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#874 -- U.S. Has Poor Health, 28-Sep-2006


Rachel's Democracy & Health News #874

"Environment, health, jobs and justice--Who gets to decide?"

Thursday, September 28, 2006............Printer-friendly version
www.rachel.org -- To make a secure donation, click here.

Featured stories in this issue...

The Health of U.S. Citizens Is Poor and Declining
  The health of U.S. citizens is abysmally poor, compared to that of
  other wealthy, industrialized societies. When we look for causes, we
  often don't examine the real fundamentals -- the "social determinants
  of health." These "social determinants" are, in turn, created or
  modified by specific public policies. This week and next we depart
  somewhat from our usual journalistic approach to offer this important
  new statement on the poor health of U.S. citizens and the public
  policies that lie behind the shocking numbers. The statement is framed
  as a challenge to the public health community in the U.S.
Our Billionaire Bunch
  The 400 exceedingly wealthy individuals on the annual Forbes list
  now hold, as a group, nearly as much wealth as the poorer half of
  America's households. This has real consequences for public health.
Intersex Fish Raises Pollution Concerns in U.S.
  The cleanup of the Potomac River has long been considered one of
  the nation's great success stories. Ever since Lady Bird Johnson made
  it a priority in the 1960s, the Potomac has been getting cleaner.
  Now, new evidence indicates that perhaps we were measuring success
The Ascent of Wind Power
  "Wind power may still have an image as something of a plaything of
  environmentalists more concerned with clean energy than saving money.
  But it is quickly emerging as a serious alternative not just in
  affluent areas of the world but in fast-growing countries like India
  and China that are avidly seeking new energy sources."


From: Rachel's Democracy & Health News #874, Sept. 28, 2006
[Printer-friendly version]


Is the Public Health Community Prepared to Become Involved?

By Dennis Raphael

[Editors' introduction: Dr. Dennis Raphael is a professor in the
School of Health Policy and Management, York University, Toronto. In
recent years he has edited two volumes on the social determinants of
health -- Staying Alive: Critical Perspectives on Health, Illness,
and Health Care (2006), and The Social Determinants of Health:
Canadian Perspectives (2004). He is the author of Inequality is Bad
for Our Hearts; Why Low Income and Social Exclusion are Major Sources
of Heart Disease in Canada (2001). If you have a high-speed internet
connection, you can see and hear Dr. Raphael delivering an
interesting lecture. If you are not familiar with the concept of
"social determinants of health," you might read this short article
in Wikipedia. In manuscript, this article was originally titled,
"Public Policies Drive the Deteriorating Population Health Profile in
the USA."]


International interest in the social determinants of health represents
yet another cycle of recognition of the importance of structural
determinants of health that began in earnest in the 1850's (1, 2).

Yet, recent waves of concern with structural determinants of health
appear to have bypassed the mainstream American public health
community (3-5). Analysis of how early life, education, employment and
working conditions, food security, housing, income and its
distribution, and unemployment and employment security (6) shape
health and creates health inequalities seem especially timely as the
USA presents one of the worse population health profiles among wealthy
developed nations and one of the most undeveloped public policy
environments in support of health (7, 8).

These public policy issues concern income distribution, employment
security and working conditions, and quality of the social
infrastructure in support of health. Despite evidence that the USA has
become a striking outlier among wealthy developed nations in its
population health and public policy profiles, the USA public health
community is taking only cautious steps towards addressing the
structural antecedents of health and disease (4, 9) . And when the
social determinants of health concept is explored the analyses are
typically narrow and strangely depoliticized (10-13). Public policy
antecedents of health determinants such as family, labor, tax, social
assistance, and taxation policy, as examples, are rarely mentioned and
when they are, are done in a rather perfunctory manner (14, 15).
Resignation that progressive public policy change in support of health
in the USA is unlikely is frequently a message conveyed in these
analyses (16-19). What roles could the public health community play in
this effort and how likely is it that these efforts could succeed?

Social Determinants of Health

The renewed focus on social determinants of health (6, 20-25) grew out
of efforts by UK researchers to identify the specific exposures by
which members of different socio-economic groups come to experience
varying degrees of health and illness (26). It is no accident that the
term social determinants of health made its contemporary appearance
during the Thatcher era in a UK volume concerned with policy, social
organization, and health (27). The concept struck a responsive chord
in many wealthy industrialized nations where growing income and wealth
inequalities, the weakening of the welfare state, and increasing
evidence of social exclusion were causes for concern (28-30).

The social determinants of health concept failed to gain much traction
within the USA pubic health community even though the growth in income
and wealth inequalities since the 1980's has been greater than any
other wealthy developed nation (8). Despite sporadic mention of the
concept in various American academic articles (10, 14, 31, 32), the
USA public health community gaze is firmly focused on rather narrow
issues of identifying racial and ethnic disparities, health care
access, and behavioral risk factors rather than structural issues
concerned with the distribution of economic and social resources (4,
33). When the social determinants of health are considered, these are
strangely de-politicized such that their public policy antecedents are
rarely mentioned and certainly not criticized through a consistent
political analyses.

The key exceptions to this trend include the work of Smeeding and
Rainwater who have labored over the years to raise issues of poverty,
income distribution, and service distribution, their public policy
antecedents, and their implications for health (8, 34-36). Similarly,
the recent volume by Hofrichter brought together much of the sparse
literature on the structural determinants of population health in the
USA (37). See also Alesina and Glaeser, (38), Rank (39), Kawachi and
Kennedy (40), Brooks-Gunn (41) and Auerbach and colleagues (42) and
work on income and wealth inequality by numerous non-governmental
organizations (43-46).

At the same time the public health community gazes on ethnic and
racial disparities, access to health care, and behavioral risk
factors, the public policy environment in support of health
deteriorates (43, 47-49). Much of this has to do with the neo-liberal
and neo-conservative resurgence that began in earnest during the
Reagan presidency which coincided -- and was incompatible -- with
growing international interest in structural approaches to health
promotion (50). Now, 20 years after the Reagan Revolution led to
astounding increases in income and wealth inequality, the dismantling
of much of the American welfare state, and hardening public attitudes
towards governmental provision of services, the public health
community is taking cautious steps towards addressing structural
determinants of health. How likely are these efforts to be successful?

Within most nations, social class, occupational status, and income are
analyzed as key issues that interact with public policy approaches to
resource distribution and service provision to shape health
inequalities and population health (28, 51, 52). Social stratification
interacts with public policy to produce differential exposures to
societal resources that shape health (53, 54). In the USA however,
issues of social class, occupational position, and income take a back
seat to analysis of "racial and ethnic disparities" in health (4).
Indeed, discussion of resource distribution including income and
general social provision as determinants of health is clearly
undeveloped in the USA. Analysis of social stratification and social
class as health determinants is even less so (42, 55-57).The reasons
for this and the impact this focus has on public health researchers
and workers' activities in the service of health are discussed below.

The USA Population Health Profile

The social determinants of health and their public policy antecedents
are especially relevant to the USA as its health profile is especially
poor in relation to other wealthy industrialized nations. For the
following indicators of population health of a nation, a rank of 1 is
best, with increasing rank indicating poorer relative performance as
compared to the wealthy industrialized nations of the Organization for
Economic Cooperation and Development (OECD).

Life Expectancy

In 2002, life expectancy for American males was 74.4 years, and for
women, 79.8 years providing a relative rank of 22nd of 30 wealthy
developed nations for men; and 25th of 30 for women (7). The average
life expectancy increase in the USA of 7.2 years from 1960 to 2002 was
well below the OECD average of 9.2 years giving the USA a rank of 22nd
of 30 nations.

Infant Mortality Rate

In 2002, the USA's 2002 rate of 6.8/1000 gives it a rank of 25th of
the 29 wealthy industrialized nations for which these data are
available (7).

Low Birthweight Rate

In 2003 the USA's low birthweight rate was 7.9 per 100 newborns giving
it a ranking of 25th of 28 wealthy industrialized nations for which
these data were available (7).

Childhood Death by Injury Rate

During the period 1991-1995, 14.1 American children per 100,000 died
from injuries giving the USA a ranking of 23rd of 26 wealthy
industrialized nations (58).

Child Maltreatment Deaths

During the 1990's the incidence of childhood death by maltreatment per
100,000 children in the USA was 2.2 per 100,000 (59). This gave the
USA an overall rank of 26th of 27 wealthy industrialized nations. A
ranking that takes into account "undetermined intent" raises the USA's
rate to 2.4 per 100,000 and a relative ranking of 25th of 27.

Teenage Pregnancy Rate

The USA's rate during the 1990's of 51.1 births to 1000 women below 20
years of age gives it a rank of 28th of 28 wealthy industrialized
nations. These rates are exceptionally high -- 21 points higher than
the nearest nation, the UK.

To summarize, the USA shows a very poor population health profile on a
variety of health indicators. It does poorly on male and female life
expectancy, infant mortality rank, low birthweight rate, deaths from
child injury and child maltreatment.

Poverty as a Health Determinant: USA Rates in International

Poverty is increasingly seen as the greatest threat to human
development and a nation's quality of life (60, 61). The experience of
poverty also results in -- as well as contributes to -- social
exclusion, a process identified by the European Union and the World
Health Organization as the primary threat to the smooth functioning of
developed societies (62, 63). Where does the USA stand on this

Overall National Poverty Rates and Poverty Gaps

Using the internationally agreed-upon convention of poverty as the
percentage of individuals with disposable income less than 50% of the
median income of the population, the USA's overall poverty rate for
the mid 1990's was 16.6% (7). By 2000 it had increased to 17.0% which
was well above the OECD average of 10.2%. The USA's relative rank in
this important rating was 26th of 27 wealthy industrialized nations.
In terms of the gap between the average incomes of those living in
poverty and the median income of the population, the USA's gap of
34.3% is above the OECD average of 27.7%, providing a rank of 23rd of

Child Poverty -- Relative and Absolute Rates

During the late 1990s, the USA's relative child poverty rate of 22.4%
gave it a ranking of 22nd of 23 wealthy industrialized nations (64).
These rates can be compared with those seen for the Nordic nations
(Denmark, 5.1%; Finland, 4.3%; Norway, 3.9%; and Sweden, 2.6%),
Belgium (4.4%); and Luxembourg (4.5%).

Absolute child poverty rates are generated by applying the USA poverty
standard to other nations adjusting for national currencies and
national purchasing power. The USA poverty standard is set very low
and is usually seen as an indicator of very limited resources
associated with serious material and social deprivation (64). The
USA's rate of 13.9% places it 11th of 19 nations for whom these data
were available. The Nordic nations also have very low absolute poverty
rates (Sweden, 5.3%; Norway, 3%; Denmark, 5.1%; Finland, 6.9%),
Belgium (7.5%), and Luxembourg (1.2%) thereby maintaining their low
rankings on both kinds of poverty indicators.

Recent Analyses from the Luxembourg Income Study (LIS)

How does the very high level of poverty in the USA come about? An
analysis of LIS data by Smeeding provides insights into this process
among 11 wealthy developed nations (36). These nations represent four
Anglo-Saxon nations, Canada, Ireland, United Kingdom, and the USA;
four central European nations, Austria, Belgium, Germany, and the
Netherlands; one Southern European nation, Italy; and two Nordic
nations, Finland and Sweden.

These analyses highlight how public policy determines poverty rates.
Poverty rates are based on the international convention of a poverty
cut-off of less than 50% of median adjusted disposable income for

The USA's overall poverty rate of 17% places it as the highest of
these 11 nations. For USA children living in single parent households
the poverty rate is a striking 41.4%, almost four times the rate for
Swedish children living in this situation and almost six times the
rate for Finnish children. The situation for USA elders does not fare
much better. The USA's elder poverty rate of 28.4% is the second
highest among these nations exceeded only by the strikingly high rate
of 48.3% seen in Ireland. Similarly, the USA's poverty rate for
childless adults is at 18.8%, exceeding every nation.

Have USA rates changed over time? Smeeding compares overall poverty
rates for each nation over a 23 year period from the base year of 1987
to 2000. In 1987, the relative poverty rate for the USA was 17.8%. For
2000 he provides two rates. The 2000 relative rate applies the same
calculation to 2000 as applied in 1987: the poverty line as less than
50% of the median disposable income for all residents. For the USA,
the relative poverty rate in 2000 was 17% showing little change form

The anchored rate refers to the percentage of Americans in 2000 living
below the poverty line as it was calculated in 1987 and adjusted for
increases in the cost of living since that time. In the USA, this
figure is 13.8%. There has been therefore some improvement in the
actual income of those at the bottom, but in relative terms poverty
rates in USA are virtually unchanged from 1987 to 2000.

Poverty rates are shaped by government spending programs.

Market income refers to income derived from gainful employment or
investments and other private sources. Relying upon the market as the
source of income provides rather high overall poverty rates across all
nations. The USA's poverty rate based on market income is lower than
most nations. Social insurance and taxes -- referring to transfers
such as child benefits and children's allowances and changes in
distribution resulting from taxation -- reduces the USA's poverty rate
to 19.3%. The USA's poverty rate associated with the provision of a
few more varied benefits -- called social assistance -- further
reduces the poverty rate to 17.0%.

What is the calculated effect on poverty rates of these government
programs? In the USA, social insurance programs reduce the poverty
rate by 16.5% and all programs reduce it by 26.4% which is the
smallest amount among these nations. In contrast, the overall
reduction rate is 60.9% for the nations included in this analysis.
Indeed, Sweden reduces its poverty rate by 77.4% by such actions.
Belgium, Germany, Austria, and Finland also reduce their overall
poverty rate by at least 70% through government action.

The USA expends a miserly 2.3% of Gross Domestic Product (GDP) on
non-elderly citizens. In contrast, Finland and Sweden spend over 10%
of GDP on citizen benefits. The importance of government expenditures
in reducing poverty is illustrated by an analysis that reveals that
non-elderly cash and near-cash (e.g., housing subsidies, active labor
market subsidies, etc.) predict 61% of the variation among these
nations' non-elderly poverty rates. Nations that spend more money on
these benefits have lower poverty rates. Nations that spend less have
higher poverty rates.

Smeeding also shows that the percentage of low-paid workers is
strongly related to the percentage of non-elderly citizens within a
nation living in poverty (36). The USA has 25% of its workers
identified as earning less than 65% of the median wage and a poverty
rate of 17.8%. In contrast only 5% of Finnish and Swedish workers earn
low wages and their poverty rates are 4.5% and 6% respectively. These
variations in numbers of low paid workers accounts for a strikingly
high 85% of the variation among nations in the number of people living
in poverty. In essence, the single best predictor of the number of
people living in poverty in a nation is the number of people earning
low wages. This begs the question of why so many USA workers are
low-paid, an issue discussed in following sections.

Nations that transfer less resources to citizens are more likely to
have higher levels of poverty -- and as other evidence shows -- poorer
population health profiles (65-67). Nations that tolerate greater
proportions of low-paid workers have higher poverty rates and the
associated population health consequences. The next sections explore
the nature of these differences in governmental support of citizens
through transfers and programs.

USA Public Policy in Perspective

Health inequalities and population health profiles associated with
these inequalities result from systematic variations in approaches to
public policy (68, 69). Commonly termed the welfare state, this basket
of public policies serves to promote human, social and economic
development, reduce citizen uncertainty, and foster health and
well-being. This political economy of health is well developed in
Europe, much less so in North America (70, 71). It is especially
undeveloped in the USA.

Societal Commitments to Citizens and Governmental Spending

Public commitment to supporting citizens is seen in percentage of
Gross Domestic Product (GDP) transferred to citizens through programs,
services, or cash benefits. Nations may choose to transfer relatively
small amounts, allowing the marketplace to serve as the primary
arbiter of how economic resources are distributed (72). Or a nation
may choose to intervene to control the marketplace and make decisions
concerning these allocations of resources (73). Nations that transfer
a greater proportion of resources are more likely to show better
population health profiles, and relatively less health inequalities
(67). These health and inequality differences emerge through a series
of mechanisms that involve degree of poverty and the material and
social deprivation that are associated with such levels (65).

An especially important indicator is extent of government transfers.
Transfers refer to governments taking fiscal resources that are
generated by the economy and distributing them to the population as
services, monetary supports, or investments in social infrastructure.
Such infrastructure includes education, employment training, social
assistance or welfare payments, family supports, pensions, health and
social services, and other benefits (7).

Among the developed nations of the OECD, the average public
expenditures in 2001 was 21% of Gross Domestic Product (GDP) (74).
There is rather large variation among countries with Denmark (spending
29.2% of GDP) and Sweden (spending 28.9% of GDP) being the highest
public spenders. The USA ranks 26th of 30 wealthy industrialized
nations and spends just 14.8% of GDP on public expenditures. The only
nations that allocate a smaller percentage of GDP to public
expenditure are Ireland (13.8%); Turkey (13.2%); Mexico (11.8%); and
Korea (6.1%).

The USA is the highest spender on total expenditure on health care.
However, it is in the mid-range on public spending for health care as
much of its spending on health care is from private sources. It is in
the other areas of benefits and supports to citizens that the USA
reveals itself as a very frugal public spender. The USA ranks near the
bottom of nations in allocations to old-age related spending,
primarily pensions with a rank of 26th of 30 wealthy industrialized
nations. The USA also ranks among the lowest spenders on incapacity or
disability-related issues for a rank of 25th of 29 wealthy
industrialized nations. And the USA ranks very poorly on family
benefits achieving a rank of 28th of 29 of these wealthy
industrialized nations.

Another way to slice up the expenditure pie is to consider spending on
income support to the working age population and social services as
well as health and pensions. Income support involves family benefits,
wage subsidies, and child support paid by governments to help keep
low-income individuals and families out of poverty. Social services
include counseling, employment supports, and other community services.
Not surprisingly, the USA ranks relatively low on income supports to
the working-aged population and social services. The USA spends just
7.9% of GDP in income supports to the working age population (rank
28th of 30) and 6.7% on social services (rank 20th of 30).

Active Labor Policy

Active labor policy refers to the extent that governments support
training and other policies that foster employment and reduce
unemployment. The USA allocates 0.53% of GDP to such policies. This
provides it with a ranking of 20th of 22 wealthy industrialized
nations for which data was available.

Public Policy and Citizen: Implications for Day-to-Day Life

How do these differing commitments to supporting citizens translate
into differing conditions of day-to-day life? Only a few sets of
issues can be examined here: resources available to the unemployed,
level of social assistance benefits, level of minimum wages, and
levels of pension benefits.

Unemployment Benefits over a Five Year Period for an Average
Production Worker

For most Americans, benefits that would be available over a five year
period would be unemployment insurance which would expire after a year
of benefits. A family with liquid assets would then need to liquidate
these prior to receiving social assistance benefits. For these non-
destitute families, unemployment insurance provides only 6%
replacement income over this period. This ranks the USA 27th of 28
wealthy industrialized nations in its generosity of benefit. If
families did qualify for social assistance, the benefit percentage
would be 30%, providing a ranking of 26th of 28 nations (7).

Social Assistance or Welfare

The OECD identifies as social assistance and welfare support as
"benefits of last resort." On average, USA social assistance benefits
for a married couple with two children provide 22% of median average
income. This places these benefits as 28% less than the <50% of median
income-indicator of poverty. As compared to the other nations for
which these data are provided, the USA ranks 20th of 23 nations in
providing these benefits of last resort (7).

Minimum Wages

Percentage of low-paid workers is the best predictor of percentage of
citizens living in poverty. How does the USA compare to other nations
in having minimum wages that keep people out of poverty? For an
American two-child family with one full-time minimum wage earner, the
wages received places the family at 34% of the median household
income, well below the commonly accepted poverty cut-off of 50% of
median poverty level (7). For a two-parent family with two children
working full-time at minimum wages, the level of median income
achieved is 46% of the poverty level. The USA's ranking for single
parent working family is 12th of 15 wealthy industrialized nations.
For the two-parent working family, the USA rank is 14th of 15.


The Social Security System provides benefits to individuals upon
retirement. The OECD provides data on the value of pension benefits
provided by each nation as a function of the gross earnings of an
average production worker (7). For a worker earning 50% of an average
production worker, the USA's pension provides a rate of 61% of these
earnings. For an American earning the average production worker's
income, the rate is 51%. The rates for average-waged workers are very
low by international comparison giving the USA a rank of 25th of 30
wealthy industrialized nations. For very low-paid workers, the USA
achieves an even lower rank of 28th of 30.

[To be continued next week.]


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From: Too Much, Sept. 25, 2006
[Printer-friendly version]


The only official arm of the United States government that
systematically tracks the wealth of America's wealthy, the Federal
Reserve, does not -- for privacy reasons -- count the wealth of
America's very wealthiest. Thank goodness we have Forbes.

Every year, ever since 1982, this business magazine has assembled a
research team that dives deep into the nation's business records to
count the dollars of both exhibitionists eager to flaunt their wealth
and the shy anxious to hide it.

The resulting annual list of America's richest 400 may not be
absolutely accurate. But few people on the Forbes list, or left off
it, ever end up complaining. In a world of imperfect information, the
annual Forbes 400 numbers give us a reasonably accurate -- and
intensely sobering -- look at our grotesquely unequal nation.

How grotesquely unequal?

Back in 1982, the year Forbes started publishing an annual list of
America's 400 richest, the magazine could find only 13 billionaires in
the entire United States. The nation's entire billionaire population
could stand, quite comfortably, in a living room.

Not anymore. The just-released Forbes 400 list for 2006 includes,
for the first time ever, only billionaires.

Together, these 400 billionaires own $1.25 trillion in total
net worth.

Let's put this total in a more comprehensible context. In 2004, the
most current year with stats available, the 56 million American
families who make up the poorer half of America's wealth distribution
had a total combined net worth of just $1.29 trillion.

In other words, our nation's richest 400 households own just about as
much of our nation's treasure as our poorest 56 million.

That treasure appears to be concentrating at economic warp speed. In
1982, a deep-pocket in the United States needed a mere $90 million to
enter the lofty ranks of the Forbes 400. In 2004, the price of
admission stood at $750 million. On last year's Forbes list, the cut-
off jumped to $900 million. This year's entry fee: a straight $1

Let's put that number in context, too. An average American could win,
three times over, the biggest lottery jackpot ever -- the $315 million
payout recorded in California last November -- and still need over $50
million more to knock on the Forbes 400 door.

This year's fastest-growing Forbes 400 fortune belongs, somewhat
fittingly, to Sheldon Adelson, the CEO of the Las Vegas Sands, the
global gambling industry giant. Worth $20.5 billion, this casino
magnate holds the nation's third-largest fortune. Adelson's fortune,
over the past two years, has grown at the rate of nearly $1 million an

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From: Reuters, Sept. 7, 2006
[Printer-friendly version]


By Deborah Zabarenko, Environment Correspondent

Washington -- The discovery of intersex fish -- males with some female
characteristics, including some carrying eggs -- in Washington's
Potomac River is raising concerns about pollution from chemicals that
can affect hormones.

A preliminary investigation by the U.S. Geological Survey found a high
incidence of intersex among smallmouth bass in the South Branch of the
Potomac and Shenandoah Rivers, both near Washington.

"We ended up identifying a problem that is typical of endocrine
disruption, that is, seeing eggs in the testes of sexually mature
fish," Chris Ottinger, an immunologist at the Geological Survey's
National Fish Health Research Laboratory, said on Thursday. "It was
something that warranted further investigation."

These so-called endocrine disrupting chemicals are used widely in
industry and in consumer products including pharmaceuticals,
cosmetics, perfumes, plastics and even materials used to keep
barnacles from clinging to boat bottoms.

Theo Colburn, an environmental health analyst who has specialized in
studying the effects of endocrine disruptors, said they work during
gestation, and have been linked to feminization of male fish in the
Great Lakes, smaller penises in alligators and polar bears, and
hermaphroditic whales -- with genitalia of both sexes -- in the St.
Lawrence River.

Safe To Drink

Laboratory studies have shown developmental effects from very low
doses of hormone disruptors, but it would be technically impossible at
present to remove such low concentrations of these compounds from
drinking water, Colburn said by telephone from her office in Colorado.

The manager of the water utility that covers a large swath of the
Washington area stressed that drinking water is safe.

"As water plant manager, what I know is that there is no evidence
pointing to any concentrations of these substances in the water that
are having human effects," said Thomas Jacobus, manager of the
Washington Aqueduct. "The water is safe to drink."

Jacobus said the water was tested for some endocrine disrupting
chemicals, but noted that there are potentially 20,000 of these
compounds in existence.

The U.S. Environmental Protection Agency said in a statement that the
exact amounts of these chemicals, especially at extremely low doses,
in the environment are difficult to determine.

"Little is known about the potential harm posed by trace amounts of
PPCPs (pharmaceuticals and personal care products) in drinking water,"
the agency said in a statement. "Current water treatment processes may
remove some PPCPs, but more research is needed to determine how
efficiently these compounds are removed by various treatment

Copyright 2006 Reuters Limited

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From: The New York Times, Sept. 28, 2006
[Printer-friendly version]


By Keith Bradsher

KHORI, India -- Dilip Pantosh Patil uses an ox-drawn wooden plow to
till the same land as his father, grandfather and great-grandfather.
But now he has a new neighbor: a shiny white wind turbine taller than
a 20-story building, generating electricity at the edge of his bean

Wind power may still have an image as something of a plaything of
environmentalists more concerned with clean energy than saving money.
But it is quickly emerging as a serious alternative not just in
affluent areas of the world but in fast-growing countries like India
and China that are avidly seeking new energy sources. And leading the
charge here in west-central India and elsewhere is an unlikely
champion, Suzlon Energy, a homegrown Indian company.

Suzlon already dominates the Indian market and is now expanding
rapidly abroad, having erected factories in locations as far away as
Pipestone, Minn., and Tianjin, China. Four-fifths of the orders in
Suzlon's packed book now come from outside India.

Not even on the list of the world's top 10 wind-turbine manufacturers
as recently as 2002, Suzlon passed Siemens of Germany last year to
become the fifth-largest producer by installed megawatts of capacity.
It still trails the market leader, Vestas Wind Systems of Denmark, as
well as General Electric, Enercon of Germany and Gamesa Tecnologica of

Suzlon's past shows how a company can prosper by tackling the special
needs of a developing country. Its present suggests a way of serving
expanding energy needs without relying quite so much on coal, the
fastest-growth fossil fuel now but also the most polluting.

And Suzlon's future is likely to be a case study of how a manufacturer
copes with China, both in capturing sales there and in confronting
competition from Chinese companies.

Suzlon is an outgrowth in many ways of India's dysfunctional power-
distribution system. Electricity boards owned by state governments
charge industrial users more than twice as much for each kilowatt-hour
as such customers pay in the United States -- and they still suffer
blackouts almost every day, especially in northern India.

Subject to political pressures, the boards are often slow to collect
payments from residential consumers and well-connected businesses,
especially before elections. As a result, they often lack the money to
invest in new equipment.

To stay open and prevent crucial industrial or computer processes from
stopping, a wide range of businesses -- including auto parts factories
and outsourcing giants -- rely on still more costly diesel generators.

With natural gas prices climbing as well, wind turbines have become
attractive to Indian business. The Essar Group of Mumbai, a big
industrial conglomerate active in shipping, steel and construction, is
now working on plans for a wind farm near Chennai, formerly Madras,
after concluding that regulatory changes in India have made it
financially attractive.

"The mechanisms didn't used to be there; now they are," said Jose
Numpeli, vice president for operations at Essar Power. The electricity
boards "know how to cost it, they know how to pay for it."

Roughly 70 percent of the demand for wind turbines in India comes from
industrial users seeking alternatives to relying on the grid, said
Tulsi R. Tanti, Suzlon's managing director. The rest of the purchases
are made by a small group of wealthy families in India, for whom the
tax breaks for wind turbines are attractive.

Wind will remain competitive as long as the price of crude oil remains
above $40 a barrel, Mr. Tanti estimated. To remain cost-effective
below $40 a barrel, wind energy may require subsidies, or possibly
carbon-based taxes on oil and other fossil fuels.

Mr. Tanti and his three younger brothers were running a textile
business in Gujarat, in northwestern India, when they purchased a
German wind turbine -- only to find that they could not keep it
running. So they decided to build and maintain turbines themselves,
starting Suzlon in 1995 and later leaving the textile business.

To minimize land costs, wind farms are typically in rural areas,
chosen for the strength of the wind there as well as low prices for
land. But that can mean culture shock.

"There were no big changes until the turbines came," Mr. Patil said,
pausing from plowing here with his father in this remote, hilly,
tribal area 200 miles northeast of Mumbai, where oxen remain at the
center of farm life and motorized vehicles are uncommon.

Doing business in rural areas of the developing world carries special
challenges. The new Suzlon Energy wind farm in Khori is a subject of
national pride. More than 300 giant wind turbines, with 110-foot
blades, snatch electricity from the air. But it has also struggled
with the sporadic lawlessness that bedevils India.

S. Mohammed Farook, the installation's manager, was far from happy one
recent afternoon. At least 63 new turbines, worth $1.3 million apiece
and each capable of lighting several thousand homes when the wind
blows, could not be put into service because thieves had stolen their
copper power cables and aluminum service ladders for sale as scrap.

The copper or aluminum fetches as little as $1 from black-market scrap
dealers. But each repair costs thousands of dollars in parts and staff
time, in a country that is desperately short of electricity and

"I am crying inside," Mr. Farook said.

Despite such problems, Suzlon has expanded rapidly as global demand
for wind energy has taken off. Its sales and earnings tripled in the
quarter ended June 30, as the company earned the equivalent of $41.6
million on sales of $202.4 million.

The demand for wind turbines has particularly accelerated in India,
where installations rose nearly 48 percent last year, and in China,
where they rose 65 percent, although from a lower base. Wind farms are
starting to dot the coastline of east-central China and the southern
tip of India, as well as scattered mesas and hills across central
India and even Inner Mongolia.

Coal is the main alternative in the two countries, and is causing acid
rain and respiratory ailments while contributing to global warming.
China accounted for 79 percent of the world's growth in coal
consumption last year and India used 7 percent more, according to
statistics from BP.

Worried by its reliance on coal, China has imposed a requirement that
power companies generate a fifth of their electricity from renewable
sources by 2020. This target calls for expanding wind power almost as
much as nuclear energy over the next 15 years. India already leads
China in wind power and is quickly building more wind turbines.

Chinese and Indian officials are optimistic about relying much more
heavily on wind.

"I believe we may break through these targets -- if not, we should at
least have no problem reaching them," said Zhang Yuan, vice general
manager of the China Longyuan Electric Power Group, the renewable-
energy arm of one of China's five state-owned electric utilities,
China Guodian.

Kamal Nath, India's minister of commerce and industry, was even more
enthusiastic. "India is ideally suited for wind energy," he said. "The
cost of it works well and we have the manufacturing capability."

International experts are more skeptical that wind will displace coal
to a considerable extent, saying that while electricity production
from wind is likely to increase rapidly, the sheer scale of energy
demands suggests that coal burning will expand even more.

Suzlon still sees plenty of opportunity in China and has decided to
build some of its latest designs in China for the market there,
despite the risk of having them copied by Chinese manufacturers.

"Being an Asian leader," Mr. Tanti said, "we cannot afford to ignore

A dozen Chinese manufacturers have jumped into wind-turbine
manufacturing as well. They have struggled with quality problems and
have limited production capacity so far, resulting in long delivery

But the Chinese producers already have an edge on price over imported
equipment, according to Meiya Power of Hong Kong, which owns and
operates power plants in China and across Asia, and is considering a
wind farm in windswept Inner Mongolia.

Mr. Tanti said that rapid innovation and design changes would allow
Suzlon to stay ahead of copycats. "It's a time-consuming process," he
said, estimating that it would take two to three years for rivals to
clone Suzlon turbines because they use unique or proprietary parts.

Suzlon manufactures its turbines at two factories in India, but has
begun test production at a just-completed turbine-blade factory in
Minnesota, where it already supplies turbines for a wind farm operated
by the Edison Mission Group and Deere & Company. It has also begun
test production at a Chinese factory that will make both turbines and

To reach the Suzlon wind farm here, the huge rotors travel by night on
special trucks for a 300-mile journey from northwestern India on a
succession of paved and dirt roads.

Squatter huts have had to be removed along the way to allow the long
trucks to turn; Suzlon is not required to pay compensation but often
makes donations in these cases, Mr. Farook said.

The truck crews also carry wooden poles to prop up electricity wires
across the road and pass underneath. The trucks sometimes attract
gawkers, and live wires occasionally burn bystanders.

"With human error, it may touch human flesh," Mr. Farook said. "In
that case, we have to pay compensation."

Villagers in Khori said that thievery and even robberies by rock-
throwing gangs were nothing new, and were a problem long before Suzlon
began setting up wind turbines. The company's response -- stepping up
patrols by security guards -- has reduced everyday crime. That has
made villagers more willing to rent land at the edge of their fields
for the turbines.

At first, "we were really confused about what was going on," Mr. Patil
said. "But now we're O.K. on it."

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  The natural world is deteriorating and human health is declining  
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  health, the destruction of nature, the decline of community, the
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  workers and families, and the crippling legacies of patriarchy,
  intolerance, and racial injustice that allow us to be divided and
  therefore ruled by the few.  

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