5. Mortgaging the Earth

Mortgaging the Earth (2004)


Le Train Bleu, Ransom Wilson, conductor

Recorded: Feb 1, 2013

Kendra Colton, Pam Dellal, sopranos


Muneko Otani violin1, Francesca Anderegg violin 2, Nathan Schram, viola, Mihai Marica, Cello

Brian Ellingson, Double Bass

Chris Matthews flute, Carl Oswald, Oboe

Brad Balliett, Bassoon, Alma Liebrecht, French Horn


DATE: December 12, 1991

TO: Distribution

FR: Lawrence H. Summers

Subject: GEP

‘Dirty’ Industries: Just between you and me, shouldn’t the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Less Developed Countries]? I can think of three reasons:

1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.

2) The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. I’ve always though that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.

3) The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity. The concern over an agent that causes a one in a million change in the odds of prostrate cancer is obviously going to be much higher in a country where people survive to get prostrate cancer than in a country where under 5 mortality is is 200 per thousand. Also, much of the concern over industrial atmosphere discharge is about visibility impairing particulates. These discharges may have very little direct health impact. Clearly trade in goods that embody aesthetic pollution concerns could be welfare enhancing. While production is mobile the consumption of pretty air is a non-tradable.

The problem with the arguments against all of these proposals for more pollution in LDCs (intrinsic rights to certain goods, moral reasons, social concerns, lack of adequate markets, etc.) could be turned around and used more or less effectively against every Bank proposal for liberalization.

From:              Jose Lutzenberger

Secretario do Meio Ambiente


To:                  Mr. Laurence Summers

Vice President Research and Policy

World Bank

Washington, DC 20433


It was almost a pleasant surprise to me to read reports in our papers and then receive a copy of your memorandum supporting the export of pollution to Third World Countries and the arguments you present for justifying it. Your reasoning is perfectly logical but totally insane.  It underlines what I just wrote in a chapter on the absurdity of much of what goes for “economic thinking” today as part of a a book that will be presented at the RIO-92 Conference.  Your thoughts will be quoted in full in the book as a concrete example of the unbelievable alienation, reductionist thinking, social ruthlessness and the arrogant ignorance of many conventional “economists” concerning the nature of the world we live in.

If it came from some insignificant teacher in a third grade school in the backwoods it might be laughable, but coming from a Harvard professor and a man in your position it is an insult to thinking people all over the World.  If the World Bank keeps you as vice president it will lose all credibility. To me it would confirm what I often said as an environmentalist years ago, fighting ecologically devastating and socially disruptive World Bank “development projects”, namely that the best thing that could happen for the Bank to disappear.

Dear Mr. Lutzenberger:

Your recent note to me expresses understandable outrage at the contents of my now infamous memo on toxic waste.

As I have tried to make clear in the past few days, this memo can only be fully understood in the context of internal discussions held here on a draft of our forthcoming Global Economic Prospects paper.  To sharpen the analysis and clarify a rather vague internal discussion, this note took as narrow-minded an economic perspective as possible.  Outside this context, you and other readers  can and have misunderstood the memo’s intent.

Let me very clear: The memo does not represent my view, the World Bank’s view, or that of any sane person.  The Bank’s record on this topic and its strong position on numerous other environmental issues today should give you great confidence that this ridiculous and absurd argument in no way reflects the real world of the Bank’s policies and programs.

As you know, this has been a painful period for me.  I deeply regret that this has happened, and I sympathize with the concern you and others have expressed.



Lawrence H. Summers



Thanks to Bruce

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