Sunday, October 28, 2007

Supply and Demand: Energy and Food Policy

A few weeks ago, I went to a lecture arranged by the Stanford alumni association by Professors Roz Naylor and David Victor at NYU. Professor Naylor, who I studied with briefly, is an economist who has long focused on food economics and other issues inter-relating environmental and developmental policy, and Professor Victor, whom I did not cross paths with at Stanford, is a law professor focused on energy policy. The lecture was good, although brief and, as such, handled some very complex issues very simply. A few modest comments that have been kicking around in the back of my head for the past few weeks:

- Professor Victor made an interesting comment in response to a question about whether small-scale "clean energy" solutions constitute an effective energy policy. Specifically, the question seemed tied to a lot of success stories coming out of India and China where distributed energy producers (like local solar-powered batteries are loaned out at the village-level) are emerging to meet the burgeoning energy demand that is occurring in areas not well served by existing energy grids. The substance of Professor Victor's comments was that while such trends were interesting, distributed/point solutions to supplying energy would simply never scale -- and therefore, couldn't be a central part of a sustainable energy policy. He suggested, as I understood, focusing on large capacity production that could be made "cleaner," including nuclear, natural gas, and the cleaner forms of coal burning. While I agree that the magnitude of our energy problems require large scale solutions, I am always curious at how quickly distributed solutions are dismissed as being a component of an overall policy solution. Unfortunately, the session was too abbreviated to really push the issue.

- Professor Naylor forced me to an interesting, if unintended, connection between food policy and energy policy. I'm still sorting the thinking out on this, but it basically works like this:

1. We are confronting a supply problem in the world energy markets. The increasing demand for energy, driven by growing economies and growing populations, can not be met by our current, known energy production capacities. We need to innovate on the ability of the world economy to deliver energy (and when you tie in climate policy, clean energy) to the marketplace.

2. In the 1940s and 1950s, the world confronted a supply problem in food markets. Population growth created greater demand for food than was immediately available. Investments were made in food technology, specifically fostering the Green Revolution. The Green Revolution was successful in increasing world food supply, which, in turn, certainly staved off a lot of human destitution. However, simply addressing the supply problem did not address the challenge of world hunger. Massive logistical problems, failure of political will and infrastructure (notably, corrupt/incompetent third-world governments failing to deliver on food aid provided by incompetent/corrupt multinational aid and relief agencies, including UN and GATT), failures in wealth distribution to the poorest segments of economies, and disproportionate population growth at the bottom of the demographic pyramids (from both an income and a poverty level) thwarted a purely supply-side solution to the food problem.

So, the question I have, with this history of food policy behind us, is why do we continue to think of the energy problem as strictly a supply issue?

Not that I have a pat answer to this question, but the inability of the political, economic, and academic leaders to address either the demand side of the equation or the equality issues bound up in how resources get consumed fails to take our analyses of these problems off charts and graphs and into the human dimensions of the real world.

Still, a very compelling talk, with a lot of interesting issues to follow up on.

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