Archive for the ‘Environment’ Category

Amflora potatoes

BASF announced last week that it was moving its genetically modified plant-science headquarters from Germany to the United States. The chemical firm said widespread resistance to GM crops in Europe prompted the move, one which mirrors a decision the company made two decades ago when it opened a biotech research lab in Boston.

The company said it will relocate 123 jobs from Limburgerhof, Germany, and other European facilities to Raleigh, North Carolina. BASF was the last company still pursuing regulatory approval for GM crops in Europe, according to a Nature News Blog article. Though it won approval for its Amflora potato, it was the first time in a decade that a new GM plant was allowed to be grown in the European Union.

That BASF has elected to shift research and development in both transgenic plants and biotech to the United States should come as no surprise. There are strong sentiments in Germany against both technologies. “The anti-GM movement is in large part an offspring of the broader anti-biotech movement in the 1980s,” said Klaus Weber, an associate professor of management and organizations who has studied BASF and other German chemical and pharma firms.

While the German anti-biotech movement is still skeptical about the safety and benefits of medical biotechnology, it is more strongly opposed to applications in the agricultural sector, Weber said. Medical—or “red”—biotech had “undeniable medical and health benefits,” he noted, which made it harder to contest. Plus, the industry became highly regulated. Agricultural—or “green”—biotech, on the other hand, hasn’t had the benefit of perceived indispensability. Many early GM crops showed only incremental improvements over non-GM versions, and “industrial agriculture as a whole became suspect in the wake of major scandals, such as mad cow disease,” Weber said.

BASF’s pharmaceutical division stumbled when it moved from Germany to the U.S. in the early 1990s, but Weber doesn’t think the same problems will repeat themselves with the GM crop division. In the short term, the move will be expensive and disruptive, but the current global reach of the company’s R&D efforts, coupled with its partnerships with other firms like Monsanto, will insulate it from long-term problems. “I see this move as less problematic for BASF,” Weber said. “It is more of a problem for German research institutes that worked with them.”

Other firms have been closely watching the BASF case, Weber said, especially Bayer CropScience. While Bayer conducts much of its R&D on GM crops outside of Europe, it retains the division’s headquarters there much like BASF had. “As long as it is hard to get approval for outdoor tests and commercial scale permits in the EU, companies won’t invest a lot there,” he said. “The bigger question is whether BASF, Bayer, and others will keep their crop science units or sell them at some point.”

“My impression is also that BASF was acting not only on its own interest with the potato case, but also was trying to set a regulatory precedence for the industry as a whole. A lot of other companies were closely watching this case and there was certainly industry lobbying going on in support of the larger issue.”

That BASF decided to move its GM crop headquarters to the U.S. is a win for the anti-biotech movement in Europe, Weber said, “not just because of BASF, but because of the signal it sends to the entire industry.”

Further reading:

The Fall of German Biotech” on Kellogg Insight

Photo from BASF.

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global accessibility map

You can get there from here. At least if you live within spitting distance of a big city, as a new map of global accessibility makes abundantly clear. The map’s glowing webs of terrestrial connectivity and thin wisps of sea borne traffic paint a picture of a strikingly connected world.

So it may surprise (or delight) some to discover that there are still isolated places where travel time to a large city is measured in days, not hours. Still, the scales are tipped towards connectedness—95 percent of the world’s population live on just ten percent of the land, but only ten percent of the Earth’s land area is more than two days from a city of 50,000 or more people. Though some inhabitants of those areas are just a mouse-click away from the Internet, it’s clear that physical connectivity still matters greatly in the flow of goods and ideas.

Geographers at the European Union’s Global Environmental Monitoring Unit compiled eleven data sources to create a “friction” map of the world. Here friction is not the literal coefficient of friction of a particular place on the globe, but rather a measure of travel difficulty to population centers based on the data they had available, including road networks, water bodies, elevation, and more. Imagine if the map were a table top onto which water was sprinkled. Population centers would be depressions in the table’s surface into which water would pool, while transportation corridors would be steeply sloped groves that would channel the water toward the depressions. Areas where travel is difficult would be nearly flat, causing the water to pool on the surface.

The geographers created the map for the World Bank Development Report 2009, which examines the effects of geographic concentration on income and production.

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Farm truck in front of a Wal-Mart

Wal-Mart announced Thursday that they would be expand the amount of locally grown produce in its stores.  The move is a part of the retail giant’s efforts to improve the efficiency of its suppliers, but will Wal-Mart benefit itself or is this just another ploy for goodwill?

“The jury’s out,” said Sunil Chopra, a professor of managerial economics and decision sciences. But, he added, “The ability to set up such a system has advantages besides obvious ones from a PR perspective.”

“Wal-Mart really has to come up with a gathering mechanism.  It’s not something that they’re not capable of doing, but it will be a change in their supply chain.  They will have to come up with good collection mechanisms”

The challenge for Wal-Mart will be incorporating small farms into its supply chain, which currently operates on a “large to large” model, Chopra said, where large producers supply large stores.  But the move is not a complete about face. Wal-Mart, famous for its sprawling big box stores, will be adding smaller format stores in urban areas in next couple of years.  “In some sense, this is the equivalent of what they will have to do with smaller format stores on the front end at the back end,” he said.

Wal-Mart’s experience in developing nations may give them a head start in integrating smaller farms. In countries like India where lack of refrigeration can be an issue, up to 40 percent of produce spoils before it’s sold, Chopra said. Furthermore, India lacks the large corporate farms that have come to dominate American agriculture. As a result, most Indian produce comes from smaller local farms.

Wal-Mart’s local produce program also has an analog in India called e-Choupal. ITC Limited, an Indian conglomerate, built the system by installing computer terminals in farming villages that allow farmers to view current commodity prices in various regional markets along with the price ITC is offering. If the farmer likes the ITC price, they can leave their harvest at the terminal. If not, they can travel to the market of their choosing. This helps ITC efficiently collect agricultural products from thousands of small farms. It also benefits farmers by cutting out the traditional middlemen who bought the farmer’s products well below market price and then resold them for a handsome profit.

ITC’s program is “taking out an inefficient middleman who is really trying to take advantage of price differentials that are invisible to the farmer,” Chopra said. Though programs like e-Choupal have greatly benefitted farmers in the developing world, it’s less certain that Wal-Mart’s program will help small farmers in the United States, Chopra cautions.

Wal-Mart also rolled out an index that will rate its agricultural suppliers on both waste and efficiency. Though some environmental groups have praised the move, Chopra said sustainability indices are tricky to get right. Many questions need to be answered in the course of their development, including how far back in the supply chain companies should measure—does a company measure only its direct impact or also that of its suppliers? And who develops the index is equally important. “What might look good for a company may or may not be good across the whole supply chain,” Chopra said.

Photo by merfam.

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Extent of BP oil spill as of 5-25-10

The massive undersea gusher caused by the explosion onboard the Deepwater Horizon drilling rig has spewed oil nearly unabated into the Gulf of Mexico for 36 days now. And unless BP’s risky “top kill” procedure successfully seals the well, what currently could be the one of the top ten spills of all time will certainly achieve that dubious distinction.

The environmental impact of the spill will be catastrophic. Oiled birds have already washed ashore and more are expected. Fish are swimming through the oil-and-dispersant plumes that are roaming beneath the surface. And worst of all, oil is now entering the Gulf Coast’s fragile wetlands. Removing the tar-like substance will be difficult at best. Wetlands soils would swallow heavy machinery, and the vegetation would take years, maybe decades, to bounce back depending on how crews attempt to remove the oil. Currently, the feeble clean-up efforts are costing BP $33 million a day at last estimate—and without any substantial wetland damage so far, they have gotten off easy.

The spill’s environmental damage is already hammering the Gulf Coast’s economy.  Tourism, estimated to be worth more than $100 billion annually to the region, is hurting. Cancellation rates in Mississippi are almost 50 percent, and some vacationers are axing their trips to Florida three months in advance. Captains for fishing charters are also reporting cancellations and lower booking rates.

Commercial fishing has also taken a hit. Even though the industry represents a small portion of the Gulf’s total economic output, it is a culturally significant vocation in the region. Over 20 percent of the federal waters open to fishing in the Gulf Coast area have been closed because of the spill. What’s more, if the oil creeps into the estuaries that feed the Gulf, breeding grounds for the fish that prop up the industry will be poisoned.

Early estimates pegged the total economic loss at $1.6 billion, but that figure was calculated assuming the oil would not reaching the loop current. If it does, the toxic sludge would be carried to the Atlantic Ocean and up the eastern seaboard.

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Exxon gas pump

“If the climate is going to change, then so will our policies,” the U.S. Securities and Exchange Commission said in issuing updated disclosure guidance Wednesday, albeit with more tact and verbiage.


The S.E.C. currently requires public companies to spill the beans about changes that could affect their stock prices—acquisitions, layoffs, factory closings, and so on—but Wednesday’s decision is the first that asks companies to specifically comment on climate change.

Unfortunately, investors may gain little information from the new disclosures, said Kathleen Hagerty, senior associate dean and professor of finance. Companies could weasel their way out of substantive statements by citing the uncertainties surrounding climate change—legislation, international agreements, and even physical effects. “It’s possible some completely non-informative boilerplate could be developed” to respond to the new guidance, Hagerty said.

Even if the S.E.C. frowns upon such general statements, companies may still be able to cherry pick which impacts to report.

Hagerty suspects investor and environmental groups—which have petitioned the S.E.C. since 2007—lobbied for the change to call attention to the issue. Though investors may gain little, the new guidance “does raise people’s consciousness,” Hagerty said. “That might be worth it.”

Photo by clairegren.

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carbon dioxide courtesy of Kristian Vinkenes

Climate change news has been recently dominated by the rift between developed and developing nations over the amount of money the former should give the latter to move to a low carbon economy. Yet this issue, while vitally important, is not all that’s at stake. Beyond climate friendly funding lie the questions of how the goals will be reached and what will happen if a country snubs its nose at the rest. (more…)

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George Soros

George Soros, billionaire investor and philanthropist, proposed Thursday that the International Monetary Fund should serve as financier for green projects in developing nations to help battle climate change. Developing countries have criticized any climate agreement that would impose emissions cuts without assistance from developed nations. Soros’ proposal would tap the special drawing rights IMF members receive when they deposit money. Current SDRs are worth a total of $283 billion, over half of which are held by the world’s 15 largest economies. (more…)

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