My Case for Divestment

Yesterday I wrote an emotional, Swarthmore-centric argument urging Swarthmore to divest. This post is going to be a more measured view. 350.org has started a campaign that urges universities to divest from fossil fuel companies. Here's their statement:

"In short: it just doesn’t make sense for universities to invest in a system that will leave their students no livable planet to use their degrees on, or for pension funds to invest in corporations that will ruin the world we plan to retire in. The one thing we know the fossil fuel industry cares about is money. Universities, pension funds, and churches invest a lot of it. If we start with these local institutions and hit the industry where it hurts — their bottom line — we can get their attention and force them to change. This was a key part of how the world ended the apartheid system in South Africa, and we hope it can have the same effect on the climate crisis."

I don't think that's a great argument, but (spoiler alert) I still think divestment is a worthwhile cause.

Case Against Divestment

Problems with the divestment strategy have been brought up by Christian Parenti and less forcefully by Cecelie Counts. The President of my alma mater, Rebecca Chopp, also made a brief case against divestment. All of these writers are pro-climate change action, but they don't think that divestment is the appropriate activism tool. Putting words in their mouth, I assume they would prefer a campaign for regulating coal power plant emissions or cap-and-trade legislation. The argument is that divestment won't impact fossil fuel companies (and greenhouse gas emissions) in the way that 350.org wants. I think there are two basic points in their favor:

1) Publicly traded fossil fuel companies don't control that much oil. "More than 70% of world oil reserves, and an even greater percentage of the remaining reserves of "easy oil" are held by national oil companies controlled by kings and potentates and even some democratically elected governments like Saudi Arabia, Venezuela, and Norway." Other fossil fuel companies, like the very evil Koch Industries, aren't publicly traded. None of these entities even have stock to divest from.

2) More importantly, even publicly traded companies won't be economically hurt by divestment. Companies make money from selling fossil fuels, not from stocks. Moreover, IF Exxon's share price fell because of divestments, less scrupulous investors would just see a bargain and buy the stock. There's a reason investors by Exxon stock: it makes a ton of money.

Thus, the anti-divestment crowd would rather see activism that is more directly linked to greenhouse gas emissions. And so would I. Except that the climate change movement has so little momentum right now and it needs to start with something tangible....

Case For Divestment

Bill McKibben makes his case in the NYTimes and Kate Aronoff (a Swarthmore student) makes hers in Common Dreams.

A lot of my argument is based on the context provided by this report on why climate legislation failed in 2009, summarized here. In a nutshell, Obama doesn't have as much power as people think he does; Congress has to pass legislation. Politicians need to see a political benefit to climate action (or cost to inaction). The Tea Party's hatred of climate change legislation outweighed broader support for action. "On public opinion, cap-and-trade supporters were too concerned with breadth and too little concerned with intensity." In Washington, interests groups with small, but passionate support (see the NRA) have influence that is disproportionate to the size of their base. Gun control legislation is so difficult to pass because politicians know there will be a political cost to doing so. We need the same sort of intensity with climate change.

Frankly, it's hard to get excited about advocating for a $20 per ton carbon tax. Or cap-and-trade. Or the production tax credit (a subsidy for wind energy). As much as the the 2009 push for cap-and-trade included the business community, that general support couldn't match the Tea Party's passionate hatred for the bill. Divestment (and the Keystone XL pipeline, which will be the subject of a later blog) is the opportunity to create that passionate base and send a message that there is a political cost to inaction on climate. And, as Bill and Kate point out, divestment can turn climate change corporations into social pariahs. If divestment leads to a conversation about the irreparable harm that fossil fuel companies are doing to our livelihoods, that is a great outcome.

AND, there is a moral case to be made here. Tobacco, apartheid, fossil fuels, whatever. I don't want to profit on things that do the world harm. Universities should be moral examples for the young adults they are shaping. As I said in my previous post, this is an opportunity to lead, not a cost.

And To Conclude...

That said, divestment advocates should know that, even if the campaign is 'successful,' it's just the beginning. Don't expect too much, climate change is still happening. At some point, there has to be a transition from divestment and Keystone XL to actionable policy that will make a dent in greenhouse gas emissions. And very soon. Government subsidies for fossil fuel subsidies might be a good transition issue for the movement.  Eventually, we'll need cap-and-trade or a carbon tax. Demand for greenhouse gas intensive products and services has to be reduced, rather than just their supply. Ultimately, as long as we're demanding fossil fuels, there will be a market for suppliers to profit from, divestment or not.

Divestment at Swarthmore College

I'll be getting into a more nuanced discussion of divestment in a later post, but for now I'm going to post a letter I'm writing to the Swarthmore Bulletin (our alumni magazine).

In response to President Chopp’s “Taking Care of the Land,” in the latest Bulletin, I first want to applaud the College for the steps it has taken to moving towards sustainability on campus. It makes me proud to be a Swattie.

President Chopp briefly addresses the divestment issue that has gotten so much attention recently: “some believe that the College should divest from fossil-fuel companies while others of us think change should come about through activism aimed at long-term policy changes at the state and federal levels.” I completely agree that activism should target policy changes. However, the idea that President Chopp presents that we must choose between divestment and policy activism is the wrong way to proceed: we need both. From my perspective working in international environmental policy in Washington DC, the policy route has stalled out. I attended the Rio +20 UN Conference on Sustainable Development in June. Seeing international leaders avoid taking decisive action on a problem that they all acknowledge was an incredibly frustrating experience. In domestic politics, there is little prospect of climate change legislation becoming law. Divestment and other protest movements can create the momentum that policymakers need in order to affect change.

For context, a recent World Bank report argues that the goal of keeping global warming to 2°C is becoming a lost cause and that 3°C or 4°C is more likely by 2100. Most are probably familiar with the consequences of such extreme warming, but they are worth repeating: sea-level rise of 0.5 to 1 meters by 2100 and resulting displacement of millions of people, extinction of entire coral reef ecosystems, significant reduction in agricultural productivity, and an increase in the intensity of extreme events amongst other impacts. The report concludes that:

“…there is also no certainty that adaptation to a 4°C world is possible. A 4°C world is likely to be one in which communities, cities and countries would experience severe disruptions, damage, and dislocation, with many of these risks spread unequally. It is likely that the poor will suffer most and the global community could become more fractured, and unequal than today.”

Relying on national governments to solve this problem is going to result in a 4°C world. If change is going to happen, it will have to come from the bottom-up. Given Swarthmore’s reputation and endowment size, divestment is the perfect way for the institution to make an impact. President Obama is signaling that he wants to do something on climate change, but he needs to know that there will be political cost if he doesn’t.

I haven’t had much money since graduating in 2007 and have given inconsistently to Swarthmore. Peace Corps and grad school aren’t exactly big money makers. But five years out of Swarthmore, I finally have a job that provides me financial stability and I want to give back to the College. However, I don’t want to see that money invested in companies whose actions are so harmful.

Thanks to generous alumni like Eugene Lang, Swarthmore has an ample endowment and other resources that made my college experience an amazing one. I had life-changing teachers and access to wonderful facilities; I also received enough financial aid from Swarthmore that I was able to avoid taking out loans for my education. I understand that divestment would likely be costly and the last thing I’d want is to reduce the quality of the experience for any future Swatties. How much would divestment cost? Maybe it’s not an easy question to answer, but I’d like to see estimates from Swarthmore before the idea is rejected out of hand. I believe that there are enough alumni out there who would be willing to give more to make up the difference. I think asking alumni to participate would get an overwhelming response and create enormous goodwill for the school.

That’s how I hope Swarthmore sees divestment: as an opportunity. It’s a chance to take a moral stand on one of the biggest issues of our time. It’s a chance to support our students as they learn about social activism. It’s a chance to be a leader among prestigious colleges and create momentum for a stagnant movement. It’s a chance to engage alumni. And it’s a chance to make an impression on all the 2017 specs who are writing their “Why Swarthmore” essays. If the College divested, it would certainly reaffirm why I chose Swarthmore.

Intro Post - What Are Ecosystem Services?

This blog is going to discuss a number of current environmental issues. I want the concept of ecosystem services to be the foundation of this discussion. Since I think this is a critical concept - both for further writing in the blog and environmental/economic decision-making - I'm going to use the intro post to explain what the concept of ecosystem services means and why it has become the focus of many environmentalists. Other posts aren't going to be so basic and focused on definitions and will instead focus on current events and issues.

What are ecosystem services?
Although there are a number of writers who have brought up the idea of ecosystem services (this article provides a good history), the Millenium Ecosystem Assessment (MEA) is the seminal work that really popularized the concept. Their definition of an ecosystem is:

"An ecosystem is a dynamic complex of plant, animal, and microorganism communities and the nonliving environment interacting as a functional unit. Humans are an integral part of ecosystems. Ecosystems provide a variety of benefits to people, including provisioning, regulating, cultural, and supporting services."

Ecosystem services are the multiple ways in which the natural world benefits humans. These benefits are sometimes obvious and sometimes more subtle, but we could not exist without them.

The MEA categorizes ecosystems services into four types: supporting, provisioning, regulating, and cultural. These services support security, basic material, health, and good social relations:

This is a hugely important diagram, but all the arrows make it a little more confusing than it needs to be.

Moving left to right, what the diagram is saying is that supporting services underpin the basic functioning of ecosystems. Nutrient cycling, soil formation, and more allow ecosystems to thrive. For instance, without pedogenesis - the conversion of organic material into soil - terrestrial ecosystems couldn't function. Soil and the nutrients it holds allow plants to grow. Supporting services don't directly provide benefits, but they enable the next set of services - provisioning, regulating, and cultural. This is where this concept becomes more tangible and easy to link to human well-being.

Provisioning is the easiest to explain. Agriculture, timber, fresh water, fisheries, etc. provide humans with the building blocks of life. These services are easiest to measure: e.g. 83.13 million metric tons of soybean were produced in 2011.

Regulating services are a little more abstract, but also hugely important. A couple examples: first, trees and other organic material sequester carbon dioxide; the concentration of carbon dioxide plays a large part in the determining the temperature of the earth's atmosphere. Second, vegetation also plays a critical role in reducing erosion and accompanying landslides and floods. In places like Rio de Janeiro, landslides are the direct result of deforestation.  Mangroves and other coastal wetlands play an important role in reducing the impact of devastating storms. There are numerous other examples of regulating services, but I'll share just one more example. Vultures in India and elsewhere (see here and here) play an important role in decomposing dead animal carcases. Farmers administer a pain killer, diclofenac, to reduce the pain of dying animals, that is coincidentally deadly to vultures. Without this natural removal of carcasses, it is easier for disease to spread and the feral dog population has exploded.

Cultural services cover the remaining ecosystem services. Some, like recreational services, are easy to ascribe value to. Tourism that is dependent on nature (beaches, hiking, etc.) is obviously connected to beautiful ecosystems; eco-tourism has a obvious economic benefit. On the other hand, 'spiritual' ecosystem services are impossible to measure.

The next set of arrows is overly complicated, but the essential idea is that these services underpin human well-being.

Why has this idea become so popular?
I think that so many environmentalists have started using the ecosystem services framework for basically two related reasons.

1) The focus on 'biodiversity' and high profile species (see WWF's tiger and panda campaigns) has failed to stop widespread degradation of important ecosystems. While these animals do pull the heartstrings, direct human interest ultimately prevails. By changing the focus to ecosystem services, environmentalists are shifting the argument to how the environment affects humans rather than its inherent value. Once benefits are defined, they can be given economic value: a popular study has valued global ecosystem services at an annual US$16–54 trillion. I'll write some more posts about the benefits and problems of such analysis, but, setting criticisms aside, it is an eye-catching number.

2) Defining ecosystem services and their economic value should allow the environment to be incorporated into mainstream economic decision. Through ascribing values to ecosystem services and modeling different scenarios, defining ecosystem services should impact decision-making. I'm working on issues such as this and I'll be writing more about this in the future.

I welcome any feedback or suggestions. And I promise that future posts will be less definitional and deal more with contemporary issues.