THE OPTION: RESTRUCTURE OR DECLINE
Chapter 1. The Economy and the Earth
Lester R. Brown, Eco-Economy: Building an Economy for the Earth
(W.W. Norton & Co., NY: 2001).
Whether we study the environmental undermining
of earlier civilizations or look at how adoption of the western
industrial model by China would affect the earth's ecosystem, it
is evident that the existing industrial economic model cannot sustain
economic progress. In our shortsighted efforts to sustain the global
economy, as currently structured, we are depleting the earth's natural
capital. We spend a lot of time worrying about our economic deficits,
but it is the ecological deficits that threaten our long-term economic
future. Economic deficits are what we borrow from each other; ecological
deficits are what we take from future generations.58
Herman Daly, the intellectual pioneer of the fast-growing field
of ecological economics, notes that the world "has passed from an
era in which manmade capital represented the limiting factor in
economic development (an 'empty' world) to an era in which increasingly
scarce natural capital has taken its place (a 'full' world)." When
our numbers were small relative to the size of the planet, it was
humanmade capital that was scarce. Natural capital was abundant.
Now that has changed. As the human enterprise continues to expand,
the products and services provided by the earth's ecosystem are
increasingly scarce, and natural capital is fast becoming the limiting
factor while humanmade capital is increasingly abundant.59
Transforming our environmentally destructive economy into one that
can sustain progress depends on a Copernican shift in our economic
mindset, a recognition that the economy is part of the earth's ecosystem
and can sustain progress only if it is restructured so that it is
compatible with it. The preeminent challenge for our generation
is to design an eco-economy, one that respects the principles of
ecology. A redesigned economy can be integrated into the ecosystem
in a way that will stabilize the relationship between the two, enabling
economic progress to continue.
Unfortunately, present-day economics does not provide the conceptual
framework needed to build such an economy. It will have to be designed
with an understanding of basic ecological concepts such as sustainable
yield, carrying capacity, nutrient cycles, the hydrological cycle,
and the climate system. Designers must also know that natural systems
provide not only goods, but also servicesservices
that are often more valuable than the goods.
We know the kind of restructuring that is needed. In simplest terms,
our fossil-fuel-based, automobile-centered, throwaway economy is
not a viable model for the world. The alternative is a solar/hydrogen
energy economy, an urban transport system that is centered on advanced-design
public rail systems and that relies more on the bicycle and less
on the automobile, and a comprehensive reuse/recycle economy. And
we need to stabilize population as soon as possible.
How do we achieve this economic transformation when all economic
decisionmakerswhether
political leaders, corporate planners, investment bankers, or individual
consumersare
guided by market signals, not the principles of ecological sustainability?
How do we integrate ecological awareness into economic decisionmaking?
Is it possible for all of us who are making economic decisions to
"think like ecologists," to understand the ecological consequences
of our decisions? The answer is probably not. It simply may not
be possible.
But there may be another approach, a simpler way of achieving our
goal. Everyone making economic decisions relies on market signals
for guidance. The problem is that the market often fails to tell
the ecological truth. It regularly underprices products and services
by failing to incorporate the environmental costs of providing them.
Compare, for example, the cost of wind-generated electricity with
that from a coal-fired power plant. The cost of the wind-generated
electricity reflects the costs of manufacturing the turbine, installing
it, maintaining it, and delivering the electricity to consumers.
The cost of the coal-fired electricity includes building the power
plant, mining the coal, transporting it to the power plant, and
distributing the electricity to consumers. What it does not include
is the cost of climate disruption caused by carbon emissions from
coal burningwhether
it be more destructive storms, melting ice caps, rising sea level,
or record heat waves. Nor does it include the damage to freshwater
lakes and forests from acid rain, or the health care costs of treating
respiratory illnesses caused by air pollution. Thus the market price
of coal-fired electricity greatly understates its cost to society.
One way to remedy this situation would be to have environmental
scientists and economists work together to calculate the cost of
climate disruption, acid rain, and air pollution. This figure could
then be incorporated as a tax on coal-fired electricity that, when
added to the current price, would give the full cost of coal use.
This procedure, followed across the board, would mean that all economic
decisionmakersgovernments
and individual consumerswould
have the information needed to make more intelligent, ecologically
responsible decisions.
We can now see how to restructure the global economy so as to restore
stability between the economy and the ecosystem on which it rests.
When I helped to pioneer the concept of environmentally sustainable
economic development some 27 years ago, at the newly formed Worldwatch
Institute, I had a broad sense of what the new economy would look
like. Now we can see much more of the detail. We can build an eco-economy
with existing technologies. It is economically feasible if we can
get the market to tell us the full cost of the products and services
that we buy.
The question is not how much will it cost to make this transformation
but how much it will cost if we fail to do it. �ystein Dahle, retired
Vice President of Esso for Norway and the North Sea, observes, "Socialism
collapsed because it did not allow prices to tell the economic truth.
Capitalism may collapse because it does not allow prices to tell
the ecological truth."60
This book has three purposes. The first is to make the case that
we have no alternative to restructuring the economy if we want economic
progress to continue in the decades ahead. The second is to describe
not only the broad structure of the eco-economy, but some of its
details. And the third is to outline a strategy for getting from
here to there in the time available.
Building an eco-economy is exciting and satisfying. It means we
can live in a world where energy comes from wind turbines instead
of coal mines, where recycling industries replace mining industries,
and where cities are designed for people, not for cars. And perhaps
most important of all, we will have the satisfaction of building
an economy that will support, not undermine, future generations.
ENDNOTES:
58. Population from United Nations, op. cit. note 25.
59. Herman E. Daly, "From Empty-World Economics to Full-World Economics:
A Historical Turning Point in Economic Development," in Kilaparti
Ramakrishna and George M. Woodwell, eds., The Future of World Forests:
Their Use and Conservation (New Haven, CT: Yale University Press,
1993), p. 79.
60. Discussion with author at Worldwatch Briefing, Aspen, CO, 22
July 2001.
Copyright
© 2001 Earth Policy Institute
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