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The environment:
present and prospects for the future

Question: What are the major environmental dangers facing us today?
Answer: Though some progress has been made in the rich nations in controlling pollution and protecting ecosystems, the situation in the rest of the world is dire. Since the rich countries account for only some 20% of the worlds’ landmass, it can safely be said that the global environment is at risk. A list:

See also Global Development - CHAPTER III: THE ENVIRONMENT

Question: That’s a frightening list. What’s being done about it?
Answer: Relatively speaking, very little - in spite of the efforts of many environmental organizations. Natural ecosystems continue to disappear, though in some countries the pace has slowed somewhat. On the other hand, in the former Soviet Union the destruction of natural habitats, especially forests, is rapidly increasing. Loss of agricultural land continues and in some cases, accelerates, in spite of minor, mostly local successes. As regards the Greenhouse effect: the world’s nations are hotly debating an agreement, drafted in Kyoto, Japan, that doesn’t even begin to address the problem. Instead of calling for the large- scale replacement of fossil fuel with renewable energy, an essential strategy for reducing greenhouse emissions, it calls for no more than a stabilization of emission levels.

Question: Why the lack of action, and results?
Answer: Governments are unwilling to spend the large sums of money that are needed to effectively address the problems. Powerful interest groups – oil producing nations and companies, loggers – block initiatives to change things around. And most important: short term economic interests are put above the longer term common good.

Explanation: Priorities, rationalization, and ideology.

Politicians give priority to the economy. They are largely pushed to do so by voters, who consider the present contents of their wallet much more important then the problems we will face in thirty years.

Rationalization is used to play down the consequences: nature is more resilient, so it is said, that all those environmental doomsday prophets pretend it to be, and nature, and people, will adapt to the changes.

Ideology is also used to justify inaction: the invisible hand of the market will ensure that everything will turn out all right. When the time comes people, companies and governments, prodded by the right balance between costs and benefits, will take the required action. For example, if oil becomes scarce and therefore, expensive, companies will be stimulated to look for alternatives – and will actively identify, develop and market them. No need to interfere in that process – it is better not to.

Another ideological argument is that presently we, and especially the poor countries, can’t afford to spend much money on the environment. The same argument is used to argue against large scale spending on fighting poverty. It states that first, countries have to create wealth, and only then can they invest in improving the environment – or fighting poverty. That’s what the rich countries did, the poor countries should follow the same path.

Question: What’s wrong with those arguments?
Answer: Bad economics, and poor morals.
Bad economics: Much of the damage being done to the environment will be difficult or impossible to restore. And for what can be restored, the longer we wait, the higher the cost. Mainstream economics, markets, and voters have, unfortunately, a very short time horizon, and do not take account of future costs and damages. In present cost-benefit calculations environmental costs, that is, the cost of damage to the environment, are not counted. Therefore neither the private sector nor markets can be counted upon to remedy the situation: by the time markets will react it will be too late, or the cost of remedying the situation will be astronomical.

Morals: The environment is a public good, and investment in its maintenance and where possible, recuperation is, because of its importance for current as well as future generations, a moral duty. The millions of deaths that occur each year, almost all of them among the (very) poor and mostly, among children under five, are simply unacceptable. Even less acceptable is that, if current trends continue, more suffering and death lie ahead.

The key problem is that there is simply no time to follow the path the rich countries have followed, that is, to first sacrifice the environment on the altar of economic growth, and only then start paying attention to our surroundings. Moreover, what’s the point of making the same mistakes the rich countries made? Contrary to, say, the 19th century and the first 60 to 70 years of the 20th, the knowledge and the technology to produce in an environmentally friendly manner are there. So why not use it?

Question: Why not indeed? Why is all that knowledge and technology not used?
Answer: Because of its cost, and – related to that - because the competition between countries to attract and keep business makes governments slack on imposing and maintaining environmental regulations.

Explanation: costs of pollution control, globalization and environmental regulations

Pollution control technology is often expensive. It does not as a rule add to production quantity and, with the partial exception of agricultural products, product quality. Therefore, pollution control raises production costs. That reduces profits and makes products less competitive in international markets. Recognizing this, governments, especially of poor countries, tend to avoid bothering their business sector with environmental regulations - until environmental problems become such that action can no longer be delayed. Likewise, in their drive to attract foreign investment governments outdo themselves in trying to outdo governments in offering a favorable investment climate. Environmental regulations that increase production costs are not part of that climate. Thanks to globalization, international business can threaten to set up shop elsewhere if environmental regulations are perceived as too tight. Thus both national and international business push, directly or indirectly, to loosen environmental laws, if not in writing then in enforcement.

Moreover, especially in poor, badly governed countries (the two usually go together), those responsible for causing most of the environmental damage are part of the local economic and political elite, and are thus easily capable to block any measures they see as contrary to their interests.

See also Global Development - CHAPTER III: THE ENVIRONMENT and, more specifically: The failure to address the problems

Question: So what to do?
Answer: A global "bottom line" will have to be established, which will oblige business as well as governments and other parties to comply with minimum environmental standards. As was described for the social "bottom line", non-compliance should give complying countries the right to impose trade sanctions. Rather then its current hammering on totally unrestrained trade the World Trade Organization, WTO, should take the lead in establishing and implementing these environmental and social "bottom lines". At the same time, a massive effort should be initiated to provide poor countries with the technology required for effective pollution control. Financing of this effort should take place within the framework of an overall sustainable development program, which should also address the already mentioned issues of adequate land and water management, conservation of natural areas and bio-diversity, and the conversion to clean, renewable fuel.

See also: Global Development - Chapter VI: A bottom line in trade and A global investment program in sustainable development .

Question: Sounds great. But that’ll cost. Where should the money come from?
Answer: Part of the funding could be generated in conventional ways. The remainder will have to be financed through money creation.

For more, click on:
Financing sustainable development - the conventional way?
Money creation for sustainable development


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