Trade and The Environment

Understanding the Problem

Your Economics or Management Studies class is a place to develop the connection between trade and the environment.

1. National environmental standards are one of the fastest-growing non-tariff barriers within the European Economic Community. In Germany, households pay directly for garbage removal by leasing a garbage can from their municipality by the year. In Bonn, for example, the fee is 400 DM (roughly $300). Excess refuse bags cost 5 DM each.
   
   In order to further reduce waste, the German government decided to make producers, retailers, and consumers responsible for recycling packaging. Since December 1991, manufactures have had to take back transport packaging (cardboard padding for appliances and plastic wrap around furniture). On April 1, 1992, retailers were required to take back all secondary packaging and arrange for its recycling. This has put pressure on manufacturers to reduce secondary packaging. Volkswagen has pledged to take back used cars. The private sector has set up a system called DSD which collects and reprocesses packaging waste (Globe & Mail, December 2, 1992, p. B12).
   
   
2. What enforcement problems would you expect if a similar system were implemented in Canada?
   
   
3. Imagine that you manufacture board games which you plan to export to many countries, including Germany. You learn about these new laws from the import broker you will use in Germany. The broker tells you it is the importer’s responsibility to pay for the collection and recycling of all packaging (primary, secondary, and transport). Brainstorm ways to meet the German packaging requirements and reduce the cost to your company and the importer. Design the package.

Strategies for Change

• Determine the impact of a similar program in your own community. Include considerations from the point of view of consumers,
• producers and environmentalists.
  
• Develop an awareness program for the community including ways to inform the public of the need for change, the expected change and consequences of the change.
  
• Prepare a Job Description for a Co-Op student interested in working on an environmental project similar to this.

Debt and Environmental Damage

Understanding the Problem

There is a connection between debt and environmental damage in developing countries. Many less developed countries are in deep debt to developed countries, banks, and international lending organizations. The need to make payments compels developing nations to:

• Increase their production of export goods and commodities to raise hard currency for interest payments which means;
  
• Over-cultivating marginal lands or cut-down forests, increasing desertification and erosion which means;
  
• Flooding, drought, and loss of farmlands resulting in;
  
• Higher rates of starvation and illness resulting in:
  
• A loss of productive labour, which will increase birth rates, which will then make it increasingly difficult for developing nations to pay
• debts, which means they will;
  divert funds from education, health, and economic development, and environmental protection to make interest payments which will:
  
• Increase the cycle of poverty resulting in the developed world sending more and more aid.
  

Summary

Poverty and hunger lead to environmental destruction which leads to more poverty and hunger because high interest rates for loans and lower commodity prices lead to lower savings and less investment.

Classroom Development

1. Form your students into four groups. Each group will represent one of the following stakeholders.
   Home Groups
   a) President of a large, multi-national corporation which extracts natural resources from countries around the world.
   b) Director of the World Wildlife Fund (WWF), an organization which raises funds for education about, and protection of endangered natural areas around the world.
   c) Leader of a developing nation in Africa or South America.
   d) Director of the Canadian Hunger Foundation, a charity which is involved in projects in the developing world aimed at reducing hunger and poverty.
2. Discuss the situation as described. From the standpoint of your group, brainstorm ways to remedy these problems.
3. Divide into new groups, each with one representative from each home group. Using DeBono’s Six Thinking Hats, analyze the suggested ways to solve the problems.
4. Return to your home groups. Compare and contrast the solutions.
5. As a class, select the best solution. Explain why you think it is the best solution.
   

The Six Thinking Hats:

Summarize the discussion Options and Choices
Make conclusions

Strategies for Change

Because many countries are unable to pay off their debts to banks in the developed world, some lending institutions are willing to sell the debt to someone else so that the lender can at least recoup some of the loss. Conservation groups are using debt-for-nature swaps to save rain forests in developing countries.

The very first debt-for-nature swap was in 1987 when US-based Conservation International purchased $650 000 of Bolivia’s debt from Citibank for $100 000. In return, the Bolivian government agreed to establish a $250 000 fund in local currency to maintain a biological research station in a nature reserve in the foothills of the Andes.

In 1991, the government of Costa Rica struck a deal with the government of Sweden, the WWF, and the Nature Conservancy. Ten million dollars in debt were purchased for $2 million, in return for an issuance of Costa Rican bonds which will be used to pay for a variety of environmental programs.

1. Use DeBono’s Six Thinking Hats to examine debt-for-nature swaps. The objectives of DeBono’s Six Thinking Hats exercise include:
   a) Examining an issue more closely;
   b) A provision for examining an issue from many points of view.
   Divide the class into 6 groups, each wearing a different hat. The groups should brainstorm ideas specific to the hat they are wearing. When each group has completed its work, redivide the class into groups containing one representative from each “hat” group.
   
   
2. Groups should pursue a variety of areas of interest:
   Write to the WWF or the Nature Conservancy to congratulate them and determine how individuals and groups can support their debt-for-nature swaps;
   a) Devise a way to bring attention to the cause and develop a strategy for gaining student commitment to the projects;
   b) Develop a fundraising program to solicit donations for debt-for-nature swaps on behalf of groups such as the World Wildlife Fund and Nature Conservancy;
   c) Research companies which encourage the exploitation of resources in Bolivia, and Costa Rica;
   d) Write an article for the school newspaper on debt-for-nature swaps;
   e) Using products such as chocolate bars whose ingredients originate in developing countries, investigate where the ingredients originate;
   Investigate existing policies on bank loans to developing countries. Develop a new policy which a loans officer can deliver to the Board of Directors of her/his Canadian bank.