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ECONOMICS AND SECURITY 171 ESC 05 E Original: English NAT O Pa rl i a me n t a ry As s e mb l y POLICY IMPLICATIONS OF THE RISK SOCIETY DRAFT GENERAL REPORT JOS VAN GENNIP (NETHERLANDS) GENERAL RAPPORTEUR* International Secretariat 6 October 2005 * Until this document has been approved by the Economics and Security Committee, it represents only the views of the Rapporteur. Assembly documents are available on its website, http://www.nato-pa.int

171 ESC 05 E i TABLE OF CONTENTS I. ECONOMIC TRENDS AND THE POLITICS OF RISK ASSESSMENT ................................ 1 II. THE THEORY OF THE RISK SOCIETY - THE WORK OF ULRICH BECK ......................... 3 III. THREATS AND OPPORTUNITIES ASSOCIATED WITH GLOBALIZATION....................... 6 IV. NATURAL RESOURCES ..................................................................................................... 7 V. SCIENCE AND TECHNOLOGY........................................................................................... 9 VI. DEMOGRAPHICS.............................................................................................................. 10 VII. ENERGY............................................................................................................................ 10 VIII. DISEASE ........................................................................................................................... 12 IX. AVIAN FLU: A CONTEMPORARY CASE STUDY IN POTENTIAL “MEGA RISK” ............. 13 A. NATURE OF THE VIRUS........................................................................................... 14 B. POTENTIAL CONSEQUENCES OF THE EPIDEMIC ................................................ 14 C. POLICY RESPONSES AND CHALLENGES AHEAD ................................................. 15 X. TENTATIVE CONCLUSIONS......................................................................................16 BIBLIOGRAPHY ........................................................................................................................... 20

171 ESC 05 E 1 I. ECONOMIC TRENDS AND THE POLITICS OF RISK ASSESSMENT 1. This Committee has long argued that the economic dimension of security is too often relegated to the second tier by those engaged in the business of security. This is mistaken for a number of reasons, perhaps most obviously because national wealth is the primary underpinning of national power. But economics injects itself into the realm of security in myriad and often subtle ways. 2. Economic trends can be highly useful tools for those engaged in long-term strategic planning. To take perhaps the most obvious contemporary case, the sheer pace of China's current economic growth will alter the international system as we know it in fundamental ways. The implications are broadly based and will affect Western strategic and foreign policy planning, economic strategy and national macro-and micro-economic policies for decades to come. China's competitive challenge will ultimately alter the way Western societies organize their own domestic institutions and even the way in which they educate their children. Of course China’s economic power will also underwrite its strategic military posture. In short, change in Asia could well have an impact on virtually every level of public policy making in the West. 3. This example only serves to illustrate how dynamic economic phenomena can quickly alter the very foundations and assumptions on which foreign policy is predicated. The case of China is useful as well because it points to the kind of dilemma policy makers and parliamentarians confront in their deliberations. Those responsible for policy-making must not only consider immediate needs, but also whether particular policies are appropriate given longer-term economic trends and risks. 4. In fact, coping with risk represents one of the most complex aspects of national policy- making. Risk itself is an intangible phenomenon. Our understanding of it lies in our capacity to fathom past phenomena and experience, and to project lessons learned into a framework for thinking about the future. Doing so is a highly problematic process and is rendered only slightly less so through the use of statistical analysis and probability theory: tools which help analysts extrapolate relevant data from past experience in order to provide a foundation for dealing with future risk or opportunity. The hope is that a reasonably clear picture of the future emerges from past trends, thereby allowing public policymakers to fathom risk and hedge against it, or in strategic terms, to anticipate potential challenges and begin to cope with them before they become explosive. To continue with our example, one might project recent Chinese economic growth rates into the future, and compare these with projected Western economic growth rates to arrive at a better sense of how global economic power will be distributed in twenty years. One is then better able to breakdown the implications of these changes, for example, by looking at what this means for global energy markets and the so-called great game of international energy rivalries. 5. Of course, such straight line projections can be highly misleading, particularly if they fail to consider other factors in our case, China's internal stability, developments in Taiwan, limits to growth imposed by energy supply constraints, policies pursued to minimise those constraints, technological revolutions or unanticipated natural disasters. The number of variables and intangibles make straight-line calculations virtually impossible. Nevertheless, simplified models have their use in risk analysis as they can suggest how the world might evolve, "other things being equal." 6. Economic trends, like demographic trends, are relatively easy to capture statistically. Indeed, economic phenomena yield a wealth of computable data that can be extraordinarily useful in anticipating new challenges. To take a domestic example, discussions about pension and health care reform in North America and Europe are premised on the confluence of three data sets that in combination paint a rather worrisome portrait of what will happen if pension reforms in

171 ESC 05 E 2 Western societies are not undertaken very soon. Those trend lines relate to rates of economic growth, projected government revenues in light of those growth rates, projected taxation rates, and the demographics of ageing societies. The picture those trend lines draws is so startling clear that there can be little debate about the shortages that will soon befall national pension and health spending in many Western societies. 7. The future risk to national pension funds is relatively easy to discern because the variables that are driving the looming crisis are already in play. Yet even in this case, forging national or international responses to the coming crises is proving inordinately difficult. In the US, the administration has proposed creating a parallel system of private retirement accounts coupled with massive public borrowing (tax increases have been politically ruled out) to underwrite the transition period from a single social security fund to a mixed public-private system. In Europe, the discussions and proposals are tend to be even more timid, although the demographic time bomb there is even more apparent. 8. All this suggests that even with a very clear picture of "risk", democratic societies can be very slow to respond. Deeply imbedded interests in the status quo invariably constitute a formidable barrier to even the most necessary of changes. It would be interesting to look at how public authorities in America determined the strength of the New Orleans levy system, which ultimately proved inadequate to the risks of flooding in that beleaguered city. In the market place, such barriers can sometimes be easier to surmount. For example, the insurance industry is far more sensitive to risk and risk management than the political world. It is interesting to note, for example, how quickly the catastrophic insurance business has broadened its scope from insuring against natural disasters like hurricanes and floods to man-made disasters precipitated by terrorism. At the same time, sophisticated financial innovations like derivative markets are helping further spread risk in order to manage it more efficiently. (Felsted) 9. There are also the somewhat paradoxical cases in which a potential risk is far more amorphous, and yet societies manage to mobilise very quickly and efficiently to ward off that risk. Europe's response to genetically modified food might be an example here. The scientific data of health and environmental risk of Genetically Modified Organisms (GMOs) in some cases seems far less compelling than the evidence that current national pension systems are unsustainable. Yet the capacity of the GMO risk to mobilize society and its political representatives in Europe represents a startling contrast with the failure to mobilize political action in order to deal with the pension crisis. 10. On the face of it, this might seem like a totally irrational phenomenon. A near certainty fails to trigger a compelling response while an uncertain one somehow moves to the centre of the political and international trade agenda. There are several possible explanations for this. It is certainly the case that a society's capacity to respond to risks partly corresponds to the correlation of interests engaged in the issue, yet other more amorphous factors like culture, tradition and the perceptions these nurture also play a part. Why do Europeans perceive GMOs as so risky while Americans do not? Certainly the fact that American business is playing a leading role in the development of the technology provides one element of the explanation. The risk of GMO is not only a risk to European consumers and the environment, it also challenges vested European commercial and agricultural interests. In this sense, trumpeting the risk of GMOs might also be a means of protecting certain powerful interests in the society. Yet, it is also the case that Europe has a centuries old food culture that is not very amenable to rapid change. Anything purporting to offer a revolution in the way food is cultivated or eaten in many European societies will be greeted with a high degree of scepticism, if not outright hostility. In the case of the recent GMO debate, consumers, rather than governments, mobilized most quickly to resist rapid adoption of GMO food, and the response was highly conditioned by culture.

171 ESC 05 E 3 11. It is also worth noting that some developing countries approach the GMO issue with a very different set of interests and needs. At least for some developing countries, the prospect of a high yield, vitamin crop might well outweigh potential risks. Other developing countries, however, might take their cue from the Europeans, largely because they sell in that particular market and do not want to adopt technologies that might jeopardize those markets. There have even been cases of countries in the midst of famine refusing to accept GMO food aid. 12. The notion of societal risk is thus of an inherently political nature. Governments and parliamentarians are constantly asked to engage in risk assessment and to hammer out legislation, regulations and policies designed to hedge risk, eliminate it or in other cases, even ignore it. On the face of it, this could be understood as an inherently rational process in which all available statistical analysis is used to forge appropriate strategies to minimize or eliminate risk. But if things were this simple, one might see the abolition of motorcycles in Europe, or the eradication of gun permits in the United States. As neither seems very likely, one has to admit that an array of other factors condition society's capacity to accept risk or not. 13. Another important factor, of course, is cost. We accept some degree of risk because the cost of eliminating a particular hazard might simply be too high. It might be possible to manufacture a perfectly safe car, to take one example, but the costs of doing so are commercially prohibitive. Societies establish car safety regulations with implicit risk/costs trade-offs. We accept some risk both because risk, and tragedy for that matter, are inevitable in a fallen world, and because the cost of eliminating even preventable risk can be prohibitive. Given those constraints, societies seek to minimize risk as best they can. 14. Therefore, risk is not some objective or scientific concept that can be routinely quantified, socially agreed upon and then eliminated or minimized. Coping with risk is culturally conditioned; it is a process shaped both by prevailing interests in a given society, and by the potential costs of the options. One also often speaks of "risk perception" - an important concept in strategic military affairs, and certainly in Alliance politics. States respond to risk only insofar as there is a certain correlation of interests and cultural dispositions within a given society that helps it to acknowledge the risk and to agree upon a course of action to cope with it. Finally, different societies will set the bar at different heights - a phenomenon that is evident in the GMO controversy as European consumers perceive great risk and want to eliminate it, while American consumers see little risk and, if anything, detect a potentially rewarding commercial opportunity. This paradox inherently complicates a multilateralization of risk management. II. THE THEORY OF THE RISK SOCIETY - THE WOR K OF ULRICH BECK 15. Globalisation, mass production and technological advance are fundamentally changing the way in which Western societies fathom and cope with risk. They are, according to some academics, also changing the very nature of risk. Some sociologists increasingly understand risk as an almost automatic result of goods production and technological advance. Incalculable risks are emerging from nuclear, chemical, defense, and genetic sectors, and from the generalized use of carbon-based fuels. Indeed, industrialization as a whole is putting the world's climate at risk of catastrophic change of incalculable cost to human society. As these risks mount, the institutions designed to manage risk and protect citizens seem increasingly unable to do so. Threats have begun to outweigh socially agreed safety norms, and there seem to be no rational means at hand to achieve a rebalancing. (Harries-Jones) This phenomenon has been the subject of a new academic line of inquiry in economics, sociology and political science. Ulrich Beck, a German sociologist, has played a leading role in developing this new approach. 16. Ulrich Beck argues that a fundamental change is underway that will dramatically alter the way risk is identified and managed or rather, not managed. In the age of industrialization, nation

171 ESC 05 E 4 states had been the primary players in coping with risk. Progress, certainty and security were understood as mutually reinforcing, and the nation state along with the market played central roles in ensuring all three. Managing risk generated public trust in the state, as well as within markets, which were structured not only to generate prosperity but also to cope with risk - an obligation that the insurance secttor long helped shoulder. 17. According to Ulrich Beck and his colleagues, a new form of modernity is now emerging. It is characterized by increasing speed, ever more intense transnational interdependence, and the emergence of economic, cultural, political and societal “globalisation” in which the dividing lines among states and even among Western and non-Western societies are ever less valid. As the old bipolar order has retreated, new challenges arising out of technological change and global integration are compelling governments and societies to deal not so much with enemies as with risks. The rapid pace of technological advance, coupled with an ever more dense web of global linkages is driving risk in new and largely unforeseen directions. Many of these risks elude national control because they are truly global in character, and because they can be the totally unforeseen consequence of rapid innovation and technological change. 18. Indeed, Ulrich Beck characterizes today's global market as a form of “organized irresponsibility”. For all intents and purposes global governance does not exist. Managing trans-national “mega risk” without genuinely trans-national governance institutions has become all but impossible. This deficiency is so compelling, however, as to raise the possibility that politics, as we know it, may ultimately have to evolve. Risk politics was first rooted in very local concerns, but quickly assumed an international character. This is increasingly understood as perhaps the only way to manage trans-border risk, particularly as globalisation and technological advance are weakening the autonomy and power of the modern state. This raises new challenges to global governance, or, as Ulrich Beck calls it, “cosmopolitan democracy”. 19. Ulrich Beck discerns a shifting balance between what were once considered global issues and those typically understood as local challenges. Increasingly, the latter need to be posed, discussed and resolved through transnational frameworks. Politics and states have not caught up with this imperative, although many non-governmental actors have begun to think and operate on these terms. Beck suggests that over time, we could see a reinvention of politics. For example, the creation of cosmopolitan parties, perhaps akin to the groupings that today operate in the European Parliament. These might be more adept at representing transnational interests trans-nationally as well as nationally and locally. Of course, pan-European party groupings exist largely because there is an institution in place that, by its very nature, demands such structures. Europe, of course, is bound by common institutions, and a shared sense of mission; but this cannot be said of the broader global community today, although shared risks could ultimately precipitate the kind of changes that would make hammering out genuinely trans-national responses to global challenges more likely. 20. Indeed, Ulrich Beck suggests that risk management will be the central catalyst of transnational politics. He speaks of the emergence of "risk communities" - groups of people united by a shared risk even if divided by borders. In a highly integrated and technologically advanced international order, these risk communities are already appearing and are increasingly active. Such groups are linked by the fact that they are compelled to accept the risks generated through the actions of others. Beck clearly discerns a new fault line in modern political life. In the emerging global order, there are small groups that produce and profit from risk, while vast strata of society are effectively exposed to risk without obtaining any discernable benefits. The consequences and dangers of developed industrial production are now global, and from this perspective, the "world risk society" reflects forced global socialization, arising out of the mounting dangers that civilization and the global economy are generating.

171 ESC 05 E 5 21. Ulrich Beck believes that transnational institutions, capable of responding to the global scope of these challenges, will ultimately be needed to cope with global risks. In dealing with new uncertainties, however, it is also important to distinguish between risks that in principle can be brought under control, and those that are beyond the capacity of human institutions to manage. But even drawing this line is a problematic exercise. Ecological crisis, for example, can arise out of shortcomings in norms and institutions of industrial society, or, more likely it could be intrinsic to the very nature of that society. The former suggests that solutions can be found by tinkering with the rules of the game, while the latter raises profound systemic questions. 22. Ulrich Beck distinguishes among several types of global environmental threats: 1. Wealth-driven ecological destruction, undertaken to advance the consumer-society (hole in the ozone layer, greenhouse effect etc.); 2. Poverty - driven environmental destruction (felling of tropical rainforests, toxic waste, the use of environmentally destructive obsolete technologies); 3. The potential use of weapons of mass destruction - nuclear, biological or chemical. 23. He argues that it is uniquely difficult to fathom, quantify and manage the interaction among ecological destruction, war, and the consequences of incomplete modernization. Tried and true safety calculations now seem inadequate in the face of the catastrophic forms of risk global society presently confronts. Containing damage in the event of dramatic global warming, for example, may well be beyond the capacity of humankind and its institutions. 24. Ulrich Beck suggests that there are powerful interests arrayed against the construction of new trans-border coalitions to deal with these challenges. Great industrial concerns generate colossal levels of environmental risk, although the costs to society are not reflected in prices. Contemporary legal systems are inadequate to manage real liabilities and the public debate often minimizes the extent of real risk, particularly since the interrelationships among various environmental phenomena and human activities are not well understood. Yet, when such vital matters are neglected in formal politics, extra-parliamentary forces and citizens groups are left to take up the challenge. Such groups today appear to have greater flexibility to operate across borders, although their political leverage is limited. 25. Ulrich Beck also concerns himself with how society calculates the trade-offs between industrial production or military activity and the risk of setting off catastrophic chains of events that evade human control. Mad cow disease might be understood as a representative case where industrial agricultural processes helped trigger a disease that proved very difficult to control once it was unleashed. Control has been made all the more difficult because of virtually unhindered international trade patterns. 26. This raises another question regarding the kinds of instruments that society might use to manage risk. Can society devise the financial means to hedge against mega-risk or to develop policies to mitigate the risk? Or are certain risks simply too great to insure against? Alternatively, should societies begin to conceive of social compacts designed to discourage the development of industrially produced hazards before they can even pose catastrophic risk? 27. Ulrich Beck argues that two contrary lines of historical development began to converge in the late 20^th century; a level of security founded on the perfection of techno-bureaucratic norms and controls, and the rise of historically new "mega hazards", which slipped through existing legal, technological, intellectual and political filters. Since the beginning of the 20^th century, the social institutions of industrial society have had to account for the historically unprecedented possibility that human kind could engineer the destruction of all life on this planet. We now live in an age of nuclear, chemical and genetic technology, all of which pose more complex barriers to insuring against the worst imaginable cases of catastrophic events. Ultimately there is no institution that

171 ESC 05 E 6 would be prepared for the worst imaginable accident. The risk society, Ulrich Beck writes, has thus become the uninsured society. 28. Rising hazard technocracy, Ulrich Beck notes, undermines risk calculation. Risk definitions are inadequate, and there are no standard rules attributing causes and effects in conditions of high complexity, integration and contingency. Modern societies have found it easier simply to ignore risks they cannot fathom than seek to understand them, particularly when these are consequences of industrial action and production. 29. According to Ulrich Beck, there are also important time lags in understanding the nature of risk. The hazards to which society is currently exposed may have been produced in another era. Equally, the risks generated by atomic, genetic and chemical technologies are being handled with concepts derived from early industrial society of the 19^th and early 20^th centuries. 30. Another interesting dimension of mega ”risk” is that it does have a "democratic" character insofar as all are ultimately rendered vulnerable. That said, the poorest in the world are still more vulnerable and would be the least able to adapt, for example, to sudden changes in the environment. This was perfectly and tragically illustrated when the Hurricane Katrina struck New Orleans; it was the poorest strata of that city’s society that lacked the means to escape the flooding and thus constituted an outsized share of the casualties. This aspect of asymmetrical risk burden sharing could lead to new global divisions between risk winners and risk losers. Risk conflict or resource war stemming from catastrophic events could even emerge as the ultimate form of political conflict. 31. Ulrich Beck is interested in how these “mega risks” are altering politics. He foresees the rise of a new kind of "life" politics, in which civil society seeks to reassert itself over the risks the global order has generated. In the words of Ulrich Beck, the emergence of large scale hazards and "manufactured uncertainties set off a dynamic of cultural and political change that undermines state bureaucracies, challenges the dominance of science and redraws the boundaries and battle lines of contemporary politics." Ulrich Beck and other risk theorists have suggested that global risks exacerbated by a liberal order cannot be harnessed by the regulatory state. He appeals for a new kind of "bottom up" politics capable of participating in decisions once left to the “Western technocracy”. He concludes that civil society driven localism, as well as new forms of multilateralism, may offer the only means for individuals to reassert some control over the risks they are increasingly forced to accept. (Harries-Jones) III. THREATS AND OPPORTUNITIES ASSOCIATED WITH GLOBALIZATION 32. Ulrich Beck is interested in developing new fields of social and political inquiry, as well as offering a strong critique of the liberal global order. He has developed a useful theoretical foundation to study how risk is altering political dynamics in the West and particularly in Europe. National governments, however, will very likely remain the primary protagonists for coping with risk. Indeed the nation state continues to play the predominant role in ordering society even though NGOs and trans-national organisations have influence, and will continue to change the context in which states operate. It may also be the case that science should be understood as offering a potential way out, rather than simply as an engine of risk. Science itself is a neutral phenomena; society provides the context in which it is used. This is why the problem of governance lies at the core of managing risk, and as Ulrich Beck points out “mega risks” cannot be adequately managed given current national frameworks for assessing and coping with risk. Genuinely meeting the challenge of governance will alter the way states interact with each other and could indeed provide the foundation for renewed multilateralism. States will also need to forge new partnerships with the private sector, non-governmental organisations and citizens.

171 ESC 05 E 7 33. In any case, globalisation and technological revolution pose some of the most compelling challenges to the way societies anticipate and manage risk. The problem is that as the world grows more economically integrated, and as technology becomes the very cement that binds distant countries and cultures together, the points of vulnerability multiply. For this reason, a number of governments as well as independent commissions, international organisations, and academics are now trying to anticipate some of these challenges. 34. Strategic forecasters increasingly speak of “drivers” - that is those areas of risk that will most likely act as important catalysts for long-term strategic change. These include: demographics, natural resources and the environment, food and agriculture, science and technology, the evolution of the global economy and globalisation, disease and health, and the way national and international governance copes with these and other risk areas. It is interesting to note that many of these areas also have implications for the way we understand and cope with terrorism - one of the primary strategic threats the West currently faces, and certainly the one that has attracted the most attention. But as many learned from the fall out of Hurricane Katrina, focusing selectively on risk is not necessarily a rational risk aversion strategy. IV. NATURAL RESOURCES 35. This April, the first ever-global inventory of natural resources was published. The Millennium Ecosystem Assessment (MA), underwritten by the UN, the World Bank and the World Resources Institute, cost $24 million to complete and engaged 1300 scientists working in 95 countries. According to the assessment, human activity has changed global ecosystems more rapidly and profoundly over the past 50 years than at any other time in human history. 60% of the planet’s resources that support human life, such as water, are being degraded or used in a fashion that cannot be sustained, and by 2032, more than half of the world could be afflicted by water shortages (OSCE Report, 28 May 2002). This degradation is also increasing the possibility of dramatic and sudden environment change with catastrophic effects, such as the disappearance of the world’s fisheries -something perhaps foreshadowed by the collapse of Atlantic cod stocks in the early 1990s. 36. The most apparent changes to natural ecosystems stem from the conversion of natural habitats to farmland and the destruction of forests. In 25 countries most forests have been completely eradicated, and in 29 other countries the area of forested land has fallen by 90%. The MA report also suggests that water and fisheries are currently so degraded that they cannot adequately meet current demands, a situation that will worsen without profound policy change. Irrigation has doubled since in 1960, and ground water resources are also seriously strained as a result. Fertilizer use has exploded and is leading to oxygen depletion in lakes and portions of the ocean floor. More worrisome still, is the fact that these processes are sometimes interrelated in ways that are not fully understood. 37. According to the CIA, by 2015 nearly half of the world's population of 3 billion will live in water stressed countries, most of which are in Africa, the Middle East, South Asia and northern China. In developing countries, 80% of water is used in agricultural production. This is not sustainable. 1,000 tons of water are needed to produce a ton of grain. Water tables are falling sometimes precipitously. In northern China, to take one example, water tables have been falling at a rate of five feet per year. Indian water tables are falling between 3-10 feet per year. Such depletion rates simply cannot be sustained, and water will have to be used far more efficiently in many areas of the world. Technological fixes may be part of the solution. Some genetically modified plants, for example, require less water than normal varieties to bring to harvest. But more broadly sustainable development strategies are essential if sustained water crises are to be avoided.

171 ESC 05 E 8 38. Water shortages also pose potential challenges to security. Nearly one half of the world's land surface consists of river basins shared by more than one country, and more than 30 nations receive more than one third of their water from outside their own border. Water rights issues have become an important source of tensions in the Middle East, Central Asia, North America and elsewhere, and one cannot rule out the possibility that in future, tensions over water rights could escalate to military conflict in certain regions. So far, however, this has not transpired; at this juncture, water-based resource wars are more a potentiality than a reality. (Gleditsch and Urdal) 39. The loss of wetlands because of development and construction poses another set of problems. Wetlands are a vital component of biodiversity, a critical natural filter, and a storm barrier. Their potential value was made apparent in the wake of Hurricane Katrina, which destroyed much of New Orleans this summer. Had coastal wetlands in Louisiana not been systematically destroyed, the hurricane's impact would likely have been far less devastating. Simply put, wetlands soak up storm surges: every 2.7 miles of wetland absorb one foot of surge. Louisiana’s shoreline has moved 30 miles inland since the 1930s, a change that exposed the city to a devastating rise in water levels (Greentree). As many as 160,000 homes in New Orleans were rendered uninhabitable by flooding, and the costs associated with the shutdown of a major American city will be nationally significant (Martin Wolf “How rising oil prices add to the world economy’s fragility, Financial Times, September 7, 2005). 40. Meanwhile biodiversity poses another serious long-term challenge. Extinction rates are now a thousand times higher than the norm in evolutionary history, and between 10-30% of the world’s land vertebrates are now under threat. According to recent models, extinction rates are predicted to accelerate in part because of habitat destruction. Although it is enormously difficult to model the consequences of this kind of change, there are doubtless great risks to the ecological balance of the planet when so many of the flora and fauna that constitute that balance are on the verge of extinction. 41. The MA could do for the crisis of global resources what the Intergovernmental Panel on Climate Change did for global warming; place the risks upon which it focuses at the centre of the international agenda. The difference, though, is that governments did not demand the MA, as was the study on global warming; rather it is an initiative of the scientific community itself. The study does, however, provide important background information for four international environmental treaties including the UN Convention on Biological Diversity and the Ramsar Convention on Wetlands. (Graham-Rowe and Homes) 42. Rapid industrialization in developing countries, the proliferation of automobiles, rising weather-related insurance settlements, and ever more compelling scientific evidence suggest that global warming is not only a reality but one that could well exact a terrible toll on human habitats. Although it is not clear whether the most recent spate of hurricanes to strike the United States can be directly attributed to global warming, or if they are simply part of the long term cyclical pattern of Atlantic storms, most scientists suggest that the permanent warming of the world’s oceans would likely trigger significantly more severe weather patterns. One need only observe the devastation wrought in New Orleans to begin to imagine the potential consequences. Before the industrial revolution, carbon concentrations in the atmosphere stood at 275 parts per million. The current ratio is 380. Scientific models suggest that environmental catastrophe will likely be triggered when the figure rises above 550. This is the red line that should not be crossed according to many experts (McKibben). 43. One Pentagon paper on the security implications of global warming recently acknowledged that, "here is substantial evidence to indicate that significant global warming will occur during the twenty first century." For speculative purposes, the paper painted a worse case scenario of resource wars arising out of global warming/cooling catastrophes in key food-producing regions. Thus some defense planners are already taking the risk of global warming seriously, although

171 ESC 05 E 9 others do not (Schwartz and Randall). The Pentagon Paper concludes that alternative fuels, greenhouse gas emission controls, and conservation efforts might help ameliorate the situation although any solution poses its own set of challenges. 44. According to most scientists, the ratification and even the full implementation of the Kyoto Protocol in itself will not be sufficient to reverse the trend described above. The international community will be increasingly pressed to take more dramatic measures as conditions worsen, and this will involve weaning economies from their utter dependence on carbon-based fuels, or at least lowering their use through conservation and new technologies. Many scientists assert that global warming has already begun to burden the global economy and is intensifying other environmental challenges like water shortages and weather related problems (McKibben). 45. These problems are already serving as a catalyst to research on non-carbon energy sources including solar, wind, and nuclear energies. Investment in these technologies is likely to increase as petroleum prices rise. Both improved technology coupled with the higher energy prices could facilitate their mass introduction. Technological advance in these fields should be one of the pillars of any long-term strategy for coping with environmental risks and balancing these with rising energy requirements. But all these technologies have their limitations, and none are poised to substitute fully for carbon fuels. V. SCIENCE AND TECHNOLOGY 46. The world is still in the midst of a technological revolution, which is introducing rapid change in computer and telecommunications, material sciences as well as, genetic and biological engineering. The implications of these scientific revolutions cut across numerous sectors of human activity, including military affairs. The effects of these advances are difficult to foresee. Technology can both help resolve old problems while creating new ones. Global integration and the proliferation of information technology are ensuring that technology diffuses more widely and quickly. The time lag between technological innovation and commercial adaptation also appears to be narrowing. Meanwhile these advances are helping forge new links across national borders and between rural and urban centres. These changes, in turn, are eroding the capacity of governments to control information, and could well bolster democracy movements in authoritarian countries, a pattern that was evident in Eastern Europe at the end of the Cold War. On the other hand, terrorist groups are also positioned to avail themselves of these empowering technologies. The risk of cyber crime and terrorism are already generally understood, but they too point to the risks associated with an ever more integrated global economy. (Reese) Given the mounting level of networked communication and information systems, as well as the destructive powers technology can confer upon a relatively small number of actors, the capacity of a few determined terrorists to inflict catastrophic damage with global implications has increased almost incalculably. This calls for constant vigilance, as well as efforts to build in back up redundancies to vulnerable networks. 47. Genetic sciences will also continue to progress, and startling advances are likely in medicine as well as in agriculture. But even here, risks abound. Recent tests on herbicide-tolerant GM rapeseed and sugar beet, for example, found that these new hybrids posed a greater threat to biodiversity than conventional crops, while GM maize actually encourages biodiversity; results that were only known after very extensive testing (Financial Times, October 17, 2003). More malicious forms of genetic engineering are also within the realm of possibility. In the hands of millenarian terrorist movements, individual fanatics or even unwitting experimenters, these technologies could threaten vital ecosystems and public health. Not surprisingly, today there are serious strategic concerns about the capacity of human-designed pathogens to inflict serious damage upon public health whilst evading easy remedies. Finally, technological advance will continue to pose moral and ethical dilemmas, as seen in the recent stem cell debates in the United States.

171 ESC 05 E 10 VI. DEMOGRAPHICS 48. Since 1961 the world’s population has doubled. Although, food production has increased at an even greater rate in that same period, environmental stress has also increased dramatically. Demographic explosion points to real problems of environmental sustainability and the capacity to produce sufficient wealth to lift an increasing share of the world’s population out of poverty, one of the fundamental objectives of the Millennium Development Goals. Indeed, one ecologist who participated in the MA suggested that reducing poverty when population’s are so large will inevitably place further stress on the environment and thus compromise the capacity for long-term poverty reduction. This is a particular problem in arid regions where water shortages impose natural limits on poverty eradicating economic growth. But even in general terms, building wealth will almost invariably result in new demands on ecosystems. This could lead to environmental calamities if not properly managed. 49. The World's population in 2015 will be 7.2 billion, up from 6.1 billion in 2000. Ongoing advances in healthcare mean that people are living longer. Developing countries will see the largest increase in population, although some countries may see declines due to pandemics like Aids and malaria or even because of war. These broad population trends will generate serious stress in countries where political and economic systems are less robust. Adding to the complexity of the challenge is the fact that the developing world is also undergoing a massive migration from the countryside to urban settings. Urbanization, in turn, is generating unprecedented pressures on infrastructure and environmental resources that could well foment political and social instability. China, for example, has recently experienced a set of environmental protest riots because of unchecked pollution related to the rise of new manufacturing plants. Large-scale infrastructure investments will be needed to minimise urban chaos in much of the developing world if they are to have any hope of establishing reasonable urban standards that protect public health. Finding jobs for young people is also vital to achieving security; high unemployment is extremely destabilizing and can have a range of knock-on effects with international repercussions. 50. Most developing countries will also undergo a significant increase in their working population. This theoretically boosts the potential for economic growth, but it can only be harnessed if a context for growth and opportunity is created both nationally and internationally. 51. As suggested above, demographic trends in developed countries are moving in the opposite direction. Waning populations are generating serious strains on pension and health care systems. New social tensions and the rise of more stark generational politics might undermine existing social contracts that have been so critical to internal stability in Western countries. The pressures on defense and aid budgets will clearly mount in Europe as the budgetary effects of an ageing society become evident. New deals will clearly have to be struck, but the transition will likely be politically very difficult (CIA Report). 52. Divergent demographic trends in the North and South finally suggest that migration from developing to developed countries is likely to continue, given wealth disparities and the inevitable need for new workers in ageing developed countries. Although the economics here might make sense, the politics of integration are more daunting and highly sensitive. Here again, new political and social compacts will be needed to mediate the social, political and military tensions that will inevitably arise. VII. ENERGY 53. Anticipating trends in energy markets is a highly contingent process; critical factors like future demand conditions, new discoveries, energy policy changes, political stability in supply countries, refining capacity, weather patterns, the evolution of technology and energy efficiency

171 ESC 05 E 11 are all difficult to anticipate. That said, it is becoming increasingly clear that, over the next twenty years, demand for oil and gas will be far greater than estimates made several years ago predicted. The explosive growth of China, India and other Asian countries and their energy intensive development is effectively revolutionizing global energy markets. Forecasters in recent years have had to significantly adjust their assumptions to accommodate shifting long-term market conditions. The most recent forecasts of the US Department of Energy (DoE) suggest that global oil demand will rise from 80 million barrels per day in 2003 to 120 million barrels per day in 2025. OPEC production will rise by 80% in that period, while non-OPEC production will increase from 49 to 65 million barrels a day in that same period. The DoE anticipates in its reference model that oil prices in 2025 will approach $30/ barrel in 2003 prices or $52/barrel in nominal prices. Their high price scenario puts the price at $48/barrel, a price that could trigger significant activity in alternative energy production (DoE). 54. Of course, at the moment, $48/barrel seems like a very low price indeed. Other analysts are forecasting far higher price rises both because of dynamic demand and emerging concerns about long-term supply. There have been several recent cases of oil companies over-estimating reserves, either to manipulate stock prices, or because of miscalculation. Finally, as the Hurricane season in the United States has demonstrated, refining and drilling infrastructure is vulnerable to natural catastrophe, while in other regions political and security insecurities can lead to shutdowns. Given the fact that much of the energy industry is running near full capacity, there are currently no means of cushioning the impact of major supply interruptions, which consequently manifest themselves in skyrocketing prices. 55. Indeed, recent price increases point to highly dynamic demand conditions in parts of the world, which international watchdogs may have been underestimating (Binks), as well as real supply problems. Refining capacity limits exacerbated by hurricanes, as well as political uncertainties, have contributed to recent supply problems. Chinese oil demand increased by 11% in 2003 and 15.6% in 2004, increases that have dramatically tightened the market (Oil Market Report, International Energy Agency). Not coincidentally, car demand in China rose by 50% last year, and automobile use will inexorably expand in that rapidly growing economy. Exploding Chinese demand coincides with still rising demand in the US, the world’s largest oil consumer, and mounting demand in other Asian countries, including India. Capacity has simply not kept pace (Binks). The International Energy Agency has indicated that short-term risks to energy security will increase over the coming decade as ever-larger shares of oil and gas comes from politically unstable regions. OPEC will likely enjoy a revival of some of its oligopolistic powers. (Keven Morrison) 56. Developing countries will account for most of the increase in future demand, and these countries will account for nearly half of total demand by 2030. Carbon emissions will probably be 60% higher in 2030 than they are today, with 2/3 of the increase coming from the developing world. Western economic trends point to a diminishing ratio of energy use to GDP, in part, because services rather than energy intensive manufacturing have become the engines of growth, and because technological innovation has bolstered energy efficiency, although the trend has been in the opposite direction in the US automobile sector, because of very low energy taxes and low fuel efficiency requirements for the kinds of trucks [sports utility vehicle (SUVs) and Minivans] that over the last decade have become widely used as family cars. (Bamberger) 57. With gasoline prices inexorably rising, Detroit now finds itself in a genuine bind because the business models of US automobile manufacturers have for so long focused on the production of larger rather than smaller, more energy-efficient automobiles. Consumers have not made fuel efficiency a priority although that is now changing. Energy prices are now driving many consumers to demand more fuel-efficient models that, more often than not, are imported from abroad. This state of affairs will only magnify the blow from large energy price increases to the US economy. Europe has long taxed gasoline at a much higher rate, and fuel-efficient cars are far

171 ESC 05 E 12 more common. This gives Europe a certain advantage as prices rise both because governments are able to extract a share of the profits from oil exporting countries through taxation, and because those governments also have the option of reducing energy taxes in the event of an oil price shock in order to cushion the blow: a policy that a number of European governments have implemented in recent months. 58. The United States has seen its domestic oil output fall by 40% in the past 30 years, while domestic oil consumption has increased by 40%. Accordingly, the share of imports in US consumption rose from 35% to 56% in that same period. Within the next twenty years, the US will be importing more than a quarter of its natural gas, compared with 2% today. Persian Gulf oil producers now sit atop most of the world's spare production capacity, which makes the global economy particularly dependent on that highly unstable region. All of this suggests that even the world's most powerful country is burdened with a grave energy vulnerability, and currently lacks a demand side strategy to cope with it, this at a time when the supply side is increasingly out of its control. (Buchan and Hoyos) 59. There is a range of long-term energy supply risks to which governments need to respond. Perhaps the most important of these is instability in the Middle East, where authoritarian governments are consistently failing to meet the expectations of restive and disenfranchised publics. Mounting demand from developing countries like China also points to the potential for new strategic rivalries over access to energy. A recent CIA report suggests that energy suppliers and demanders will link up in new ways; eventually, the Gulf, Russia, and Central Asia will primarily supply Asian consumers, while Atlantic producers will serve the European and North American markets (CIA). But how this division of labour might be achieved is not at all clear, and one can easily imagine an ever more fierce competition for resources, particularly if demand growth begins to outstrip supply increases. Finally, mounting dependence on carbon energy clearly conditions Western approaches to highly authoritarian regimes that happen to sit on large petroleum or gas reserves. Western countries are perhaps less likely to push for positive political change when they are dependent on these regimes and their elites for energy. But failure to deal with highly repressive regimes leads to a broad range of other threats including long-term instability. VIII. DISEASE 60. Population growth and environmental stress are also affecting the speed at which pathogens develop and spread. Today, half the urban population of Africa, Asia, Latin America and the Caribbean suffer from diseases associated with inadequate water and sanitation. Deforestation is leading to increases in malaria because water run-off is increasing swampland areas where mosquitoes flourish. Almost 5 million people were infected with HIV in 2004 alone, while 3.1 million died of AIDS that year. Between 39 and 44 million people are now infected. The pandemic is spreading in different ways around the world, thus making prevention all the more difficult. Africa today has more than 60% of the world’s HIV infected people, while India and China now appear to be on the edge of an explosive expansion in the number of cases (Fek et. Al). Globalisation, and ever more efficient and rapid transportation links, in particular, has complicated the task of containing epidemics. SARS became a global problem when international travellers helped rapidly spread the disease, thereby gravely complicating efforts to contain it. Health policy makers are now closely monitoring the outbreak of avian flu with this in mind. 61. Dealing with these challenges through technological means represents something of a two edged sword. On the one hand, breakthroughs in medical research are generating new treatments for serious diseases, on the other hand, viral resistance to some of these treatments suggests that nature often finds ways to circumnavigate human innovation. But technology also creates new strategic dilemmas. Medical science and technologies, for example, can empower terrorist groups in unanticipated ways. The North-South divide in access to health care will also likely be

171 ESC 05 E 13 exacerbated over time. Along these lines, infectious diseases will ultimately pose a greater problem for developing than developed countries, although, again, containing the spread of disease is always a difficult challenge and in some cases, can even overwhelm the public health machinery of highly developed societies. Still expensive preventative public health measures, and treatments will remain a luxury of the richer countries. Tuberculosis, malaria, hepatitis, and AIDS will continue to ravage parts of the developing world and the fight against these diseases will consume important shares of GDP in the poorest regions. Some countries will undergo important reduction in life spans as a result. IX. AVIAN FLU: A CONTEMPORARY CASE STUDY IN POTENTIAL “MEGA RIS K” 62. Avian flu is an example of a nascent global risk that is already posing policy makers with a series of conundrums exacerbated by the global movement of goods and people and sanitary conditions in the developing world. The flu virus, known as H5N1, was first detected in Hong Kong in 1997 and since then has been responsible for the death of millions of chicken, ducks and other birds in Southeast Asia. More worrisome to public health experts is the fact that the virus has been transmitted from birds to humans and mortality rates have been extremely high in these cases. As of mid 2005, 59 people had died from this particular flu strain, most of them after direct contact with infected birds. This strain of Avian Flu has been prevalent in Asia, but in July 2005, Russian authorities reported the first cases among domesticated birds. They are concerned that when birds migrate from Siberia to the Caspian and Black Sea regions, and then on to Africa and the Mediterranean, the disease could rapidly spread to important population centres. (Wall Street Journal, August 18, 2005) 63. Although there is no evidence that H5N1 has been transmitted from people to people, scientists are extremely concerned that if the virus mutates, this wall against a genuine pandemic would collapse. Worst-case scenarios foresee the infection of 40 percent of the world’s population and the death of millions (Garrett). Of course, if the virus does not mutate, transmission to humans can be limited by reducing contact with birds. But there is a sense among many scientists that a mutation will occur at some point. (Osterholm) 64. Avian flu thus displays the core features of potential global “mega risk”; yet the outcome remains highly uncertain and hinges above all on the genetic paths that the flu itself follows, as well as on public policy decisions and the capacity of the public health community to develop and distribute a vaccine. Any policy response, however, will have to be international as national or local responses alone will be inadequate to the challenge. Scientists are currently comparing avian flu to the Spanish flu pandemic of 1918, both in terms of its symptoms and potential mortality rates. That disease killed an estimated 675 000 Americans, or 6% of the population. The military was particularly hard hit as troop movements to Europe facilitated virus transmission. There is no official record of the global death toll from the flu, although estimates range between 40 and 50 million (Garrett). In the face of the pandemic, scientists and governments appeared to be helpless: all known hygienic measures failed, and there were no vaccines against the disease. 65. The Swine Flu scare of 1976 offers a counter example of an expected pandemic that never materialized. In 1976, American health officials warned of a coming swine flu epidemic. President Ford ordered large sums to be directed at vaccine production and offered liability protection to pharmaceutical companies to encourage them to produce a vaccine, yet, the flu never materialized. The government spent an estimated $90 million to prevent a disease that never became a threat. This undermined the credibility of the US health authorities and even the standing of President Ford. The implications of this are worrisome because it demonstrates the political downside of overestimating a threat. It also suggests how deep the policy conundrum can be for officials.

171 ESC 05 E 14 A. NATURE OF THE VIRUS 66. Influenza generally originates in aquatic birds and is often transmitted from migratory birds to domesticated birds and then to humans. Asian countries are especially susceptible to influenza because of poor phyto-sanitary conditions on farms. As suggested above, a major problem is that the genetic code of influenza viruses can mutate easily, thus immunities and vaccines developed from past epidemics are useless in the face of new epidemics. Accordingly there is no known human immunity to the emerging avian flu virus (H5N1). Moreover, since its emergence in 1997, the virus has mutated to a more resilient form called “z+”, which is capable of killing rodents, mammals and humans. Over a period of three weeks in January 2004, the virus killed 11 million chickens in Vietnam and Thailand. The death rate among chickens is 100%. 67. By mid 2005, there were 109 reported cases of human H5N1 infection, the majority of which originated from some form of contact with chickens, however, there are a number of cases in which infected people had no exposure to birds. Another mysterious pattern has been that there have been no deaths among chicken farm workers. In sum, the routes of the virus transmission remain largely unknown, making policy formulation all the more difficult. 68. The nature of the avian flu among humans is very similar to that of the Spanish flu: apart from classic flu symptoms like coughing, headache, fever etc., infected persons also suffer pneumonia, encephalitis, meningitis and internal bleeding. Its most dangerous feature is acute respiratory distress syndrome (ARDS), which severely damages lungs. ARDS caused most of the deaths during Spanish flu. The death rate from the avian flu among humans has ranged between 37% in 1997, when the flu emerged, to 68% in 2003, when the new resilient type “z+” developed. In 2004, the death rate fell back to 36%. (Garrett) Scientists have not yet explained these fluctuations, but, according to one version, the fall of death rate may mean that the virus has adapted to human hosts, so that it is now less lethal but easier to transmit. In the past, such a pattern has been a prelude to flu epidemics. B. POTENTIAL CONSEQUENCES OF THE EPIDEMIC 69. There are increasing concerns that that the impact of the H5N1 virus will be similar to that of the Spanish flu. If this were to transpire it would result in the death of roughly 1.7 million people in the US and 180-360 million worldwide, most of them between 18 and 40 years old. This is 5 times the cumulative number of deaths from AIDS (Garrett). 70. Apart from vaccine shortage, were this flu to break out into the human population, there would very likely be a shortage of health care services and equipment (ventilators, protective gear etc) Other potential consequences could include: 1) Military forces may be particularly vulnerable to the flu because of their movement and location. US troops deployed in Asia, for example, are likely to be more vulnerable to infection than those based in the United States. During the First World War, epidemics killed far more soldiers than the battlefield. A catastrophic pandemic could thus affect international peacekeeping and military operations with unforeseen consequences for order and peace. 2) The global economic impact of a pandemic would be of great consequence. Countries will likely introduce bans on meat imports. Livestock will have to be slaughtered in order to slow the spread of disease. It is estimated that by the beginning of 2005, the Asian poultry industry has lost roughly $15 billion due to the death of chickens and reduced demand. (Garrett) If the flu jumps to the human population, worker illness could dramatically reduce

171 ESC 05 E 15 economic activity and health care costs could inflict serious fiscal burdens, particularly in developing countries. 3) The illness could also lead to the restriction of human liberties related to mass quarantines and serious restrictions on international travel. In the spring of 2005 American officials restricted entry of international visitors suspected of carrying the SARS influenza, a decision that disrupted travel from Asia for three months. The avian flu is potentially far more dangerous than SARS, and an outbreak in the human population would very likely lead to serious travel restrictions, which in turn would disrupt global tourism and trade. 4) The rapid spread of influenza could ultimately generate mass panic. This too raises a dilemma for government authorities who must balance the requirement of spreading good information against the risk of fomenting irrational responses in the public. The Chinese government's response to the SARS epidemics in 2003 was to conceal information about the disease; yet this too triggered anxiety and panic. According to one China analyst, the SARS epidemic created the most severe social crisis in China since the 1989 Tiananmen Square crack down. (Osterholm) C. POLICY RESPONSES AND CHALLENGES AHEAD 71. As of mid 2005, there was no vaccine against the avian flu virus. According to tests, the virus could be vulnerable to Tamiflu, a drug produced by the Swiss pharmaceutical company Roche. Tests suggest, however, that for it to have an effect, it should be administered within 48 hours of infection. In the absence of other options, the World Health Organization (WHO) has recommended the stockpiling of Tamiflu; the United States, the United Kingdom, Australia and Malaysia, as well as several multinational companies have been following the advice. Less developed countries have been unable to generate an adequate policy response, Indonesia for example, where a number of people have recently died from avian flu, has so far not built an adequate stockpile of Tamiflu. (Financial Times, September 17, 2005) 72. Scientists are also trying to develop an anti z+ vaccine, with no results so far. There is a range of problems that inhibit the development of the vaccine. Flu vaccine production currently employs chicken eggs to produce viral samples. But there is a high risk of contamination and rigorous and very costly hygienic procedures are needed. Development of a new flu vaccine by this method would likely generally take two and a half years (European Voice, September 28, 2005). Developing a z+ vaccine has the additional problem that 100% of chickens infected with it die, which makes growing the virus on chicken eggs very difficult. It has taken five years for researchers to overcome the problem. Whilst research is being conducted on more efficient methods of vaccine production, its results are not expected to be available for practical use in the foreseeable future. 73. Another problem is that only a handful of pharmaceutical companies are currently willing to produce flu vaccines. Recent mergers have significantly reduced the number of pharmaceutical companies operating in the market and these are very reluctant to assume the financial risk of vaccine research and production. The US government has not provided liability guarantees to pharmaceutical companies for vaccine production to ease the burden. They are also discouraged by the seasonal character of influenza, which demands that new vaccines be produced each year. This is financially risky particularly if a seasonal epidemic is of a low intensity. 74. WHO experts gather each year in February to agree upon the types of vaccines needed for the coming year. The problem is that flu epidemics in Asia start prior to the production of the vaccines and consequently, there seems to be a need to change the vaccine production cycle.

171 ESC 05 E 16 75. Finally, vaccine production is a slow process, and manufacturers are unable to produce large quantities of vaccines quickly. Global flu vaccine production currently stands at about 350-450 million doses a year, which is a small fraction of the amount required in the event of a pandemic (Financial Times, August 23, 2005). The shortage of vaccines will affect poor countries above all, but it is doubtful that even rich countries will be able to meet fully the need for vaccinations of their own citizens. Currently, the influenza vaccine is only produced commercially in nine countries (Australia, Canada, France, Germany, Italy, Japan, Netherlands, UK and US), which together constitute only 12% of the world’s population (Garrett). 76. Alarmed by the advent of the avian flu in Russia, the Netherlands has introduced precautionary measures, such as keeping poultry indoors, to prevent its contact with wild birds migrating from Siberia. Germany has prepared similar regulations. Moreover, on August 12, the European Commission banned imports of live poultry and feathers from Russia and Kazakhstan (Financial Times, August 23, 2005). The EU has planned several policy initiatives for Autumn 2005: the Commission has scheduled communication tests among national authorities in case of an epidemic. The EU’s Centre for Disease Prevention and Control plans to hold an October workshop with the WHO to address weak points of national response plans. 77. European pharmaceutical companies complain that EU governments are not yet willing to spend adequate funds to develop new vaccines. Luc Hessel from Sanofi-Aventis, a French pharmaceutical company, says that although many companies have already started developing prototypes, more investment is needed to speed up the process. France, the UK and Italy have launched tenders to produce a limited amount of prototypes (European Voice, July 28, 2005). To date anti-flu efforts have been largely undertaken at the national level. But a more genuinely multilateral response will be essential. US President George W. Bush has called for creation of an international partnership to improve avian flu information and sample sharing. The European Commission has suggested that an international donors’ conference on bird flu be held to help Asian countries combat the disease and thereby prevent a global pandemic. X. TENTATIVE CONCLUSIONS 78. States will remain the single, most important organizing unit of political economic and security affairs over the coming decade. But governance will emerge as a major challenge in an ever more global environment in which decisions made beyond one's borders will have powerful local implications. The ever-freer flow of information, capital, goods, services, and people, as well as the rise of global risks will erode the capacity of governments, corporations and individuals to manage risk. Increased international dialogue, cooperation and action on an ever-lengthening list of transnational issues may prove to be the only way to reassert control over phenomena that might otherwise evade all control. 79. One of the great problems in managing risk is forging broad social agreements about the nature of risk in time to manage challenges before they become catastrophic. This is particularly difficult when one is talking about enormously complex phenomena involving numerous variables, some of which pertain to core habits of contemporary civilization. To take one example, a political consensus on global warming has still not been fully achieved, even though the scientific community has been united on the nature of this threat for some time. Moreover, even when risk is generally understood, taking measures to cope with it can be highly contentious, particularly when costs are involved, and invariably, they are. Nevertheless, a lack of agreement and delays in implementation can make risk even more compelling. 80. Proactive rather than reactive policies are clearly needed in order to contain the risk of catastrophe and to lower the long run costs of prevention. It is estimated, for example, that it will cost $32 billion to protect European coastlines from the effects of global warming, while Tanzania

171 ESC 05 E 17 would need $14.6 billion to fend off the effects of a one meter rise in the sea level (Harvey). With numbers like these in mind, politicians need to take environmental science more seriously if they are to exercise genuine stewardship over a fragile planet and manage humanity's ever mounting capacity to upset nature's balance in catastrophic ways. It is no coincidence that religious movements in the West are increasingly concerned with the important moral question of global environmental stewardship. Laissez-faire approaches to energy use are failing because markets have not been structured to account for the real costs of environmental degradation. 81. More comprehensive externality costing, therefore, must become a priority. In other words, the environmental and security costs of consumption need to be better incorporated into pricing. One recent estimate suggested that Western countries subsidize fossil fuel use to the tune of $73 billion (Harvey). At the same time, new partnerships among governments, scientists and economists must be forged in order to come to a better understanding of the real costs of ecosystem degradation and biodiversity loss. Gas and oil prices should better reflect their environmental opportunity costs, as well as the huge national security costs involved in ensuring the uninterrupted flow of oil to market. In many countries, gasoline prices fail to capture these costs, and consumption patterns are consequently environmentally hazardous, and indirectly exacerbate military vulnerabilities. Energy pricing should reflect these costs even if higher prices have to be introduced through taxation. Governments should also demand higher fuel efficiency in consumer vehicles, and adopt policies to encourage energy saving transport alternatives. Such measures can have both enormously beneficial environmental and security effects and can spawn new environmentally friendly industries (Samulson). 82. If countries can justify military spending as a means to achieve security, they should also consider initiatives that foster greater energy efficiency and lower the use of carbon based energy, for example by promoting the development of renewable low polluting energy sources including wind and solar power. Already the wind energy market is doubling every two and a half years and if properly promoted, could be supplying as much as 12% of the world's energy by 2020. Solar panels are becoming more efficient and less costly by the year, and rising oil prices will make them increasingly competitive. The problem is that their inherent intermittency results in power interruptions, which means that they cannot become anything like the sole source of power for the world. Nuclear power, of course, has some benefits but it also introduces very fundamental risks as was made clear in the Chernobyl catastrophe. It is vulnerable to human error and offers an inviting target for terrorists. At the end of the day, only technological breakthroughs will help the world move away from carbon-based energy. In the meantime, governments need to support that research while doing all in their power to foster energy conservation (McKibben). 83. By extension, we need to better understand the benefits that natural habitats confer upon humanity in order to begin to assign values to these as well. Most government statistics fail to incorporate the benefits that stewardship of the environment accords society. This is why rapid economic change and globalisation seem so at odds with the environmental health of the planet and the real risks that our human economic activity poses to it. It might even be helpful to include such factors in GDP calculations. China may be growing at 9% a year but its growth is also exacting a huge toll on its environment and generating daunting costs that future generations will have to pay. Surely such enduring and real costs should be reflected in any reasonable statement of a country's current and future prosperity. The old communist system was particularly notorious in utterly ignoring these costs and the clean-up bill faced by new democracies is terribly daunting. We need to learn from that brutal experience. 84. Kyoto has helped encourage the creation of emissions trading schemes that are helping to incorporate “environmental scarcity” costing into normal production costs. Such initiatives need to be broadened into other areas where human activity is speeding the world towards potentially dangerous catastrophic environmental events. More systematic thinking is needed to develop the means to generate wealth by preserving rather than destroying ecosystems. Welfare and

171 ESC 05 E 18 biodiversity should no longer be seen as exclusively in conflict. Information sharing on how best to preserve environment while sustaining wealth generation needs to be further developed. Along these lines, the recently created Public-Private Climate Group has provided a model of how governments, cities, states and businesses can pool environmental experience and build coalitions of emissions reducers (Houlder). The trans-Atlantic dispute over Kyoto, however, is also a reminder that dealing with catastrophic threats will not necessarily unite even close allies. Indeed, if the nature of the risk and the remedy are not agreed, such challenges can undermine solidarity. 85. Water security should be another area of priority. Here local as well as national and international efforts are required to improve water quality and access. Conservation strategies are critical because the current rate of water table depletion is unsustainable. Water conservation and quality should thus remain a key priority of the global development agenda. 86. Some have suggested that one way to reduce the risks posed by modern production methods and the science behind them is to impose further controls on science itself. Generally speaking, it is very difficult to slow scientific advance, although safeguards in specific instances are certainly crucial. One need only look at the problem of nuclear weapons proliferation to recognize the dangers. Both prudence and ethics should guide authorities in these areas, but clearly global dialogue is needed before research moratoria are put in place. Once a technology is effectively "out of the bottle", it becomes extraordinarily difficult to contain its development over time. The problem is that technology is advancing even more quickly today than at the dawn of the nuclear age. Moreover, most technologies can be used for good or iniquitous purposes, and applications are not always apparent in research phases. 87. This does suggest, however, that in the future, scientists themselves will have tremendous implicit power, particularly when working with profoundly powerful new technologies, ill-understood by the public and their leaders. These technologies nevertheless have the potential to evade social controls. Scientists should certainly not have the final word in those cases where the downside of research outcomes might be global catastrophe. In the words of Martin Reese, Professor of Cosmology and Astrophysics at Cambridge University, "In view of our current scientific and technological capabilities, what is the safest and most responsible way to develop them further? Humanity is more at risk than at any earlier phase in its history, and this is a critical time. Our future as a species may depend on the choices we make in the next hundred years". (Reese) 88. Risk management requires a deepened dialogue between government and the private sector and a recognition that preparing for one catastrophic scenario can also help cope with an unanticipated one. This was the case in New York where the financial community had spent millions of dollars building in back-up systems in preparation for YK2. The passing of the millennium ultimately proved uneventful as far as information systems were concerned, but the redundancies built in the years running up to 2000 proved enormously useful in the immediate wake of the September 11 attacks (Partos). Such redundancies need to be extended internationally because catastrophic risk itself does not recognize national borders. Along these lines, risk in a global age requires global management strategies. Purely national approaches to matters like global warming, fisheries depletion and epidemic management will invariably fail. The imperative for multilateralism is rising not diminishing. Global governance is increasingly necessary and foundations need to be laid for greater multilateral dialogue on everything from shared environmental threats to technology governance; yet, governance must also be rooted in local activism and local concerns. As Ulrich Beck has suggested, this is a new direction for politics and structures need to be put in place that help bring local concerns onto the international agenda. 89. Although some of those currently invoking the emergence of the risk society are doing so to critique neo-liberal politics and market globalisation, one should not discount the role markets can play in mitigating risk. The challenge is that governments need to provide the context in which

171 ESC 05 E 19 markets operate, and it is up to states to establish the broad goals of risk reduction while allowing the markets themselves to take up the cause once new rules of the game are in place. 90. As for Avian flu, several policies should be implemented to mitigate the risk of global pandemic: 1) Governments should develop a mechanism of financial guarantees to the pharmaceutical companies to encourage them to produce flu vaccines. 2) Public health officials should alter vaccine production cycles to better adapt to influenza cycles. 3) Governments should strongly support research and development of a z+ vaccine. 4) Reinforce the modalities for a multilateral response mechanism. WHO would be a natural candidate to act as a coordinating body, however it currently lacks the financial resources to play this role. Its annual budget is $400 million, and only a small portion of this is spent on influenza prevention. According to one study, the agency will need about $600 million for the flu program. 5) The international community should establish mechanisms to provide the vaccine to the whole world and not just the wealthier countries. 6) Governments, together with private sector and the scientific community, should develop a blueprint on how to deal with epidemics of a long-term nature (1-3 years). 7) The international business community should also prepare for the pandemic and should, in particular, think through how to arrange the flow of necessary goods and medication in case of transportation and trade disruption during the pandemic.

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