Environment & the World

Monday, November 27, 2006

Clarification by Kai

Filed under: Economics — kwolfgan @ 1:59 am

I sent Kai Chan, author of the research cited in Amir’s original post, a note today about what I posted yesterday, and after reading it he sent back this insightful and on-point response. I publish it here because I think it points out some key tensions raised by this debate (and my contribution, specifically). Thank you, Kai!

Thanks very much for your kind comments and also for tipping me off about your exchange… Regarding that exchange, please recognize a few things:

(1) The media puts their own spin on stuff, and that is often at odds with the material itself. In particular here…we did *not* put a dollar value on ecosystem services, although that’s certainly how the media chose to spin it (anyone interested can check out the original study, as it’s publicly available. I actually doubt that they would have been as interested in the study if they couldn’t spin it that way! Yes, we attempted to value ecosystem services and we are in some cases using monetary values to help us do that, but we firmly resisted translating all the ecosystem services into a common metric like dollars. Instead, we set goals for each of the services and sought the most appropriate ways of meeting those goals through land conservation. We are concerned about the primacy of dollars, also, so our goals reflect not only the needs of current people but also equity and the needs of future people and biodiversity (see more below).

(2) There’s a sentence from your post that merits further discussion: “If the environment is appropriately valued, gross violations of the natural order—an order in which people have a role to play, which cannot be played by any other creatures—will cease to exist.” The truth of this statement depends on what you mean by “appropriately valued”. If you mean—as most people do—the internalization of all externalities so that prices of goods and services reflect the impacts of their production (etc.) on other goods and services, then appropriate valuation does not ensure no gross violations of the natural order. Such a perfect economy would only look out for those who can impact market prices, and that means currently existing human beings, with an emphasis on the wealthy ones. If you’re concerned about non-human organisms and future people and issues of equity, the perfect economy just doesn’t help all that much. So those who resist the internalization of externalities have good reason to do so: it may help some things (the interests of people now) but it almost certainly won’t make our use of the world sustainable, equitable, or ecologically benign.

Now, if you mean for “appropriate valuation” to include these other three concerns (distribution across (1) time and (2) species and (3) within current societies), then we’ve got a lot of work to do. That endeavour is the gist of my entire research program and my life! I have a lot more to say on the topic, but it’ll have to wait for another day. But let’s keep up this conversation!

One other thing: As you can see, I’m concerned about many of the same things as you and your friends (e.g., as they express in saying, “What if, for example, we find a more “cost effective way” to protect coastal towns than protecting coastal wetlands?”). I agree that there would likely be a loss to nature itself if we found a more cost-effective way to protect coastal towns and probably also to future generations. Your friends ask why then we should seek a value for nature, if we already know that it matters? The response is that sometimes the interests of current people will and should win out over these other interests. This is especially true when those people who stand to benefit are desperately poor. The only way that we can figure out when the interests of current people should take precedence over nature and future generations, and vice versa, is to appropriately characterize the values of nature.


Sunday, November 26, 2006

Is “Command and Control” Really so Bad?

Filed under: Economics — Cathy @ 4:19 pm

I had a few more thoughts to continue our little discussion on environmental economics.  Having thought more about this issue over the past couple weeks and having just read the excellent article by Jonathan Rowe that Amir recommended in an earlier post, I am increasingly struck by the bizarre assumptions underlying the market economy.  Some of these notions – that all people make decisions based on complete knowledge of all economic information, that they base all of their decisions solely on personal economic gain, and that there is perfect competition between all companies – are so contrary to everyday experience that one really wonders how our society bought into this concept so heavily in the first place.

Moreover, for my generation that has grown up in the last couple decades in the United States, it is too easy to forget that there was a time in very recent US history where the market was not a god, and where it was perfectly acceptable and even desirable for the government to intervene in the market.  Indeed, most of our landmark environmental laws – the Clean Air Act, the Clean Water Act, and the National Environmental Policy Act – were passed as a result of citizen pressure demanding government action.  The “command and control” approach to environmental and social policy embodied in these laws is still much more acceptable in Europe, although there are signs (such as the EU carbon emissions trading scheme) that they are moving more towards market approaches to environmental problems. 

I see nothing wrong, in principle, with using market instruments for environmental policy.  In some cases they work remarkably well and at much less cost than regulatory approaches – the classic case study being the sulfur dioxide emissions reductions from US power plants in the 1990s as a result of a sulfur emissions trading scheme.  But the danger is to assume that market instruments are therefore the best solution to any problem.  My fear is that this is becoming the fashionable attitude among some environmentalist circles.  As we have discussed in previous posts, perhaps attempts to treat environmental problems as economic externalities and to develop ways to integrate them into the current capitalistic system are serving to prop up the very system that caused many of these problems to begin with. 

Fundamentally I do not think that environmental protection needs to be justified on the grounds of economic efficiency.  Indeed, to do so would imply the environmental and economic variables deserve equal weight.  Yet given that the economy cannot exist without a reasonably healthy environment (and the environment would exist just fine without an economy!), I cannot accept this argument.  Although attempts to quantify the economic damage of climate change (e.g. the Stern report), for example, can serve a useful purpose, we should recognize that the sole goal of government is not to promote economic efficiency.  In social policy, redistribution of wealth through social security and other programs has generally been accepted even though it reduces economic efficiency, because it is seen as a higher goal of society to care for citizens who are less well-off.  Similarly, I would argue that environmental groups should be less afraid to abandon the arguments of economics and be more willing to advocate for government regulation on the grounds of morality and inter-generational equity.

Environmental Economics: An Armchair Response

Filed under: Economics — kwolfgan @ 2:33 am

After reading Cathy and Amir’s exchange on the subject of Economics x Environmentalism, I went to my bookshelf and pulled off some reference materials to help me think. Wendell Berry’s A Continuous Harmony: Essays Cultural and Agricultural (turned to the last essay, “Mayhem in Industrial Paradise”) and Nature’s Economy: A History of Ecological Ideas, ed. Donald Worster, are now sitting next to me on our new green recliner, keeping me company as I address this particularly thorny topic. I am in the thick of finishing up assignments for this term, so I intend for my response to be relevant for some other papers I’m needing to write.


First things first. Let us recall the beginning of this discussion: Amir’s citation of research done by Kai Chan, coincidentally a friend of mine from Princeton. I do not doubt in the slightest Kai’s good intentions, as he is one of the kindest and most honest—not to mention most thoroughly pragmatic—people of my acquaintance. I am inclined to recognize that pragmatism as a motivating factor in his research, and will try in the rest of this entry to make clear how assigning a dollar value to ecosystem services has great practical importance, despite the lingering distaste some (myself included, truth be told) feel at the mere suggestion of doing so.


I wonder, when we talk about putting a price tag on nature, whether we are nervous about the act of recognizing or assigning the value of ecosystem services, or whether we are really concerned about the pattern of putting price tags on everything that got us to where we are in the first place. My guess is that we are upset about the latter and worried that the former will be an extension of this trend instead of a way to move past it. This is totally legitimate, but brings us to an impasse: in theory, we dislike it, but we don’t know of a better valuation alternative that will bring about the results we hope for. My suggestion is to think about the dollar sign as a metaphor—one that, for better or for worse, makes sense to most people embroiled in the system(s) causing/exacerbating environmental problems.


It is true that the profit motive can drive people to do terrible things: patent indigenous people’s genes; strip-mine mountaintops completely off; build dams that create thousands of ecological refugees; do a shitty job of post-war “reconstruction”; destroy everything from entire species of organism to entire ways of life. When making money is the most important pursuit and highest goal, there arise serious problems. In the pursuit of wealth, though, we have trained ourselves to think in terms of money. My time currently has a dollar value when I work, which I sometimes have to do; the home that I have lovingly decorated could be assigned one for insurance purposes (if I could afford insurance). The $ is an indicator of value, however abstract. And value is what we should be concerned with. How we determine that value is another question entirely—one I trust Kai Chan to be thinking through.


So when we’re talking about price tags, the point should not necessarily be the price tag itself. Valuing ecosystem services in this way is a means to an end. If the environment is appropriately valued, gross violations of the natural order—an order in which people have a role to play, which cannot be played by any other creatures—will cease to exist. Perceiving (economic) value in “nature” does, indeed, entail a change of mindset, and a radical one, at that. If monetary value can be used as the metaphor to catalyze that transformation, in my view it should be, along with any other system of valuation that can make the immensity of the present situation at once fathomable and deeply significant.


Putting a price tag on nature can definitely be identified as a step in the wrong direction. But if putting a price tag on nature can lead to ecologically preferable activities and cause us to really consider what the environment is worth in non-monetary terms—if putting a $ in front of clean water, clean air, etc. enables people who might otherwise destroy in the name of profit to understand that their actions have negatively-valued effects beyond their wildest imaginations—it might be worth the discomfort: not as a be-all end-all solution, but as a piece in a dynamic puzzle, a step in the right direction.

Saturday, November 25, 2006

Indonesian Mud Volcano Update

Filed under: Environmental Justice, Geology, Natural Disasters — Cathy @ 9:11 pm

In a previous post, I discussed the mud volcano in Indonesia that has been spewing hot mud in East Java since May.  About 12,000 people have been forced to flee their homes as the mud has flowed over the landscape, destroying villages and croplands.  As if that weren’t enough, just this week another tragedy unfolded as a result of the mud volcano.  Because of the outpouring of mud from underground, land surrounding the volcano has sunk by about 5 meters; this week, the pressure from this land subsidence cracked a natural gas pipeline, causing a serious explosion, according to an article in the Hong Kong Standard.  “The blast shot flames 500 meters into the night sky and burst a dyke built to contain hot mud that has inundated East Java’s Sidoarjo district, sweeping away vehicles and forcing the closure of a nearby highway”  The explosion killed at least 8 people and dozens more are missing or injured.  According to an Australian radio program, other companies with pipelines in the region have shut down their production to avoid similar disasters (http://www.abc.net.au/pm/content/2006/s1796100.htm).

There is still no end in site from the mud volcano.  According to Nur Hidayati from Greenpeace Indonesia, “The area that has been covered by the mud is around 400 hectares … it is predicted that already six million cubic meters of mud has already gone out … the volume of the mud is now reaching 150,000 cubic meters per day, with a temperature of 100 degrees Celsius.”  In my previous post last month, I reported a rate of 125,000 cubic meters a day.  Recent articles contain little speculation about the original cause of the mud volcano, although the likely culprit (as I said in previous post) is an oil and gas exploration company, Lapindo Brantas, that may have engaged in unsafe practices that triggered the mud eruption.  Workers are trying hard to build dykes to contain the mud, to pump some of it into the ocean, and to try to cap the flow of mud, but it is by no means clear whether such efforts will be successful.

Lapindo Brantas agreed to pay for all damages resulting from the mud volcano, which now include the costs of human life.  However, according to an article in Al-Jazeera, it appears that the company is so far not living up to its promises.  People who have been forced to resettle as a result of the mud volcano claim that the money paid to them by the company has been insufficient to compensate for their loss of home and livelihood.   Ironically, according to the Al-Jazeera article, “Lapindo Brantas [is] a subsidiary of PT Energi Mega Persada (EMP), Indonesia’s second largest publicly listed energy company. EMP is controlled by the family of a senior cabinet minister, Aburizal Bakrie. He is minister of people’s welfare.”

SoCal Cities Pass on More Coal

Filed under: Energy, Politics — amirj @ 8:17 am

Before the what-are-you-thankful-for trope gets too far behind us, here’s something to consider. Just in time for Thanksgiving, a group of Southern California cities decided they’ve had enough with dirty coal power plants. To make it official, they decided not to renew their contracts for coal power, and instead to look to renewable energy sources to power their future.

“Officials in Pasadena, Anaheim and several other large cities notified the Intermountain Power Agency this week that they would not be renewing their contracts for cheap, coal-fired power.

Those contracts expire in 2027. That leaves the cities two decades to secure the alternative energy sources they’ll need, from wind farms to desert solar power.

The moves could put the region in the forefront nationally of the commercial use of alternative energy in coming years, but researching and building the infrastructure to replace coal-fired power will be a costly, risky business.

‘All of these technologies are still in their infancy,” said Phyllis Currie, general manager of Pasadena Water & Power. ‘We’re still looking at the fact that right now, the Intermountain plant is 65 percent of our energy.'”

I suppose this announcement is something to be thankful for. Oh, and about the risky business stuff–I’m not too worried. If there’s political will, I’m confident we’ll find a way. With its abundant sunshine, it shouldn’t be too hard to generate plenty of solar power in SoCal.

Wednesday, November 22, 2006

More Thoughts on Environmentalism and Economics

Filed under: Economics — amirj @ 2:47 pm

In the last few weeks, we’ve developed a little discussion about the tension between environmentalism and economics and the role of the latter in modern-day decision making. In Cathy’s last post on the issue, she wondered whether any viable alternatives to environmental economics exist, writing,

“In the long term, maybe we don’t want to live in a world where environmental decisions and plans are made on the basis of this sort of analysis.  But what would that world look like and how would we get there?  I have no idea…  It seems unlikely to me that we will ever find anything better than a market-oriented economy, and if that is the case, we will always be plagued by this question of assigning dollar values to nature. ”

When I think about this unresolved problem, I often reach the same conclusion as Cathy. It’s not, however, one that I can readily embrace. Perhaps this is because I fear that to let market capitalism progressively cannibalize the decision-making process in every arena in this world would perpetuate a downward hegemonic spiral that got us to this point and would leave even the best-intentioned among us uncomfortably silent and inadvertently complicit in creating an odd new world order of corporate control, individual powerlessness, and environmental destruction.

However, taking a step back into the realm of idealism, I realize that this conclusion does not have to be inevitable. In fact, the main reason we probably imagine it to be so is because we are socialized into a market economy from birth. Thinking in these terms essentially becomes natural for us. All this is not to say that markets are evil or completely unnecessary. Indeed there are fucntions that markets can probably accomplish best, but that should not preclude us from determining when market-capitalism decision making reaches its limits and subsequently envisioning alternatives for other realms of decision making.

In the midst of thinking through these issues, I came across an essay by Jonathan Rowe on the blog onTheCommons.org. He writes about the famed economist Milton Friedman who recent passed away and reflects upon Friedman’s views and how they played out contemporary economics. Rowe’s cogent essay amounts to an undeniable indictment of the shortcomings of the market economics paradigm, which I would highly recommend reading in its entirety.

Rowe’s argument concerning Friedman’s beliefs is extremely relevant to our discussion. There’s tons of great stuff about the myth of the “rational” individual who only makes the best choices, economists’ appropriation of scientific objectivity and their abrogation of value-judgments, and the economics narrative that perpetuates a false notion that The Market fulfills “demands,” by producing “goods, services, and wealth”–never “disservices and illth.”

According to Rowe, Friedman argued there was no role for the concept of “need” in economics. Rowe’s treatment of this subject merits quoting at length because he sheds a bright light on alternatives to the market capitalism paradigm of economics. In particular, Rowe invites us to imagine what an economics of need would look like.

“If need is relevant to economics then clean air must be, and a healthy atmosphere. So too traditional Main Streets and the social interaction and cohesion they provide. Wal-Mart might provide more cash flow and GDP; but those Main Streets provide a benefit flow that Wal-Mart can’t.  The same can be said for an internet that is free of corporate enclosures, university research labs that are not beholden to corporate interest, a gene pool that no person or corporation owns.

If need matters then these must matter too because they meet real needs. That thought is truly threatening to those who think markets should be not just one thing but everything.  ‘Demand’ by definition channels the thought process into a market context.  Need by contrast opens up a wider realm of possibility.  This includes the possibility that the corporate market itself has been destroying the realm of productivity that meets needs that it – the market – can’t.

This realm – the commons — is not amenable to the conventional modes of economic measurement.  It does not work through the textbook ‘laws.’  Commons involve reciprocity, trust and social norms, rather than acquisitiveness and greed.  They provide stability and maturity to balance the market’s adolescent grasping; and they give expression to the ‘we’ side of human nature as opposed to the market’s relentless and solipsistic ‘me.'”

There you have it. A simple suggestion really–a society organized on reciprocity, trust, and social norms. Of course, this suggestion comes without complicated equations, and snazzy graphs, but perhaps that’s what’s so elegant about this proposal–that protecting our air, water, and land and providing for vital human needs requires no more than a different mindset.

This may seem like a wildly romantic notion to those entrenched in and deeply committed to upholding an economics of greed and endless capital accumulation. Moreover, the fact that much of our world is increasingly  becoming organized upon those principles does pose a challenge even to considering alternatives. But it should not lock us into thinking that translating common assets like clean air and water into commodities with a price tag is a way out of our 21st century conundrum–indeed it’s just a step back deeper into our problem.

Tuesday, November 21, 2006

China’s Takeover of Africa

Filed under: China, Development, Environmental Justice — Cathy @ 2:17 pm

One thing that is sometimes overlooked when people (like Bono) talk about ending poverty in Africa is the huge role that multinational corporations play in extractive industries in Africa.  And more and more of those raw materials are now going straight to China.  According to a recent article, Angola is now China’s largest single oil provider.  China also gets ore and platinum from South Africa, copper and cobalt from the Democratic Republic of the Congo and Zambia, and timber from Cameroon and Congo Brazzaville.  The article states, “from a US$3 billion mark in 1995, trade between China and Africa last year stood at US$32 billion. Projections are that the figures will hit US$50 billion by the end of this year and will triple by 2015, the UN’s target year to halve poverty worldwide.”

The key question is: how will this rapidly growing trade impact the UN’s poverty alleviation goals? Certainly extractive industries in Africa do not have a good track record.  One need only look at the Niger Delta as a case in point. After about 40 years and more than $350 billion dollars worth of oil development, the people of the Delta are poorer than they were before.  The money has chiefly gone to the multinational corporations and to prop up a corrupt government, perpetuating a host of human rights abuses, including the murder of human rights and environmental activist Ken Saro-Wiwa in 1995. (see, eg, http://www.remembersarowiwa.com/delta.htm)

Is there any way to improve this situation?  Certainly it appears that the extractive industries are not going to leave Africa any time soon, if the above projections regarding China are even remotely accurate.  But large infrastructure or resource extraction projects are inherently not conducive to poverty alleviation.  For starters, the scale of the solutions to poverty issues are often orders of magnitude smaller than the scale of investment and profits from resource extraction.  Successful micro-credit poverty alleviation programs like the Grameen Bank (winner of this year’s Nobel Peace Prize) are based on the idea of distributing small amounts of money to large numbers of people and allowing them to develop their own small businesses; large resource extraction projects, which typically give a large amount of money to a very few people, are almost diametrically opposite to this idea. 

There is no easy solution to this problem.  Multi-national corporations in principle could insist on fair compensation for people displaced by their projects and make a sustained commitment to micro-credit and other small-scale projects.  But they have no incentive to do so.  I think it will ultimately depend on the activists in developed nations demanding that multi-national corporations make a serious commitment to appropriate technology development in Africa – instead of the usual model of throwing money at large dams and road projects, all the while propping up corrupt governments, and calling it development.

Thursday, November 16, 2006

Alternatives to Environmental Economics?

Filed under: China, Economics — Cathy @ 2:01 pm

This post is a bit of a follow-on to some previous posts on environmental economics.  I generally agree with Amir’s previous post that the idea of assigning a dollar value to nature is not very meaningful because some things simply cannot be measured in money. Yes, there are plenty of assumptions that one can make and that are made, but ultimately things like the value of human and non-human life cannot be quantified.  Moreover, I also tend to agree that trying to assign a dollar value to such things perpetuates a rather narrow-minded worldview.

On the other hand, I am having trouble thinking of a viable alternative that would force people to pay attention in a similar way.  Having followed some of the fall-out from the Stern report (which I wrote about a couple weeks ago), I was impressed by how seriously it was taken by the business and investment communities in certain countries.  Granted, as mentioned above and in my previous post, quantifying the projected damage of various climate change scenarios
is a very uncertain business, but the ultimate conclusion that acting to stabilize carbon concentrations at a reasonable level would cost 1% of GDP while doing nothing would cost more like 10% is pretty powerful; even if 10% really means more like 5%-15%, the conclusion is
still the same.

In the long term, maybe we don’t want to live in a world where environmental decisions and plans are made on the basis of this sort of analysis.  But what would that world look like and how would we get there?  I have no idea. Living in China, I am not particularly inspired by their alternative.  Having a centrally planned economy is not exactly good for the environment unless the central planners have uncommon foresight.  (Which, given Chairman Mao’s ardent belief in dam building and in “growing grain everywhere”, he clearly did not).  It seems unlikely to me that we will ever find anything better than a market-oriented economy, and if that is the case, we will always be plagued by this question of assigning dollar values to nature.

Wednesday, November 15, 2006

Word of the Year: Carbon Neutral

Filed under: Books, Climate Change — amirj @ 2:08 pm

Okay, so actually it’s two words that together signify one concept, but don’t take issue with me over it. Oxford University Press announced carbon neutral as the word of the year.

“Being carbon neutral involves calculating your total climate-damaging carbon emissions, reducing them where possible, and then balancing your remaining emissions, often by purchasing a carbon offset: paying to plant new trees or investing in “green” technologies such as solar and wind power.

Erin McKean, editor in chief of the New Oxford American Dictionary 2e, said “The increasing use of the word carbon neutral reflects not just the greening of our culture, but the greening of our language. When you see first graders trying to make their classrooms carbon neutral, you know the word has become mainstream.”

This mainstreaming of a somewhat wonky environmental concept offers an opportunity to reflect upon other ways in which concepts from the environmental movement have crept into pop culture. As beleaguered as much of the environmental movement may have fancied itself so far this decade, due to an unfavorable political climate in the U.S., some progress has still been made. Some celebrities have started to ditch SUV-limos in favor of hybrids to arrive at red carpet events. Al Gore made a big splash with An Inconvenient Truth, forcing many in the U.S. to confront the reality of climate change at a time when public discourse on the issue still called it into question. We’ve also seen leadership on the city and state levelballoon into something of a grassroots groundswell to reduce our emissions. Even corporations like Wal-Mart and Google have announced major initiatives to curb their emissions, and take the first steps towards sustainability.

While Bush certainly has not been the right president to elect to champion environmental protection, I never saw his election as a reason to give up hope. A good president can certainly give a cause a megaboost, but even Bush’s rather apathetic stance on climate change couldn’t stop us–there was just too to accomplish. So far this decade climate action didn’t come from the federal level, top down, in one ceremonious presidential signing ceremony. So what? Even in the 2006, during the reign of President Bush, “carbon neutral” became the word of the year. Yep, on his watch.  

Sunday, November 12, 2006

Coal Here to Stay?

Filed under: China, Energy — Cathy @ 12:46 pm

Working in the energy sector in China, even focusing on renewable energy as I am, one can hardly be unaware of the incredible importance of coal.  For better or for worse, China has a huge amount of coal reserves, and it is bent on making use of them.  Indeed, I was shocked to learn that coal production approximately doubled in China between 2000 and 2005.  (I am still unable to grasp the speed at which things change in this country …)

Coal is a fairly unpleasant industry on virtually every level – from mining operations that ruin the landscape and miners’ health to the ultimate production of carbon dioxide that is destabilizing the climate.  In China, the statistics for coal mining deaths are particularly staggering: 20 mine deaths per day in 2005.  As most environmentalists do, I have long hoped that we will be able to quickly turn away from this dirty energy source to renewables and energy efficiency.  How likely is that to happen in the near future though? 

I was recently looking at an interesting report analyzing recent trends in renewable energy markets and policies (see http://www.martinot.info/Martinot_Environment.pdf).  The report points out some facts that were news to me and probably to many other people: for example, the installed capacity of renewable energy (excluding large hydropower) is nearly half that of nuclear power (although it only generates about one-fifth of the electricity of nuclear because it is more intermittent); or, “30 percent of all gasoline sold in the United States has ethanol blended with it.”  Indeed, it seems that the renewable energy industry, unbeknownst to many policymakers who still view it as prohibitively expensive, is making significant progress.  The report concludes that optimistic scenarios of getting 40-50% of our energy from renewable sources by 2050 are looking more and more plausible.

But, while this is good news, we also have to remember that energy consumption will also likely increase drastically during this period.  A growth rate in energy consumption of 1.4% (less than the current rate of 1.5%) would lead to a doubling of energy consumption by 2050.  Currently, we get 77% of our energy from fossil fuels, 6% from nuclear, and 17% from renewables (including large hydropower).  So if we assume that nuclear energy remains constant over the next fifty years, even if renewables account for 50% of total energy by 2050, we will still require about a 25% increase in fossil fuel consumption.

The above – very, very rough – analysis suggests that if we want to make a serious dent in coal consumption, we will need a broader social transformation than a conversion of our primary energy supply to more renewables.  Energy efficiency clearly has a huge role to play.  And by energy efficiency, I don’t mean just improving fuel economy standards or power plant efficiencies, but also lifestyle changes – improved public transport, better designed cities, and more locally-based economies.

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