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Taking up the potential
In principle, the geography of economic activities and the spatial division of labour represent the outcome of choices about the use of transport system improvements and low transport costs. However, choice is contextually constrained. Competitive forces and prevailing relative prices have made a business necessity out of moving materials and goods (often repeatedly) between different points in value adding chains. To the extent that profit maximizing arrangements differ from those that would be environmentally optimal, this difference arises from the ways in which markets have been constructed (legally, institutionally, and fiscally) and how this affects relative prices. A conclusion now widely drawn is that the social and environmental costs of transport services and energy should be included within their prices.
While recognizing the problems involved, an important element of strategy in eco-restructuring must be to take up the opportunities created even by apparently negative developments and trends. Growing traffic volumes represent a negative development. But the projected growth in traffic under conditions of already congested infrastructure is now focusing policy makers' attention on the need for demand-side management. Similarly, progress toward and actual experience with free trade have highlighted the trade distorting implications both of the under pricing of environmental resources and of differences in national policies toward environmental protection. As a result, the issues are growing in political importance. They are shifting from being purely domestic policy items to a central position on agendas concerned with the topography of the "playing field" for international competition. This gives them a much higher political priority.
Environmental protection - whether by harmonization of standards or by the use of compensatory mechanisms that would factor differences in national standards into the terms of trade - is now an agenda item for the newly formed World Trade Organization, the successor to the GATT. Differences in national policies affecting transport and energy prices within EU member states are causing these to come under critical scrutiny in ways and to a degree almost unthinkable within a purely national framework. At the same time, these differences are highlighting that the sources of distortions are often linked to policy interventions through subsidies and tax differentials and that fiscal regimes often bear no clear link to third-party costs (Gabel 1994). As a result, work is under way to elaborate basic principles for transport and energy pricing from the standpoint of economic theory and optimal resource allocation.
In this respect it is interesting that, although freight transport prices are consistently predicted to fall within the EU as a result of deregulation and the creation of the Single Market, expectations on longer-term price changes are more varied. In respect to recent questionnaire surveys (e.g. Byrne 1990), substantial disagreement among respondents was found reflecting different views on the likelihood and severity of environmental legislation. Many of those approached in a Delphi study on the European outlook anticipated price increases in the longer term as transport operators are made to pay for environmental damage and bear the full costs of infrastructure use. Theirs was the prevailing view. The study concluded that road transport prices would rise by 17 per cent in real terms between 1991 and 2001. A further conclusion was that price rises in the road freight sector would be significantly above those for other modes. The predicted rise for rail was 9 per cent (Cooper 1995). A report by the Council of Logistics Management (CLM 1993) similarly foresees that the shallow fall in prices associated with the Single Market will be followed by a sharp rise in the late 1990s, continuing on beyond the year 2000.
A recent ECMT study has calculated the price corrections that might be needed to internalize some of the more significant environmental externalities of the transport sector (ECMT 1995). The external costs of road and rail freight transport were assessed across four categories of externalities (accidents, noise, local pollution, and greenhouse effects). Results were expressed as ranges, reflecting different assumptions made about loading. For road freight, total externalities were 18-30 Ecu per 1,000 tonne kilometres. For rail freight, total externalities were 4.0-7.5 Ecu per 1,000 tonne-kilometres. The lower level for rail freight is associated with lower externalities across all categories, but especially for accidents. The road freight externalities equate to 0.29-0.38 Ecu per truck-kilometre. Were these costs to be factored into fuel prices (and on the assumption of an average fuel consumption of 35 litres/100 km for trucks), they would constitute a tax equivalent to 0.7-1.1 Ecu per litre. All of these figures are calculated for operating externalities only and do not include costs associated with infrastructure provision.
As a precursor or supplement to fiscal measures aimed generally at transport and energy, several truck-specific actions have been proposed. To correct the distortions that arise from the off-loading of warehousing and inventory costs, for example' Zuckerman (1991) proposes the use of a tax based upon a combination of weight and distance criteria, which would reduce reliance on distant suppliers and increase the attractiveness of local suppliers. Alternatively, a tax based upon weight and volume would address the packaging problem, discouraging manufacturers from inefficient and wasteful packaging. A combined weight-volume-distance tax could be designed to encourage truckers to make shorter runs, consolidate their own loads, and share space with other truckers. The net effect would be fewer vehicle kilometres (Zuckerman 1991, p. 142).
There is need to institute new controls on trucks and to enforce both these and existing controls strictly. Data suggest that existing controls - many of them relevant to environmental impact - are frequently ignored. On British dual carriage ways, surveys show that 92 per cent of articulated truck drivers exceed speed limits. Over 20 per cent of trucks fail annual inspections carried out under Department of Transport requirements, suggesting that these are inadequately maintained during the year. Calculations show that operators' potential cost savings in breaking regulations (for example, loading limits) are many times higher than the fines faced if caught. Technology now exists to enable automatic spot checks to be made as trucks pass sensors in the road bed. These would allow more systematic checking of speeds and loadings. In association with increased penalties, stricter enforcement of regulations would ensure higher compliance and greater environmental protection.
Part of the needed approach would be to reduce institutionalized support to processes and decisions that lead to increased transport demands. Road programmes have already been substantially cut back in many industrialized societies. None the less, land-use planning processes that might be expected to preserve green sites and prevent decentralization are consistently prejudiced by efforts to attract investment and enterprise into regions. Land-use planning processes need to be more fully linked into the overall effort to secure sustainable development and restrictions placed on developments likely to generate extra traffic. Such restrictions, once enacted, need to be more rigorously enforced through strengthened public enquiry and appeal procedures.
Another important aspect is to focus on consumers. By providing information on the transport intensity of different products, consumers would be empowered to make informed decisions. Studies such as that exemplified by Böge could be used as the basis for product labelling schemes.
Although it is not possible to specify in abstract which patterns of land use, trade, logistics, and transport would offer greatest scope for reducing environmental stresses, shifts toward sustainable societies and economies would most likely involve:
- less physical movement,
- less emphasis on physical transportation infrastructures,
- substitution of information and capital flows for physical goods movement,
- greater mixing of land uses,
- less specialization and concentration in production,
- smaller-scale installations and use of flexible technologies to emphasize economies of scope over economies of scale,
- decentralization of production,
- greater reliance on local resources,
- greater serving of local markets,
- new networking arrangements among contractors/subcontractors,
- more sensitivity in matching activities and locations so as not to overreach local environmental capacities.
The flexibility for spatial and sectoral shifting - even within the framework set by the inertia of sunk costs and market contestability is considerable. However, the signs are not positive that these opportunities will automatically be taken up. Finding geographical and logistics arrangements that are less resource intensive and defining the market conditions under which these would be consistent with profit maximization is therefore a central concern for eco-restructuring. In this regard, spatial indicators could be important diagnostics in eco-restructuring processes. A reconfiguration of the market framework is necessary to provide the incentive/disincentive structure for change. Although it may not be politically possible in the short term to internalize all currently externalized social and environmental costs into environmental resource prices, it is important to begin that process soon and to target some sectors for early action. A combination of gradually increasing motorway tolls and fuel taxes, together with specific regulatory actions targeted at trucks and aimed at securing speed, loading, and environmental performance standards, would constitute an important start.
International agreement on a harmonized resource taxation system is unlikely. This implies that a way must be found to reconcile the need for individual countries or blocs to act independently to tax resource use without jeopardizing the competitiveness of their own industry in either domestic markets (vis-à-vis imports) or in export markets (vis-à-vis competing exporters). Maintaining a level playing field for international competition depends upon taxing imports on entry on the basis of their resource intensity and exempting exports from resource taxes using rebates, again based upon resource intensity. Such a solution would allow independent, incremental action by the lead countries. None the less, this would still depend first upon reforming the GATT agreement (Weaver 1995).
Because of interlinkages between freight transport and all other economic activities, actions targeted at freight transport (and at truck transport specifically) would have important knock-on effects. Together with the energy sector, transport is privileged in this respect. Against the backdrop of industrialized countries' obligations under the Framework Convention on Climate Change and responsibility to take the lead in eco-restructuring, the fact that transport energy use is increasing faster within these countries than within the developing world is salutary. It is indicative that this is a lifestyle issue - a reflection of conspicuous over-consumption in the context of distorted incentives. This makes it all the more important for policy to focus on freight transport. It is a critical and potential swing sector in eco-restructuring.
I am grateful to Gilberto Gallopín, Walther Manshard, Ray Hudson, and Michael Taylor for editorial comments on an earlier draft. Friedrich Schmidt-Bleek alerted me to relevant work at the Wuppertal Institute and Eric Britton to relevant work of EcoPlan International. Landis Gabel provided helpful information on deregulation, market liberalization, and freight transport. Thanks are due also to two anonymous reviewers whose suggestions for improvement were most helpful.
1. A possibility that arises from the very differentiated nature of truck transport, which involves vehicles of different sizes, weight power ratios, and resource productivity.
2. Judged on an economic growth criterion, impressive progress has been made under the regime. Between 1950 and 1990, real ($ adjusted) gross world product increased five-fold from US$3.8 trillion to US$18.8 trillion. On a sustainability criterion, we can be less sanguine because more rapid growth equates with more rapid conversion of environmental capital and higher rates of environmental change.
3. Both are alleged to cost 1-2 per cent of GDP in countries lightly affected by distortions and 3-5 per cent of GDP in countries with severe distortions (Repetto 1993).
4. A prediction that prompted the Task Force to single out transportation as the sector through which liberalization of the internal EU market would have its greatest environmental impact.
5. EU truck limits now allow truck lengths of 16.5 m. widths of 2.5 m, and gross weights of 40-50 tonnes.
6. The situation is actually even more complex than this suggests. Although some operators have increased their average truck size, the overall tendency recently has been for a shift in many OECD countries away from medium-sized trucks toward very large trucks for bulk freight and small trucks for retail distribution and high-value goods. Much of the recent growth has also been concentrated in small trucks. The environmental downside here is that these have relatively low energy efficiency per freight tonne (compared with large trucks (IPCC 1996, p. 691). Overall, it seems that the shift from medium-sized to large and small trucks has reduced overall transportation energy efficiency.
7. I have already focused heavily on the significance of distance - and the need to overcome distance - in contributing to environmental impacts. But distance has more significance than is immediately apparent in the shift toward sustainability. In respect to future sustainable societies and economies, distance is also important as: (i) a factor in the ecological viability of recycling; and (ii) a factor in the viability of service-driven business plans. As to the latter, proximity to the market will be more important as businesses shift from strategies based upon selling goods (the service delivery machinery) to those based upon selling services. Radical increases in resource productivity will depend upon such shifts (Ayres and Schmidt Bleek 1993).
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12 National and international policy instruments and institutions for eco-restructuring
Building on small agreements
Economic policy instruments and mechanisms
International distributional implications
A precondition for social breakthroughs in the context of developing societies
Issues of science and technology for development
A future united nations system
The search for a viable path to a sustainable future must be hinged upon a wide array of complex problem sets, including not only the technological issues related to global climate, preservation of biodiversity, and other natural/ecological constraints to the cohabitation of billions of world citizens, but also the very art of cohabitation in an ever-shifting hierarchy of political, economic, and social issues. The notion of eco-restructuring goes a few steps further than the UN Conference on Environment and Development's Rio Declaration and Agenda 21. It necessarily includes an element of "futurology," leading us into a wide range of possibilistic explorations. Experience shows, however, that, apart from a listing of possible technological breakthroughs, the futurology has been notoriously incompetent at dovetailing social breakthrough scenarios into a feasible policy package with concrete instruments and institutional devices. What difference would it make then, if, instead of a wholly original new World Order, we look for just a plausibly reconstituted version of the existing order?
We have had some way to come to back away from the carefree altar of "limitless economic growth." With the advent of an "eco-topian" challenge there is a still further distance to establish a satisfactory methodology to win the hearts and minds of accountants and bankers. As a paradigm of sustainable resource management has begun to emerge as something technically manageable in the vein of pragmatic gradualism, the hill has already got slippery enough. This technical paradigm is loaded with such buzzwords as impact assessment, risk management, energy efficiency, renewable resource/ conservation strategies, population stabilization, a Global Commons law for oceans, atmosphere, climate, and biodiversity, etc. Some visionaries, such as Sagasti and Colby (1993), see a paradigm of eco-development looming in the further distance, however. It seeks not only to integrate society and the environment in accordance with longer-term economic and ecological goals, but also to restructure international society to the principles of equity and popular participation.
Given the prolonged world recession, coupled with a complex reordering of international security arrangements in the post-Cold War world, the process of following up on the UNCED agreements has seemed already to enjoy a much lower priority than was originally hoped. And yet it has been just visible enough to augur the beginning of a new process of international "learning by doing."
The discussion in this chapter purports, rather modestly, to build on the lessons being gained from past experience in taking up the challenge of sustainable development. A systematic assessment of all the relevant component instruments and related law-making processes would have been a much larger undertaking than was possible in the context of this book. In the following I attempt only selectively to highlight certain controversial aspects of the subject at hand.
I start, first, with an issue related to international environmental institutions. Features of the historical process of international environmental treaty-making will be examined, particularly with regard to changing practices of national sovereignty in the collective management of global common-pool resources. One important, rather hard-learned, lesson will be that the best strategy should be to start with, and build on, "small agreements," rather than to aim for a quantum-jump solution.
I then turn to the issues related to the designing and packaging of policy instruments for tackling environmental problems. I look into the recent trend towards the market-based approach in national environmental policy in OECD countries, the evolving knowledge base for the carbon tax, and then the art of policy packaging for neutralizing the power of special interest groups (particularly transnational corporations) tending to impede the negotiation process for new environmental agreements. Whereas the economists' typical advice is to "get the prices right," political scientists are concerned with how to "get institutional incentives right."
This is followed by an assessment of the North-South income redistributional implications of joint implementation, or North-South partnerships, towards eco-development. The distributive bargaining over the twin issue of the transfer of financial and technological resources has long served as a natural common front for the South ever since the 1950s, but it is in conjunction with global environmental agendas such as climate change and biodiversity that Southerners have gained enormous bargaining power just by a threat of inaction or free-riding. Reference will be made to international incentive schemes such as the Global Environmental Facility and the trade related aspects of international environmental regimes.
Then I try to step onto the scene within the developing world, particularly to see how an "environmental enlightenment" of developing society has taken place in conjunction with international development cooperation. The process has coincided with a spate of decentralization, mass participation, democratization, and "technology blending" at the grass-roots level. The latter trend may well be taken as a precondition for social breakthroughs toward eco-restructuring in the context of many developing societies.
The bottom-up approach is essential but is unlikely to be a sufficient condition for global eco-restructuring. So I dwell upon certain critical issues of science and technology for development. After examining briefly the question of technology transfer in the North South context, I move on to shed light on a bias built into the world's science and technology community in that ever since the era of the Industrial Revolution the profession has succumbed to market mechanisms by responding sooner to the lucrative opportunities of urban mass markets than to the basic human needs of the people in disadvantaged regions. Attention will be drawn to some of the bolder propositions, contained in this book, that hint at possibilities for global engineering projects that would contribute to redressing the basic infrastructural conditions of currently energy-deficient and water-deficient regions.
Finally, I revert to the question of international institutions, searching for the image of a "third-generation world organization" or a United Nations renaissance. With the advent of a rapidly expanding universe of non-governmental organizations omnipresent in many aspects of international relations, and with an ever more muddled hierarchy of issues and organizations, we still need some sort of global focal point with a "switchboard" role for stimulating interactive thinking and planning among diverse actors, and thus enhancing humankind's capacity for collective learning.
Building on small agreements
The Convention Concerning the Use of White Lead in Paint (adopted in 1921 and enforced in 1923) marks the very beginning of the list of some 140 international environmental agreements (the UN Environmental Programme's International Register of Environmental Treaties now available through the Internet). These agreements have established rules for the use of the Antarctic, the exploitation of ocean resources, the protection of migratory and endangered wildlife, the abatement of pollution at sea and in the atmosphere, the management of watersheds, the control of pests and hazardous chemicals, the testing of nuclear weapons, the notification of nuclear accidents, and many other environmental problems that have trans-border complications. The number of signatory countries averages around 12 but varies from a minimum of 3 to a maximum of 161 (for the 1982 UN Law of the Sea Convention).
The pace of treaty-making has been accelerating. Taking as a divide the 1972 UN Conference on the Human Environment (UNCHE) at Stockholm, which propounded the notion of Only One Earth, the pace has increased from 1.2 treaties per year in the pre-UNCHE decades to some 4.2 per year during the subsequent two decades. Distinguishing the treaties concerned with the management of commons outside national control from those dealing with within-border or territorial resources, the proportion of the former grew from some 50 per cent before 1973 to nearly 70 per cent during the period since 1973. Moreover, countries have seemed to demonstrate a willingness to subordinate national controls to the requirements of international agreements. The proportion of treaties that regulate only extra-territorial activities has fallen from 44 per cent before 1973 to 15 per cent since 1973, with those calling for internal controls to internationally agreed standards and criteria rising to 85 per cent.
In spite of the "tragedy of the commons" thesis of rational choice theorists (Olson 1965; Hardin 1968), this may signify that humankind's willingness to assume collective responsibility for the management of common-pool resources has increased, if not radically, and that the exigency of deepening interdependence has begun to erode the concept of the national sovereign state.
This does not presage, however, anything like an increased visibility of a Global Government. Empowerment of a supranational authority for treaty enforcement has occurred only twice so far (for the conventions on high seas fisheries and living resources of 1952 and 1958). And, in most of the cases in which supranational authorities are involved to assist national governments in treaty implementation, their role has been limited to collecting information and conducting research. This is in spite of the fact that the majority of conventions concerned with air pollution, water pollution, marine dumping, and natural resource conservation do not stop at mere coordination of national policies but involve collaboration games in which countries have conflicting interests and solutions entail real distributional costs (Haas and Sundgren 1993).
After long debates among ecological scientists, economists, and the policy community, a broad consensus seems to be emerging that the best strategy is to start with "small agreements" and build on their ratchet effects, rather than to struggle for a big, sweeping (and eternally elusive) agreement. One of the important lessons learned from the decade-long "marathon" of the Law of the Sea negotiations is that "to create a universally inclusive process with respect to both issues and participants, together with the requirements for consensus on an overall package deal" can be "a very serious time-consuming mistake" (Sebenius 1993, p. 198). The reason is that the ultimate results of such a heroic endeavour can easily be held hostage to the most reluctant parties on the most difficult issues.
"The process is the policy" was a strategy adopted by Maurice Strong for managing the UNCHE with the vast agenda of "human environment." It has since become a shared password in multilateral environmental diplomacy (Herter, Jr. and Binder 1993). The new pattern of interactive planning emerging in that process is roughly as follows.
First, a framework convention is instituted. It defines a commonly shared perception of the problems at issue and sets forth a set of principles and norms to be observed in tackling those problems. This is a precondition for subsequent, more specific rule-making protocols. The process provides enough time for laggard states to become motivated to reassess their respective national interests relative to others. It also allows time for the leading coalitions of interest groups and non-governmental organizations (NGOs) to generate public pressure against resistant institutions and governments. It thus paves the way for protocols and concurrent national and international regulatory activities.
This technique was first developed by UNEP's Regional Seas Programme for the Mediterranean in 1975, followed by the subsequent nine regional programmes (Haas 1990). A similar approach was adopted for the LongRange Transboundary Air Pollution (LRTAP) Convention in Europe (1979) as well as the Vienna Convention to protect the stratospheric ozone layer (1985).
In the process of preparing for the Framework Convention on Climate Change (1992), debates continued for some time among the press and the scientific community as well as within the International Panel on Climate Change (IPCC), formed in 1988. These debates, which still continue, have gradually shifted from their initial focus. At first the issue was whether the available data sets and the existing climate models were really robust enough to base policy on. Now the question at issue is nearer to a matter of strategy: how fast must the level of carbon dioxide emissions be reduced to combat effectively the ongoing degradation of the global atmosphere at the lowest economic cost? The issue has spawned a growing number of global policy scenarios and simulation models (the Edmonds-Reilly model, the OECDGREEN model, the Whalley-Wigle model, the Japanese CGER-AIM model, etc.). Conceivable options vary greatly. At one extreme is the approach that just puts a new policy structure into place and leaves aside the question of the uncertainty of costs and benefits. At the other extreme is a comprehensive, stringent, and universalized approach whose benefits might be more certain except that its realization would be politically impossible.
The currently considered target of stabilizing the annual emission of greenhouse gases at the 1990 level by the year 2000 would help slow the pace of global warming by just 20 years or so even if the developing countries and the former socialist economies joined the move. The grace period provided by this target (if it were met) would be no more than five years if the latter groups of countries did not join the protocol! This is due to the long residence time of trace gases in the atmosphere (170 years for N2O, 100 years for CO2, and so on). To stabilize the density of these gases in the atmosphere and thus really stop global warming would require a drastic cut in current emissions, say by as much as 50 per cent within 100 years (e.g. Matsuoka and Morita 1992). So we need to hurry up with both technological and social breakthroughs.
That might sound a very relaxed long-term agenda when ecologists keep warning that even a minor change in temperature is likely to have potentially significant impacts on a regional and local basis. But political scientists' reflective cynicism retorts that humankind has not yet learned enough to make any big systemic change in international political systems before a catastrophic signal becomes really palpable (Mathews 1989; also Cooper 1994, esp. p. 73).
"Looking for small agreements" is not escapist chicanery. On the contrary it is the basis for progressive, pragmatic wisdom. A grand paradigm of global eco-restructuring would remain just an act of hubris without consciously sustained gradualist efforts. The process is akin to climbing up a slippery hill that is, itself, a heap of older, but not yet discarded, paradigms to be followed by newer, increasingly more demanding, ones.
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