 Welcome to the Political Economy of the Environment. I'm Jim Boyce. Today we're going to be talking about globalization. Globalization refers to the increasing integration of economic activity across the planet into a single world economy. This involves not only the integration of markets, but also the integration of governance, the integration of the rules and incentive systems that structure the way that markets operate. Even there's a lag between how rapidly markets are integrated and how rapidly governance is integrated. And as a result of that, one risk associated with globalization is that we'll see a globalization of market failure. We'll see a proliferation of market failures as the ability of governance institutions to correct for things like environmental externalities is outpaced by the proliferation and integration of markets themselves. Because of this, there have been a number of concerns expressed about what will happen as a result of, for example, free trade agreements and other innovations that are part of the globalization process. Something that it will produce a race to the bottom. That what will happen is that those jurisdictions, those countries or states with the weakest environmental standards will attract more investment and that that will put pressure on countries or states with relatively strong regulation to weaken their regulations in order to retain that investment at home. Globalization in this story produces a race to the bottom towards the least common denominator in terms of environmental quality. Others more optimistically think that globalization will produce a harmonization upwards that as a result of globalization, environmental policies and environmental quality will converge across the globe, but will converge to a stronger level of protection and better environmental quality than would otherwise be the case. And there are some cases where there's evidence to support that view, just as there's evidence to support the race to the bottom view and other cases. Another possibility is that rather than convergence either towards the bottom or towards the top, globalization will produce increasing polarization as environmental quality improves in some places and diminishes in others. This could happen through the offshoring of dirty industries as production that involves a lot of pollution, a lot of resource depletion shifts to those places in the world where people are less able to either exercise purchasing power or political power in order to protect their own environments. All of these outcomes are possible. Twenty years ago in the debate over the North American Free Trade Agreement, which is one of the first agreements to really bring these issues to public consciousness and into the policy arena, the environmental movement in the United States was bitterly divided over whether or not to support NAFTA as the agreement was called. Some environmentalists felt that it would produce a race to the bottom and therefore opposed the agreement and others thought that it would produce harmonization upwards and therefore supported the agreement. What both sides agreed on was that up meant the United States and down meant Mexico. NAFTA did combine Mexico, the United States, and Canada into one free trade zone with no restrictions on trade amongst these countries. The concerns of the environmentalists were about whether Mexico would become more like the United States, that would be harmonization upwards, or the United States become more like Mexico, that would be the race to the bottom. That framing of the problem missed what turned out to be arguably the single most important environmental impact of NAFTA, which was the erosion of Mexican corn production by imports of cheap corn from the United States. Corn, or maize as it's called in the rest of the world, is the single most important agricultural product in both countries, in both the United States and in Mexico, but it's produced in very different ways. In Mexico, much of the corn production is carried out by small farmers growing a wide range, thousands of different varieties of corn, as they've been doing for thousands of years, because Mexico's where corn was first domesticated. In the United States, by contrast, it's typically grown on very large farms, using heavily mechanized production, and a very small number of corn varieties. Why does it matter that cheap U.S. corn has been displacing more expensive Mexican corn thanks to the elimination of the tariff barriers which previously protected Mexican corn producers? The reason it matters is that all those thousands of varieties of corn that are grown in Mexico turn out to be critical to the long-term viability of corn production worldwide. When you grow one or a few varieties over a large area of land, the process of survival of the fittest, the process of evolution, inexorably produces diseases and pests that are especially virulent on those few varieties. And as a result, plant breeders engage in what sometimes is called the varietal relay race by which they're breeding new varieties that are resistant to the new pests and diseases emerging in the farmers' fields. Here in the United States, and in all advanced industrialized countries, this is part of the agricultural system. It's a part that's not visible to everybody, but it really underpins the viability of the system. And the raw material for those breeding activities is the crop genetic diversity maintained by small farmers in the field in places like Mexico. So as globalization erodes that production as the cheap corn from industrial agriculture displaces the small farmers who've been cultivating diversity and in effect contributing an environmental service that underpins long-term food security for humankind. It's creating a huge environmental problem. The NAFTA debate largely missed that because so many participants assumed that our production here in the north is relatively clean, green and sustainable and theirs in Mexico is relatively dirty and unsustainable. But as this example of corn shows, that's not always the case. Sometimes it's the other way around. Sometimes production in the global south in places like Mexico is cleaner and more sustainable than production in the global north. What we therefore need to do as part of the governance arrangements that accompany globalization is devise ways to reward and recognize people like the Campesinos or small farmers of Mexico for their contributions to the environmental services that sustain long-term human food security. Globalization isn't going to go away. But if we want to make it work for people, we need to control it. We need to govern it. And we need to make sure that those who are doing things that benefit the environment and benefit humankind over the long-term are rewarded and those who are jeopardizing the future of humankind and the health of our environment are penalized.