Extinction Rebellion, a look inside

I have friends and friends of friends, loosely involved with Extinction Rebellion - it is a form of holocracy (self-organising).

I think a middle of the road type of person’s first instinct might dismiss this as somewhat crazy.

Borrowing from NIke’s successful ad campaign (and Cf. Thinking Bigly) it’s only crazy until you do it.

While I’m fairly uncommitted ideologically, I think supporting others in their strong views is valid.

This FT article looks at some of the prominent members of the Extinction Rebellion movement, and gives you an insight into their thinking. It’s pretty coherent, even if you disagree.

““I had this really rude awakening where I realised that my career was completely pointless — it was irrelevant, it was meaningless,” Green says. “Either I’m going to continue doing what I do and not sleeping well at night because of the crisis that we’re in, or I’m going to jump ship. How can we knowingly educate students for a future that doesn’t exist?”  A friend of hers coined a phrase — “ecophany” — to describe Green’s metamorphosis. She has since resigned from her job to support Extinction Rebellion, persuading hundreds of academics and scientists to endorse its principles. “

FT Long read on extinction rebellion

https://www.ft.com/content/9bcb1bf8-5b20-11e9-9dde-7aedca0a081a

Ray Dalio on reforming capitalism

This Ray Dalio piece on the problems and solutions for modern capitalism is an important piece of insight. It builds on his work on inequality and populism.

It is important as (1) he is a billionaire with considerable weight and clout

(2) it highlights the problems of both growing the (economic) pie and splitting the pie fairly

(Me: He omits natural/environmental capital in his primary analysis as a weakness)

(3) he observes social democratic/socialism ideas are better at (or at least focused on) pie splitting but free market type ideas have been better at (or at least focused on) pie growing

He pulls this together with a few other observations (amongst others) that

• the left and right have never been further apart since the 1930s - they are entrenched and polarised

• Technology (and other forces of capitalism) is continuing to disproportionately benefit the “haves”/rich ie owners of capital, automation will continue to displace workers

• The US and China are at loggerheads with unknown outcomes

He has strong focus on the education inequality in the US amongst other insightful data (particularly on the bottom 60% and other data on the poor) and some insightful data on food poverty

(The childhood poverty rate in the US is now 17.5% and has not meaningfully improved for decades. In the US in 2017, around 17% of children lived in food-insecure homes where at least one family member was unable to acquire adequate food due to insufficient money or other resources.Unicef reports that the US is worse than average in the percent of children living in a food-insecure household (with the US faring worse than Poland, Greece, and Chile).

He then draws the important insight that it is systems problem:

“Contrary to what populists of the left and populists of the right are saying, these unacceptable outcomes aren’t due to either a) evil rich people doing bad things to poor people or b) lazy poor people and bureaucratic inefficiencies, as much as they are due to how the capitalist system is now working.”

He sketches out some solutions to work on including:

-i  Leadership from the top

-ii  Bipartisan working groups (ie left and right together)

-iii Co-ordination of fiscal and monetary policy together

-iv Clear metrics for success and accountability

-v  Redistribution of resources that will improve both the well-beings and the productivities of the vast majority of people.

And within that a focus on good “double bottom line outcomes”

Ie outcomes that have good economic return and good social return

(for instance education fits that well)

(Again he misses out environment unfortunately, although many double bottom line ideas could be triple bottom line as well)

He proposes:

Create private-public partnerships (including governments, philanthropists, and companies) that would jointly vet and invest in double bottom line projects that would be judged on the basis of their social and economic performance results relative to clear metrics. That would both increase the funding for and the quality of projects because people who have to put their own money on the line would be responsible for them.

Raise money in ways that both improve conditions and improve the economy’s productivity by taking into consideration the all-in costs for the society (e.g., I’d tax pollution and various causes of bad health that have sizable economic costs for the society).

Raise more from the top via taxes that would be engineered to not have disruptive effects on productivity and that would be earmarked to help those in the middle and the bottom primarily in ways that also improve the economy’s overall level of productivity, so that the spending on these programs is largely paid for by the cost savings and income improvements that they create. Having said that, I also believe that the society has to establish minimum standards of healthcare and education that are provided to those who are unable to take care of themselves.

While you can argue about the diagnosis and cause of the problem, the data is insightful, and the solutions are food for thought.

Unfortunately, I am fairly pessimistic about most of those solutions given what I can see about the politics of the UK and US (and others) although some countries may fare better (eg New Zealand which I feel is working on i and iv)

But there are elements of v. I can see working although this may only come through if our leaders can take a longer view and whole-view lens (for instance, increasing educational and social resources in areas of poverty brings long term returns but is short term costly and painful; carbon taxes are hard to fall progressively on society)).

And in theory there’s no reason why i - iv couldn’t happen but it would take a moment or time of social cohesion and cultural change to get there. We don’t have that. But it could happen as I talk about in my performance-lecture Thinking Bigly.

Full Essay by Dalio here:

https://www.economicprinciples.org/Why-and-How-Capitalism-Needs-To-Be-Reformed/

A blog on his populism work:

https://www.thendobetter.com/investing/2019/1/5/ray-dalio-on-cycles-populism-trade-wars

https://www.thendobetter.com/investing/2017/8/21/divides

Recent Carbon Trends, IEA

“Driven by higher energy demand in 2018, global energy-related CO2 emissions rose 1.7% to a historic high of 33.1 Gt CO2. While emissions from all fossil fuels increased, the power sector accounted for nearly two-thirds of emissions growth. Coal use in power alone surpassed 10 Gt CO2, mostly in Asia. China, India, and the United States accounted for 85% of the net increase in emissions, while emissions declined for Germany, Japan, Mexico, France and the United Kingdom.” IEA

IEA

Global energy-related CO2 emissions grew 1.7% in 2018 to reach a historic high of 33.1 Gt CO2. It was the highest rate of growth since 2013, and 70% higher than the average increase since 2010. Last year's growth of 560 Mt was equivalent to the total emissions from international aviation.

The increase in emissions was driven by higher energy consumption resulting from a robust global economy, as well as from weather conditions in some parts of the world that led to increased energy demand for heating and cooling.

CO2 emissions stagnated between 2014 and 2016, even as the global economy continued to expand. This decoupling was primarily the result of strong energy efficiency improvements and low-carbon technology deployment, leading to a decline in coal demand. But the dynamics changed in 2017 and 2018. Higher economic growth was not met by higher energy productivity, lower-carbon options did not scale fast enough to meet the rise in demand.

The result was that CO2 emissions increased by nearly 0.5% for every 1% gain in global economic output compared with an increase of 0.3% on average since 2010. Renewables and nuclear energy have nonetheless made an impact, with emissions growing 25% slower than energy demand in 2018.

For the first time, the IEA assessed the impact of fossil fuel use on global temperature increases. It found that CO2 emitted from coal combustion was responsible for over 0.3°C of the 1°C increase in global average annual surface temperatures above pre-industrial levels. This makes coal the single largest source of global temperature increase.

The global average annual concentration of CO2 in the atmosphere averaged 407.4 ppm in 2018, up 2.4 ppm since 2017. This is a major increase from pre-industrial levels, which ranged between 180 and 280 ppm.

IEA report (2018) here.

Univeral Basic Income, Finland experiment

A trio of articles looking at the Universal Basic Income idea and recent trial in Finland. Plus link to the Finiland page.

Tiny Indian state wants to pay its citizens a universal basic income | South China Morning Post / WaPo

If successful, the experiment by Sikkim, one of India’s most progressive states, would help alleviate poverty and address the challenge of job automation

https://www.scmp.com/news/asia/south-asia/article/2182595/tiny-state-india-wants-pay-its-610500-citizens-universal-basic

Universal basic income in India is a tantalisingly close prospect

Biometric ID cards and the squeeze on the rural poor are propelling the idea forward | Financial Times  

https://www.ft.com/content/a7ef07ec-2a00-11e9-9222-7024d72222bc

Finland's grand universal basic income experiment raises more questions than it answers | WIRED

Universal basic income might make people feel less stressed but doesn't necessarily fix unemployment

https://www.wired.co.uk/article/universal-basic-income-policy-universal-credit

Me: Along with a “job guarantee” idea, UBI started off as a fairly radical idea with now some significant small scale experiments behind it. I’m cautious as to how much other places can extrapolate from Finland, but overall it neither seems to help nor hinder your job prospects, but makes you feel happier. Maybe that’s enough given the highly admin intensive and relatively poor long-term outcomes for the current “job seeker” type benefits/sanctions, despite policy-maker backing.  

“In Britain, intensifying the use of sanctions and introducing harsher penalties associated with being sanctioned has been largely ineffective  at increasing flows from JSA into sustainable employment.” doi:10.1093/cje/bex088 Job Seeker’s Allowance (JSA) benefit sanctions and labour market outcomes in Britain, 2001–2014 Martin Taulbu et al. (2018)  https://academic.oup.com/cje/article/42/5/1417/4827894

Link to the Finland experiment here: https://www.kela.fi/web/en/basic-income-experiment-2017-2018

New Zealand looking at non-financial capitals, more than GDP

The NZ PM talking about the problems with GDP and suggesting NZ should look at a broader set of indicators and changing the way it should make decisions, including a well-being budget in 2019.

Living standards | New Zealand Treasury

“Our vision is focused on higher living standards for New Zealanders. Achieving this requires growing the country's human, social, natural, and financial/physical capitals which together represent New Zealand's economic capital. Our vision is to be a world-class Treasury working for higher living standards for New Zealanders.”

Me: NZ (along with others) has been looking at a broader framework than GDP for a while now. The NZ PM is now pushing further ahead in asking the Treasury to think about other non-financial capitals such as human, social, natural etc. It’s an intriguing and possibly a positive development. It ties into many recent blogs on intangible capitals, Cowen’s idea of GDP+ and the idea companies have a lot of other capitals to draw upon.

https://treasury.govt.nz/information-and-services/nz-economy/living-standards

https://www.budget.govt.nz/budget/2018/economic-fiscal-outlook/budget-2019-focus-on-wellbeing.htm

Blog on Intangible Capitals here

Blog on GDP+ amongst other Tyler Cowen ideas here: https://www.thendobetter.com/investing/2018/11/21/tyler-cowen-vision-of-free-prosperous-and-responsible-individuals

Significant Major cross-discipline EAT-Lancet Commission paper on Sustainable Food

Major cross-discipline EAT-Lancet Commission on Sustainable Food has published its findings (Jan 2019). I give a summary review. With a fairly broad scientific consensus, the report establishes 3 significant items.

The major items the paper establishes are

• A healthy reference diet

This diet is considered to sustainably feed likely world populations from 2050 and beyond, and give a broadly correct amount of nutrition. The paper evidences that there would like be

• Health benefits from this diet

In rich nations, this would be from better nutrition helping obesity and cardiovascular disease and the second order benefits of this. And in poorer nations, this would be from decreasing malnutrition.

The diet mainly due to a extremely large pivot away from red meat also establishes

• a sustainable agriculture supports this diet

Where the environmental impacts of such a proposed diet are kept within likely carbon budgets and other planetary considerations.

While the report mentions several cultures that eat within the reference diet, in my view, a major weakness is little acknowledgment of the scale of socio-cultural change this diet suggests. To me, a cross-disciplinary socio-anthropologist or cultural philosopher would have made a great addition as a major component of why we eat what we eat is conditioned by social and cultural value.

-The reference diet is high in vegetables and low in red meat, sugar, potatoes and processed foods.

This healthy reference diet largely  consists of:

• vegetables,   fruits, whole   grains, legumes,  nuts, and unsaturated  oils,

• includes  a low to  moderate amount of seafood and poultry,

• includes no or a low quantity of red meat, processed meat, added sugar, refined grains, and starchy vegetables.

Summary values are in table above.

If you look at the carbon impacts of various foods, you can see below that the move to vegetables over red meat is very positive for the environment. This is also because of the second order effects of growing grain to feed beef or other animals, which is environmentally intense both in land use and energy use. (See Fig. 4 below)

Source: Eat-Lancet (2019)

The “Business as usual” modelling shows the huge impact from animals on greenhouse gases.

There are strong second order health effects deriving from this as well - many fewer deaths - although I suspect keeping within the energy intake limit and cutting out added sugar and processed foods would achieved a fair amount of this benefit.  Cutting out processed foods and added sugar and eating about the correct amount of calories is almost universally favoured in all diets (even low carb, high fat diets as fat is high satiety) Still the economic benefits of lower health costs, and a more productive workforce.

In terms of where we need to get to…There is a long way to go (See below). Rich nations eat too much red meat and potatoes. Parts of Africa are too reliant on low nutritional-value cassava (starchy vegetables).

The overall paper is a fascinating read as it takes in the intersectional nature of food and the environment and health and proposes concrete guidance that enables a growing population. As I mentioned earlier, its weakness is in not weighting the cultural change factors in a strong enough way. For instance, many Americans and Europeans know they eat too much to be healthy but there is a learnt cultural attitude and difficulty in enabling change. Still, at least a good road map has been laid out. In terms of behaviours everyone can play a part in, food waste is important no matter what diet or scenario is chosen (grpah below).

I end on the important summary messages below from the paper:

Unhealthy and unsustainably produced food poses a global risk to people and the planet. More than 820 million people have insufficient food and many more consume an unhealthy diet that contributes to premature death and morbidity. Moreover, global food production is the largest pressure caused by humans on Earth, threatening local ecosystems and the stability of the Earth system.

Current dietary trends, combined with projected population growth to about 10 billion by 2050, will exacerbate risks to people and planet. The global burden of non-communicable diseases is predicted to worsen and the effects of food production on greenhouse-gas emissions, nitrogen and phosphorus pollution, biodiversity loss, and water and land use will reduce the stability of the Earth system.

Transformation to healthy diets from sustainable food systems is necessary to achieve the UN Sustainable Development Goals and the Paris Agreement, and scientific targets for healthy diets and sustainable food production are needed to guide a Great Food Transformation.

Healthy diets have an appropriate caloric intake and consist of a diversity of plant-based foods, low amounts of animal source foods, unsaturated rather than saturated fats, and small amounts of refined grains, highly processed foods, and added sugars.

Transformation to healthy diets by 2050 will require substantial dietary shifts, including a greater than 50% reduction in global consumption of unhealthy foods, such as red meat and sugar, and a greater than 100% increase in consumption of healthy foods, such as nuts, fruits, vegetables, and legumes. However, the changes needed differ greatly by region.

Dietary changes from current diets to healthy diets are likely to substantially benefit human health, averting about 10·8–11·6 million deaths per year, a reduction of 19·0–23·6%.

With food production causing major global environmental risks, sustainable food production needs to operate within the safe operating space for food systems at all scales on Earth. Therefore, sustainable food production for about 10 billion people should use no additional land, safeguard existing biodiversity, reduce consumptive water use and manage water responsibly, substantially reduce nitrogen and phosphorus pollution, produce zero carbon dioxide emissions, and cause no further increase in methane and nitrous oxide emissions.

Transformation to sustainable food production by 2050 will require at least a 75% reduction of yield gaps, global redistribution of nitrogen and phosphorus fertiliser use, recycling of phosphorus, radical improvements in efficiency of fertiliser and water use, rapid implementation of agricultural mitigation options to reduce greenhouse-gas emissions, adoption of land management practices that shift agriculture from a carbon source to sink, and a fundamental shift in production priorities.

The scientific targets for healthy diets from sustainable food systems are intertwined with all UN Sustainable Development Goals. For example, achieving these targets will depend on providing high-quality primary health care that integrates family planning and education on healthy diets. These targets and the Sustainable Development Goals on freshwater, climate, land, oceans, and biodiversity will be achieved through strong commitment to global partnerships and actions.

Achieving healthy diets from sustainable food systems for everyone will require substantial shifts towards healthy dietary patterns, large reductions in food losses and waste, and major improvements in food production practices. This universal goal for all humans is within reach but will require adoption of scientific targets by all sectors to stimulate a range of actions from individuals and organisations working in all sectors and at all scales.

And important strategies identified:

Three lessons can be learned from other examples of societal responses to global changes. First, no single actor or breakthrough is likely to catalyse systems change. Second, science and evidence-gathering are essential for change. Third, a full range of policy levers, from soft to hard, will be needed. ...we outline five specific and implementable strategies, which are supported by a strong evidence base….These strategies are:

(1) Seek international and national commitment to shift towards healthy diets. The scientific targets set by this Commission provide guidance for the necessary shift, which consists of increasing consumption of plant-based foods and substantially reducing consumption of animal source foods. Research has shown that this shift will reduce environmental effects and improve health outcomes. This concerted commitment can be achieved by investment in public health information and sustainability education, and improved coordination between departments of health and environment.

(2) Re-orient agricultural priorities from producing high quantities of food to producing healthy food. Production should focus on a diverse range of nutritious foods from biodiversity-enhancing food production systems rather than increased volume of a few crops, most of which are used for animal production.

(3) Sustainably intensify food production to increase high-quality output. The current global food system is unsustainable and requires an agricultural revolution that is based on sustainable intensification and driven by sustainability and system innovation. This change would entail reducing yield gaps on cropland, radical improvements in the efficiency of fertiliser and water use, recycling phosphorus, redistributing global use of nitrogen and phosphorus, implementing climate mitigation options, including changes in crop and feed management, and enhancing biodiversity within agricultural systems.

(4) Strong and coordinated governance of land and oceans. Such governance includes implementing a zero-expansion policy of new agricultural land into natural ecosystems and species-rich forests, management policies aimed at restoring and re-foresting degraded land, establishing mechanisms of international land-use governance, and adopting a Half Earth strategy for biodiversity conservation to safeguard resilience and productivity in food production. The world's oceans need to be effectively managed to ensure that fisheries do not negatively affect ecosystems, fish stocks are used responsibly, and global aquaculture production is expanded sustainably given its effect on and linkage to both land and ocean ecosystems.

(5) At least halve food losses and waste, in line with global sustainable development goals. Substantially reducing the amount of food lost and wasted across the food supply chain, from production to consumption, is essential for the global food system to stay within its safe operating space. Technological solutions will need to be applied along the food supply chain and public policies implemented to achieve a 50% reduction in food loss and waste.

Link to paper here in Lancet

https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(18)31788-4/fulltext

And a summary on the EAT site.

https://eatforum.org/eat-lancet-commission/

Blog on living longer through diet:  https://www.thendobetter.com/blog/2018/1/6/how-to-live-longer

AQR Quant paper on ESG

AQR quant paper using MSCI ESG scores and Barra factor model. “Stocks with worst ESG exposures have total and stock-specific volatility that is up to 10-15% higher, and betas up to 3% higher, than stocks with the best ESG exposures. This finding is strong overall, robust to a wide variety of controls, and clear globally as well as in individual regions (US, World ex US, or in emerging markets). We also find that ESG scores may help forecast future changes to risk estimates from a traditional risk model. Controlling for the contemporaneous risk model estimates, we show that poor ESG exposures predict increased future statistical risks. While the effect is modest in magnitude, it is consistent with ESG exposures conveying some information about risk that is not captured by traditional statistical risk models.”

“..we find that deterioration of ESG score from the 75th to the 25th percentile is associated with about a 1% increase in risk.  While this increase might seem small, it may simply reflect the fact that ESG captures risks that are long-run in nature and may not materialize in short to medium term. For example, a firm with poor governance may be more likely to experience a scandal, earnings misstatement, etc., but that does not mean that such an event will necessarily happen over the next few years and consequently be captured in a statistical risk model. Moreover, we are using a state of the art risk model that already reflects much of the information about a given stock’s risk, whether such risk is driven by ESG or any other type of exposure. Thus, it is by no means obvious that ESG information could help improve on this risk model’s forecast, even if it is by a modest amount. Overall, we conclude that investors might be able to utilize ESG information to glean additional insights about the riskiness of their investments…”

Me: (1) The “modest effect” on the future risk estimate might be considered by some to be small enough to dismiss. (2) The use of Barra and MSCI ESG gives an amount of standardisation and ability to replicate the work but is not “consensus ESG”. (3) The constant flow of ESG quant papers is notable. Most recent are neutral to modertately positive. (4) Short run data will be a problem for histroic validification but the forward looking situation tends to chime and never exactly rhyme.

Source from AQR: http://bitly.com/2GwShXT

More thoughts on ESG ratings: https://www.thendobetter.com/investing/2018/9/21/why-esg-ratings-will-never-agree-and-some-of-the-problems-of-ratings

Germs killed 90% native americans c. 1500 causing re-forestation and mini ice age

Earth system impacts of the European arrival and Great Dying in the Americas after 1492

Germs from Europeans arriving in the Americas from 1492, caused the native American population to die in large epidemics. With the loss of 90% of the human population, much of the agriculture land turned back into forests.

These forests acted as a large carbon capture sink reduced the Earth’s temperature significantly causing a mini ice age / cold spell.

A comprehensive paper drawing on many previous papers in this area. Link here:  https://doi.org/10.1016/j.quascirev.2018.12.004 

The arrival of Europeans in the Americas in 1492 CE marks the onset of disease epidemics resulting in the loss of the majority of indigenous people living in the Americas over the subsequent century (Berlinguer, 1993; Cook, 1998; Crosby, 1972, 1976; Nunn and Qian, 2010). Indigenous land use was widespread before European arrival, particularly in Mexico, Central America, Bolivia and the Andes where terraced fields and irrigated agriculture was practised (e.g. Abrams and Nowacki, 2008; Chepstow-Lusty and Jonsson, 2000; Heckenberger et al., 2003; Hunter and Sluyter, 2015; Whitmore and Turner, 1992), and across Amazonia where diverse pre-Columbian land uses left its traces in the composition of contemporary Amazon forests (Clement et al., 2015; Levis et al., 2017; Maezumi et al., 2018a; Watling et al., 2018). Thus the Great Dying of the Indigenous Peoples of the Americas (Wolf, 1982) after 1492 CE likely led to a reduction in land use. Fields and fallow areas then underwent secondary succession and in many cases increased carbon stocks as they reverted towards similar prior states – with local, regional and potentially global consequences for the Earth System.

The uptake of carbon on the abandoned anthropogenic lands after European contact may have been large enough to impact the atmospheric CO2 record (Dull et al., 2010; Faust et al., 2006; Lewis and Maslin, 2015; Nevle and Bird, 2008; Nevle et al., 2011; Ruddiman, 2005). Furthermore, at the same time high-resolution Antarctic ice-core records of atmospheric CO2 concentration show an anomalously large decline of ∼7–10 ppm (Ahn et al., 2012; MacFarling Meure et al., 2006) beginning in the 1500s with a minimum in the early 1600s (Fig. 1). Isotope analysis shows that the anomaly was driven by an increase in the terrestrial carbon sink (Fig. 1B, Bauska et al., 2015; Francey et al., 1999; Trudinger et al., 1999). Hence, the carbon uptake that is thought to have occurred following the arrival of epidemics in the Americas may have reduced atmospheric CO2 levels and led to a decline in radiative forcing that may then have contributed to the coldest part of the Little Ice Age(Faust et al., 2006; Neukom et al., 2014)

More on climate

Paper on temperature impact on human capital

https://www.thendobetter.com/investing/2019/1/28/long-term-impacts-of-exposure-to-high-temperatures-on-human-capital

Nassim Taleb on climate risk

https://www.thendobetter.com/investing/2017/9/18/nassim-taleb-climate-change-risk