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The country's economic collapse is a grim preview of what can result from distorting markets in the name of utopian priorities.

Sri Lanka Is a Wake-Up Call for Eco-Utopians

By Chelsea Follett @Chellivia

By Malcolm Cochran @MalcolmGCochran

Earlier this week, a group of Sri Lankan protestors took a refreshing dip in President Gotabaya Rajapaksa’s pool. It was probably a welcome respite from the steamy eighty-degree day in Colombo, as well from the unprecedented economic crisis currently devastating the country. Over the last year, Sri Lanka has experienced an annual inflation rate of more than 50 percent, with food prices rising 80 percent and transport costs a staggering 128 percent. Faced with fierce protests, the Sri Lankan government declared a state of emergency and deployed troops around the country to maintain order.

On Thursday morning, the New York Times published an episode of The Daily podcast discussing some of the forces behind the collapse. They outlined how years of irresponsible borrowing by the Rajapaksa political dynasty, combined with the damage caused by Covid lockdowns to Sri Lanka’s tourism industry, drained the country’s foreign exchange reserves. Soon, the country was unable to make payments on its debt or import essential goods like food and gasoline. Strangely, the hosts of the podcast, which reaches over 20 million monthly listeners, didn’t mention President Rajapaksa’s infamous fertilizer ban once during the thirty-minute episode.

The fertilizer ban was, in fact, a major factor in the unrest. Agriculture is an essential economic sector in Sri Lanka. Around 10 percent of the population works on farms, and 70 percent of Sri Lankans are directly or indirectly dependent on agriculture. Tea production is especially important, consistently responsible for over ten percent of Sri Lanka’s export revenue. To support that vital industry, the country spent hundreds of millions of dollars a year importing synthetic fertilizers.

During his election campaign in 2019, Rajapaksa promised to wean the country off these fertilizers with a ten-year transition to organic farming. He expedited his plan in April 2021 with a sudden ban on synthetic fertilizers and pesticides. He was so confident in his policies that he declared in a (since stealthily deleted and memory-holed) article for the World Economic Forum in 2018, “This is how I will make my country rich again by 2025.” As the ecomodernist author Michael Shellenberger writes, the results of the experiment with primitive agricultural techniques were “shocking:”

Over 90 percent of Sri Lanka’s farmers had used chemical fertilizers before they were banned. After they were banned, an astonishing 85 percent experienced crop losses. Rice production fell 20 percent and prices skyrocketed 50 percent in just six months. Sri Lanka had to import $450 million worth of rice despite having been self-sufficient just months earlier. The price of carrots and tomatoes rose fivefold. … [Tea exports crashed] 18 percent between November 2021 and February 2022 — reaching their lowest level in more than two decades.

Of course, Rajapaksa’s foolish policy wasn’t revealed to him in a dream. As Shellenberger points out, the ban was inspired by an increasingly Malthusian environmentalism led by figures like the Indian activist Vandana Shiva, who cheered the ban last summer. Foreign investors beholden to the same ideology also praised and rewarded Sri Lanka for “taking up sustainability and ESG (environmental, social and corporate governance) issues on its top priority.” ESG represents a trend (or lasting shift, depending on who you ask) in some investors’ priorities. Put simply, it is an attempt to move capital toward organizations that further a set of amorphous environmental and social justice goals instead of toward the enterprises most likely to succeed and turn a profit.

Proponents of ESG have been pushing for government mandates requiring enterprises to disclose detailed information related to environmentalism and other social goals. That distorts and harms the smooth functioning of the capital markets that keep modern economies running and, in some cases, incentivizes nice-sounding but economically inefficient projects, like a return to primitive agriculture. “The nation of Sri Lanka has an almost perfect ESG rating of 98.1 on a scale of 100,” notes David Blackmon in Forbes, and “the government which had forced the nation to achieve that virtue-signaling target in recent years [has as a result] collapsed.” Sri Lanka, in other words, offers a grim preview of what can result from distorting markets in the name of utopian priorities.

Consider a long-run perspective. Throughout most of human history, farmers produced only organic food—and food was so scarce that, despite the much lower population in the past, malnutrition was widespread. The long-term, global decline in undernourishment is one of humanity’s proudest achievements. Lacking a sense of history and taking abundant food for granted, some environmentalists want to transform the global food system into an organic model. They see modern agriculture as environmentally harmful and would like to see a transition to natural fertilizers that would be familiar to our distant ancestors, such as compost and manure.

However, conventional farming is not only necessary to produce a sufficient amount of food to feed humanity (a point that cannot be emphasized enough—as the writer Alfred Henry Lewis once observed, “There are only nine meals between mankind and anarchy”) but it is in many ways better for the environment. According to a massive meta-analysis by the ecologists Michael Clark and David Tilman, the natural fertilizers used in organic agriculture actually lead to more pollution than conventional synthetic products. Fertilizers and pesticides also allow us to farm land more intensively, leading to ever-higher crop yields, which allow us to grow more food on less land. According to HumanProgress board member Matt Ridley, if we tried to feed the world with the organic yields of 1960, we would have to farm twice as much land as we do today. 

Global agricultural land use has peaked and is now in decline. So long as crop yields continue to increase, more and more land can be returned to natural ecosystems, which are far more biodiverse than any farm. Smart agriculture allows nature to rebound.

In wealthy countries, conventional farming is becoming ever-more efficient, using fewer inputs to grow more food. In the United States, despite a 44 percent increase in food production since 1981, fertilizer use barely increased, and pesticide use fell by 18 percent. As the esteemed Rockefeller University environmental scientist Jesse Ausubel noted, if farmers everywhere adopted the modern and efficient techniques of U.S. farmers, “an area the size of India or the USA east of the Mississippi could be released globally from agriculture.”

Most importantly, it must be restated, conventional agriculture feeds the world. Since the Green Revolution of the 1950s and 60s, world agricultural production has exploded, causing the global food supply to reach nearly 3000 kcal per day in 2017, up from just over 2,000 in 1961. While hunger is now making a comeback, that is due to war, export restrictions, and the misguided policies of leaders like Rajapaksa, not a lack of the ability to produce enough food.

The fertilizer ban was not the only factor behind Sri Lanka’s economic crash. Much of the damage was also caused by the hastiness of the ban and the difficulty of obtaining enough organic alternatives. However, the idea that organic farming can produce enough food for the world is an unreachable fantasy based on the naturalistic fallacy — the baseless notion that anything modern, such as agriculture incorporating non-natural components produced by the ingenuity of man, must be inferior to the all-natural precursor. 

As Ted Nordhaus and Saloni Shah from the Breakthrough Institute point out, “there is literally no example of a major agriculture-producing nation successfully transitioning to fully organic or agroecological production.” We must never take the relative rarity of starvation in modern times as a given nor romanticize and seek to return to farming’s all-organic past. Unfortunately, the delusion seems to be spreading, helped along by the global shift toward ESG. Last Sunday, Narendra Modi, the prime minister of India, praised “natural farming” during a speech in Gujarat, calling it a way to “serve mother earth” and promising that India will “move forward on the path of natural farming.” Let’s hope not.

Chelsea Follett is the managing editor of HumanProgress.org and a policy analyst in the Cato Institute’s Center for Global Liberty and Prosperity.

Malcolm Cochran is a research associate at HumanProgress.org

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