and nuclear energy would enable us to continue to meet our needs for more energy, and limit environmental impact. If the farmers around the world achieved the best agriculture productivity prevalent today, based on today’s technology, then a hundred years later, the demand for agriculture land could be about half of what it is today, even while feeding 8 to 10 billion.

If the present generation is unable to take care of the present, they will not be able to contribute for the future. The present generation cannot help the future by restraining its consumption today. In a free society, increased consumption today triggers the chain of exploration and innovation that will prepare the future generation to deal much better with their present. The Stern report’s focus on reducing emission today exposes its political agenda, rather than its economic concern.

How healthy is our health care system?

While on a trip to South-East Asian countries, I found that many are looking at India for health care policies. There is a belief among many, that with 97% of medicines in the Indian market being generic, and prices quite low, Indians must be enjoying a very good health. In this article, "How healthy is our health care system?" I look at the grim reality facing patients in India.

International perceptions of India have been radically changing over the last few years, whether for her higher economic growth rate, the extraordinary rise of her IT sector or her potential as an emerging super-power.

However, during recent trips to south-east Asia, this writer suddenly became aware of yet another perception of India. From Thailand to Malaysia to Philippines and Indonesia, it seems many people in Asia are looking at India as a model for health-care policy.

This came as a surprise, given that commentators in India are generally united in the belief that the two areas where India faces the biggest challenge are education and health care. At about 60% literacy rate, with life expectancy hovering around 64 years, infant mortality rates persisting at 60 for every 1, 000 live births, and a maternal mortality rate between 400 and 500 per 100,000, among the worst health indicators in Asia, the question is: how healthy is the Indian health care system? Can Indian health care policies really serve as a model for south-east Asia?

In Malaysia, there is a sense among many health care activists, that India’s large, generic industry has successfully met the challenge from innovative pharma multinational companies. With prices in India perceived to be low, it is believed that access is assured.

The reality is somewhat different. The price of medicine does not automatically translate into better access. It is estimated that about 70% of Indians hardly have access to modern health care facilities, or don’t seek such services in their lifetime. This year’s UNAIDS report noted that, although India today is estimated to have about 5.7 million HIV positive people, just about 7% of the estimated 500,000 Indians with AIDS receive any kind of treatment at all.

Another source estimated that well over 60% of generic AIDS medications produced in India are exported, while most Indian patients don’t have access. Although India has thousands of companies manufacturing various kinds of generic medicines, the government is now talking of the need to extend price control on generic medicine from about 70 life saving drugs, to over 300 drugs. In Malaysia, there are demands to restrain prices on innovative patented drugs. In India, though, the talk is on price control over generics, since over 97% of the drugs in the Indian market are off-patents in any case.

Thailand, over the last few years, has tried to emulate the generic drug experience of India. One public sector drug company was entrusted with the job of manufacturing an AIDS retroviral, Gpovir, to help Thai patients with low-cost medication. The drug, it is believed, never passed WHO pre-qualification standard. Last year, some Thai scientists admitted that Gpovir may have contributed to growing drug resistance among Thai patients. Now the demand is that the same Thai company be allowed to manufacture a second-line AIDS drug to help deal with the problem of resistance.

To anyone familiar with the Indian situation, this should sound familiar. The expansion of generic manufacturing has coincided not only with lower prices but also the rapid spread of spurious and adulterated drugs. It is estimated that a perhaps a third of global spurious drugs are manufactured in India. So serious is the problem that, a couple of years ago, the government had proposed death penalty for the guilty.

Indian AIDS activists estimate that a few thousand patients in India today need low cost second line drugs. “Our main effort is to provide basic treatment for millions of HIV- positive people. The second line of treatment is very expensive and we cannot afford to provide it free at this point,” responds National AIDS Control Organisation (NACO). So far, NACO has provided first line medicines for about 100,000 patients in India, about half of whom are under its own treatment programme. NACO is planning a drug resistance assessment programme before changing its treatment protocol.

The Philippines is considering the import of some low- cost drugs from India in the hope of saving patients from patents. However, about 40% of the population in the Philippines reportedly never visit modern health care facility in their lifetime. Yet, like in India, there is a growing segment of medical tourism. Thus, both India and Philippines reflect this glaring contrast – five-star health facilities for the rich and for the foreigner, dismal health service for most of their own citizens. This is not so much because of patents but due to misguided priorities in the health sector.

Patents play a very important role in stimulating innovations and enhancing our knowledge. Without a relevant health care system which attracts investment and looks at patients as customers, taking care of their needs and competing to improve the quality of care, patents or not, patients will continue to suffer. For 35 years, India did not recognise any product patent on medicine, yet its pharmaceutical industry has remained fragmented, its share of the global health sector has remained tiny, and most importantly, the patients have continued to suffer.

Clearly, this focus on patents has diverted attention from the real factors contributing to the health care crisis in India and elsewhere

Thirty-five years ago, an Indian scientist at John Hopkins University had first experimented with oral rehydration solution (a proportion of sugar and salt in clean water), yet today, hundreds of thousands of children in India continue to die each year due to diarrhoea. Even at US cents 2, the ORS pouch does not reach the people who need it the most.

Recently, there was a report from a rural district in the western India that over a few weeks 18 AIDS patients had died, because they were too poor to travel to the nearest AIDS clinic for their medication every month.

Since 1988, WHO is running a campaign to rid the world of polio. Vaccination is simple, and available for free in India. Yet, UNICEF estimates that 58% of children received the vaccine this year, a drop from 70% coverage in 2004. What is particularly tragic is that 70% of the incidences of polio have occurred among Muslim children, although they constitute 13% of the population. World wide, polio has resurfaced in about 25 countries, in the last few years, from a low of 7 in 2003. Some believe that a campaign by Islamic clerics who are warning people against the vaccine, painting it as a US conspiracy to sterilize the youth and perhaps even spread AIDS. The terrible disease has now jumped from Nigeria to Yemen to Indonesia.

The price of medicine is only one component of the total health care system. Health care delivery depends on a range of related resources – trained manpower, diagnostic facilities, pathological laboratories, treatment, monitoring of medication, supply of medication, access to health clinics, insurance, logistics such as cost of transportation, etc. In the absence of this functioning chain, it is folly to believe that medicine, or its price, is the magic bullet for patients. Some health experts are beginning to realise that even if medicines are available for free, these would still not be accessible to many who need it the most.

India’s health care sector is sick. No amount of politically convenient assaults on multinational pharmaceutical companies will help improve the health of health care system in India or other developing countries. Over 80% of drugs sold in the Indian market are made by local companies, yet 70% of Indians have no access to them. We need to ask why a bottle of Coca Cola is more easily available in some of the remote villages in India than a pouch of ORS.

IPN to Participate In Montreal COP-11 Climate Meeting: 'Global Climate Control Not Cost Effective– Will Undermine Sustainable Development'

My IPN Press release titled IPN to Participate In Montreal COP-11 Climate Meeting: 'Global Climate Control Not Cost Effective– Will Undermine Sustainable Development' was published on International Policy Network on December 1 2006

London, 1 December: Environment ministers from around the world will gather in Montreal, Quebec, next week at the COP-11 climate change meeting.

International Policy Network will send four individuals to Montreal to participate in COP-11 from 5 to 9 December:

• Kendra Okonski, Environment Programme director of IPN
• Oliver Hartwich, Research Fellow, IPN
• Barun Mitra, director of the Liberty Institute in New Delhi, India
• Juan Carlos Hidalgo, Costa Rican- based policy analyst and IPN Research Fellow.

These individuals share the view that attempting to control the climate through mandatory restrictions on carbon emissions, through the Kyoto Protocol or similar measures, would be harmful and counterproductive for both wealthy and poor countries.

Ms Okonski explained, “Democratically deficient organizations such as NGOs, the EU and the United Nations continue to claim that we must have climate control through the Kyoto Protocol or ‘a son of Kyoto’. But as EU countries have already experienced, attempts at climate control increase the price of energy, which harms the poor and vulnerable, and reduces economic growth. Climate control causes more harm than good.”

Barun Mitra concurred: “Poor countries, such as my native India, are being pressured by unaccountable bureaucrats and green organisations to sign up to ‘climate control’. But India, China and other poor countries are ill-advised to sign up to emission restrictions through the Kyoto Protocol, or any other agreement.”

Mitra explained: “Restricting greenhouse gas emissions in poor countries would not save lives. Instead, it would cause economic stagnation, which would perpetuate poverty and exacerbate current environmental problems in poor countries. For the benefit of people and the environment, poor countries must urgently develop their economies, which will require consuming more – not less -- energy. “

Ms Okonski concluded: “Adaptation is a better policy to address climate change. It would deliver short- and medium- term benefits – especially for the poor -- while reducing our vulnerability to climate-sensitive problems in the future.”