Fair Trade Diversitifcation and Climate Change

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Fair Trade In a Time of Climate Change:

Fair Trade In a Time of Climate Change

Themes for Tonight:

Themes for Tonight The Context Development & Capacity Inequality and Poverty Capacity & Climate Change Importance of Diversification and Adaptation under Climate Change Fair Trade as a Response

Contemporary Understanding of Development:

Contemporary Understanding of Development Development has many interpretations and is represented by many indicators Amartya Sen “Development as Freedom”: Increasing the degree to which individuals have the freedom to live a life that they themselves have reason to value Need to accumulate core development assets: Financial Physical (infrastructure technology) Social (networks) Environmental (resources and ‘waste’ sinks) Human (education and health)

Global Financial Capacity:

Global Financial Capacity How are we doing in reducing poverty? Overall global poverty is slowly decreasing (but…) What about inequality? Inequality is increasing

State of Poverty in 2013:

State of Poverty in 2013 How many people are in poverty in 2013? Around billion people live in extreme poverty ‘ Chronic poverty’ – those unlikely to rise above $1.25 global poverty line for at least 5 years ‘Churning poverty’ – moving above and below the poverty line 400 Million 600 million

Negative Shocks & Poverty :

Negative Shocks & Poverty I’m not technically poor so I’ll just survive… Poverty Line But un-oh, I have a bad feeling Negative Shock Negative Shock Negative Shock Negative Shock Now I’m not doing so well What negative shocks should I look out for in the future?

Negative Shocks in the Developing World:

Negative Shocks in the Developing World Natural shocks - weather hazards, irregular rainfall, disease and injury (crops, animals and people) Technical shocks – loss of electricity, breakdowns of machinery Socially constructed shocks - political instability, market price volatility (especially agriculture), cultural requirements (weddings and schooling) (See Dercon 2002 for great overview on risk and its management)

That’s Right! Climate Change!:

That’s R ight! Climate Change! The responsibility for climate change is unevenly distributed Impact is geographically differentiated Ability to respond to climate change conditional on ‘capacity’ Poor people and communities have less capacity to adapt to climate change – which means?

Poverty and Climate Change:

Poverty and Climate Change Both can be addressed by building capacity of individuals and their communities! The question is how?

How to Grow Capacity? (economic capability):

How to Grow Capacity? (economic capability) Internal Efficiencies Profit from Trade

So how is trade structured?:

So how is trade structured? Global economy structured by imperialism Essentially improves living standards of a core But consequentially hinders change at the ‘margins’ Core Periphery

Global Division of Labour:

Global Division of Labour Core Periphery

Today’s Inequalities of Trade:

Today’s Inequalities of Trade Historical conditioning of global division of labour part of unequal development Agricultural goods have suffered structural decline in ‘terms of trade’ Export agricultural does not ensure farmers have sufficient food to eat Therefore, something needs to change in the way trade is structured But what do we need to achieve?

‘Diversification’ and ‘Upgrading’ a significant development strategy:

‘Diversification’ and ‘Upgrading’ a significant development strategy Always important to diversify and reduce ‘risks’ from ‘negative shocks’ Ironically, this is often a poverty trap Most risk management by the poor is low return Three strategies identified to promote diversification and structural change that increases incomes

Factors in Transformation:

Factors in Transformation Incentives – usually provided by market prices One of the primary reasons trade & markets are important But important to remember ‘push’ and ‘pull’ incentives Capacity to respond to incentives Confidence that risks can be overcome

The Place of Fair Trade:

The Place of Fair Trade “Fair Trade is, fundamentally, a response to the failure of conventional trade to deliver sustainable livelihoods and development opportunities to people in the poorest countries of the world”. Charter of Fair Trade Principles (2009)

Understanding Fair Trade:

Understanding Fair Trade “Poverty and hardship limit people’s choices while market forces tend to further marginalise and exclude them. This makes them vulnerable to exploitation”. Lower levels of development: Obscure market signals (incentives) Fundamentally imply less assets and lower levels of capacity Generate great risk for value added diversification

The Role of Fair Trade:

The Role of Fair Trade Governance for the proactive organisation of viable international trade systems that promote economic development where capacity to engage beneficially with the wider ‘commercial’ global economy is considered insufficient

The Operation of Fair Trade:

The Operation of Fair Trade What approaches do you know…? ...to encourage northern stakeholders to: Engage in transparent and respectful dialogue with trade partners Offer pre-financing to ease cash flow constraints Raise price points to promote sustainable livelihoods and facilitate investment Make additional investment in core economic capacity of southern actors

The Future of Fair Trade Under Climate Change?:

The Future of Fair Trade Under Climate Change? Fair Trade is complimentary to other initiatives We need trade AND aid that promotes capacity of poor producers Fundamentally reduces poverty Help build capacity to adapt to climate change However, now is the time to move beyond buying Fairtrade goods! Many producers excluded - what about crafts? Without changes in formal trade rules efforts will always be of minimal effect Fair Trade is ours! Lets make it work!

Questions Please!:

Questions Please! What is the relationship between fair trade and the transition movement? Is international trade environmentally sustainable? Resources This presentation online My academic papers Please contact me Dr. Alastair M. Smith ( smitham3@Cardiff.ac.uk)

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