Wednesday, 22 May 2002

East of Eden

After years of foreign control, East Timor became the world's newest nation this week. Now the country must rise from the ashes wrought by years of brutal domination by Indonesia -- and it hopes to do so in part by capitalizing on its abundant natural beauty to attract eco-tourists. Currently, East Timor is the poorest country in Asia, but revenue from scuba diving, mountain trekking, biking, and other outdoor pursuits could become the island-nation's lifeblood, according to Craig Wilson, an economic policy adviser who helped draw up a development plan for the new nation. But there are some catches to the plan: East Timor is not easy to get to, prices are higher than in nearby vacation destination Bali, and, unsurprisingly, there have been virtually zero foreign travelers in recent years, so the nation must start from scratch to build a tourist base.

Fatwa Alberta

Canada's already-tense internal battle over whether to ratify the Kyoto Treaty on climate change heated up further yesterday, when the province of Alberta withdrew from negotiations after its alternative emissions-cutting plan was rejected by the other provinces and territories. In response, Alberta resigned as co-chair of the commission formed to negotiate climate issues and refused to sign the communique issued by the nation's other energy and environment ministers. Without Alberta in the picture, it will be difficult for Canada to comply with the Kyoto accord, because the province produces about a third of the nation's greenhouse gas emissions. The stage is now set for even more internal friction: The federal government has said it is prepared to override Alberta's opposition if necessary, and there are rumblings that the province could go to court to avoid complying with the treaty if it is ratified.

Miner Threat

The Bush administration canceled yesterday a two-year ban on new mining claims in roughly 1.2 million acres in and around southern Oregon's Siskiyou National Forest. The ban was imposed by the Clinton administration in response to lobbying efforts by conservationists, who wanted the area declared a national monument. Instead, former Interior Secretary Bruce Babbitt imposed the moratorium to allow time for further study and public comment. But the Bush administration, a pal to mining interests and no friend to new national monuments, lifted the ban, which was set to expire in January 2003. In its place, the Bureau of Land Management and the U.S. Forest Service proposed a prohibition on new mining claims on 117,000 acres of land -- a 90-percent reduction in the amount of land under protection. Critics said the shift threatened key plant and animal habitat.

Sign of the TIMOs

A major shift is taking place in U.S. timber ownership, and it could have significant consequences not just for the industry but also for ecosystems across the country. Traditionally, the major private owners of forestlands in the U.S. have been forest product companies, but increasingly, such land is being bought by investment groups hoping to make money on their holdings. In the last four years alone, 15 million acres (an area about three times the size of Massachusetts) have changed hands. Most of that land has been snapped up by timber investment management organizations, or TIMOs, which invest money for institutions and individuals looking to diversify their portfolios. Environmentalists are still trying to determine the likely long-term consequences of the trend. Trees held by timber companies went to feed their mills, while TIMOs have sometimes enabled preservationists to buy large tracts of land. But the knife can cut both ways, since parcels can also be sold off for development. One trend is clear, though: TIMOs are good moneymakers. Between 1985 and 2001, the largest of them, Hancock Natural Resource Group, generated an average annual return of 14.6 percent, making it one of the market's top-performing investments.

New Sue Review

Oral arguments were heard yesterday in the U.S. EPA's lawsuit against the Tennessee Valley Authority, the nation's largest public power provider. Lawyers for the EPA argued that the TVA violated the New Source Review rule of the Clean Air Act by failing to install state-of-the-art pollution-control equipment when upgrading its older coal-burning power plants. Lawyers for TVA, meanwhile, argued that the company had conducted routine repairs, not major overhauls, and that EPA was trying to change its rules mid-game. The utility also noted that compliance with the EPA's order would cost billions of dollars and force up electricity rates. The outcome of the case could have broad implications for utilities, which want to be able to conduct maintenance at older plants without installing expensive new equipment. The three-judge panel hearing the case is expected to rule this summer; meanwhile, similar cases are pending against several other utility companies.