The Economics Behind Saving the Planet
We all want to save the planet but who is going to pay for it?
We all want to save the planet. None of us want to face mass extinction or a planetary breakdown. I doubt we seriously believe that the future lies in moving to Mars or hoping and praying that some technology is going to fall out of the sky and save us. We appreciate the climate scientists. We accept that we have a climate crisis. But how do we pay for all the work required to save a planet from possible extinction?
The problem with the climate crisis is that finding solutions can be hard. And the more natural the solution the harder it gets. Just cutting emissions is not enough. We also need to absorb emissions and store them in the planet. There are two sides to this problem. From an economic perspective cutting emissions is more straight forward. Absorbing emissions is way harder.
We have a plethora of approaches and organisations working on reducing emissions - some of which are starting to gather pace - from renewable energy, to waste recycling, sustainable clothing materials, synthetic paper products, vegan food products, carbon neutral concrete, carbon farming, solar roof tiles, electric tools and vehicles and more. Each of these has a lower carbon footprint than their predecessor. The maths is a little more dubious when we take into account the CO2 created to make the products in the first place.
The economics for greener products that reduce emissions is reasonably straight forward. Market forces will dictate. Governments can provide subsidies to accelerate take up, but in the end the reason why we will transition to eco-friendly products is because consumers will pay for them.
It gets much harder when we start to think about approaches to absorbing emissions and nature-based solutions to the climate crisis. To absorb emissions we need nature. Our land and sea is where emissions should be stored. Not floating ominously in the atmosphere.
A theory developed by Dieter Helm, called natural capital, attempts to bridge the gap. Natural capital is an accounting system for nature. Helm argues that until we reach the point where we can quantify the environmental value of nature from an economic perspective, we have little chance of harnessing capitalism (and wider state intervention) to solve the problem.
He argues that if we were able to value nature we would look after it better. If we were forced to account for it in standard business accounting methods, like we are forced to account for business assets such as property, inventory, vehicles, computers and business furniture, then we would work harder to maintain and improve the nature that we own or work with. After all, as businesses, we want a healthy balance sheet which means assets that appreciate rather than depreciate.
And if you roll this natural capital approach up to the state level and force countries and regions to account for nature-based assets (which help solve the climate crisis) then we would have the beginning of an economic model for taxing bad behaviours and rewarding good environmental practices.
So, for example, if a country could quantify the value of nature within its borders and place that value on its balance sheet they would pay a great deal more attention to how that asset was performing. They would be forced to tax organisations and practices that reduced the value of the natural asset and they would support those that enhanced nature. And the ultimate economic value that nature provides, from an environmental perspective, is its ability to absorb greenhouse gases, closely followed by its ability to support wildlife and plant life.
Valuing nature becomes essential when we look at the vital exercise of storing emissions. In the end, the only way to take greenhouse gases out of the atmosphere is to absorb them back into our land and sea. For our soil, rocks and water to absorb carbon efficiently we need nature to repair itself. We need our natural ecosystem to work better and that means plant life and animal life. Flora and fauna.
Recent research points out that we probably need to set aside 50% of the earths surface for nature, wild animals and plants. It even highlights the most critical areas by geography - such as the Amazon rainforest. Time is against us as the world continues to heat, while we have depleted our animal populations by a staggering 68% over the last fifty years and seem to be on track to potentially lose 40% of our plant life. Given that plants are a vital source for food, medicine, vaccines and oxygen - we really do not want to go there.
Until natural capital approaches are practised it will be hard for government and industry to have the economic incentive to support nature-based solutions to the climate crisis. And yet these are critical to absorbing our destructive emissions.
In the mean time we are reliant on charities, national parks and a few private projects to rewild and repurpose some of our natural spaces to better absorb carbon, regenerate habitats and grow wildlife and plant life - just to save the planet. Most of our green spaces are owned by farms which are purely designed and incentivised to produce food at scale, generally at nature’s expense, and poorly funded nature charities and institutions which are often forced to use natural spaces for human endeavours to pay the bills, also at the expense of the pure rehabilitation of nature.
Given that farmland is reserved for food production and truly wild national parks are few and far between we are left with having to rewild gardens, verges, riverbeds and neglected corners of farms, parks and playing fields. This may be a good start and a powerful exercise in community action, but will likely not prove expansive enough.
We need governments and businesses to take natural capital principles and net zero targets more seriously. We need investment funds, banks and finance professionals to embrace natural capital methods. Capitalism can be unleashed for the good of the planet. We just need to push it to get there a little quicker.
And this takes us full circle back to us consumers. Because in the end, natural capitalism will start with us putting the ‘eco’ into our expenditure.
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