Bahama Pundit

New Regional Report on Economic Impacts of Climate Change

by Larry Smith

A new regional report says the economic impacts of climate change could cost Caribbean countries up to 5 per cent of annual Gross Domestic Product over the next four decades, if if no mitigating action is taken.

The report was published last month by the UN's Economic Commission on Latin America and the Caribbean. Funded by Britain, assessments were conducted in different economic sectors across 14 countries, including tourism in the Bahamas.

Here a brief look at the top 10 highlights:

Agriculture is no Economic Panacea for the Bahamas

by Larry Smith

Year after year there are ringing calls for the Bahamas to invest more and do more to develop agriculture.

In 2001, former Central Bank researcher Gabriella Fraser observed that Bahamian agriculture had "hardly evolved" over time, and asked whether enough effort was being made to achieve food security.

Environmental advocate Sam Duncombe argued in a recent online exchange that If we don't invest in agriculture and manufacturing, Bahamians will be condemned to "a life of servitude and dependence."

Dr Marikis Alvarez of the Inter-American Institute for Cooperation recently said agriculture could make a "huge contribution" to the Bahamian economy - if only we would inject enough funds into the sector to make it work.

Farmer's association president Keith Campbell says we need to focus on food security and "fully protect" Bahamian farmers from imports.

Lawyer, physician and sometime politician Dr Dexter Johnson insists we can feed ourselves - and produce a surplus for export.

Visioneer John Bostwick says that with better management we could easily achieve food self-sufficiency, and even replace oil imports with our own bio-energy crops.

BAIC chief Edison Key says agriculture could be "the catalyst for economic diversification" by substituting local products for $500 million of imported foodstuffs.

Meanwhile, the government's sector development plan argues that agriculture can be "repositioned as a strong pillar of the Bahamian economy".

And for anyone who remembers the "good old days" when granny and pa harvested fresh fruit and vegetables from their backyard, it is easy to believe that these projections can be fulfilled.

The Economic Impact of Bahamian Protected Areas

by Larry Smith

In January 2009, the container ship Westerhaven ran aground and destroyed about an acre of Belize’s 180-mile barrier reef – the world's second largest. Fifteen months later the Belizean Supreme Court ruled that the ship’s owners had to pay the government $6 million in damages.

Their ruling was based on scientific studies showing that coral reef- and mangrove-associated tourism contribute 15 per cent of Belize’s gross domestic product. And when shoreline protection is considered, these ecosystems provide an extra $347 million in avoided damage every year.

With a similar population to the Bahamas, Belize has protected more than a third of its total land area of just under 9,000 square miles in one way or another, as well as about 13 per cent of its marine area.

In fact, this little, out-of-the-way nation (formerly known as British Honduras) is recognised today as a world leader in conservation and ecotourism, and there has been a lot of research on the value of Belize's protected areas.

One of the scientists involved in this research is 32-year-old Venetia Hargreaves-Allen, who has a doctoral degree from Imperial College, London. She was the principal investigator for the Marine Managed Area Economic Valuation in Belize that was recently produced by Conservation International as part of a global initiative involving hundreds of researchers.

Last year, Hargreaves-Allen produced a similar valuation for the Bahamas, using the Exuma Cays Land and Sea Park and the Retreat Gardens in Nassau as case studies. Tough Call was able to review her 100-page report in advance.

Critics Ignore Some Inconvenient Points

by Simon

The more dishonest critics of Prime Minister and Minister of Finance Hubert Ingraham’s handling of the effects of the global economic crisis on The Bahamas typically stretch the truth if not outright shred it to pieces. 

There are three main inconvenient points these critics fail to honestly assess: The nature and severity of the financial crisis and its impact on The Bahamas, the Prime Minister’s deftness and dexterity in handling the crisis, and their own lack of a credible alternative in dealing with the same despite their flippant criticism.

In the telling of some, for nakedly partisan reasons, Hubert Ingraham is responsible for the terrible effects of the financial meltdown on The Bahamas.   Never mind that most of the region and the world have been similarly affected with some countries in an even worse position than The Bahamas.

LNG Exports from US Enter Bahamas Energy Planning Mix

by Larry Smith

The extraction of oil and gas from beneath the Bahamian seabed is a medium-term likelihood that many may instinctively oppose for environmental reasons. But we could cut costs and pollution now by generating electricity from liquified natural gas - imported from the US.

That's a scenario made possible by the development of large, unconventional gas fields in the US. Right now, the cost of natural gas is much cheaper than oil, and burning gas instead of heavy fuel oil or diesel produces 30 per cent less pollution.

The recent increase in North American gas reserves, combined with projected growth in global demand, will make the US a major liquified natural gas exporter over the next few years, experts say. This is in sharp contrast to previous years, when the US was seeking to import LNG from the Middle East and Trinidad.

Natural gas accounts for about 16 per cent of the global energy mix, but the US has near zero LNG export capacity. Existing LNG import terminals in Louisiana and Texas are already adding liquifaction capacity to allow for major LNG exports by 2015.

Meanwhile, the first US license to export smaller quantities of gas (up to 145 million gallons per year for 25 years) was obtained in July by a Florida firm called Carib Energy.

Innovation and Electric Vehicles in the Bahamas

by Larry Smith

Indian-American journalist Fareed Zakaria presented an interesting CNN special this past weekend. The topic was innovation, which is something that the Bahamas desperately needs in both the private and public sectors if we are to move forward at more than a snail's pace.

Zakaria is editor-at-large of Time Magazine and host of CNN's Global Public Square Sunday newsmagazine. He is an incisive commentator and author, who argues that older industries in the US are under tremendous pressure and future growth will have to come from new industries that create new products and processes.

This requires a high level of innovation, but surveys show the US ranks well down the top ten list in spending on things like research, patents and venture projects. In one measure of how much a country has improved its innovation capacity over the past decade, the US was last among 40 nations. That survey took account of factors like research funding, education and corporate-tax policies.

Innovation requires novel business ideas and new technology. For example, Google's Eric Schmidt explained that after developing a better online search programme, his company figured out how to make money from it by creating a new model for advertising sales. But Zakaria makes the interesting point that innovation is not an exclusive property of the private sector.

It is Getting Better in The Bahamas

by Simon

Bahamians at home and in Florida are used to picking up the Miami Herald and reading bad news about The Bahamas.  So it was with delight that Bahamians on both sides of the Florida Straits read Chelle Koster Walton’s recent 1400-word article, It’s Getting Better in The Bahamas.

It was not the only good news recently written of the positive direction in which The Bahamas is moving.  In the Tribune on the same day, Business Editor Neil Hartnell wrote:

“Multi-million dollar infrastructure development in the Bahamas is ‘creating fantastic opportunities’ for Bahamians, a leading financial services professional believes, describing ‘a rising tide in the Bahamas’ that was set to lift all sectors of the economy.

North and West and East and South

by Simon

At independence The Bahamas looked mostly north in the direction of Great Britain and Europe, and West in the direction of the United States.  We are still looking in those directions.  But our sights have been considerably broadened, mostly south and east. 

We are diversifying our political economy in significant ways.  In addition to improved English skills, the country will also need Bahamians fluent in Mandarin, Portuguese and Spanish. 

The downgrading of the UK’s diplomatic presence here was telling as the sun set on Britain’s ability to fund its far-flung overseas missions at empire levels.  The High Commission closed in 2005, which happened to be the same year that China’s economy surpassed the economies of both Britain and France. 

Lessons for BTC from Bahamas Airways

by Simon

A recent editorial cartoon of MPs bearing a coffin labelled Bahamianization was cute as a caricature but unconvincing as commentary.  The cartoon represents a polar extreme from the left.  From the right is another polar extreme claiming that Bahamianization has been tried and has failed. 

As usual, the truer picture is somewhere in the middle beyond the hyperbole and casual analysis.  Certainly, we are not where we want to be, but to deny various advances since independence, of which both extremes are prone, betrays many examples of progress despite the distance we have to travel.

All of which begs the question: What constitutes Bahamianization?  Like all strands of nationalism, notions of Bahamianization are often driven by romanticism, ideological purity tests, prejudice and fear.  At its most extreme, nationalism can explode into jingoism, xenophobia and racism. 

At the heart of nationalism is a sense of identity and belonging to a place and may include political, social and economic nationalism.  The highly emotive debate about the future of BTC has triggered various waves of economic nationalism which concern issues of opportunity, ownership and empowerment.

Reforming the Bahamian Energy Sector

by Larry Smith

So here we are, two years after the last oil shock, and prices are over $100 per barrel again, with some forecasters saying they could pass the 2008 high of $147 a barrel that sent everyone scrambling to cut energy costs.

Already we are hearing the usual cries for government relief. And those cries will only get louder as higher prices filter through to gas pumps, electricity meters and store shelves. But in our case, there is very little the government can do beyond providing short-term consumption credits - and that comes at a cost to BEC's solvency.

Worldwide, fossil fuel consumption subsidies amounted to $312 billion in 2009, compared to government support for renewables and biofuels of $57 billion. A subsidy is any government action that lowers the cost of energy production, raises the price received by energy producers, or lowers the price paid by consumers.