Foundation capital

The crisis in Sri Lanka reveals the dangers of green utopianism

Last week, a group of Sri Lankan protesters cooled off in President Gotabaya Rajapaksa’s swimming pool. It was probably a welcome respite from the scorching eighty degree day in Colombo, as well as the unprecedented economic crisis currently devastating the country. Over the past year, Sri Lanka has experienced an annual inflation rate of over 50%, with food prices up 80% and transport costs up 128%. In the face of strong protests, the Sri Lankan government declared a state of emergency and deployed troops across the country to maintain order.

Thursday morning, the New York Times released an episode of The Daily podcast discussing some of the forces behind the collapse. They explained how years of irresponsible borrowing by the political Rajapaksa dynasty, combined with the damage caused by Covid shutdowns to Sri Lanka’s tourism industry, have depleted the country’s foreign exchange reserves. Soon the country was unable to repay its debt or import essentials like food and gasoline. Strangely, the hosts of the podcast, which reaches more than 20 million monthly listeners, did not mention President Rajapaksa’s infamous fertilizer ban once during the thirty-minute episode.

The fertilizer ban was, in fact, a major factor in the unrest. Agriculture is an essential economic sector in Sri Lanka. About 10% of the population works on farms and 70% of Sri Lankans are directly or indirectly dependent on agriculture. Tea production is particularly important, responsible for more than ten percent of Sri Lanka’s export earnings. To support this vital industry, the country has spent hundreds of millions of dollars a year importing synthetic fertilizers.

During his election campaign in 2019, Rajapaksa promised to wean the country off these fertilizers with a ten-year transition to organic farming. He accelerated his plan in April 2021 with a sudden ban on synthetic fertilizers and pesticides. He was so confident in his politics that he said in an (often-deleted and redundant) article for the World Economic Forum in 2018: “This is how I will make my country rich again by 2025.” As ecomodernist author Michael Shellenberger writes, the results of the experiment with primitive farming techniques were “shocking”:

Over 90% of Sri Lankan farmers had used chemical fertilizers before they were banned. After they were banned, an astonishing 85% suffered crop losses. Rice production fell 20% and prices soared 50% in just six months. Sri Lanka had to import $450 million worth of rice when it was self-sufficient a few months earlier. The price of carrots and tomatoes has quintupled. … [Tea exports crashed] 18% between November 2021 and February 2022, reaching their lowest level in more than two decades.

Of course, Rajapaksa’s senseless politics were not revealed to him in a dream. As Shellenberger points out, the ban was inspired by an increasingly Malthusian environmentalist led by figures like Indian activist Vandana Shiva, who acclaimed the ban last summer. Foreign investors attached to the same ideology also praised and rewarded Sri Lanka for “making sustainability and ESG (environmental, social and corporate governance) issues its top priority”. ESG represents a trend (or a lasting change, depending on who you ask) in the priorities of some investors. Simply put, it is an attempt to shift capital to organizations that pursue an amorphous set of environmental and social justice goals rather than to the companies most likely to succeed and make a profit.

ESG proponents have lobbied for government mandates requiring companies to disclose detailed information related to environmentalism and other social goals. This distorts and damages the well-functioning capital markets that keep modern economies running and, in some cases, encourages good-sounding but economically inefficient projects, such as a return to primitive agriculture. “The nation of Sri Lanka has an almost perfect ESG score of 98.1 on a scale of 100,” notes David Blackmon in Forbesand “the government which had compelled the nation to achieve this goal of virtue for the last few years [has as a result] collapsed.” Sri Lanka, in other words, offers a grim glimpse of what can result from distorting markets in the name of utopian priorities.

Consider a long-term perspective. For most of human history, farmers produced only organic food – and food was so scarce that, despite the much lower population in the past, malnutrition was widespread. The long-term global decline in undernourishment is one of humanity’s proudest achievements. Lacking a sense of history and taking plentiful food for granted, some environmentalists want to turn the global food system into a biological one. They see modern agriculture as harmful to the environment and would like to see a transition to natural fertilizers that would be familiar to our distant ancestors, such as compost and manure.

However, conventional agriculture is not only necessary to produce enough food to feed mankind (a point that cannot be stressed enough – as the writer Alfred Henry Lewis once observed, “ There are only nine meals between humanity and anarchy”), but it is in many ways better for the environment. According to a massive meta-analysis by environmentalists Michael Clark and David Tilman, the natural fertilizers used in organic farming actually lead to more pollution than conventional synthetic products. Fertilizers and pesticides also allow us to farm the land more intensively, leading to ever higher crop yields, allowing us to grow more food on less land. According to HumanProgress board member Matt Ridley, if we tried to feed the world with the organic yields of 1960, we would need to farm twice as much land as we do today.

Global agricultural use has peaked and is now in decline. As crop yields continue to increase, more and more land can be returned to natural ecosystems, which are far richer in biodiversity than any farm. Smart farming allows nature to bounce back.

In rich countries, conventional agriculture is becoming increasingly efficient, using fewer inputs to produce more food. In the United States, despite a 44% increase in food production since 1981, fertilizer use has barely increased and pesticide use has fallen by 18%. As esteemed environmental scientist Jesse Ausubel of Rockefeller University has noted, if farmers around the world adopted the modern and efficient techniques of American farmers, “an area the size of India or the United States at the east of the Mississippi could be freed from agriculture on a global scale”.

Above all, it must be repeated, conventional agriculture feeds the world. Since the Green Revolution of the 1950s and 1960s, global agricultural production has exploded, causing the global food supply to reach almost 3,000 kcal per day in 2017, up from just over 2,000 in 1961. at war , export restrictions and misguided policies of leaders like Rajapaksa, not a lack of ability to produce enough food.

The fertilizer ban was not the only factor behind Sri Lanka’s economic crash. Much of the damage was also caused by the rush of the ban and the difficulty of obtaining enough organic alternatives. However, the idea that organic farming can produce enough food for the world is an unattainable fantasy based on the naturalist fallacy – the baseless notion that anything modern, like agriculture incorporating unnatural components produced by human ingenuity, must be inferior to the all-natural precursor.

As Ted Nordhaus and Saloni Shah of the Breakthrough Institute point out, “there is literally no example of a major agricultural producing nation successfully transitioning to all-organic or agroecological production.” We must never take the relative rarity of famine in modern times for granted, nor romanticize and seek to return to agriculture’s all-organic past. Unfortunately, the illusion seems to be spreading, helped by the global transition to ESG. Last Sunday, Narendra Modi, India’s Prime Minister, praised “natural agriculture” during a speech in Gujarat, calling it “serving mother earth” and promising that India “will move forward on the way of natural agriculture”. Let’s hope not.

This article from Human Progress has been republished with permission.