The Striker Report

In August of this year, Scottish newspaper the Sunday Herald reported that cod fish caught off the coast of Scotland were being frozen and shipped to China only to be processed, re-frozen and sent back to Scottish supermarkets, a 10,000 mile round-trip journey. The reason for such a lengthy detour? Cheaper labor costs - the Chinese workers earn less than a British pound a day for their efforts, according to the Herald.

What would that most famous of Scots economists, Adam Smith, have made of such waste?

In his landmark economic treatise the Wealth of Nations, Smith celebrated the virtues of free markets and the division of labor. While the above arrangement appears to be benefiting both the producers of cod and the Scottish consumer, recent evidence suggests that this kind of inefficiency has quite serious costs indeed, and not just to Scottish labor.

The US National Oceanic and Atmospheric Administration has found that each year commercial ships emit one million kilograms of particle pollution into the air, or roughly half of that produced by all road traffic in the world. Ship engines also produce large amounts of nitrogen, contributing to the formation of algae "dead zones" where no fish can survive.

What's more, according to a 2008 report by the United Nations, the world's merchant vessels produce 1.12 billion tonnes of CO2 a year, or nearly 4.5% of all global emissions of the greenhouse gas.

Modern economists refer to such hidden costs as "negative externalities": external costs that producers shift on to the public. These costs are rapidly emerging as some of globalization's most vexing problems. In the case of the oceans their effect in increasingly visible in the form of increasing acidity, melting ice-caps and declining fish stocks (which, according to a 2006 study, will all but collapse within fifty years).

Luckily, the problem has not gone unnoticed. According to Supply Chain Review, in 2008 the International Maritime Organization's (IMO) Marine Environment Protection Committee reached an historic agreement to slash emissions of pollutants by up to 90 percent, while agreeing to a progressive reduction in the global cap on sulphur content in marine fuel from the current 4.5 percent to 0.5 percent by 2020.

In 2008, the New York Times reported that a number of shipping companies have already invested in more efficient engines to capture and convert waste heat into more energy, cutting down on both fuel use and emissions. But the Times noted that of the hundreds of ships under construction, only a handful include such technology.

In a related article, the Times also noted that the European Commission is considering a freight tax specifically to address the environmental toll of shipping food.

However, according to a 2007 study for the American Petroleum Institute, it would cost the fuel industry $126 billion over 13 years to invest in equipment and chemicals to replace polluting fuels with sufficient amounts of cleaner diesel to supply the shipping industry, costs which the industry would pass on to ship operators.

Globalization has provided the world's consumers with an unprecedented degree of choice at the market place. We now live in a strange wonderland where shoppers in Beijing can buy wines from France, and half of Europe's peas are grown and packaged in Kenya.

Still, the problem of externalities remains; as long as the comparative advantages of cheaper labor exist in some countries, environmentally damaging inefficiencies are likely to persist.

But take heart, environmentalists; thanks to Japanese innovation, your ship may have already come in.

Inhabitat.com has reported that a 665 foot solar-powered cargo ship, the M/V Auriga Leader recently docked in Los Angeles. Owned by Tokyo-based shipping company NYK Line, the ship has 328 solar panels on its top deck providing 40 kilowatts of power. The Auriga set sail in Japan last year, and docked at the Port of Long Beach--the second busiest port in the U.S.--for the first time last week. The only question is: will such advanced technology be adopted in time to save the world's oceans?