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FSI's second major conference on global underdevelopment brought together worldwide thought leaders to explore the root causes of global underdevelopment and to provide fresh insights on the links between international security and universal access to adequate food, health care and water.

Redefining Security Along the Food/Health Nexus Conference website

Frances C. Arrillaga Alumni Center

Kofi Annan former Secretary-General, the United Nations, Nobel Peace laureate, chairman of the Alliance for a Green Revolution in Africa Keynote Speaker
Jeff Raikes CEO, the Bill & Melinda Gates Foundation Keynote Speaker
Robert Gates former U.S. secretary of Defense Keynote Speaker
David Bloom Clarence James Gamble Professor of Economics and Demography; chair, Department of Global Health and Population, Harvard School of Public Health Panelist
Mariano-Florentino Cuéllar Professor and Deane F. Johnson Faculty Scholar, Stanford Law School; co-director, Center for International Security and Cooperation Panelist

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Professor, Department of Civil and Environmental Engineering
jennadavis.jpg PhD

Jennifer (“Jenna”) Davis is a Professor in the Department of Civil and Environmental Engineering and the Higgins-Magid Senior Fellow at the Woods Institute for the Environment, both of Stanford University. She also heads the Stanford Program on Water, Health & Development. Professor Davis’ research and teaching is focused at the interface of engineered water supply and sanitation systems and their users, particularly in developing countries. She has conducted field research in more than 20 countries, including most recently Zambia, Bangladesh, and Uganda.

Higgins-Magid Faculty Senior Fellow, Stanford Woods Institute for the Environment
Jenna Davis assistant professor, Department of Civil and Environmental Engineering; center fellow, Woods Institute for the Environment Panelist
Alex Evans head of research, Program on Resource Scarcity, Climate Change and Multilateralism at the Center on International Cooperation, New York University Panelist
Donald Francis co-founder, Global Solutions for Infectious Diseases Panelist
David Lazarus former senior advisor for rural affairs, Domestic Policy Council, the White House, and former senior advisor to the secretary of agriculture Panelist
Jenny Martinez professor of law and Justin M. Roach Faculty Scholar, Stanford Law School Panelist

Encina Commons Room 101,
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Henry J. Kaiser, Jr. Professor
Professor, Health Policy
Senior Fellow at the Freeman Spogli Institute for International Studies
Senior Fellow at the Stanford Institute for Economic Policy Research
Professor, Economics (by courtesy)
grant_miller_vert.jpeg PhD, MPP

As a health and development economist based at the Stanford School of Medicine, Dr. Miller's overarching focus is research and teaching aimed at developing more effective health improvement strategies for developing countries.

His agenda addresses three major interrelated themes: First, what are the major causes of population health improvement around the world and over time? His projects addressing this question are retrospective observational studies that focus both on historical health improvement and the determinants of population health in developing countries today. Second, what are the behavioral underpinnings of the major determinants of population health improvement? Policy relevance and generalizability require knowing not only which factors have contributed most to population health gains, but also why. Third, how can programs and policies use these behavioral insights to improve population health more effectively? The ultimate test of policy relevance is the ability to help formulate new strategies using these insights that are effective.

Faculty Fellow, Stanford Center on Global Poverty and Development
Faculty Affiliate, Stanford Center for Latin American Studies
Faculty Affiliate, Woods Institute for the Environment
Faculty Affiliate, Interdisciplinary Program in Environment & Resources
Faculty Affiliate, Stanford Center on China's Economy and Institutions
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Grant Miller assistant professor of medicine, Center on Health Policy/Center for Primary Care and Outcomes Research core faculty member Panelist
Onesmo K. ole-MoiYoi chair, Kenya Agricultural Research Institute & Consortium; senior advisor, Aga Khan University Panelist
Gary Schoolnik professor of medicine (infectious diseases), and microbiology and immunology, Stanford School of Medicine; senior fellow, Woods Institute for the Environment and FSI Panelist
Ray Yip director, China Program, Global Health Program, the Bill & Melinda Gates Foundation Panelist
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Blaming leaders in America and abroad for not doing enough to combat climate change, former United Nations Secretary-General Kofi Annan said continued failure to tackle the problem will result in worldwide hunger, social unrest and political turmoil.

“Without action at the global level to address climate change, we will see farmers across Africa – and in many other parts of the world including here in America – forced to leave their land,” the 2001 Nobel Peace Prize winner told a crowd of about 1,400 people at Stanford’s Memorial Auditorium on Thursday. “The result will be mass migration, growing food shortages, loss of social cohesion and even political instability.”

Citing numbers from the World Bank, Annan said rapidly rising food prices since 2010 have “pushed an additional 70 million people into extreme poverty.” He called a lack of food security for nearly 1 billion of the world’s population “an unconscionable moral failing” that is also a stumbling block to a strong international economy.

“It affects everything from the health of an unborn child to economic growth,” he said.

Annan’s talk, “Food Security Is a Global Challenge,” was delivered as part of a daylong conference on global underdevelopment sponsored by Stanford’s Freeman Spogli Institute for International Studies. The event drew the world’s leading experts in the field and featured panel discussions that explored the connections between global security and food supplies, health care and governance. Keynote speeches were delivered by Annan and Jeff Raikes, CEO of the Bill & Melinda Gates Foundation. Former Secretary of Defense Robert Gates also planned to deliver a talk to a private audience.

The conference marked the launch of FSI’s Center on Food Security and the Environment.

“With this facility, and the creative thinkers and inquisitive minds for which Stanford is famous, you are well-equipped to undertake research which advances our knowledge and helps to shape our response to the many global challenges we face,” Annan said. “And with the resources at your disposal, you also have the capacity to actively engage to influence policy, implement solutions and thus improve the lives of the most vulnerable people on the planet.”

Annan also lauded government initiatives such as America’s Feed the Future program that focus on alleviating global hunger. He recently met with Secretary of State Hillary Clinton, Secretary of Agriculture Tom Vilsack and Raj Shah, head of the U.S. Agency for International Development, to discuss ways to address food insecurity.

“If we pool our efforts and resources, we can finally break the back of this problem,” he said.

But he challenged wealthier nations to do more than pay lip service to the problem.

“We need to make sure that promises of extra support from richer countries are kept and involve fresh funds rather than the repackaging of existing financial commitments,” he said.

Annan, who is the chair of the Kofi Annan Foundation, the Africa Progress Panel, and the Alliance for a Green Revolution in Africa, said Africa represents both the greatest problem and the greatest promise when it comes to food security.

The continent is home to 60 percent of the world’s uncultivated arable land, but cannot produce enough food to feed its own people, he said. But if Africa can grow just half the world’s average yield of staple crops like wheat, corn and rice, it would end up with a food surplus.

Transforming Africa into one of the world’s biggest crop producers will take more than supporting farmers, he said. It entails sound environmental stewardship.

 “I hope this is an area where the Center on Food Security and the Environment can make a major contribution to finding solutions,” Annan said.

Without those solutions, the future is bleak.

In Sub-Saharan Africa, where global warming brings the threat of persistent drought, current crop production is expected to be cut in half by the end of the century and 8 percent of the region’s fertile land is expected to dry up.

“Those arguing, here and elsewhere, for urgent action and a focus on opportunities to green our economies still find themselves drowned out by those with short-term and vested interests,” Annan said. “This lack of long-term collective vision and leadership is inexcusable. It has global repercussions, and it will be those least responsible for climate change – the poorest and most vulnerable – that will pay the highest price.”

Annan's speech was sponsored by FSI, Stanford in Government and the Stanford University Speakers Bureau.

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Former U.N. Secretary-General Kofi Annan delivers a keynote address on food security and climate change during FSI's global underdevelopment conference on Nov. 10, 2011.
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David Lobell
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Over much of the world, the growing season of 2050 will probably be warmer than the hottest of recent years, with more variable rainfall. If we continue to grow the same crops in the same way, climate change will contribute to yield declines in many places. With potentially less food to feed more people, we have no choice but to adapt agriculture to the new conditions.

To some extent, adaptation can be done by moving crops to more favourable areas and by agronomic tweaks. But that will almost certainly not be enough. We will have to give crops a genetic helping hand, infusing them with new genes to allow them to better cope with new climates, and the new pests and diseases they will bring. Where are these genes going to come from?

Some of them could come from completely unrelated organisms, to be spliced into their new genomic homes using advanced biotechnologies. However, there is significant public resistance to that strategy, and it is still unclear how effective genetically modified crops are at coping with heat and drought. We cannot risk putting all our eggs in that basket.

Another source of genes for crop improvement are traditional heirloom varieties, often called landraces, which are still grown by subsistence farmers in many parts of the world, although they are fast disappearing. Large collections of their seeds have been made over the years, creating genebanks that are scoured by plant breeders searching for crop diversity, and which helped spur the Green Revolution in agriculture from the late 1960s.

But there’s a limit to the diversity found in domesticated species, imposed by domestication itself. Cultivated species usually contain a fraction of the genetic diversity found in their closest wild relatives — a legacy of the ‘domestication bottleneck’. Ancient farmers selected relatively few plants from the progenitors of modern crops, in a limited number of places. Although there has been continuous gene flow between crops and their wild relatives where they coexist, a lot of genetic diversity has been lost as agriculture has developed.

We know that the ‘lost’ genetic diversity includes genes for resistance to high temperatures and drought, and to pests and diseases, as well as taste and nutritional composition, and even yield. If there was ever a time to go back and reclaim this diversity, that time is now. In fact, it is already being used more than many people realize. For instance, there is probably no widely grown rice cultivar that does not have some genes obtained by breeders from its wild relatives. But we could be making much more effective, and systematic, use of the reservoir of diversity our Neolithic ancestors left behind.

To read the full commentary, click here.

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Feeding a growing population in a hotter world will require exploiting a far broader range of crop diversity than now — and that means valuing wild genes.

Over much of the world, the growing season of 2050 will probably be warmer than the hottest of recent years, with more variable rainfall. If we continue to grow the same crops in the same way, climate change will contribute to yield declines in many places. With potentially less food to feed more people, we have no choice but to adapt agriculture to the new conditions.

To some extent, adaptation can be done by moving crops to more favourable areas and by agronomic tweaks. But that will almost certainly not be enough. We will have to give crops a genetic helping hand, infusing them with new genes to allow them to better cope with new climates, and the new pests and diseases they will bring. Where are these genes going to come from?

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Ronald I. McKinnon is an applied economist whose primary interests are international economics and economic development-with strong secondary interests in transitional economies and fiscal federalism. Understanding financial institutions in general, and monetary institutions in particular, is central to his teaching and research. His interests range from the proper regulation of banks and financial markets in poorer countries to the historical evolution of global and regional monetary systems. His books, numerous articles in professional journals, and op-eds in the financial press such as The Economist, The Financial Times, and The Wall Street Journal reflect this range of interests.

 

 

Event Summary

Professor McKinnon first outlines the two major assumptions behind his paper (available on this page). First, that from December 2008 to August 2011, an inflow of "hot money" to emerging economies resulted from low U.S., European, and Japanese interest rates. Since then, the trend has reversed in the wake of the European banking crisis and bank lending has fallen. Second, the dollar remains the widespread central bank reserve currency despite instability in the U.S. system. 

 

McKinnon voices concern about Federal Reserve Chairman Ben Bernanke's zero interest rate policy, calling it an overreaction to the crisis and a "lose-lose" policy as it deters investment in the U.S. while simultaneously spurring destabilizing hot money flows to surrounding emerging markets. These countries are in turn forced to suppress interest rates to mitigate the inflows, and to build up dollar reserves to keep exchange rates in check. The zero interest rate policy also stimulates carry trades in commodities by speculators.

 

The belief that under a zero interest rate regime, inflation will stimulate the economy by bringing real interest rates to negative levels, is misplaced in McKinnon's view. He argues that this simply adds uncertainty and interferes with efficient bank intermediation, as banks hold high excess reserves and tighten lending, causing a procyclical contraction as has been seen in the United States and Europe. He contrasts this approach with China, which stabilized its economy following the “dot-com” bust by expanding rather than contracting bank credit. He criticizes U.S. pressure on China to appreciate or float its currency, asserting that these strategies would fail to reduce China's trade surplus.

 

McKinnon suggests that international reforms should target interest rates instead of exchange rates.  He recommends coordination between central banks of the major industrialized countries, especially the United States, European countries, and Japan - to collectively raise interest rates to approximately 2%. This would improve overall bank intermediation, and would benefit both central and peripheral countries in Europe.

 

A question and answer session following the talked addressed topics including: the likelihood of a coordinated effort between central banks; the potential effects of Kucinich's monetary reform proposal; the potential negative effects on real growth from carry trades, and whether this is a cause for concern; and the effects of bank borrowing trends in Europe on the European monetary system.

CISAC Conference Room

Shorenstein APARC
Stanford University
Encina Hall, Room E301
Stanford, CA 94305-6055

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William D. Eberle Professor of International Economics
R_McKinnon_headshot.jpg PhD

Ronald McKinnon is the William D. Eberle Professor of International Economics at Stanford University. Currently, he is researching trade and financial policy in less-developed countries, the transition from socialism in Asia and Eastern Europe, the foreign exchange market and U.S.-Japan trade disputes, European monetary unification and international monetary reform, and the economics of market-preserving federalism.

Recent books by McKinnon include The Order of Economic Liberalization: Financial Control on the Transition to a Market Economy, 2nd edition (1993); The Rules of the Game: International Money and Exchange Rates (1996); and Dollar and Yen: Resolving Economic Conflict between the United States and Japan (with K. Ohno, 1997). Recent (1997) articles include "Credible Liberalizations and International Capital Flows: The Overborrowing Syndrome" (with H. Pill); "The East Asian Dollar Standard, Life after Death?" (1999); and "The Syndrome of the Ever-Higher Yen: American Mercantile Pressure on Japanese Monetary Policy" (with K. Ohno and K. Shirono, 1999). McKinnon teaches international trade and finance, economic development, money and banking, and financial control in developing and transitional socialist economies.

Ronald I. McKinnon William D. Eberle Professor of International Economics (Emeritus) Speaker Stanford University
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Reducing carbon-dioxide emissions is primarily a political problem, rather than a technological one. This fact was well illustrated by the fate of the 2009 climate bill that barely passed the U.S. House of Representatives and never came up for a vote in the Senate. The House bill was already quite weak, containing many exceptions for agriculture and other industries, subsidies for nuclear power and increasingly long deadlines for action. In the Senate, both Republicans and Democrats from coal-dependent states sealed its fate. Getting past these senators is the key to achieving a major reduction in our emissions.

Technological challenges to reducing emissions exist, too. Most pressing is the need to develop the know-how to capture carbon dioxide on a large scale and store it underground. Such technology could reduce by 90 percent the emissions from coal- fired power stations. Some 500 of these facilities in the U.S. produce 36 percent of our CO2 emissions.

But these plants aren’t evenly spaced around the country. And therein may lie the key to addressing the political and technological challenges at the same time. If the federal government would invest in carbon capture and storage, it could go a long way toward persuading politicians in every state to sign on to emission reductions.

I’ll get to the specifics of the technology shortly. But first, consider how the costs of emission reduction fall hardest on certain parts of the country: A carbon tax levied on all major sources of released CO2, the approach favored by most of the environmental community, would make energy from coal-fired power plants cost more. To make a significant difference, such a tax would have to amount to $60 a ton.

Midwest Carbon Footprint

As a result, gasoline prices would rise 26 percent, and natural gas for household usage by 25 percent, nationwide. Rich and urbanized states could probably tolerate this. The West Coast, with its hydroelectric power, and the Northeast, which relies to a large extent on natural gas, could most easily absorb the associated increase in energy costs.

But the price of energy in the rural, Midwestern states would more than quadruple because of their large carbon footprint. Midwesterners get most of their electricity from coal; they drive relatively long distances to get to work, shopping and entertainment; and rural homes and buildings use more energy for heating and cooling.

One carbon-tax proposal now being considered is a “cap and dividend” plan that would send the tax revenue back to all U.S. citizens equally. But that would also favor the rich states that are less dependent on driving and coal.

It would be more helpful for the coal-dependent states if the federal government would use revenue from a carbon tax to help develop the technology for carbon capture and storage.

And that brings us to the technological challenges: No plant of any size with the capacity for CCS yet exists, but it has been demonstrated to work at small scales. Three different processes for capturing the CO2 are being tested, and scaling them up for 500-megawatt or 1,000-megawatt facilities should be possible.

For two years, the Mountaineer plant in New Haven, West Virginia, has been capturing and storing a tiny amount of its CO2 -- 2 percent of it -- but plans to build a full-scale carbon-capture plant here have been abandoned. Because Congress has dropped any idea of imposing a tax on carbon emissions, the investment doesn’t make sense.

A large plant in Edwardsport, Indiana, was being constructed with the expensive gasification process that makes it easy to add carbon-capture facilities, but it, too, has been shelved.

China may finish its large demonstration carbon-capture plant before the U.S. gets any model up to scale. Others are planned in Europe, and a small one is operating in Germany. This plant has been unable to get permission for underground storage, so it is selling some of its CO2 to soft-drink companies and venting the rest.

Subterranean Storage

Storing captured CO2 is eminently possible, too. For 15 years, the Sleipner facility in Norway has been storing 3 percent of that country’s CO2 underneath the ocean floor, with no appreciable leakage. Algeria has a similar facility, the In Salah plant, operating in the desert.

One storage strategy under consideration in the U.S. is to inject captured CO2 into huge basalt formations off both the east and west coasts. Inside the basalt, the carbon gas would gradually turn into bicarbonate of soda.

There are other ways to dispose of carbon dioxide. It has been used for enhanced oil recovery for many decades without any danger, and has been effectively stored in depleted oil reservoirs. (The gas is dangerous only in high concentration.)

It remains uncertain how much of the captured CO2 might leak during storage. Even if this were as much as 10 percent, however, it would mean that 90 percent of it would stay underground.

As CCS technology develops, it will have to be made more efficient so that it uses less energy. As it is, the capture phase is expected to require that a power plant burn 20 percent to 25 percent more coal than it otherwise would.

The technological challenges may explain why energy companies haven’t lobbied for subsidies to develop CCS. The electric-energy sector isn’t known for innovation and risk- taking. Just look at the U.S.’s outdated power grid.

But the federal government could pay for the subsidies through a tax on carbon. Such a levy would have other advantages, too: It would raise the cost of energy to reflect the damage that burning coal and oil now do to the environment, and spur the development of renewable sources.

If states with large carbon footprints can’t accept such a tax, the CCS subsidies could be paid from the general fund. The cost to build coal-fired power plants with CCS technology is estimated to be about $5 billion to $6 billion -- about the price of a single nuclear power plant. The total price for the U.S.’s 500 large plants would be $250 billion. That’s as much as the planned modernization and expansion of our missile defense system over 10 years.

But it would slash our carbon emissions by at least 20 percent. There is no other politically possible way to cut CO2 as much, and as quickly -- in a decade or two. And devastating climate change is far more likely than a missile attack.

U.S. investment in CCS technology could also induce China and Europe to follow suit. And this would allow the world time for renewable-energy technologies to mature -- to the point where we could do away with coal burning altogether.

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George and Setsuko Ishiyama Provostial Professor
Senior Fellow, Stanford Woods Institute for the Environment
FSE Affiliated Faculty
Screen_shot_2011-10-21_at_12.14.24_PM.png MS, PhD

Dr. Lambin's research is in the area of human-environment interactions in land systems. He develops integrated approaches to study land use change by linking remote sensing and socio-economic data. This includes research to better detect subtle land changes based on time series of Earth observation satellites at multiple scales. He aims at better modeling causes and impacts of deforestation, dryland degradation, agricultural intensification, and conflicts between wildlife and agriculture around natural reserves. He also studies responses by rural communities to environmental changes. He focuses on land use transitions - i.e., the shift from deforestation (or land degradation) to reforestation (or land sparing for nature) that is taking place in some forest countries or drylands. This research identifies the conditions for a sustainable land use by rural communities. He also conducts projects on the impact of land change on vector-borne disease, through integrated analyzes of interactions between people, vectors, animal hosts and land. His research is mostly focused on tropical regions.

Introduction to the Problem: Agricultural productivity is highly dependent on climate variability and is thus susceptible to future changes including temperature extremes and drought. The latter is expected to increase in frequency regionally over this century.

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U.S. ethanol policy may be the single most significant contributor to world food price instability, states a Stanford study on the global costs of American ethanol. The rapid rise of biofuels has tied energy and agricultural markets together, making it difficult to assess one without understanding the other.

The price of corn recently hit an all time high, a departure from a long-term trend that has seen the cost of corn decline with each passing decade. Price spikes have happened before, and some experts viewed the latest jump as part of this familiar cycle. Stanford food policy economists Rosamond L. Naylor and Walter P. Falcon alternatively argue in a new paper released in The American Interest that we have entered a new era where agricultural commodity prices are increasingly driven by U.S. biofuel policies. This food and fuel linkage has, and will continue to have, major implications for global food prices and the world’s poor.

Over the last decade, the U.S. ethanol industry experienced a major increase in production and consumption as a result of beneficiary of tax breaks, tariffs and government mandates. In 2005, MTBE was phased out as a gasoline additive because of environmental and health risks, and ethanol became the preferred MTBE substitute. Production was further supported with a mandate to reach a minimum target of 15 billion gallons by 2015. 

A jump in the price of crude oil gave a further boost to ethanol as a potential replacement for petroleum. As a result, 40% of the U.S. corn crop is now devoted to ethanol production. These policies have been promoted under the banner of protecting the American farm industry, securing energy independence, and decreasing greenhouse gas emissions, and they have succeeded on a number of these fronts.

However, as a major global producer and exporter of corn, the rapid rise of ethanol production in the U.S. during such a short period of time has produced a fundamental change in the structure of demand for corn. Increased demand has led to higher and more volatile food prices, not only for corn but other agricultural commodities. If the United States, along with the rest of the G-20, is serious about stabilizing global food prices, U.S. domestic biofuels policy in its entirety will need to be re-examined.

High prices are a boon to the U.S. farm sector, but can be devastating for poor consumers with minimal income to spend on food. Food riots have broken out in several countries suggesting the new volatility in the price of staple crops has had a severe impact on developing economies. Where once the policies of the U.S. helped keep agricultural prices on an even keel, current support for the production of corn-based ethanol has reversed this stabilizing role. 

Given the bullish financial outlook for the U.S. agricultural sector, this is an ideal time to begin dismantling both ethanol and corn (and other major commodity) subsidies. Corn-based ethanol tax and tariff provisions together cost the federal government around $6 billion annually. Cutting these subsidies would help reduce the Federal budget deficit without harming the rural economy.

The trickier political and economic questions relate to reassessing mandates, and are likely off the table with the 2012 elections approaching. This is unfortunate, for these policies will continue to cause unrest in food markets far beyond American shores.

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