I was always annoyed by those who talked about Obama as a transformational leader. One reason was that I was keenly aware of some basic transformations we badly need to make in order to have a livable future for all–none of which he seemed to really have a handle on. This diary is about one huge example of this.
By now, everyone knows about global warming. Many also know that it’s not “just” an environmental problem–if left unchecked it will have ruinous economic consequences as well. But that’s not the only global environmental problem we face that also involves enormous economic costs that most people are unaware of.
Thursday before last, the UK Guardian ran a story about a forthcoming UN report on the environmental costs of doing business the old-fashioned way, “World’s top firms cause $2.2tn [trillion] of environmental damage, report estimates”. The story’s subhead read: “Report for the UN into the activities of the world’s 3,000 biggest companies estimates one-third of profits would be lost if firms were forced to pay for use, loss and damage of environment.” And the story itself began thus:
The cost of pollution and other damage to the natural environment caused by the world’s biggest companies would wipe out more than one-third of their profits if they were held financially accountable, a major unpublished study for the United Nations has found.
The report comes amid growing concern that no one is made to pay for most of the use, loss and damage of the environment, which is reaching crisis proportions in the form of pollution and the rapid loss of freshwater, fisheries and fertile soils.
Later this year, another huge UN study – dubbed the “Stern for nature” after the influential report on the economics of climate change by Sir Nicholas Stern – will attempt to put a price on such global environmental damage, and suggest ways to prevent it. The report, led by economist Pavan Sukhdev, is likely to argue for abolition of billions of dollars of subsidies to harmful industries like agriculture, energy and transport, tougher regulations and more taxes on companies that cause the damage.
The report is the final stage of an ongoing process that’s been under way for several years, as you can see at the UN’s webpage for the project:
THE ECONOMICS OF ECOSYSTEMS AND BIODIVERSITY
Human well-being is dependent upon “ecosystem services” provided by nature for free, such as water and air purification, fisheries, timber and nutrient cycling. These are predominantly public goods with no markets and no prices, so their loss often is not detected by our current economic incentive system and can thus continue unabated. A variety of pressures resulting from population growth, changing diets, urbanisation, climate change and many other factors is causing biodiversity to decline, and ecosystems are continuously being degraded. The world’s poor are most at risk from the continuing loss of biodiversity, as they are the ones that are most reliant on the ecosystem services that are being degraded.
At the meeting of the environment ministers of the G8 countries and the five major newly industrialising countries that took place in Potsdam in March 2007, the German government proposed a study on ‘The economic significance of the global loss of biological diversity’ as part of the so-called ‘Potsdam Initiative‘ for biodiversity.
The following wording was agreed at Potsdam: ‘In a global study we will initiate the process of analysing the global economic benefit of biological diversity, the costs of the loss of biodiversity and the failure to take protective measures versus the costs of effective conservation.’
This proposal was endorsed by G8+5 leaders at the Heiligendamm Summit on 6-8 June 2007.
An interim report was produced in 2008, after which, the site explains:
The second, more substantial, phase of the study is structured around one background report and several reports targeted towards specific categories of decision makers who are also potential users of evaluation tools for biodiversity and ecosystem services:
- D0 Report on the Ecological and Economic Foundations
- D1 Report for Policy Makers
- D2 Report for Local Administrators
- D3 Report for Businesses
- D4 Report for Citizens.
These reports will be compiled in a phased approach and published consecutively between autumn 2009 and autumn 2010. The final results will be presented at CBD COP-10 in 2010.
The DI report was released in mid-November. I’ll have more to say about it below.
As indicated by the Guardian headline, a great deal of business profit comes directly from exploiting the unpriced goods of nature, services such as clean, breathable air that business has simply taken for granted, but that ordinary people cannot. I’ve been writing about this issue in a very concrete way at the Port of Los Angeles for several years now, primarily by focusing on the externalized health and mortality costs being inflicted on primarily low-income and/or minority communities-otherwise known as “EJ [environmental justice] communities.”
For Earth Day three years ago, I wrote a feature I republished at MyDD, “Behind Green Eyes: Four Concepts That Can Change How You See The Environment”. These were: community-centered environmentalism, externalized costs, the precautionary principle, and ecosystem services. All four relate to the subject of the UN project and its forthcoming final report, but the last two are particularly salient. Instead of the environment being something “out there,” community-centered environmentalism sees the environment as an integral component in everything we do.
The Precautionary Principle states that if an action or policy could cause significant or irreversible public harm, the burden of proof falls on those who would advocate taking the action. It is not enough to say, “We don’t know of any health effects,” as happened for decades with smoking, asbestos, or diesel pollution. Regarding externalized costs, I wrote, in part:
Although it’s a long-standing economic concept, elaborated in detail by British economist Arthur Pigou almost 100 years ago, economic measurements of externalized costs have been hard to make until quite recently.
Locally, the South Coast Air Quality Management District (AQMD) has played a leading role in developing cost models including health, premature death, agricultural productivity, traffic congestion, visibility, and corrosion.
“With each new air quality plan–we update about every 3 years–we do a socio-economic analysis,” AQMD spokesman Sam Atwood explained. “As more and more medical research is done, we continue to get a more accurate picture the monetary health benefits from cleaning up the smog.”
The most recent analysis was just days away from being released when Atwood spoke to Random Lengths, but he provided a ballpark picture.
“Total benefits including health and other benefits exceed $20 billion a year, total. Costs on average each year will be $2.35 billion,” Atwood said.
The benefits are reductions in negative externalities, but the ports [are] only part of AQMD’s responsibility, and significant externalized costs will still remain.
“The state has told us that by 2020, polluting activity from California’s ports operations and associated freight transport will have a health impact of approximately $200 billion,” Annette Kondo, spokesperson for the Coalition for Clean Air (CCA) pointed out. “That’s a huge health bill that hurts the pocketbooks of all Californians,” Kondo continued, adding the following breakdown of annual statistics from the California Air Resources Board:
- 2,400 premature deaths
- 2,830 additional hospital admissions
- 360,000 sick days for workers
- And, 1.1 million missed school days for children in California.
If these costs were included in the price of doing business, it would play havoc with existing business models. Costs of imported goods would skyrocket. But fortunately, as Atwood’s figures remind us, the costs of reducing pollution are much cheaper than costs incurred by producing it.
This is the problem seen on a local scale–already quite massive, but relatively easy to grasp conceptually. It’s not hard to get people to start seeing things this way. The effort just has to be made to start educating them.
And regarding ecosystem services, I wrote:
Finally, the ecosystem services perspective looks at natural systems in terms of the services they provide for human society. Because we have never had to pay for such services, we tend to take them for granted–that is, until they are gone, when they can be very expensive, or even impossible to replace.
These include provisioning services such as food, water, timber, and fiber; regulating services that affect climate, floods, disease, wastes, and water quality; cultural services that provide recreational, aesthetic, and spiritual benefits; and supporting services such as soil formation, photosynthesis, and nutrient cycling.
The UN-sponsored Millennium Ecosystem Assessment, with 1,300 expert contributors from 95 countries concluded that 15 of 24 ecosystem services studied “are being degraded or used unsustainably, including fresh water, capture fisheries, air and water purification, and the regulation of regional and local climate, natural hazards, and pests.”
From this perspective, the unpaid health costs from port pollution are typical of economic costs incurred by the destruction of ecosystem services (in this case, the provision of healthy air to breath). The loss of thousands of acres of wetlands in the harbor also helped destroy the provisioning of rich fisheries which formerly employed thousands of harbor area workers.
The UN’s effort is to look at the entire world the way that I described in terms of our local problem of port pollution. The press release for the D1 report released in mid-November that I mentioned above described a set of “key recommendations for policymakers to consider.” Here are the first five of them:
1: Invest in ecological infrastructure: This can provide cost-effective opportunities to increase resilience to climate change, reduce risk from natural hazards, improve food and water security, and contribute to poverty alleviation. Up-front investments in maintenance and conservation are almost always cheaper than trying to restore damaged ecosystems, and the social benefits that flow from restoration can be several times higher than the costs. Preliminary TEEB estimates suggest that the potential rates of return can reach 40 percent for mangrove and woodlands/shrublands, 50 percent for tropical forests and 79 percent for grasslands when the multiple ecosystems services are taken into account.
2: Reward benefits through payments and markets: Payments for ecosystem services (PES schemes) from local (e.g. water provisioning) to global (the REDD-Plus proposal for Reduced Emissions from Deforestation and Degradation, as well as from afforestation, reforestation, and effective conservation).
3: Reform environmentally harmful subsidies: Reforming subsidies that are inefficient, outdated or harmful makes double sense during a time of economic and ecological crisis.
4: Address losses through regulation and pricing: The cost of losses of biodiversity and ecosystem services should be tackled through regulatory frameworks that establish environmental standards and liability regimes. Designing a robust instrumental and market framework to confront resource users with these costs is a key priority for policy makers.
5: Recognise that protected areas are a cornerstone of conservation policies and provide multiple benefits: The global PA network covers around 13.9 percent of the Earth’s land surface, 5.9 percent of territorial seas, and only 0.5 percent of the high seas: nearly a sixth of the world’s population depend on protected areas for a significant percentage of their livelihoods. Investing US$45 billion in protected areas could secure vital nature-based services worth some US$5 trillion a year, including the sequestration of carbon, the protection and enhancement of water resources and protection against flooding (Balmford et al. 2002). There are also employment incentives, for example, in Bolivia protected-area tourism generates over 20,000 jobs, indirectly supporting over 100,000 people (Pabon-Zamora et al. 2009)
The second five recommendations were more specific, under the umbrella of a particular need for urgency:
The TEEB study shows that benefits of reform are multiple. It also reinforces the growing evidence that there are a number of urgent strategic ecosystem priorities that require policy shifts to address them:
6: Halt deforestation and forest degradation should be an integral part of climate change mitigation and adaptation focused on ‘green carbon’. It has the added benefit of preserving the huge range of services and goods forests provide to local people and the wider community;
7: Protect tropical coral reefs – and the associated livelihoods of half a billion people – through major efforts to avoid global temperature rise;
8: Save and restore global fisheries, which are currently under threat of collapse from over fishing;
9: Recognise the deep link between ecosystem degradation and the persistence of rural poverty and align policies across sectors with key Millennium Development Goals.
10: Agree to a forest carbon deal at Copenhagen.
I just can’t help but think how different our political situation today would be, if only Obama really had been a transformational leader, and if he’d only had some kind of magical machine that would have allowed him to know what the UN was up to. There is no doubt whatsoever that Obama has extraordinary gifts that could have been used to bring the above-described issues to public awareness, and pressed home the need to begin thinking and acting within a new conceptual framework.
Obama had the capacity to make all the above intelligable and compelling to people. Instead, he has wasted all our time in a fruitless search for crumbs from President Snowe, President Lieberman, President Grassley, President Nelson, President Graham.
What an enormous waste! What a terrible, tragic, enormous waste!