Tax the rich and help the poor survive

  • 14/09/1993
  • FAO

WHAT DOES the International Monetary Fund have to do with land degradation? On the face of it, nothing. But in reality, quite a lot.

A degraded landscape in an increasingly integrated world is the end-product of a long chain of economic processes. Debt leads to debt repayment, which in turn leads to export-oriented activities, including an increased use of the country"s best land for cash crop production. According to an FAO estimate, 14 per cent of the agricultural land in the South today is used to produce agricultural goods for export. As population increases, food production shifts to more marginal land, which increases the processes of land degradation and desertification. And if this goes on, it can lower agricultural productivity and exacerbate famine and poverty.

The main drawback to cash crops in Africa and other Southern countries is that over the last decade, they have produced increasingly less cash. Growing them is expensive for they require hard currency for imported pesticides, fertilisers, energy and equipment. In 1984, no African nation whose economy was based on agricultural commodities had a favourable balance of trade. Real income from cash crops has declined; African shares of most commodities in world markets have shrunk; the governments" trade balances have worsened; and, most African countries are sinking deeper into debt. Yet, between 1974-76 and 1982, the total area devoted to major export crops such as coffee, cocoa, tea, sugar, cotton, tobacco and hard fibres grew by 11.4 per cent.

As Lloyd Timberlake phrased it in his book, Africa in Crisis, "African governments feel the need to grow more cash crops in much the same way African peasants feel the need to have more children. If children are dying, more -- not less -- children are needed. And if crop prices are falling, more -- not less -- cash crops are needed."

But the IMF can argue that it was not its fault that a country"s elite decided to overspend and get itself into a debt crisis. The IMF only helps a country meet its balance of payments crisis. But it does provide an economic prescription without which no country can get its financial assistance. And this prescription degrades the land in an insidious way. If a country is short of dollars, the IMF insists on a series of measures that it believes will improve the country"s competitiveness in the global market, so that, hopefully, it will not be short of dollars in the future. One major element of this prescription is to devalue the indebted nation"s currency, which effectively devalues the country"s labour and natural resources in the world market. Its tea, coffee, prawns, peanuts and pineapples all become cheaper in importing countries.

But if the ecological costs of producing these commodities were to be taken into account, as ecological economists suggest, then these commodities should show an increasing price trend. On the contrary, their prices have been falling. Between 1962 and 1989, world prices of agricultural raw materials dropped on an average by 0.7 per cent annually. But between 1980 and 1989, when the debt crisis hit the South, the world prices of agricultural raw materials dropped by 4 per cent annually. World prices of food items dropped correspondingly by 1.6 per cent and 10.3 per cent per year. The non-oil world commodity price index, thus, dropped sharply during the 1980s.

This leaves a major contradiction in the Northern prescriptions for the South: The Washington-based IMF advises the debt-ridden South to devalue its resource base, while the Rio conference advises it to value its resource base. Clearly, the South cannot do both at the same time. Meeting a country"s debt crisis may require structural adjustments at the national level, but meeting the South"s ecological crisis demands structural adjustments at the global level. The rich are being subsidised far too heavily and they must learn to pay the full ecological costs of their consumption. Otherwise, the land of the poor must degrade.

Theoretically, it is possible for a nation to secure a sustainable development path at the cost of non-sustainability in another country. A nation can import all its raw materials, use indigenous technology and human skills to produce manufactured goods and export the final products. With its export income, it can then import its food. The nation"s stock of natural resources will remain intact while the countries, which provide the raw materials and the food, may undergo serious ecological degradation. And this can go on happening for a long time, if the world prices for raw materials and food items continue to be depressed. The money earned from the sale of raw materials and food items may get spent in meeting daily consumption needs and the nation will be reduced to perpetual dependence on the exploitation of its natural resource base. Five countries -- Malaysia, Indonesia, the Philippines, Gabon and the Ivory Coast -- supply some 80 per cent of the world"s requirement of tropical hardwoods, mainly to meet demands in Japan and the European Community. Insofar as economic progress in these countries is sustainable, it can be argued that this sustainability is in part being achieved by "importing" it through non-sustainability in the timber-exploiting nations.

Unfortunately, the scarcity value of the dollar is so high today that no nation, especially one whose land is highly degraded, is prepared to demand a fundamental change in the world economy. Even when it comes to ecological negotiations, poor countries discount the future far too quickly and accept the small palliatives offered as aid with great alacrity.

The debate within the negotiating forum for the proposed desertification convention reflects this state of degraded Southern lands and desperate finances. It is true that the aid flowing out of the climate, ozone and biodiversity conventions will go largely to relatively industrialised countries in Asia and Latin America or to the forest-rich countries, which are also concentrated in Asia and Latin America. And, therefore, the African nations are arguing that the benefits of the desertification convention should go largely to them.

But what is most important is for all Southern nations to argue that land degradation cannot be halted through aid measures. Stopping degradation requires fundamental structural adjustments at the global level. The use of land in the South to meet global demands must be properly valued, and funds must flow to the South automatically through the system of international trade. The South needs better tea and coffee prices, not some more tree-planting projects to reverse the processes of land degradation. In fact, tree-planting projects in the Sahel have failed to stem the tide of land degradation there. Today, worldwide, 900 million people are estimated to be in distress because of land degradation. No ecological problem affects the people of the world more acutely than this one.

There is the possibility of achieving a grand global compact here. Since the market fails to capture the ecological costs of commodity production and the costs of land degradation affect the poor the most, let there be a public policy instrument to capture these costs -- say, for instance, an international income tax on the world"s rich to provide a guaranteed survival wage to all. This would put a floor to poverty and stem urban-rural migration. And since most of the world"s poor live in the world"s most ecologically degraded regions, let those who want to get this survival wage work on improving the ecological resource base in their own habitat. So that when the green future dawns, there will be a greater chance of finding sustainable livelihoods at home. In this way, the South will deal with its problem of poverty and land degradation and the North will meet its ecological objectives, including that of fixing carbon levels.

The proposed global survival programme can also make an enormous contribution to protecting the world"s biodiversity. Genetic diversity in the drylands has played a far more critical role in the world"s agriculture than the biodiversity in tropical forests. But wherever this biodiversity may be, it cannot be protected unless population pressure is reduced on areas of rich diversity. This cannot happen by putting fences and guards around these areas. Creating employment in the degraded areas can transfer the focus of human activity to areas that do not possess such rich diversity.

In every civilised country in the 20th century, there is a progressive income-tax, which makes the rich pay to support the poor. The global survival programme would be the best way to move towards a green and civilised globe.

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