Climate Change, GMO Crops, Nuclear Waste, and Irrational Markets.

Rising global temperatures as a result of climate change have been unanimously linked to the erratic and unpredictable weather displayed last week in Uttarakhand, said researchers from the Potsdam Institute for Climate Impact Research, Germany.

What Uttarakhand experienced on 16/17 June, that is powerful rains hitting earlier than what is usual, has been held as an extreme weather event. The frequency and intensity of such extreme events is expected to go up with the so called human activity induced climate change. However, just as Bangladesh -a poorer country than India- has done better in case of several Human development indices, it seems to be doing better than India in having long term disaster alleviation plans in place. While nature’s fury cannot be controlled, the government policies and community initiatives [See the report of माटु जनसंघटन (] can certainly mitigate the impact rather than exacerbate it as has happened in the Uttarakhand tragedy. ““Flooding is a very intermittent issue [in India),” said Neha Rai, International Institute for Environment and Development. But countries like Bangladesh, where flooding has been on-going since 1998, have been more proactive about making long-term plans, she added. India is in dire need of learning from its neighbours if it is to stop disasters like Uttarakhand from recurring… Bangladesh is a prime example of a country planning for disaster. With agriculture as Bangladesh’s main livelihood, Rai said communities there have come up with some innovative long-term solutions to protect crops like investing in certain types of seeds according to flood patterns and incorporating floating cultivation practices in naturally water-logged and low lying areas“.

Study: Monsanto GMO food claims probably false. New research reveals that plant breeding, not genetic engineering, is responsible for yield increases in US crops. 

A chance remark made by Paul Collier, an Oxford economics professor and author of the bestselling book The Bottom Billion, at a Zurich conference where Jack Heinemann, a professor of molecular biology at the University of Canterbury in New Zealand and director of the Center for Integrated Research in Biosafety, was also present triggered a research into productivity gains of GMO crops. Collier said, “that because Europe has shunned GMOs [genetically modified organisms], it’s lost productivity compared to the US“. While researching on the topic  Heinemann came across a textbook case of problems that arise in agriculture because of *low genetic diversity*, something which extensive use of GMO germplasm does engender. In 1970 a previously unknown pathogen hit the US corn crop, which more than 85% was genetically identical, and US almost lost the entire crop. It was a major crisis of the day and “the epidemic cost an estimated five trillion kilocalories in lost food energy, making it “many times larger than the Irish potato famine“. Fast forward to 2012, when due to the climate change stress (extreme dry weather) the corn crop was severely tested and the US lost 89 trillion kilocalaries just from the drought. Most of the corn grown in US today is genetically engineered. This raised serious doubts over US agriculture’s resilience and sustainability in the face of threats from weather variations, pests, and other stresses. To study the claim that productivity gains USA has made are the result of GMO crops, Heinemann chose to study three crops (Corn, Canola, and Wheat) that are grown in two regions, which have similar agro-climatic conditions and practices, save except the use of GMO crops. He found these regions on either side of Atlantic. US-Corn and Canadian-Canola crops are almost entirely genetically engineered, where as European crops are not. Wheat on either side of Atlantic still remains out of the clutches genetic engineering industry. Heinemann said, “One or more genetically engineered traits can be added to any variety of corn, soybeans, or canola. Most of those crops’ traits come from conventional breeding. If a GE crop does particularly well or particularly poorly, the success or failure could be due to the genes inserted via genetic engineering… or it could be due to all of its other conventionally bred genes. Heinemann’s group found that between 1985 and 2010, Western Europe has experienced yield gains at a faster rate than North America for all three crops measured. That means that the U.S., which grows mostly GE corn, and Canada, which grows mostly GE canola, are not doing as well as Europe, which grows non-GE corn and canola. The increases in corn yields in the U.S. have remained relatively consistent both before and after the introduction of GE corn. Furthermore, Western Europe is experiencing faster yield gains than America for non-GE wheat“. There is thus no evidence that genetically engineered crops give higher yields. ““The evidence points exclusively to breeding as the input that has increased yields over time. And there is evidence that it is constraining yields in the North American agro-ecosystem.” He offers two potential reasons why. First, he says, “By making the germplasm so much narrower, the average yield goes down because the low yields are so low.”“. Put another way, Genetic Engineering aggravates intensity of extreme events of crop failures whatever may be the agent causing the stress by throttling the genetic diversity of crops. It even compounds the problem for future generations by shrinking the gene pool.

In the last days of the Clinton Administration the U.S. and Russia agreed to dispose of 34 tons each of plutonium taken from retired nuclear weapons, ensuring the man-made metal would never again be used to build those terrifying devices.

In four superb reports this week, The Center for Public Integrity’s national security team tells the disturbing story of how billions of dollars are being wasted on a specialized nuclear plant that was supposed to produce fuel for nuclear energy and reduce weapons grade plutonium. Not only could this failing enterprise end up costing as much as $20 billion, it may also create more nuclear weapons material instead of less. The Center’s Nuclear Waste series kicks off what will be an ongoing investigation into the world’s faltering efforts to control these most dangerous nuclear explosives“.

Markets are once again showing extreme irrationality. Mumbai Stock Exchange’s bellwether index, Sensex, climbed 323.83 points on Thursday, and has climbed another 519.86 points today. The Indian Rupee too has climbed from a low of 60.72 to a dollar, to 60.21 yesterday, and a handsome 59.29 today.

Government’s policy measure of increasing the price of domestically produced natural gas heftily helped Reliance Industries and state owned ONGC shares to post a remarkable rally on Friday. Earlier on Thursday, the rebound in depreciating rupee had helped Sensex to rise. In just two days thus Sensex has risen by over 4.5%. The falling rupee got support from the announcement RBI made on Thursday- a day in advance- that the Current Account Deficit (CAD) of the last quarter -January to March- of the just ended financial year was a low of 3.6% of GDP compared to the high of 6.7% recorded in the previous quarter. RBI broke away from the convention of announcing such data on the last working day of every quarter, that is Friday in the present case, because it wanted to impact Forex markets positively, which are closed on Saturday and Sunday. Its strategy has worked as the rupee slide has not only been stemmed but it has made a handsome rebound of Rs. 1.43 to a dollar in two days of trading. This is what I would call phantom effect. Phantom effect because the macro-economic situation that dictated the precipitous fall in the value of rupee has not changed; and moreover the past figure of CAD though not exactly known was already factored into the dynamics of supply-demand of rupee on the Forex market. Finance minister and Prime minister were crying hoarse to *beseech investors* to believe in *India Story* and in *liberalising policy measures* government is taking; but no one took notice. Thus both the exuberance or the maniac panic of the markets are both highly irrational. Yet, we are told that markets are the best indicator of what is happening to the economy.
On depressed Wednesday, when rupee had hit a new low, Economic Times had this critical piece of news: External debt growing to unmanageable proportions, putting pressure on rupee. “For a good part of the decade post 1991, there was an improvement in external debt indicators such as the quantum of debt, proportion of short-term debt to total debt and the ability to service debt obligations based on the level of exports *of* goods and services… At the height of the 1991 crisis, when India’s foreign exchange reserves could barely cover six weeks of imports, the proportion of short-term debt to foreign exchange reserves was 146.5% and short-term debt to total debt was 10.2%, while the debt service ratio was 35%… Now, the rising level of short-term debt vis a vis reserves is worrying many. From a low of 5.1% in 2002-03, it rose to 14.8% in 2008-09 after the global financial crisis and ballooned to 31.1% in December 2012… Similarly, the proportion of short-term external debt to foreign exchange reserves shot up to 31.1% at the end of December 2012 from 14.8% in 2007-08. Another key indicator – the import cover of foreign exchange reserves – is now down to 6.5 months from 15 months in May 2008, when the economy was booming, capital flows were robust and the currency was strong“.
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2 Responses to “Climate Change, GMO Crops, Nuclear Waste, and Irrational Markets.”

  1. Sadanand Patwardhan Says:

    The twin brother of CAD that economists like to monitor for economic health of the nation is Fiscal Deficit. Finance Minister has budgeted a lower deficit of 4.8% of GDP compared to last years budget estimate (BE) of 5.1%, but the first two months (April-May) of current financial year have already consumed 33% of BE compared to 27.5% of BE last year. Government would have to either augment revenues or tighten the belt on expenditure. But then what about the *much needed* growth stimulus? was primarily tax revenues that took a toll on the fiscal deficit. For April-May, tax revenues stood at Rs 36,030 crore, which was just 3.1 per cent of BE of Rs 8.84 lakh crore. In the corresponding period of 2012-13, tax revenues had constituted 5.3 per cent of BE. Pulled down by higher refunds, corporate tax collections were just Rs 3,232 crore in the April-May period, sharply lower by 68 per cent over Rs 10,137 crore in the corresponding period of 2012-13. In fact, corporate tax collections were negative Rs 2,136 crore in the first month of this financial year, as refunds were higher than mop up.Similarly, excise duty could fetch only Rs 6,808 crore to the government kitty in the first two months of the current financial year, 63 per cent less than Rs 10,820 crore a year ago.unquote

  2. Sadanand Patwardhan Says:

    Money Control Interview: price hike may impact fiscal deficit by 0.4%: HDFC Bank. Given the fact that the price of Gas has doubled it will certainly have a significant impact on things like the fertiliser subsidy and so on. So we are expecting an increase by about 0.3-0.4 percent of GDP on the fiscal deficit, but it’s just a tentative number.If you look at it by way of scheduled maturity which is debt coming for redemption over the next year, we have about USD 172 billion. On the bond redemption front because of the slowdown in the economy the appetite for External Commercial Borrowings (ECB) has come down quite a bit. We might be in a situation where the CAD does moderate, but ECB flows come off at a much faster pace than the CAD moderation. So, we are left with a situation where the capital inflows are inadequate to finance the CAD and that again would lead to stress on the BoP and pressure on the rupee.

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