China's Three Gorges Dam, the world's largest hydro-electric power station. Photo: PVCG (flickr)

Can China go green without disrupting their economic growth?

Fossil fuels provide most of the energy powering the world’s post populated country, but last month China committed to producing more energy from cleaner sources.

Liu Zhenya — the president of China's largest electric provider — said that China aims to produce 35 percent of its energy from "low-emissions" sources by 2020 at a press conference in Beijing, tells Bloomberg.com.

China is currently the world's leader in renewable energy production. However, a study by Wharton University shows that low emissions sources like hydro-electricity, wind power, and solar power make up only 8 percent of the nation's total energy capacity.

China’s demand for energy is expected to double over the next decade as well — increasing consumption rates, massive amounts of industrial exports, and construction growth could potentially push electricity consumption to nearly 8 trillion kilowatt-hours a year. At that rate China would consume twice as much the United States, which is the next biggest energy consumer after China.

Considering that China’s growth in energy consumption has more than tripled the world’s average in past years and nearly 90 percent of China's energy still comes from coal and oil, the Wharton University report estimates that the nation will need $3.7 trillion to maintain its projected energy growth.

For China, the numbers don’t add up. Their demand for energy is going to double over the next eleven years and the majority of their energy capacity is highly dependent on coal. The climb to 35 percent is either going to be relatively steep or they are going to spend a lot of money converting fossil fuels.

Chile's salmon industry is worth $2 billion and the fish are one of the country's top four exports. Chile is the biggest supplier of salmon to the U.S. and second to the world. But in the past year, a flue-like virus called Infectious Salmon Anemia (ISA) has spread through the country's salmon fisheries, sometimes infecting entire salmon stocks.

Hoping to curb the devastating effects of ISA, the Chilean government has stepped up controls and passed stricter regulations for antibiotic use and addressing overcrowding. But, compliance is costly and the industry complained of having trouble securing loans at a time when most banks aren't lending. To help fulfill the new requirements, the Chilean government announced a $120 million bailout for the salmon industry.

New Tang Dynasty Television, an independent, non-profit television broadcaster based in New York, reports on at the toll the virus has taken on the industry and what the future for the industry looks like in the following video.

By the summer of 2008, the price of rice had increased five times from the average price in 2005. Photo: Thatcher Cook for Mercy Corps

The following post is from One Table, a Mercy Corps campaign to fight world hunger by investing in the world's women.

Today almost a billion people worldwide are unable to buy or grow enough food to avoid malnutrition. That's 120 million more than were hungry in 2006.

What happened? Basically, the world saw dramatic spikes in food prices. But there were many underlying causes of what's known as the global food crisis:

• Drought and other climate-related problems that resulted in smaller harvests
• Changing diets — rise of the middle class in India and China and an increased demand for food, especially meat, which requires large amounts of grain to raise
• Diversion of crops from food production to the production of biofuels
• High fuel prices during 2008 — if it costs more to transport food, prices go up
• Declining investments in agricultural productivity — total agriculture development aid to poor countries plunged from $8 billion in 1984 to $3.4 billion in 2004. At the same time, the developing world's cities have been ballooning with people who do not grow any of their food
• Export bans and restrictions last year in several major grain-producing countries like China as governments sought to lower food prices for their own citizens, with the result of reducing the global supply on hand.

While food prices have come down from their highs of 2008, they remain substantially above historic levels. Many economists feel this trend, which most severely affects those who can least afford it, is likely to continue for some time.

The economic, health and societal costs of the global food crisis have been severe. One of the first things Mercy Corps did to figure out how and where to direct our efforts was to survey the communities where we work. We discovered that within communities Mercy Corps serves, roughly 70 percent of income is spent on food, and 80 percent of the population had been affected by rising food prices over the past year. The survey also confirmed something we already suspected: that families were coping with higher prices by eating fewer meals, selling off household belongings, going into debt and removing children from school so that they can work.

In addition to being a record year for food prices, it's also been a record year for our food security team, allowing Mercy Corps to aggressively respond to this crisis. We now have 17 programs in 13 countries designed specifically to respond to this on-going problem. Through support from donors including USAID, the Bill & Melinda Gates Foundation, the Gap Foundation, the Hunger Site, and private individuals, our Food Crisis Response employs a strategy designed to ensure that the groundwork for increased prosperity in the future is laid — even while addressing the immediate problem of accessing sufficient food.

Food distributions, much of which are specifically targeted to improve child nutrition, are taking place in Tajikistan, Kyrgyzstan and Zimbabwe. Meanwhile, in the Central African Republic, India, Indonesia, Liberia, Nepal, Niger, Somalia, Sri Lanka, Uganda and again Zimbabwe, Mercy Corps is helping hungry households to access food by providing employment opportunities, agricultural training and inputs (such as seeds and tools), and helping people establish and grow small businesses.

Combined, these programs are reaching almost 1.5 million individuals who have been directly impacted by higher food prices. Overall, Mercy Corps’ Crisis Response will lead to a sustainable increase in income for these people, leading in turn to greater food security over the long-term.

Workers at a footwear factory in Dongguan, China. Photo: clayirving (flickr)

Made in China.

It's a label you might associate with cheap labor and mass production — but a recent study featured in BusinessWeek says that China's products may no longer be the best bargain for U.S. companies.

Outsourcing to mainland China has several "hidden costs" related to rising labor and currency rates, the report reveals. In the last three years, the yuan has gained ground on the weakened U.S. dollar and factory workers wages are going up. This translates to a drop in the average price gap between China and U.S.-manufactured products — from 22 percent to 5.5 percent.

And when you add in the costs that come with producing goods halfway around the world — storage fees, shipping delays and the price to repair or replace high-tech product parts — the ultimate savings are minimal. "A couple of years ago, outsourcing to China was a no-brainer," says Stephen T. Maurer, director of AlixPartners, the firm that led the study. Now, he tells BusinessWeek, manufacturers are thinking twice about where to send their business.

Some U.S. companies are turning to Mexico, where manufacturing rates are cheaper than China's and suppliers across the border are more accessible.

That doesn't necessarily mean that the label "Made in Mexico" will replace "Made in China." Low wages for factory workers still make China a top competitor when it comes to labor-intensive products like toys and clothes.

A textile worker at the nonprofit Shrujan. Photo: Meanest Indian (flickr)

India's textile industry is contracting after several years of almost double digit growth, Forbes reports. About 35 million people are employed through India's textile industry. It is second only to agriculture in size and has become a symbol of a burgeoning middle class.

Many workers had been earning nearly $4 per day. This afforded families the opportunity to send their children to private schools, offering them a future beyond physical labor. The economic crisis has changed these positive trends, however. Wages have dropped by half or more, sending millions of workers below the poverty line. As a consequence, families have been forced to stop paying for important services like medical care and have even been forced to pull their children out of schools.

In an interview with Forbes, Ajay Chhibber, assistant secretary general of the U.N. Development Program in New York, explains the long-term ramifications.

This will affect a generation. A girl who drops out of school will be an illiterate mother the rest of her life... You had a financial crisis. It's now become an economic crisis. The next phase of this in 2009 will be a social crisis.

Pigs in a crowded sty in Wieckowice, Poland. Photo: Wojciech Grzedzinski for The International Herald Tribune. visionshare (flickr)

Pork is a staple of the Romanian diet, and the country has become one of the largest producers of pig products in Europe. But it's not necessarily Romanians who are profiting from the growing industry.

U.S. agribusiness giant Smithfield Foods has carved its way into Eastern Europe's pork market, tapping European Union farm subsidies to set up shop in countries like Poland and Romania. Since its arrival in 1999, the Virginia-based Fortune 500 company has swiftly become Romania's top pork producer.

Smithfield has upended traditional ways of doing farming in Romania, one of Europe's poorest countries. The New York Times reports that 90 percent of the country's small farmers have lost their jobs in the last six years. Many have been forced to leave home in search of construction jobs in other EU member states.

The impacts of Smithfield's empire can be tracked all the way to West Africa, where the company exports cheap pork scraps to markets in Liberia, Equatorial Guinea and Cote d'Ivoire. In these countries, frozen offal sells at half the price of local pork — a bargain for consumers that again comes at the expense of local farmers.

“My farm isn’t working,” said Cote d'Ivoire farmer Patrice Yao, who told the The New York Times that he owns 45 hogs compared to the 100 he had three years ago."The Europeans are sending all their cheap meat to our market."

Rice is incredibly important for delta communities. Photo: Jeremy Barnicle/Mercy Corps

Mercy Corps has started an agency blog to give a glimpse into the work, thoughts and ideas of our team around the world. Here's a post I wrote yesterday that is really appropriate for Global Envision.

Farming communities in Myanmar's Irrawaddy Delta have always followed a cycle of debt. Each year, wealthy land owners would lend farmers money, tools and cattle needed to till the soil. After the harvest, the debt is repayed and the cycle continues.

Farming is important for delta communities. The Irrawaddy Delta produces more rice than any other region in the country. Nearly everyone is employed through rice production or the fishing industry.

So when Cyclone Nargis hit the delta about a year ago, the storm not only destroyed homes, fishing boats and agricultural fields, it destroyed livelihoods.

Nargis was the worst natural disaster Myanmar has ever experienced and racked up about $4 billion in damage. Some say the damage sustained in the Irrawaddy Delta was as bad as the Indian Ocean tsunami. Emergency aid from the UN, the government and NGOs has helped shelter and feed the thousands of survivors but there's still a lot of recovery work to be done.

Today, farmers looking to start over are caught in an incredibly frustrating situation: the wealthy land owners that used to lend money and tools lost everything as well, so now there is nobody to lend. Without cattle, tools and seeds, the farmers have little chance of ever getting ahead. Adding to the situation, prices for crops are down from past years. This leaves farming communities with few options, therefore trapping them in poverty.

I first learned about this debt trap in the Al Jazeera video below. The situation is so heartbreaking, but also too common in poverty-stricken communities. Mercy Corps has helped more than 7,000 families rebuild their rice paddies in the delta. We've also given more than 25,000 people small grants to help them earn an income, which in turn helps restart the local economy and helps free these communities from the cycle of debt.

Earlier this month, Obama began taking the first small yet significant steps to implementing a different relationship with the island by signing new measures into law. These new measures will allow Cuban-Americans to send more money to family members and travel more freely between the U.S. and Cuba.

Since 2004, travel to Cuba under the Bush administration was limited to once every three years for Cuban-Americans, with visits limited to only nuclear family and no longer than 14 days. Remittances were also only allowed to be sent to nuclear family and limited to $300 every three months.

In contrast, the new measures under Obama remove all restrictions on the amount and frequency of remittances and travel to the island. The changes also make it easier for telecommunications companies to do business in Cuba, which would allow quicker and easier access to the Internet for Cubans.

Cuba has been receptive to these changes. Raúl Castro has unexpectedly and publicly declared that Cuba is ready to "discuss everything" with the U.S. There are still no official plans for future talks between the two countries. Until then, the question remains of whether or not these measures will help to significantly alleviate poverty in Cuba and improve people's standard of living.

In Cuba, the mood among citizens ranges from cautiously optimistic to skeptical. An article in the St. Louis Post Dispatch profiles Cuban citizens like Ivan, a computer programmer, who expresses hope that Obama will bring about a much needed change. "Obama, to Cuban people, is our, how do you say, our hope," Ivan says. "We believe he wants to lift restrictions on Cuba. To Cubans, he is a very good presidente."

For the most part, the Cuban-American community has reacted with enthusiasm to the new measures. The Cuban American National Foundation, the leading organization for Cuban exiles in Miami, has expressed its support for a new course in U.S.-Cuba policy, calling for "a break from the past" that would "chart a new direction."

In Little Havana, a strongly Cuban neighborhood in Miami, residents seemed to welcome change in U.S.-Cuba relations. "It is stupid to have no relationship with Cuba," said a middle-aged man, identifying himself only as Alex. "It didn't work for 50 years... The way the system will change is by having a relationship."

In a country where the average salary is $20 a month, the ability to receive money from relatives abroad is likely to become an economic lifeline for thousands of people. However, with U.S. economic sanctions still in place, BBC correspondent Michael Voss thinks the remittances will have little effect:

It will give more spending power, it will allow people to buy mobile phones, possibly, you know, have a slightly better standard of living. But in terms of kick-starting the economy, I don’t think we’re going to see that at all.

Nevertheless, with Cuba's poverty level as one of the lowest in the developing world, even small improvements could make a noticeable difference. With the Obama administration now planning informal meetings with Cuban diplomats, hopefully any future change in U.S.-Cuban policy will make the Cuban people its central focus.

Pirates stock up on goats, cigarettes and other supplies when they return to shore. Photo: CharlesFred (flickr)

Piracy along Somalia's coastline represents a very lucrative business — as the pirates collectively earned an estimated $150 million in 2008 — but what is piracy's effect on Somalia's economy?

Somalia's economy is in a fairly grim state. An estimated 73.4 percent of the country's population lives in general or extreme poverty and the average Somali earns only $600 per year, making Somalia one of the poorest countries in the world.

Fishing used to be one of Somalia's most profitable industries. But as piracy has increased — there were roughly 100 attacks in 2008 — the New York Times reports that foreign ships have become reluctant to brave the waters surrounding Somalia's coastline to buy fish and other exports. The amount of goods coming into Somalia, including aid, has also declined.

Pirate money has also skewed prices. In the town of Garowe, near Somalia's central coast, resident Mohamed Hassan told the BBC that "piracy has a negative impact on several aspects of our life," including a financial one:

They have made life more expensive for ordinary people because they "pump huge amounts of U.S. dollars" into the local economy which results in fluctuations in the exchange rate.

On the other hand, pirates are putting wealth back into the Somali economy — an estimated $1 million to $2 million is made from each captured ship.

Whenever a ship is seized, pirates stock up on sheep, goats, water, fuel, rice, spaghetti, milk, and cigarettes in towns up and down Somalia’s coast. Sugule Dahir, a local shop owner in Eyl, a town just off the coast in central eastern Somalia, feels the incoming money has had a positive impact. He tells ABC News that, because of the pirates, more businesses are beginning to emerge and the general public seems better off. "There are more shops and business is booming because of the piracy. Internet cafes and telephone shops have opened, and people are just happier than before."

Government officials are getting a fair sum of pirate money as well. By allowing the pirates to work in controlled areas, the regional Puntland Government is given shares of the pirate's earnings. About 30 percent of the collected ransom goes directly to government officials, Farah Ismael Eid, a captured pirate, tells Time.

Some Somalis are worse off because of piracy. But it's clear that the pirates do spread the wealth.

Leaders at yesterday's G20 summit in London affirmed a commitment to bailing out developing countries. Just how is this plan spelled out? Change.org blogger Michael Kleinman was at the meeting and conveniently excerpted the sections of the G20 Communique that speak to the needs of the world's poorest nations.

Included in the Communique's promises:

$50 billion to support social protection, boost trade and safeguard development in low income countries, as part of the significant increase in crisis support for these and other developing countries and emerging markets;

Social protection for the poorest countries, including through investing in long-term food security and through voluntary bilateral contributions to the World Bank’s Vulnerability Framework, including the Infrastructure Crisis Facility, and the Rapid Social Response Fund;

The use of additional resources from agreed sales of IMF gold, together with surplus income, to provide $6 billion additional concessional and flexible finance for the poorest countries over the next 2 to 3 years.

For a candid, on-the-ground synopsis of the summit, check out G20Voice, a group of bloggers from 22 countries who had all-access passes to the summit. G20 voicers feverishly posted photos, video and audio clips that highlight discussions most relevant to poor countries.

Photo: BBC World Service (flickr)

Recently, decades of climate change warnings seem to have gained traction in political circles. Long-overdue conversation about the environment is finally underway; but is political will enough to enact environmental legislation in the face of a full-fledged economic crisis?

California is seen as one of the U.S.’s environmental leaders, having been one of the first states to pass a cap-and-trade model requiring businesses to cut carbon dioxide emissions to a certain level or pay fees if they generate more than the limit. But resistance to these efforts has increased as the economy declines, with some of California’s businesses and manufacturers saying that they are unable to afford the costs of the new legislation. According to state budget analysts, the up-front costs of this legislation are more than $30 billion, which outpace any initial savings generated from the law. These same state officials claim that, by 2020, a yearly savings of $40 billion will more than make up for this initial cost. Other analysts have openly derided these figures, however, calling them “unrealistic,” and maintaining that costs will be far higher than the forecasted estimates.

The U.S. isn’t the only country that is wrestling with this problem. Low-income countries are also wondering if their environmental efforts will be cut short due to global economic woes. In Bangladesh, a country vulnerable to global warming-induced natural disasters, the government is developing an ambitious plan to protect the country from rising sea levels, cyclones, and droughts. Estimated costs for this plan are $5 billion for the first five years, with a good chunk of the funding coming from international donors. Now, faced with economic uncertainty in their own countries, it’s not clear that donors will come through with funds to support these efforts.

Stopping or undoing environmental damage is an expensive prospect, with large upfront costs and no definitive reassurance that initial investments will pay off quickly. With daily reminders of the global economic slowdown, nearly every country is exercising more caution in choosing their investments. As a result, it’s uncertain whether local, national and international communities will be able to keep in mind that the long-term benefits of prompt environmental action surely outweigh the short-term costs. With scientists issuing dire warnings about global warming-related “floods, drought, disease and extreme weather,” ignoring these predictions is too risky a gamble to make.

"Buy American." Photo: Wedingo (flickr)

The controversial "buy American" provision in the economic stimulus packages has added fuel to the firey protectionism debate and has the power to hurt Americans and the world alike.

The "buy American" provision requires all public works projects funded under the recently passed stimulus to use only American steel, iron, and manufactured goods. The clause also changes how the government awards contracts for these projects. Normally, contracts are given any company that can do the best job for the lowest price. But under the new clause, an American company will be awarded the contract if their bid is less than 25 percent higher than foreign companies.

What does all this mean? It means goods from countries like China, India, and 100 other developing countries cannot be used in infrastructure projects funded by the stimulus. Burton G. Malkiel, a professor of economics at the Princeton University, explains to China View why in the past "buy American" has resulted in a reduction in trade for the U.S. and the rest of the world:

In 1930, just as the world economy was sinking, the U.S. Congress passed the Smoot-Hawley Tariff Act, which essentially shut off imports into the U.S., he recalled. "Our trading partners retaliated, and world trade plummeted," said Malkiel. "Most economic historians now conclude that the tariff contributed importantly to the severity of the world-wide Great Depression...Later, as one of his last acts, President Herbert Hoover made the situation even worse by signing a 'Buy America Act' requiring all federal government projects to use American materials."

British Prime Minister Gordan Brown joined the chorus, urging against the "buy American," arguing that:

The thing we know about protectionism is in the end it protects nobody, least of all the poor.... It would be short-sighted at this time to renege on promises we've made to the poor.

The U.S. Chamber of Commerce and numerous heads of state have come out in protest against the clause. Brazil is even planning to challenge the clause at the World Trade Organization.

Protectionism during recessions has been known as "beggar thy neighbor" policy, because in trying to protect ourselves we hurt others. In other words, if one country puts up trade barriers, their policies hurt their neighbors, which can prompt these neighboring countries to adopt the same harmful barriers. We are all a part of the global economic crisis, we can't get out of it alone. The New York Times Op-ed columnist Douglas Irwin explains why "buy American" could harm the U.S. economy in the future:

American manufacturers have ample capacity to fill the new orders that will come as a result of the fiscal stimulus [...other countries are] right to be concerned. Once we get through the current economic mess, China, India and other countries are likely to continue their large investments in building projects. If such countries also adopt our preferences for domestic producers, then America will be at a competitive disadvantage in bidding for those contracts.

President Obama made an important anti-protectionist statement yesterday while in Canada — assuring America's largest trading partner that despite his critiques of Nafta while on the campaign trail, the Obama administration plans to "enhance" trade, rather than create barriers between the the two countries.

Now is a time where we've got to be very careful about any signals of protectionism, because as the economy of the world contracts, I think there's going to be a strong impulse, on the part of constituencies in all countries, to see if they can engage in beggar-thy-neighbor policies.

Obama took the opportunity to reiterate his pledge to revamp Nafta side agreements to include environmental and labor protections, stating:

My hope is that as our advisers and staffs and economic teams work this through, that there's a way of doing this that is not disruptive to the extraordinarily important trade relationships that exist between the United States and Canada.

The Chinese government wants to boost rural consumerism by offering rebates on home appliances. Photo: Cassandra Nelson/Mercy Corps

As China rings in the Year of the Ox, its government is encouraging rural residents to splurge — on TVs, washing machines, refrigerators and personal computers — through a new subsidy program aimed to boost domestic demand.

Using funds generally reserved for an ailing export market, the program guarantees Chinese buyers a 13 percent rebate on the purchase of home appliances. The discounts are available to the nearly 800 million people living in rural China, a relatively untapped market in a country that is the leading producer and exporter of household appliances, according to the China Daily.

Some rural Chinese are taking advantage of the bargains. Mongolian herdsman Chaolu showed off his new 26-inch LCD television to a China Daily reporter. "With the money saved, I could buy more than 10kg of mutton. It looks as if the government has sent me a special gift for the Spring Festival."

But the long-term lure of the subsidies is questionable. A two-year pilot program in the rural Sichuan province originally helped boost appliance sales, but now farmers have little cash to pay for these luxury items, Mary Kay Magistad reports on PRI's The World.

Magistad says much of rural families' cash flow comes from migrant workers who've lost their jobs in a slow economy. And in rural communities where few people have access to good health care, retirement pensions and education, household appliances don't necessarily top the list of priorities.

High electricity costs are also a drawback when it comes to running appliances. "The cost is nothing to urban residents," farmer Yan Youqi told China Daily. "But we farmers have to think whether it is necessary to store so little food in refrigerators at such a cost."

Beijing economist Jua Du-Ming told The World that his country's government has good intentions, but needs to refocus its stimulus plan on meeting rural people's basic needs.

"The current economic crisis has really changed a lot of things. I can see that the Central government is … they are indeed trying to solve our problems, but all the conflict of interest is there. But when the general macroeconomic has changed in such a way … they have to do something."

Despite ongoing protests by environmental and indigenous rights groups, Ecuadorean lawmakers approved a mining bill earlier this week to permit large-scale projects tapping the country’s gold, silver and copper deposits. The point of contention: Will the new law promote responsible investment or careless exploitation?

President Rafael Correa revoked nearly 80 percent of mining concessions in April 2008, which mainly affected big Canadian companies. The popular Correa, who is seeking reelection this spring, promises that the revised law will bring about better environmental controls, protection from land speculators and 300,000 new jobs.

But indigenous community organizers aren't satisfied. They say large-scale mining hurts the environment and keeps power in the hands of multinational corporations. The Confederation of Indigenous Nationalities of Ecuador (CONAIE) has continued to organize nationwide demonstrations and block roads. Last week, 9,000 indigenous people shut down transportation along the Panamerican Highway south of capital city Quito.

Indigenous-rights groups argue that the mining law contradicts the new Ecuadorean constitution, which introduced a Bill of Rights for nature that grants protection for ecosystems.

Correa criticized opponents of the law as "fundamentalists" who would "condemn us to forever be beggars sitting on a sack of gold." Others disagree. As reported in Upside Down World:

President of the CONAIE Marlon Santi pointed out that the "majority of mining concessions are on indigenous and campesino lands." He also challenged President Correa’s program of "change," saying that "the people who grow potatoes, who grow maize, who live in the Amazon and the mangroves, we are where change is coming from."