Saturday, February 28, 2009

Water 'more important than oil'

Dwindling water supplies are a greater risk to businesses than oil running out, a report for investors has warned.

Among the industries most at risk are high-tech companies, especially those using huge quantities of water to manufacture silicon chips; electricity suppliers who use vast amounts of water for cooling; and agriculture, which uses 70% of global freshwater, , says the study, commissioned by the powerful CERES group, whose members have $7tn under management. Other high-risk sectors are beverages, clothing, biotechnology and pharmaceuticals, forest products, and metals and mining, it says.

"Water is one of our most critical resources – even more important than oil," says the report, published today . "The impact of water scarcity and declining water on businesses will be far-reaching. We've already seen decreases in companies' water allotments, more stringent regulations [and] higher costs for water."

Droughts "attributable in significant part to climate change" are already causing "acute water shortages" around the world, and pressure on supplies will increase with further global warming and a growing world population, says the report written by the US-based Pacific Institute.

"It is increasingly clear that the era of cheap and easy access to water is ending, posing a potentially greater threat to businesses than the loss of any other natural resource, including fossil fuel resources," it adds. "This is because there are various alternatives for oil, but for many industrial processes, and for human survival itself, there is no substitute for water."

In a joint statement, CERES' president Mindy Lubber and Peter Gleick, president of the Pacific Institute, urged more companies and investors to work out their dependence on water and future supplies, and make plans to cope with increased shortages and prices.

"Few companies and investors are thinking strategically about the profound business risks that will exist in a world where climate change is likely to exacerbate already diminishing water supplies," they say.

"Companies that treat pressing water risks as a strategic challenge will be far better positioned in future," they add.

The CERES report adds to growing concern about a looming water crisis. In the Economist's report, The World in 2009 , Peter Brabeck-Letmathe, chairman of food giant Nestlé, wrote: "under present conditions… we will run out of water long before we run out of fuel". And at its annual meeting this year the World Economic Forum issued what it itself called a "stark warning" that "the world simply cannot manage water in the future in the same way as in the past or the economic web will collapse".

CERES, which has members in the US and Europe, made recommendations, including that companies should measure their water footprints from suppliers through to product use, and integrate water into strategic planning, and that investors should independently assess companies' water risk and "demand" better disclosure from boards.

Thursday, February 26, 2009

Surviving Crashes: How Airlines Prepare for the Worst

We tend to think of airplane crashes as fatal events. So when survivors emerge from the carcass of a crumpled jumbo jet, as they did outside Amsterdam's Schiphol Airport on Wednesday or on the Hudson River in mid-January, the spectacle is often described as "miraculous." But survival in an airplane crash is no miracle. It is the result of more prosaic interventions, from sturdier seats to more carefully placed emergency lights.

Just a day before the Turkish Airways Boeing 737-800 crash landed in light fog killing at least nine of the 134 passengers on board, a Congressional Committee in Washington heard testimony from industry experts on the ways in which various regulatory steps and changes to aircraft have greatly improved the survivability of airplane crashes. In testimony to members of the Transportation and Infrastructure Committee, Candace Kolander, the Air Safety Coordinator for the Association of Flight Attendants, a flight attendant union that has long pushed for improvements to on-board safety, listed three main successes that are proving to save lives. (Read "How to Survive a Plane Crash.")

Sturdier Seats
In 1987, Congress' Airport and Airway Safety Act called for regulators to improve what is called the "crash worthiness standard" of seats — in effect, the likelihood that they will crumple and crush passengers at impact. It took 17 years to accomplish the task, as the Federal Aviation Administration tussled with aircraft manufacturers and airlines who balked at the price. The FAA produced evidence that sturdier seats could have prevented 45 fatalities between 1984 and 1998. A deal was reached. In 2005, the FAA mandated that all U.S. aircraft built after October 2009 meet the "16g rule" — seats must be built to withstand crash forces equivalent to 16 times the force of gravity (older seats were 9g compliant). Ironically, the long negotiation period and concerns among the airlines that the FAA would make requirements retroactive means that almost all major airlines in operation today already have 16g compatible seats. (See pictures of the plane in the Hudson River.)

Fire Retardant
On February 1, 1991, USAir Flight 1493 crashed into another aircraft while landing at Los Angeles International Airport. After surviving the impact, 20 passengers and two crew died as a result of smoke inhalation as they waited to leave at the overwing exit. During the 1980s, the FAA instituted various measures that demanded aircrafts upgrade the flammability standards of materials on board — The USAir aircraft was built before the effective date of these requirements, and had not yet been modernized. All aircraft in the U.S. are now compliant. The requirements were strengthened in 1991, when the FAA required all large transport planes to carry smoke detectors in lavatories, an automatic fire extinguisher in trash receptacles, and more fire extinguishers throughout the cabin. (See pictures from the Buffalo plane crash.)

Emergency Exits
Getting to an emergency exit as quickly and as safely as possible is a key factor in surviving an airplane crash. Passengers tend to take the glowing pellets that line the cabin floors for granted, but until 1984, emergency lighting systems were typically from overhead lights: not much help in smoke, or in the frenzied panic in which passengers tend to keep their heads down. In 1990, the FAA took another step by requiring passengers sitting in emergency exit seats to be willing and able to perform safety functions.

These three fixes have saved lives. In her testimony to the Congressional subcommittee, Kolander argued that airlines and aircraft manufacturers have traditionally had a safety culture more attuned to preventing airplane crashes. But just as important, she argued, airlines should also prepare to mitigate the dangers when the worse happens. A step such as improving the sturdiness of seats, she concluded, "is an essential element of preparation for the crash that can result when accident prevention fails."

Read "How to Escape Down an Airplane Slide."

Tuesday, February 24, 2009

A collapsing carbon market makes mega-pollution cheap

'Roll up for the great pollution fire sale, the ultimate chance to wreck the climate on the cheap. You sir, over there, from the power company - look at this lovely tonne of freshly made, sulphur-rich carbon dioxide. Last summer it cost an eyewatering €31 to throw up your smokestack, but in our give-away global recession sale, that's been slashed to a crazy €8.20. Dump plans for the wind turbine! Compare our offer with costly solar energy! At this low, low price you can't afford not to burn coal!"

Set up to price pollution out of existence, carbon trading is pricing it back in. Europe's carbon markets are in collapse.

Yet the hiss of escaping gas is almost inaudible. There's no big news headline, nothing sensational for TV viewers to watch; no queues outside banks or missing Texan showmen. You can't see or hear a market for a pollutant tumble. But at stake is what was supposed to be a central lever in the world's effort to turn back climate change. Intended to price fossil fuels out of the market, the system is instead turning them into the rational economic choice.

That there exists something called carbon trading is about all that most people know. A few know, too, that Europe has created carbon exchanges, and traders who buy and sell. Few but the professionals, however, know that this market is now failing in its purpose: to edge up the cost of emitting CO2.

The theory sounded fine in the boom years, back when Nicholas Stern described climate change as "the biggest market failure in history" - a market failure to which carbon trading was meant to be a market solution. Instead, it's bolstering the business case for fossil fuels.

Understanding why is easy. A year ago European governments allocated a limited number of carbon emission permits to their big polluters. Businesses that reduce pollution are allowed to sell spare permits to ones that need more. As demand outstrips this capped supply, and the price of permits rises, an incentive grows to invest in green energy. Why buy costly permits to keep a coal plant running when you can put the cash into clean power instead?

All this only works as the carbon price lifts. As with 1924 Château Lafite or Damian Hirst's diamond skulls, scarcity and speculation create the value. If permits are cheap, and everyone has lots, the green incentive crashes into reverse. As recession slashes output, companies pile up permits they don't need and sell them on. The price falls, and anyone who wants to pollute can afford to do so. The result is a system that does nothing at all for climate change but a lot for the bottom lines of mega-polluters such as the steelmaker Corus: industrial assistance in camouflage.

"I don't know why industrials would miss this opportunity," said one trader last week. "They are using it to compensate for the tightening of credit and the slowdown, to pay for redundancies."

A lot of the blame lies with governments that signed up to carbon trading as a neat idea, but then indulged polluters with luxurious quantities of permits. The excuse was that growth would soon see them bumping against the ceiling.

Instead, exchanges are in meltdown: a tonne of carbon has dropped to about €8, down from last year's summer peak of €31 and far below the €30-€45 range at which renewables can compete with fossil fuels.

The lesson of the carbon slump, like the credit crunch, is that markets can be a conduit, but not a substitute, for political will. They only work when properly primed and regulated. Europe hoped that the mere creation of a carbon market would drive everyone away from fossil fuels. It forgot that demand had to outstrip supply, and that if growth stops, demand drops too.

There is not much time to rescue the system. Carbon trading remains at the heart of the international response to climate change. Obama backs what Americans call cap and trade. Australia wants to try the same thing. It should be at the heart of a deal at the Copenhagen summit this winter. But both are hesitating, given Europe's mess.

The market must be unashamedly rigged to force supply below demand. The obvious way would be to cut the number of permits in circulation, but in a recession no government will be brave enough to do that. And private initiatives such as Sandbag, which encourages individuals to buy and lock away permits, can exert little pressure on price in a market awash with them.

Europe can choke off tomorrow's supply, however, without hitting business today. First the EU must stop importing permits from countries such as Russia - a bonus for a paper transaction. No one really believes that 15m tonnes of imported permits will not still be emitted by a steelworks somewhere east of Novosibirsk.

Second, it must publish plans to crack down on the surplus of permits when the recession is over. Warnings of famine ahead, when the scheme enters its third stage in 2012, would raise prices now, if believed.

Like medieval pardoners handing out unlimited indulgences, governments have created a glut. Reformation must follow. Wanted - a modern Martin Luther to nail a shaming truth to industry's door: Europe's whizz-bang carbon market is turning sub-prime.

Monday, February 23, 2009

How We Think Before We Speak: Making Sense Of Sentences

We engage in numerous discussions throughout the day, about a variety of topics, from work assignments to the Super Bowl to what we are having for dinner that evening. We effortlessly move from conversation to conversation, probably not thinking twice about our brain's ability to understand everything that is being said to us. How does the brain turn seemingly random sounds and letters into sentences with clear meaning?

In a new report in Current Directions in Psychological Science, a journal of the Association for Psychological Science, psychologist Jos J.A. Van Berkum from the Max Planck Institute in The Netherlands describes recent experiments using brain waves to understand how we are able to make sense of sentences.

In these experiments, Van Berkum and his colleagues examined Event Related Potentials (or ERPs) as people read or heard critical sentences as part of a longer text, or placed in some other type of context. ERPs are changes in brain activity that occur when we hear a certain stimulus, such as a tone or a word. Due to their speed, ERPs are useful for detecting the incredibly fast processes involved in understanding language.

Analysis of the ERPs has consistently indicated just how quickly the brain is able to relate unfolding sentences to earlier ones. For example, Van Berkum and colleagues have shown that listeners only need a fraction of a second to determine that a word is out of place, given what the wider story is about. As soon as listeners hear an unexpected word, their brain generates a specific ERP, the N400 effect (so named because it is a negative deflection peaking around 400 milliseconds). And even more interesting, this ERP will usually occur before the word is even finished being spoken.

In addition to the words themselves, the person speaking them is a crucial component in understanding what is being said. Van Berkum also saw an N400 effect occurring very rapidly when the content of a statement being spoken did not match with the voice of the speaker (e.g. "I have a large tattoo on my back" in an upper-class accent or "I like olives" in a young child's voice). These findings suggest that the brain very quickly classifies someone based on what their voice sounds like and also makes use of social stereotypes to interpret the meaning of what is being said. Van Berkum speculates that "the linguistic brain seems much more 'messy' and opportunistic than originally believed, taking any partial cue that seems to bear on interpretation into account as soon as it can."

But how does the language brain act so fast? Recent findings suggest that, as we read or have a conversation, our brains are continuously trying to predict upcoming information. Van Berkum suggests that this anticipation is a combination of a detailed analysis about what has been said before with taking 'quick-and-dirty' shortcuts to figure out what, most likely, the next bit of information will be.

One important element in keeping up with a conversation is knowing what or whom speakers are actually referring to. For example, when we hear the statement, "David praised Linda because. . .," we expect to find out more about Linda, not David. Van Berkum and colleagues showed that when listeners heard "David praised Linda because he. . .," there was a very strong ERP effect occurring with the word "he," of the type that is also elicited by grammatical errors. Although the pronoun is grammatically correct in this statement, the ERP occurred because the brain was just not expecting it. This suggests that the brain will sometimes ignore the rules of grammar when trying to comprehend sentences.

These findings reveal that, as we make sense of an unfolding sentence, our brains very rapidly draw upon a wide range of information, including what was stated previously and who the speaker is, in helping us understand what is being said to us. Sentence understanding is not just about diligently combining stored word meanings. The brain rapidly throws in everything it knows, and it is always looking ahead.


Alaska Coasts Melting -- And Not Just the Ice

HVAC boot cleared of Asbestos in Los Angeles