Use and Abuse of the “Natural Capital” Concept

by Herman Daly

Herman DalySome people object to the concept of “natural capital” because they say it reduces nature to the status of a commodity to be marketed at its exchange value. This indeed is a danger, well discussed by George Monbiot. Monbiot’s criticism rightly focuses on the monetary pricing of natural capital. But it is worth clarifying that the word “capital” in its original non-monetary sense means “a stock or fund that yields a flow of useful goods or services into the future.” The word “capital” derives from “capita” meaning “heads,” referring to heads of cattle in a herd. The herd is the capital stock; the sustainable annual increase in the herd is the flow of useful goods or “income” yielded by the capital stock–all in physical, not monetary, terms. The same physical definition of natural capital applies to a forest that gives a sustainable yield of cut timber, or a fish population that yields a sustainable catch. This use of the term “natural capital” is based on the relations of physical stocks and flows, and is independent of prices and monetary valuation. Its main use has been to call attention to and oppose the unsustainable drawdown of natural capital that is falsely counted as income.

Big problems certainly arise when we consider natural capital as expressible as a sum of money (financial capital), and then take money in the bank growing at the interest rate as the standard by which to judge whether the value of natural capital is growing fast enough, and then, following the rules of present value maximization, liquidate populations growing slower than the interest rate and replace them with faster growing ones. This is not how the ecosystem works. Money is fungible, natural stocks are not; money has no physical dimension, natural populations do. Exchanges of matter and energy among parts of the ecosystem have an objective ecological basis. They are not governed by prices based on subjective human preferences in the market.

Furthermore, money in the bank is a stock that yields a flow of new money (interest) all by itself without diminishing itself, and without the aid of other flows. Can a herd of cattle yield a flow of additional cattle all by itself, and without diminishing itself? Certainly not. The existing stock of cattle transforms a resource flow of grass and water into new cattle faster than old cattle die. And the grass requires sunlight, soil, air, and more water. Like cattle, capital transforms resource flows into products and wastes, obeying the laws of thermodynamics. Capital is not a magic substance that grows by creating something out of nothing.

While the environmentalist’s objections to monetary valuation of natural capital are sound and important, it is also true that physical stock-flow (capital-income) relations are important in both ecology and economics. Parallel concepts in economics and ecology aid the understanding and proper integration of the two realities–if their similarities are not pushed too far!

The biggest mistake in integrating economics and ecology is confusion about which is the Part and which is the Whole. Consider the following official statement, also cited by Monbiot:

As the White Paper rightly emphasized, the environment is part of the economy and needs to be properly integrated into it so that growth opportunities will not be missed.

—Dieter Helm, Chairman of the Natural Capital Committee, The State of Natural Capital: Restoring our Natural Assets, Second report to the Economic Affairs Committee, UK, 2014.

If the Chairman of the UK Natural Capital Committee gets it exactly backwards, then probably others do too. The environment, the finite ecosphere, is the Whole and the economic subsystem is a Part–a completely dependent part. It is the economy that needs to be properly integrated into the ecosphere so that its limits on the growth of the subsystem will not be missed. Given this fundamental misconception, it is not hard to understand how other errors follow, and how some economists, imagining that the ecosphere is part of the economy, get confused about valuation of natural capital.

Natural Capital, James Wheeler

How can we correctly price natural capital in a full world? Photo Credit: James Wheeler

In the empty world, natural capital was a free good, correctly priced at zero. In the full world, natural capital is scarce. How do we take account of that scarcity without prices? This question is what understandably leads economists to price natural capital, and then leads to the monetary valuation problems just discussed. But is there not another way to recognize scarcity, besides pricing? Yes, one could impose quotas–quantitative limits on the resource flows at ecologically sustainable levels that do not further deplete natural capital. We could recognize scarcity by living sustainably off of natural income rather than living unsustainably from the depletion of natural capital.

In economics, “income” is by definition the maximum amount that can be consumed this year without reducing the capacity to produce the same amount next year. In other words, income is by definition sustainable, and the whole reason for income accounting is to avoid impoverishment by inadvertent consumption of capital. This prudential rule, although a big improvement over present practice, is still anthropocentric in that it considers nature in terms only of its instrumental value to humans. Without denying the obvious instrumental value of nature to humans, many of us consider nature to also have intrinsic value, based partly on the enjoyment by other species of their own sentient lives. Even if the sentient experience of other species is quite reasonably considered less intrinsically valuable than that of humans, it is not zero. Therefore we have a reason to keep the scale of human takeover even below that indicated by maximization of instrumental value to humans. On the basis of intrinsic value alone, one may argue that the more humans the better–as long as we are not all alive at the same time! Maximizing cumulative lives ever to be lived with sufficient wealth for a good (not luxurious) life is very different from, and inconsistent with, maximizing simultaneous lives.

In addition, speaking for myself, and I expect many others, there is a deeper consideration. I cannot reasonably conceive (pace neo-Darwinist materialists) that our marvelous world is merely the random product of multiplying infinitesimal probabilities by infinitely many trials. That is like claiming that Hamlet was written by infinitely many monkeys, banging away at infinitely many typewriters. A world embodying mathematical order, a system of evolutionary adaptation, conscious rational thought capable of perceiving this order, and the moral ability to distinguish good from bad, would seem to be more like a creation than a happenstance. As creature-in-charge, whether by designation or default, we humans have the unfulfilled obligation to preserve and respect the capacity of Creation to support life in full. This is a value judgment, a duty based both historically and logically on a traditional theistic worldview. Although nowadays explicitly rejected by materialists, and by some theists who confuse dominion with vandalism, this worldview fortunately still survives as more than a vestigial cultural inheritance.

Whatever one thinks about these deeper issues, the point is that determination of the scale of resource throughput cannot reasonably be based on pseudo prices. But scale does have real consequences for prices. Fixing the scale of the human niche is a price-determining macro decision based on ethical and religious criteria. It is not a price-determined micro decision based on market expression of individual preferences weighted by ability to pay.

However the scale of the macro-limited resource flow is determined, we next face the question of how to ration that amount among competing micro claimants? By prices. So we are back to pricing, but in a very different sense. Prices now are tools for rationing a fixed predetermined flow of resources, and no longer determine the volume of resources taken from nature, nor the physical scale of the economic subsystem. Market prices (modified by taxes or cap-auction-trade) ration resources as an alternative to direct quantitative allocation by central planning. The physical scale of the economy has been limited, and the resulting scarcity rents are captured for the public treasury, permitting elimination of many regressive taxes. Dollars become ration tickets; no longer votes that determine how big the scale of the economy will be relative to the ecosystem. The market no longer conveys the message “we can grow as much as we want as long as we pay the price.” Rather the new message is, “there is only so much to go around, and dollars are your ration ticket for a part of the fixed quota, not a vote that can be cast for growth.” Equitable distribution of dollar incomes (ration tickets) will then be seen as the serious matter that it is, to be solved by sharing, not evaded by growth, especially not by uneconomic growth.

Unfortunately, the more common approach in economics has been to try somehow to calculate that price that internalizes sustainability and impose it via taxes. The right price, given the demand curve, will result in the corresponding right quantity. However, there is a two-fold problem: first, methods of calculating the “right” price are usually specious (e.g. contingent valuation); and second, we don’t really know where the shifting demand curve is, except on the blackboard. In fixing prices, errors in demand estimation result in variations in quantity. In fixing quantity, errors result in variations in price. The ecosystem is sensitive to quantity, not price. It is ecologically safer to let errors in estimation of demand result in price changes rather than quantity changes. This is one advantage of the cap-auction-trade system relative to carbon taxes. Although a great improvement over the present, carbon taxes attempt to ration carbon fuels without having really limited their supply. Nor are the “dollar ration tickets” limited, given the fractional reserve banks’ ability to create money, and the Fed’s policy of issuing more money whenever growth slows down.

A monetary reform to 100% reserve requirements on demand deposits would be a good policy for many reasons, to which we can add, as a necessary supplement to a carbon tax. It would not be necessary as a supplement to cap-auction-trade, but should be adopted for independent reasons. A good symbol should not be allowed to do things that the reality it symbolizes cannot do. One hundred percent reserves would require the symbol of money to behave more like real wealth, at least in some important ways. But this is another story.

An Economics Fit for Purpose in a Finite World

by Herman Daly

Herman DalyCausation is both bottom-up and top-down: material cause from the bottom, and final cause from the top, as Aristotle might say. Economics, or as I prefer, “political economy,” is in between, and serves to balance desirability (the lure of right purpose) with possibility (the constraints of finitude). We need an economics fit for purpose in a finite and entropic world.

As a way to envision such an inclusive economics, consider the “ends-means pyramid” shown below. At the base of the pyramid are our ultimate means, low entropy matter-energy–that which we require to satisfy our purposes–which we cannot make, but only use up. We use these ultimate means, guided by technology, to produce intermediate means (artifacts, commodities, services, etc.) that directly satisfy our needs. These intermediate means are allocated by political economy to serve our intermediate ends (health, comfort, education, etc.), which are ranked ethically in a hierarchy by how strongly they contribute to our best perception of the Ultimate End. We can see the Ultimate End only dimly and vaguely, but in order to ethically rank our intermediate ends we must compare them to some ultimate criterion. We cannot avoid philosophical and theological inquiry into the Ultimate End just because it is difficult. To prioritize logically requires that something must go in first place.

Ultimate Political Economy

The ends-means pyramid or spectrum relates the basic physical precondition for usefulness (low entropy matter-energy) through technology, political economy, and ethics, to the service of the Ultimate End, dimly perceived but logically necessary. The goal is to unite the material of this world with our best vision of the good. Neoclassical economics, in neglecting the Ultimate End and ethics, has been too materialistic; in also neglecting ultimate means and technology, it has not been materialistic enough.

The middle position of economics is significant. Economics in its modern form deals with the allocation of given means to satisfy given ends. It takes the technological problem of converting ultimate means into intermediate means as solved. Likewise it takes the ethical problem of ranking intermediate ends with reference to a vision of the Ultimate End as also solved. So all economics has to do is efficiently allocate given means among a given hierarchy of ends. That is important, but not the whole problem. Scarcity dictates that not all intermediate ends can be attained, so a ranking is necessary for efficiency–to avoid wasting resources by satisfying lower ranked ends while leaving the higher ranked unsatisfied.

Ultimate political economy (stewardship) is the total problem of using ultimate means to best serve the Ultimate End, no longer taking technology and ethics as given, but as steps in the total problem to be solved. The total problem is too big to be tackled without breaking it down into its pieces. But without a vision of the total problem, the pieces do not add up or fit together.

The dark base of the pyramid is meant to represent the fact that we have relatively solid knowledge of our ultimate means, various sources of low entropy matter-energy. The light apex of the pyramid represents the fact that our knowledge of the Ultimate End is much less clear. The single apex will annoy pluralists who think that there are many “ultimate ends.” Grammatically and logically, however, “ultimate” requires the singular. Yet there is certainly room for plural perceptions of the nature of the singular Ultimate End, and much need for tolerance and patience in reasoning together about it. However, such reasoning together is short-circuited by a facile pluralism that avoids ethical ranking of ends by declaring them to be “equally ultimate.”

It is often the concrete bottom-up struggle to rank particular ends that gives us a clue or insight into what the Ultimate End must be to justify our proposed ranking.

As a starting point in that reasoning together, I suggest the proposition that the Ultimate End, whatever else it may be, cannot be growth in GDP! A better starting point for reasoning together is John Ruskin’s aphorism that “there is no wealth but life.” How might that insight be restated as an economic policy goal? For initiating discussion, I suggest: “maximizing the cumulative number of lives ever to be lived over time at a level of per capita wealth sufficient for a good life.” This leaves open the traditional ethical question of what is a good life, while conditioning its answer to the realities of economics and ecology. At a minimum, it seems a more convincing approximation to the Ultimate End than today’s impossible goal of “ever more things for ever more people forever.”

Three Limits to Growth

by Herman Daly

Herman DalyAs production (real GDP) grows, its marginal utility declines, because we satisfy our most important needs first. Likewise, the marginal disutilitiy inflicted by growth increases, because as the economy expands into the ecosphere we sacrifice our least important ecological services first (to the extent we know them). These rising costs and declining benefits of growth at the margin are depicted in the diagram below.

3 Limits Graph

From the diagram we can distinguish three concepts of limits to growth.

1. The “futility limit” occurs when marginal utility of production falls to zero. Even with no cost of production, there is a limit to how much we can consume and still enjoy it. There is a limit to how many goods we can enjoy in a given time period, as well as a limit to our stomachs and to the sensory capacity of our nervous systems. In a world with considerable poverty, and in which the poor observe the rich apparently still enjoying their extra wealth, this futility limit is thought to be far away, not only for the poor, but for everyone. By its “non satiety” postulate, neoclassical economics formally denies the concept of the futility limit. However, studies showing that beyond a threshold self-evaluated happiness (total utility) ceases to increase with GDP, strengthen the relevance of the futility limit.

2. The “ecological catastrophe limit” is represented by a sharp increase to the vertical of the marginal cost curve. Some human activity, or novel combination of activities, may induce a chain reaction, or tipping point, and collapse our ecological niche. The leading candidate for the catastrophe limit at present is runaway climate change induced by greenhouse gasses emitted in pursuit of economic growth. Where along the horizontal axis it might occur is uncertain. I should note that the assumption of a continuously and smoothly increasing marginal cost (disutility) curve is quite optimistic. Given our limited understanding of how the ecosystem functions, we cannot be sure that we have correctly sequenced our growth-imposed sacrifices of ecological services from least to most important. In making way for growth, we may ignorantly sacrifice a vital ecosystem service ahead of a trivial one. Thus the marginal cost curve might in reality zig-zag up and down discontinuously, making it difficult to separate the catastrophe limit from the third and most important limit, namely the economic limit.

3. The “economic limit” is defined by marginal cost equal to marginal benefit and the consequent maximization of net benefit. The good thing about the economic limit is that it would appear to be the first limit encountered. It certainly occurs before the futility limit, and likely before the catastrophe limit, although as just noted that is uncertain. At worst the catastrophe limit might coincide with and discontinuously determine the economic limit. Therefore it is very important to estimate the risks of catastrophe and include them as costs counted in the disutility curve, as far as possible.

From the graph it is evident that increasing production and consumption is rightly called economic growth only up to the economic limit. Beyond that point it becomes uneconomic growth because it increases costs by more than benefits, making us poorer, not richer. Unfortunately it seems that we perversely continue to call it economic growth! Indeed, you will not find the term “uneconomic growth” in any textbook in macroeconomics. Any increase in real GDP is called “economic growth” even if it increases costs faster than benefits.

Earth -

The macro-economy is not the Whole, but rather Part of the finite Whole. Photo Credit: Beth Scupham

Economists will note that the logic just employed is familiar in microeconomics—marginal cost equal to marginal benefit defines the optimal size of a microeconomic unit, be it a firm or household. That logic is not usually applied to the macro-economy, however, because the latter is thought to be the Whole rather than a Part. When a Part expands into the finite Whole, it imposes an opportunity cost on other Parts that must shrink to make room for it. When the Whole itself expands, it is thought to impose no opportunity cost because it displaces nothing, presumably expanding into the void. But the macro-economy is not the Whole. It too is a Part, a part of the larger natural economy, the ecosphere, and its growth does inflict opportunity costs on the finite Whole that must be counted. Ignoring this fact leads many economists to believe that growth in GDP could never be uneconomic.

Standard economists might accept this diagram as a static picture, but argue that in a dynamic world technology will shift the marginal benefit curve upward and the marginal cost curve downward, moving their intersection (economic limit) ever to the right, so that continual growth remains both desirable and possible. However, the macroeconomic curve-shifters need to remember three things. First, the physically growing macro-economy is still limited by its displacement of the finite ecosphere, and by the entropic nature of its maintenance throughput. Second, the timing of new technology is uncertain. The expected technology may not be invented or come on line until after we have passed the economic limit. Do we then endure uneconomic growth while waiting and hoping for the curves to shift? Third, let us remember that the curves can also shift in the wrong directions, moving the economic limit back to the left. Did the technological advances of tetraethyl lead and chlorofluorocarbons shift the cost curve down or up? How about nuclear power? Adopting a steady state economy allows us to avoid being shoved past the economic limit. We could take our time to evaluate new technology rather than letting it blindly push growth that may well be uneconomic. And the steady state gives us some insurance against the risks of ecological catastrophe that increase with growthism and technological impatience.

Cold War Left Overs

by Herman Daly

Herman DalyThose of us old enough to remember the Cold War will also remember that it involved a growth race between Capitalism and Communism. Whichever system could grow faster would presumably win the allegiance of the uncommitted world. The idea of a steady state was therefore anathema to both sides. The communist growth god failed first because of political repression and economic inefficiency. But the capitalist growth god is now failing as growth becomes uneconomic due to environmental and social costs, and is propped up only by fraudulent accounting, monopoly, and financial corruption. Neither system can accept the idea of a steady-state economy, but neither can attain the impossible alternative of growing forever.

Advocates of the steady-state economy are long accustomed to attacks from capitalists, which have by no means disappeared. We are less accustomed to attacks from the left, not from communists who have virtually disappeared, but from remaining Marxists and socialists. Although Marxism is largely discredited (along with other manifestations of 19th century determinism, such as Freudianism and Eugenic Darwinism), one cannot by any means take that as a vindication of capitalism, which has only gotten worse in its quest for unending growth. In spite of my overall negative view of Marxism, there are some “green Marxists” who, in my opinion, are worth reading (e.g. John Bellamy Foster, Brett Clark, Richard York, The Ecological Rift). Recently, another socialist (I am not sure if he considers himself a Marxist) has criticized the steady-state economy for being essentially capitalist. This is economic historian Richard Smith. He sees the steady-state economy as a distraction from “eco-socialism.”

One should be grateful to one’s critics–it is much better to be criticized than ignored. Richard Smith kindly takes me as his exhibit A for a position that he misleadingly labels “steady-state capitalism.” I have never used that term, always speaking of a steady-state economy, which is neither capitalism nor socialism, although it draws features from both. Indeed, in the Cold War context it was thought to offer a Third Way, a possibility for uniting the best features of each system. Change is impossible unless you start from where you are. As noted, I am more accustomed to attacks from capitalists, so it is at least a refreshing change to be attacked, and on balance rather politely, by a socialist who, unlike many neoclassical growthists, has taken the trouble to learn about the steady-state economy. Disagreements will follow, but my appreciation for his critical attention needs to be expressed.

Richard Smith characterizes capitalism as a system that must “grow or die.” It then follows immediately that since capitalism must grow, it cannot be a steady state. OK then, if capitalism cannot be a steady state, then neither can a steady state be capitalism. So let’s not speak of “steady-state capitalism.” I, for one, never have–although Mr. Smith tendentiously attributes that term to me. By the same logic, following Marx, one might define socialism as a classless society based on overwhelming material abundance arrived at through rapid economic growth under the centrally planned dictatorship of the proletariat. Socialism also depends on growth. Therefore steady-state socialism is impossible. It was precisely to avoid such sterile definitional disputes that I always said “steady-state economy,” and never “steady-state capitalism,” or socialism for that matter.

Empty world models will no longer work in our full world. Photo Credit: www.TheEnvironmentalBlog.org

Would it not be more productive to start by defining a steady-state economy, followed by arguments for its necessity and desirability? We could then avoid ideological classifications based on abstract definitions of what capitalism or socialism “essentially must always be.” We now live in a full world. Capitalism and socialism are both from the empty-world era in which growth was the desideratum. Must we insist on pouring new wine into old wineskins, and then watching them burst?

Smith’s unhappiness with me derives most specifically from my preference for the market over centralized planning as a tool for dealing with the single technical problem of allocative efficiency. Steady-state economics deals with three problems: sustainable scale, just distribution, and efficient allocation. It takes the first two issues, scale and distribution, away from the market. It calls for quantitative ecological limits on the throughput of resources so that the market can no longer determine the physical scale of the economy relative to the biosphere. It also advocates social limits to the range of income inequality, so that the market can no longer generate large inequalities of wealth. Subject to these two prior macro-level aggregate constraints, it then relies on the market to efficiently allocate resources. This is not advocacy of the Market with a capital M, the deified master evaluator and controller of life. This is market with a small m, a limited tool for rationing, communicating, and exchanging goods and services.

Reliance on markets for allocation (now within prior ecological and distributional limits) is further constrained, even within traditional microeconomics, by opposition to monopoly, and restriction of market allocation to rival and excludable goods. Non-rival and public goods have long been recognized to require some degree of non-market allocation. Even so, Mr. Smith is still unhappy with any role for markets.

Richard Smith deserves credit for recognizing and opposing the real evils of financial-monopoly-crony capitalism as it currently exists. And, unlike both traditional Marxists and neoclassical economists, he realizes that we cannot grow forever, and that we have in many dimensions already far overshot optimal scale. And he takes the trouble to debate critical issues rather than ignore them. However, he thinks only socialism can somehow cure these evils. The operative word here is “somehow.” Somehow we must wipe the slate clean of any institutions associated with markets, such as property, division of labor, exchange, and profit. How? By violent revolution? By rational persuasion? By moral conversion? That is left vague. It is all very well, for example, to point out the real problems with excess reliance on the profit motive. But if we abolish profit as a source of income then we also abolish self-employment. Everyone must then become an employee earning a wage. Who then is the employer? Do we all then work for Ajax United Amalgamated Corporations? Or for the Universal State Monopoly? Is there something about the mere act of exchange, and the category of profit, (not just excessive inequality and monopoly ownership of the means of production) that offends or confuses Marxists?

Nevertheless, if Marxists now advocate limiting growth, that is a big change. Maximizing growth to achieve overwhelming material abundance has been seen as the path to the “new socialist man,” who, according to Marx, can only be freed from his bourgeois greed by objective abundance, by the abolition of scarcity, not by the “utopian” morality of sharing. I have never seen a Marxist proposal to limit the scale of the macro economy to an ecologically sustainable level–nor for a maximum as well as a minimum income to limit the range of distributive inequality to a reasonable and fair degree. Rhetorical calls for absolute equality and abolition of private property abound, but are neither realistic nor fair.

Marxists also go far out of their way not to recognize overpopulation and the need to limit population growth (a critical dimension of both scale and distributive inequality, given class differentials in fertility and access to contraception). A stationary population is part of the definition of a steady-state economy. Furthermore, a limited range of income inequality would restrict the ability of the rich to bid necessities away from the poor in the market. Unjust distribution of income does get reflected in markets, but let us attack the cause, not the symptom. And quotas on basic resource throughput could raise prices enough to eliminate most frivolous and wasteful production, as well as stimulate recycling, and increase efficiency while ruling out the Jevons effect. If we start with depletion quotas on basic resources, then the resulting increase in resource prices and efficiency cannot lead to more use of the resource. Auctioning transferrable quotas rather than giving them away (markets rather direct government allocation, pace Mr. Smith) will raise enough revenue to greatly reduce taxes on the poor.

It is not at all clear why Smith thinks markets must always be bad masters rather than good servants. If we forgo markets, should we then perhaps have another go at central planning and collectivization of agriculture? Would Mr. Smith have preferred War Communism to Lenin’s New Economic Policy because the latter was really just “state capitalism” that re-established significant reliance on markets? To be fair, we do not know what Smith thinks about any historical experience with the abolition of markets because he does not mention any.

If “eco-socialists” reject the steady-state economy as “inherently capitalistic,” then what specific policies do they recommend? How do their policies differ from those of steady-state economics? Are there some policies we agree on?

Critics of the present growth economy, whether steady-state economy or “eco-socialist,” are, however, united in humility before a common dilemma–namely that the bought-and-paid-for government that would have to enact the programs needed for a steady-state economy is the same government that would have to run a socialist economy. A government that cannot even break up too big to fail monopolies, or provide debt-free money as a public utility, or tax carbon, will certainly not be able to administer a centrally planned economy–nor even a steady state. We have deeper problems of moral and spiritual renewal (in addition to recognition of finitude and laws of thermodynamics) that transcend both capitalism and socialism. It is admittedly hard to envision the source for the basic moral renewal required to face the enormous problems that are looming, but Marxist dialectical materialism and collectivism seem to me already to have historically demonstrated their failure in this regard. We need something new. Although things look bleak, we never know enough to justify giving up hope. But we should avoid repeating past mistakes.

News on Blue Planet Prize

Editor’s Note: the below is cross-posted from The Asahi Glass Foundation website. We are very excited Daniel Janzen, INBio, and (especially) Herman Daly’s achievements are being celebrated with this prestigious award. Congratulations! 

Announcing the winners for 2014 Blue Planet Prize

Today, we issued a press release announcing the winners of the 23rd Blue Planet Prize.

The winners are

Prof. Herman Daly (USA) Professor Emeritus, School of Public Policy, University of Maryland

Prof. Daniel H. Janzen (USA) Professor, Department of biology, University of Pennsylvania
Instituto Nacional de Biodiversidad (INBio) (Founded in Costa Rica)

The commemorative lectures by the winners will be held at the United Nations University (Shibuya Ward, Tokyo) on November 13 (Thursday). Details will be posted on our website at a later date.

2014 (23rd) Blue Planet Prize Winners

Herman DalyProf. Herman Daly (USA)
Professor Emeritus, School of Public Policy, University of Maryland

Prof. Daly redefined “steady state economics” through the concept of sustainability by incorporating such factors as the environment, local communities, quality of life, and ethics into economic theory, which lead to building a foundation of environmental economics. He has been questioning whether economic growth brings happiness to humans and has been issuing warnings to society, which tends to overemphasize economic growth. As a consequence, he has had a significant international influence.

23-Janzen_INBioProf. Daniel H. Janzen (USA)
Professor, Department of biology, University of Pennsylvania

Instituto Nacional de Biodiversidad (INBio) (Costa Rica)

Prof. Janzen and the Instituto Nacional de Biodiversidad of Costa Rica (INBio) propose measures and policies on sustainable development in harmony with local environmental conservation and local inhabitants and works on environmental education and the conservation of biodiversity. INBio’s activities serve as a valuable role model, from which people both in developed and developing countries around the world should learn.

Remarks from the Award Recipients upon Notification of their Selection

Prof. Daly
I am both honored and humbled to accept the magnanimous Blue Planet Prize from the Asahi Glass Foundation. The making of such important products as glass and chemicals is already a great benefit to the world. Encouraging and supporting others in their efforts to protect and improve our Earth home, as the Asahi Glass Foundation does, is truly an example of generosity and service. When one is treated generously, then one is inspired to treat others the same way. Thank you for that inspiration, and for including me among a list of recipients whom I have long admired.

This recognition is not only an encouragement to me, but also to many friends and colleagues who have worked hard to protect and preserve our Earth from the destruction caused by excessive growth and careless waste. Among these I especially include my colleagues in the International Society for Ecological Economics. If I have done anything to deserve this Prize it is to have provided a generational connecting link between my best teachers and my best students. May this award strengthen that continuing chain into the future!

Prof. Janzen
We – all of us, including 2.6% of the world’s biodiversity – are delighted and honored to learn of the Blue Planet Prize for us and Costa Rica’s INBio. This honor really is for a cast of thousands of Homo sapiens – Costa Ricans and internationals – dancing with billions of other beasts, each doing their part to keep alive some portion of the nature that produced all of us. It is wonderful and wise that years ago the Asahi Glass Foundation had the foresight to offer this support to attempts to move away from the very human tendency to consume and alter our nest. Yes, we can restore some of what we have destroyed, and yes, we can help the world to become biologically literate. Without bioliteracy, nature is just a green threatening mass and there is little hope of its peaceful coexistence with all of us. We, INBio, and Area de Conservacion Guanacaste, are happy recipients of this recognition of decades of trying to open the doors of conserved wildlands to non-damaging partnerships with humanity. Only through direct understanding of the wild world can society welcome it into the family, village and nation.

INBio
To receive the prestigious Blue Planet Prize, given in recognition of our voluntary efforts to conserve Costa Rica’s rich biodiversity is a great honor, which we appreciate in all of its significance. We are humbled to be among many of the most outstanding authorities and leaders in the quest for solutions to the global environmental problems who have been previously recognized with this award, as well as to share it with Dr. D.H. Janzen, a world authority in tropical ecology and conservation with whom INBio has worked in a mutually beneficial association.

What our National Biodiversity Institute has been able to achieve through its institutional efforts has been largely determined by an enabling national environment; the endorsement of the Government of Costa Rica; the support of bilateral and multilateral development agencies; the collaboration of the scientific community and the profound commitment of INBio’s community with the cause of promoting a greater awareness of the value of biodiversity in our society.

The Blue Planet Prize becomes a new source of inspiration and motivation to continue our search for a harmonious relationship between humanity and our living world.

Integrating Ecology and Economics

by Herman Daly

Herman DalyAttempts to integrate economics and ecology have been based on one of three strategies: (1) economic imperialism; (2) ecological reductionism; (3) steady-state subsystem. Each strategy begins with the picture of the economy as a subsystem of the finite ecosystem. Thus all three recognize limits to growth. The differences concern the way they each treat the boundary between the economy and the rest of the ecosystem, and that has large policy consequences for how we accommodate to limits.

Ecology & Economy

 

Economic Imperialism

Economic imperialism seeks to expand the boundary of the economic subsystem until it encompasses the entire ecosphere. The goal is one system, the macro-economy as the whole. This is to be accomplished by complete internalization of all external costs and benefits into prices. Those myriad aspects of the biosphere not customarily traded in markets are treated as if they were by imputation of “shadow prices”–the economist’s best estimate of what the price of the function or thing would be if it were traded in a competitive market. Everything in the ecosphere is theoretically rendered comparable in terms of its priced ability to help or hinder individuals in satisfying their wants. Implicitly, the end pursued is ever-greater levels of consumption, and the way to effectively achieve this end is growth in marketed goods and services.

Economic imperialism is basically the neoclassical approach. Subjective individual preferences, however whimsical, uninstructed, or ill-considered, are taken as the ultimate source of value. Since subjective wants are thought to be infinite in the aggregate, as well as sovereign, there is a tendency for the scale of activities devoted to satisfying them to expand. The expansion is considered legitimate as long as “all costs are internalized.”

But many of the costs of growth we have experienced have come as surprises. We cannot internalize them if we cannot first imagine and foresee them. Furthermore, even after some external costs have become visible to all (e.g., climate change), internalization has been very slow and partial. Profit maximizing firms have an incentive to externalize costs. As long as the evolutionary fitness of the environment to support life is not perceived by economists as a value, it is likely to be destroyed in the imperialistic quest to make every molecule in creation pay its way according to the pecuniary rules of present value maximization.

Ironically, this imperialism sacrifices the main virtue of free market economists, namely their antipathy to the arrogance of central planners. Putting a price tag on everything in the ecosphere requires information and calculating abilities vastly beyond any imagined capacity.

There is no doubt that once the scale of the economy has grown to the point that formerly free environmental goods and services become scarce, it is better that they should have a positive price reflecting their scarcity than to continue to be priced at zero. But there remains the prior question: Are we better off at the new larger scale with formerly free goods correctly priced, or at the old smaller scale with free goods also correctly priced (at zero)? In both cases, the prices are right. This is the suppressed question of optimal scale, not answered, indeed not even asked, by neoclassical economics.

Ecological Reductionism

Ecological reductionism begins with the true insight that humans and markets are not exempt from the laws of nature. It then proceeds to the false inference that human action is totally explainable by, reducible to, the laws of nature. It seeks to explain whatever happens within the economic subsystem by exactly the same natural laws that it applies to the rest of the ecosystem. It subsumes the economic subsystem indifferently into the natural system, erasing its boundary. Taken to the extreme, in this view all is explained by a materialist deterministic system that has no room for purpose or will. This is a sensible vision from which to study the ecology of a coral reef. But if one adopts it for studying the human economy, one is stuck from the beginning with the important policy implication that policy makes no difference.

The reductionist vision frequently appeals to the Maximum Entropy Production Principle (often capitalized to elevate it to the same level as the Second Law of Thermodynamics). It says that whatever competing system maximizes entropy production will be competitively selected. Indeed one can appreciate the logic of this principle. The system that can monopolize and most rapidly degrade available sources of low entropy will displace competing systems by depriving them of their energy source. This insight should be taken seriously as a natural tendency. But when we apply it to the human economy it gives us an absurd policy implication. Namely, that the economy maximizes entropy production. Since maximizing entropy is the same as maximizing waste, that hardly offers a sensible rule for either understanding or directing the human economy!

The maximum entropy principle is more like the tragedy of open access commons than like the Second Law of Thermodynamics. That is, it is a trap–a competitive race to the bottom in the absence of collective action. The Second Law by contrast is an inevitability that we must recognize and adapt to; it has no known exceptions. The maximum entropy production principle is not a physical law. No action, collective or individual, can avoid the Second Law. Like the tragedy of the commons, the tragedy of entropy maximization is a detrimental competitive tendency that we must overcome by collective action. But if we mistakenly consider it a physical law on the level of the Second Law of Thermodynamics, then there is nothing to do but give up.

Economic imperialism and ecological reductionism have in common that they are monistic visions, albeit rather opposite monisms. It is the monistic quest for a single substance or principle by which to explain everything that leads to excessive reductionism on both sides. Certainly one should strive for the most reduced or parsimonious explanation possible without ignoring the facts. But respect for the basic empirical facts of natural laws on the one hand, and self-conscious purpose and will on the other hand, should lead us to a kind of practical dualism. After all, that our world should consist of two fundamental elements offers no greater inherent improbability than that it should rest on one only. How these two fundamental elements of our world (material cause and final cause) interact is a venerable mystery–precisely the mystery that the monists of both kinds are seeking to avoid. But economists are too much in the middle of things to adopt either extreme. Economists are better off denying the tidy-mindedness of either monism than denying the facts that point to an untidy dualism.

The Steady-State Subsystem

We must pay attention to the optimal scale of the human economy to protect the ecosystem we depend on. Photo Credit: Elisa Bracco

We must pay attention to the optimal scale of the human economy to protect the natural ecosystem we depend on. Photo Credit: Elisa Bracco

The remaining strategy is the steady-state subsystem. It does not attempt to eliminate the subsystem boundary, either by expanding it to coincide with the whole system or by reducing it to nothing. Rather, it affirms both the interdependence and the qualitative difference between the human economy and the natural ecosystem. The boundary must be recognized and drawn in the right place. The scale of the human subsystem defined by the boundary has an optimum, and the throughput by which the ecosphere physically maintains and replenishes the economic subsystem must be ecologically sustainable. That throughput is indeed entropic, but rather than maximizing entropy the goal of the economy is to minimize low entropy use needed for a sufficient standard of living–by sifting low entropy slowly and carefully through efficient technologies aimed at important purposes. The economy should not be viewed as an idiot machine dedicated to maximizing waste. Its final cause is not the maximization of waste but the maintenance and enjoyment of life.

The idea of a steady-state economy comes from classical economics, and was most developed by John Stuart Mill (1857), who referred to it as the “stationary state.” The main idea was that population and the capital stock were not growing, even though the art of living continued to improve. The constancy of these two physical stocks defined the scale of the economic subsystem. Birth rates would be equal to death rates and production rates equal to depreciation rates. Today we add that both rates should be equal at low levels rather than high levels because we value longevity of people and durability of artifacts, and wish to minimize throughput, subject to maintenance of sufficient stocks for a good life.

Ecological economics should seek to develop the steady-state vision, and get beyond the dead ends of both economic imperialism and ecological reductionism.

Krugman’s Growthism

by Herman Daly

Herman Daly

 

Paul Krugman often writes sensibly and cogently about economic policy. But like many economists, he can become incoherent on the subject of growth. Consider his New York Times piece, published earlier this month:

 

…let’s talk for a minute about the overall relationship between economic growth and the environment.

Other things equal, more G.D.P. tends to mean more pollution. What transformed China into the world’s largest emitter of greenhouse gases? Explosive economic growth. But other things don’t have to be equal. There’s no necessary one-to-one relationship between growth and pollution.

People on both the left and the right often fail to understand this point…On the left, you sometimes find environmentalists asserting that to save the planet we must give up on the idea of an ever-growing economy; on the right, you often find assertions that any attempt to limit pollution will have devastating impacts on growth…[Krugman says both are wrong]…But there’s no reason we can’t become richer while reducing our impact on the environment [emphasis mine].

Krugman distances himself from “leftist” environmentalists who say we must give up the idea of an ever-growing economy, and is himself apparently unwilling to give it up. But he thinks the “right-wingers” are wrong to believe that protecting the environment will devastate growth. Krugman then advocates the more sensible goal of “becoming richer,” but fails to ask if growth in GDP is any longer really making us richer. He seems to equate, or at least fails to distinguish, “growing GDP” from “becoming richer.” Does he assume that because GDP growth did make us richer in yesterday’s empty world it must still do so in today’s full world? The usual but unjustified assumption of many economists is that a growing GDP increases measured wealth by more than it increases unmeasured “illth” (a word coined by John Ruskin to designate the opposite of wealth).

To elaborate, illth is a joint product with wealth. At the current margin, it is likely that the GDP flow component of “bads” adds to the stock of “illth” faster than the GDP flow of goods adds to the stock of wealth. We fail to measure bads and illth because there is no demand for them, consequently no market and no price, so there is no easy measure of negative value. However, what is unmeasured does not for that reason become unreal. It continues to exist, and even grow. Since we do not measure illth, I cannot prove that growth is currently making us poorer, any more than Krugman can prove that it is making us richer. I am just pointing out that his GDP growthism assumes a proposition that, while true in the past, is very doubtful today in the US.

To see why it is doubtful, just consider a catalog of negative joint products whose value should be measured under the rubric of illth: climate change from excess carbon in the atmosphere; radioactive wastes and risks of nuclear power plants; biodiversity loss; depleted mines; deforestation; eroded topsoil; dry wells, rivers and aquifers; the dead zone in the Gulf of Mexico; gyres of plastic trash in the oceans; the ozone hole; exhausting and dangerous labor; and the un-repayable debt from trying to push growth in the symbolic financial sector beyond what is possible in the real sector (not to mention military expenditures to maintain access to global resources).

Deforestation–one of the many “illths” created by continual GDP growth

These negative joint products of GDP growth go far beyond Krugman’s minimal nondescript category of “pollution.” Not only are these public bads un-subtracted, but the private anti-bads they make necessary are added to GDP! For example, the bad of eroded topsoil is not subtracted, but the anti-bad of fertilizer is added. The bad of Gulf and Arctic oil spills is not subtracted, but the anti-bad of clean-up is added. The natural capital depletion of mines, wells, forests, and fisheries is falsely accounted as income rather than capital draw-down.

Such asymmetric accounting alone is sufficient to refute growthism, but for good measure note that the growthists also neglect the most basic laws of economics, namely, the diminishing marginal benefit of income and increasing marginal cost of production. Why do they think these two curves will never intersect? Is Krugman just advocating temporary growth up to some level of optimality or sufficiency, or an ever-growing economy? If the latter, then either the surface of the Earth must grow at a rate approximating the rate of interest, or real GDP must become “angel GDP” with no physical dimension.

Krugman is correct that that there is no necessary “one-to-one relationship between growth and pollution.” But there certainly is a very strong positive correlation between real GDP growth and resource throughput (the entropic physical flow that begins with depletion and ends with pollution). Since when do economists dismiss significant correlations just because they are not “one-to-one”?

Probably we could indeed become richer (increase net wealth) while reducing our impact on the environment, as Krugman hopes. But it will be by reducing uneconomic growth (in throughput and its close correlate, GDP) rather than by increasing it. I would be glad if this were what Krugman has in mind, but I doubt that it is.

In any case, it would be good if he would specify whether he thinks current growth in real GDP is still economic in the literal sense that its benefits exceed its costs at the margin. What specifically makes him think this is so? In other words, is GDP growth currently making us richer or poorer, and how do we know?

Since GDP is a conflation of both costly and beneficial activity, should we not separate the cost and benefit items into separate accounts and compare them at the margin, instead of adding them together? How do we know that growth in GDP is a sensible goal if we do not know if the associated benefits are growing more or less rapidly than the associated costs? Mainstream economists, including Krugman, need to free their thinking from dogmatic GDP growthism.

Depletion of Moral Capital as a Limit to Growth

by Herman Daly

In thHerman Dalye Social Limits to Growth, Fred Hirsh argues that

Morality of the minimum order necessary for the
functioning of a market system was assumed,
nearly always implicitly, to be a kind of permanent
free good, a natural resource of a non depleting kind.

Elaborating on the relation of Adam Smith’s Theory of Moral Sentiments to his Wealth of Nations, Hirsh points out that for Smith, men could safely be trusted not to harm the community in pursuing their own self interest not only because of the invisible hand of competition, but also because of built-in restraints on individual behavior derived from shared morals, religion, custom, and education. The problem that Hirsh sees is that

continuation of the growth process itself rests on certain preconditions that its own success has jeopardized through its individualistic ethos. Economic growth undermines its social foundations.

The undermining of moral restraint has sources on both the demand and supply sides of the market for commodities. In his essay, “The Growth of Affluence and the Decline of Welfare,” E. J. Mishan has noted that

a society in which ‘anything goes’ is ipso facto, a society in which anything sells.
(Economics, Ecology, Ethics)

A corollary is that self-restraint or abstinence in the interests of any higher claims than immediate gratification by consumption is bad for sales, therefore bad for production, employment, tax receipts, and everything else. The growth economy cannot grow unless it can sell. The idea that something should not be bought because it is frivolous, degrading, tawdry, or immoral is subversive to the growth imperative. If demand is to be sufficient for continual growth then everything must sell, which requires that “anything goes.”

On the supply side, the success of science-based technology has fostered the pseudo-religion of “scientism,” i.e., the elevation of the deterministic, materialistic, mechanistic, and reductionistic research program of science to the status of an ultimate World View. Undeniably, the methodological approach of scientific materialism has led to great increases in our technological prowess. Its practical success argues for its promotion from working hypothesis or research program to World View. But a World View of scientific materialism leaves no room for purpose, for good and evil, for better and worse states of the world. It erodes morality in general and moral restraint in economic life in particular. As power has increased, purpose has shrunk.

The baleful consequence of this fragmenting of the moral order, which we are depleting just as surely as we are wrecking the ecological order, is, as Mishan points out, that

effective argument [about policy] becomes impossible if there is no longer a common set of ultimate values or beliefs to which appeal can be made in the endeavor to persuade others.

Just as all research in the physical sciences must dogmatically assume the existence of objective order in the physical world, so must research in the policy sciences dogmatically assume the existence of objective value in the moral world. Policy must be aimed at moving the world toward a better state of affairs or else it is senseless. If “better” and “worse” have no objective meaning, then policy can only be arbitrary and capricious. C. S. Lewis forcefully stated this fundamental truth:

A dogmatic belief in objective value is necessary to the very idea of a rule which is not tyranny or an obedience which is not slavery.

Likewise, Mishan claims that

a moral consensus that is to be enduring and effective is the product of a belief only in its divine origin.

In other words, an enduring ethic must be more than a social convention. It must have some objective, transcendental authority, regardless of whether one calls that authority “God,” or ‘the Force,” or whatever. All attempts to treat moral value as entirely a part of nature to be manipulated and programmed by psychology or genetics only ends in a logical circularity.

Moral value cannot be reduced to or explained as a mere result of genetic chance and natural selection, without at the same time losing its authority. Even if we knew how to remake moral values as human artifacts, we must still have a criterion for deciding which values should be emphasized and which stifled in the new order. But if that necessary criterion is itself an artifact of humanly manipulated mutation and selection, then it too is a candidate for being remade. There is nowhere to stand.

Once the false belief spreads (and it already has) that morality has no basis other than random chance and natural selection under impermanent environmental conditions, then it will have about as much authority and truth claim as the Easter Bunny. In sum, the attitudes of scientific materialism and cultural relativism actively undercut belief in a transcendental basis for objective value, which in turn undercuts moral consensus. Lacking that consensus there is no longer the “morality of the minimum order necessary for the functioning of a market system” presupposed by Adam Smith and his followers.

A Medical Missionary’s Environmental Epiphany

by Herman Daly

Herman DalyDr. Paul Brand was the son of British missionary parents in South India where he grew up. He returned to England to study medicine, then went back to take care of people with leprosy in India, mainly doing reconstructive hand and foot surgery — some 3,000 operations over many years. He also spent some time in Ethiopia doing similar things, and finally ended up as director of the only leprosy hospital in the U.S., located in Carville, Louisiana. I believe that hospital closed about ten years ago, after Dr. Brand retired. He died in 2003. His son happened to be a student of mine at Louisiana State University (LSU), so that is how I met him. Medically he is credited with having established that leprosy is not the direct cause of decay or necrosis of the hands and feet universally observed in people with leprosy. Rather the damage to extremities is self-inflicted, resulting from the loss of sensation and inability to feel pain. Without pain there is no feedback to tell you that you are damaging yourself. Brand developed routines and practices to help avoid self-inflicted injuries, and wrote a book entitled Pain: the Gift that Nobody Wants. He also wrote the standard medical textbook on hand and foot surgery.

LSU is a big football school, and an assistant coach invented a super-cushioned helmet that much reduced head pain on impact. This was thought a great thing until Dr. Brand pointed out that head pain was what kept football players from breaking their necks. Would you rather have a headache or a broken neck?

So much for background. I want to focus on a paragraph that Dr. Brand wrote in 1985:

I would gladly give up medicine tomorrow if by so doing I could have some influence on policy with regard to mud and soil. The world will die from lack of pure water and soil long before it will die from a lack of antibiotics or surgical skill and knowledge. But what can be done if the destroyers of our earth know what they are doing and do it still? What can be done if people really believe that free enterprise has to mean absolute lack of restraint on those who have no care for the future?

What led him to such a statement? Living in India, Ethiopia, and Louisiana — and witnessing the same thing in each place.

Rice Terrace

Dr. Brand prescribed practices to help his patients avoid self-inflicted injuries. He realized that similar principles apply to managing our ecosystems (photo by Alain).

In India he received his first lesson in soils management at age six, from an old Indian farmer who reprimanded him and some other boys who carelessly broke the little turf dams on the terraced rice paddies along the mountain side while chasing frogs in the wet level terraces. The old man scooped up a handful of mud and said, this soil will feed my family year after year. But the soil has to stay up here. The water wants to carry the soil down the mountain to the river, and then to the sea. Do you think the water will bring it back up? No, they answered. Will you be able to bring it back up? No, grandfather. Will rocky hillsides without soil feed my family? No. Well, that is why the dams must be cared for. Do you understand? Yes, grandfather, we’re sorry. Returning to this area many years later Brand observed barren rocky hillsides — the result of government programs to use ex-prisoners to grow potatoes, but without first teaching them the wisdom of the old farmer.

In Ethiopia most of his leprosy patients were farmers, and that brought him again to the farms where he witnessed terrible erosion where there had once been trees and grasses. The Nile carried Ethiopian soil to Egypt. Farms grew poor crops, and the fields were full of large stones. But the stones were not so large that they could not be levered up and rolled to the edge of the field where they could have made useful walls instead of obstacles to tilling and harvesting. Why were such simple improvements not made, Brand asked. The peasants explained that if they made their fields look good and productive they would lose them to the ruling class. Someone from the city would claim that his ancestors had owned it, and the peasants had no chance in court. So injustice, as well as water and wind, contributed to erosion of the soil. People with leprosy who returned to the eroded farms did not have a good prognosis even if their leprosy was now under control.

The leprosarium at Carville, Louisiana, was just a stone’s throw from the Mississippi river. It dated from before levies had been built to contain the river. Therefore all the buildings and houses were built on stilts — maybe four to eight feet high. For a week or so each year water swirled under your house, but you got around in a skiff or pirogue. (Nowadays a fiberglass bass boat with a 200 horsepower Mercury outboard engine is the standard mode of transportation in Louisiana bayous.) Meanwhile the water deposited its silt before returning to its banks, transferring Midwestern topsoil to the Louisiana delta or rebuilding the eroding marshlands or barrier islands. Now the river is contained between levies to eliminate annual floods, so the silt is deposited in the river bottom rather than on the land, necessitating higher levies. Or the silt flows all the way out into the Gulf of Mexico and over the continental shelf, no longer rebuilding coastal marshlands that are now disappearing — and would have served New Orleans as a buffer against Hurricane Katrina. In addition to silt, the Mississippi carries fertilizer and pesticide runoff from Midwestern farms into the Gulf, creating a dead zone the size of New Jersey. “Cheap” corn and soybeans do not include the costs of lost seafood in the Gulf.

So in light of these experiences in Dr. Brand’s life, let us reread the first part of his statement:

I would gladly give up medicine tomorrow if by so doing I could have some influence on policy with regard to mud and soil. The world will die from lack of pure water and soil long before it will die from a lack of antibiotics or surgical skill and knowledge.

A physician treats our internal organs — heart, lungs, liver, kidneys, etc. in order that we may live longer and better. But our lives depend on external organs as well, environmental life support systems. What good are our lungs if there are no trees and grasses capable of photosynthesis? What good is our digestive tract if the land won’t grow food? What good are our kidneys if the rivers run dry, or are toxic? I think it is not much of a stretch for a good physician to realize that health and wellness now depend as much on care of our collective external organs as on our individual internal organs. Reconstructing a patient’s hands and feet, and then sending him to slowly starve on eroded farmland is at best a partial cure.

The other part of Dr. Brand’s statement, his questions, is also important:

But what can be done if the destroyers of our earth know what they are doing and do it still? What can be done if people really believe that free enterprise has to mean absolute lack of restraint on those who have no care for the future?

Environmental destruction, like other sins, is not just the result of ignorance. There is ignorance to be sure, but mostly we know what we are doing. We are caught up in structures that demand fast growth, rapid turnover, and quick profits. And that is facilitated both by ignorance of environmental costs, and by willingness to shift those costs on to others. Simple denial also plays a role — pie-in-the-sky savior fantasies of space colonization and belief in perpetual motion schemes — technological Gnosticism, I call it.

We all seem to suffer from a symptom of leprosy, we do not feel pain in our external organs and structures (our environmental extremities), and therefore do not stop the behavior that is damaging them. In part this is because often the benefits of the damaging behavior go to the people responsible for the behavior while the costs fall on others — the painful feedback is diverted to people who did not cause the damage. The fishermen in the Gulf of Mexico pay the cost of pesticide and fertilizer runoff caused by careless farming. Environmental costs have been shifted from those who caused them to those who did not.

It would be easy to say, “Well this is nothing new, just the same old prophets of doom in modern dress — there is nothing new under the sun.” But there is something new — the earth is now relatively full of us and all our stuff. In my lifetime world population has tripled, and the populations of livestock, automobiles, and refrigerators have vastly more than tripled. Meanwhile the size of the earth has stayed the same — so it is a lot more full. And the growing scale of the economy means that environmental and social cost-shifting is ever larger and more dangerous.

Consequently there are many more environmental problems than soil erosion. I focused on that because it was what led Dr. Brand to his realization. Other, newer environmental problems, many of them interrelated, include climate change, biodiversity loss, ozone layer depletion, overpopulation, oil depletion, etc. Not to mention modern warfare. I’ll spare you a complete litany.

Many environmentalists look at this list and despair. Humans, after all, they say, are just one more animal species and will over-consume and over-reproduce until they provoke a collapse — just like deer on an island or bacteria in a flask. But Christians like Dr. Brand, and other thoughtful people as well, cannot take that attitude. Yes, we are a part of the Creation, and share many commonalities with our fellow creatures, and we are kin to them by evolution. But we are inescapably the creature in charge — the one that bears the capability and responsibility of the imago Dei. Dr. Brand was an example and witness to that truth.

Remembering Robert Goodland

by Brent Blackwelder and Herman Daly

Robert Goodland, a true friend of CASSE and the Daly News, passed away shortly after Christmas. Brent Blackwelder and Herman Daly herein describe the exemplary life and contributions of their friend and colleague. Robert’s life story will inspire all who care about the environment and social justice.

Robert Goodland

Robert Goodland (1939 – 2013)

Robert Goodland was the first ecologist hired by the World Bank and worked hard for thirty years to improve that institution’s environmental and human rights practices. Robert also wrote more than twenty books on environmental and social issues and many more monographs. The Library of Congress lists more than forty of his titles. He was the first winner of the World Conservation Union’s Harold Jefferson Coolidge medal for lifetime achievement in the conservation of nature. In contrast to colleagues who avoided controversy, Robert pressed to work on the most challenging of environmental and social issues. He saw that his job at the World Bank necessitated his being a vigorous “sparring partner,” providing constructive criticism and sparking improvement. He was known as the “conscience” of the World Bank, a role in which he sought the views of environmental leaders around the world.

Robert earned a bachelor’s degree in biology from McGill University in 1960. For his master’s degree, he researched tropical ecology in a remote part of Guyana with no roads or electricity. The Canadian Government awarded him a scholarship for PhD research on ecosystems in Brazil.

Robert became a professor in 1974 at the University of Brasilia, where he established a program to teach tropical ecology and environmental assessment. Then he moved to the Instituto Nacional de Pesquiasas da Amazonia in Manaus, where he designed Brazil’s first graduate course in applied tropical ecology. Its key case study was the trans-Amazonian highway. That led Robert to co-author with his friend and mentor Howard Irwin the book Amazon Jungle: Green Hell to Red Desert. It attracted much favorable review, and became viewed as a seminal work in the birth of the international environmental movement.

From 1975 through 1978, Robert served as a consultant for World Bank projects. He designed environmental and social programs to mitigate damages being caused by the Itaipu project, then the world’s biggest hydroelectric project. He also worked on addressing environmental issues and the welfare of Orang Asli forest dwellers for the first time in Malaysia’s national development planning. Separately, he was recruited by the New York Botanical Garden to help establish what became the Cary Center for Ecosystem Studies to complement the Cary Arboretum in Millbrook, New York.

In 1978, Robert was recruited to become the first full-time ecologist at the World Bank in Washington, D.C. He was initially assigned to the task of screening every single proposed World Bank project, and selecting for scrutiny those with the largest potential impacts, for which he would draft recommendations. But project designers resisted implementing his recommendations.

As a remedy, Robert took a lead role in drafting environmental and social policies for the World Bank Group, notably covering Environmental Assessment (now Operational Policy 4.01), Indigenous Peoples (Operational Policy 4.10), Natural Habitats (Operational Policy 4.04), and Physical Cultural Resources (Operational Policy 4.11).

In 1979, Robert joined an early mission for the World Bank’s Polonoroeste project in the northwestern part of the Amazon rainforest. Vulnerable ethnic minorities were a key issue in the design of the project, and Robert protected Amerindians by incorporating elements of the then-draft policy on indigenous peoples. So Robert’s focus on policies involved not just drafting text, but also testing its implementation. Even harder work was to persuade one committee after another to approve the adoption of the policies. To foster their implementation, Robert arranged for numerous workshops, conferences, training programs, colloquia, lectures, and guidance materials. Distinguished specialists and a variety of stakeholders were involved in internal World Bank events and activities as well as external ones.

The policies and guidance materials pioneered by Robert essentially served as environmental and social standards for many countries that lacked appropriate regulatory frameworks to provide such standards. Other development banks and aid agencies became interested in adapting them for their own purposes. Robert pressed for those banks and agencies to coordinate among themselves and with the World Bank Group and others, using methods that have continued functioning to this day. Commercial banks became interested too, and Robert worked with a group of bankers called the “Gnomes of Zürich,” and with others in London and New York. He also organized workshops for major engineering and consulting firms that would have to comply with the policies.

The World Bank established a Projects Policy Department, and Robert served as Senior Environmental Affairs Officer from 1983 through mid-1987. Then the Bank created the Environment Department, and Robert became Division Chief for Latin America. He recruited specialists including George Ledec, now Lead Ecologist in the Bank’s Africa Region, and Maritta Koch-Weser, who went on to become President of IUCN. Next came a role for Robert in the Central Environment Department, where he recruited ecological economist Herman Daly.

Robert’s work on indigenous peoples led the institution to hire a cadre of anthropologists. They took up the issue of preventing forced resettlement, and mitigating its adverse impacts when it did occur. Robert also worked to complete the “Environmental Assessment Sourcebook,” which became a crucial worldwide reference on various aspects of environmental assessment. As a capstone to Robert’s work on the principles of environmental and social assessment, he served a term as president of the International Association of Impact Assessment in 1994-1995.

Robert developed ways to bolster his policy initiatives with sectoral work. This included stopping the World Bank Group from financing projects involving tobacco and asbestos. It also included avoiding the most destructive types of agricultural and forestry projects, such as those featuring transmigration, logging, and ranching in tropical forests, as well as land colonization. When internal resistance arose within the World Bank Group, Robert and his colleagues got their work published for a worldwide audience in the 1984 book Environmental Management of Tropical Agriculture. Later, after he analyzed the impacts of some of the world’s largest hydroelectricity projects, he played a key role in the establishment of the World Commission on Dams in 1997, led by Achim Steiner (who later became the head of IUCN and then of UNEP).

In the 1990s, when Robert had become Lead Environmental Advisor at the World Bank, he sought practical ways for the institution to “walk the talk” that it delivered externally, by improving its own environmental and social performance. So he volunteered to chair the Staff Association’s environmental working group. He motivated the Bank’s facilities management to commission an independent audit of their environmental and social performance. The world-renowned energy expert Amory Lovins led the audit. Based on its results, Robert successfully pressed senior management to offer staff incentives for using public transit and bicycles for commuting. He also helped implement coordinated internal sustainability programs.

Robert wanted project proponents to be held accountable to people adversely impacted by development projects. So he helped advance the work of the World Bank’s Inspection Panel, and he was shortlisted to become the first Compliance Advisor/Ombudsman in the International Finance Corporation. He also tried for many years to get the International Monetary Fund to do something about the adverse social impacts of its operations, which tend to have much broader reach than do most projects financed by the World Bank Group.

Robert cooperated with Salah El Serafy , Herman Daly, and Roefie Hueting to develop a series of conferences throughout the 1980s on “Greening the UN System of National Accounts.” Robert also worked with Herman and Salah in addressing their concerns over the draft 1992 “World Development Report” on development and the environment. Because the draft was rather bland, they developed a parallel, but more forceful publication entitled “Environmentally Sustainable Economic Development: Building on Brundtland.” They managed to get this published by UNESCO even before the “World Development Report” came out.

Robert obtained major grant funding from the government of Canada to help the government of Indonesia develop its environmental ministry, under the stewardship of Emil Salim. After Robert’s official retirement from the World Bank in 2001, Emil was appointed to head the independent Extractive Industries Review at the World Bank Group. Emil recruited Robert to play a key role, and they recommended various ways to replace fossil fuels with renewable energy sources. Also after Robert’s official retirement, he served as a senior fellow at the World Resources Institute, where he co-authored a report on human rights. In retirement he worked all over the world as a consultant, often pro bono, in protection of the environment and indigenous peoples. He once remarked that in retirement he was doing much the same things as when in the World Bank, but the difference was that now the people he worked for were more appreciative.

Robert also continued to build on his previous work that had gotten the World Bank to agree in 2001 that development finance should no longer fund large-scale livestock projects. He co-authored with Jeff Anhang a 2009 article entitled “Livestock and Climate Change,” which assessed how replacing some livestock products — and reforesting land thereby freed from livestock and feed production — could be the only pragmatic way to stop climate change before it might be too late. This work became widely cited by many prominent sources, including Bill Gates and Paul McCartney’s Meat Free Monday campaign. Robert was invited by the UN Food and Agriculture Organization to speak about this work in Rome and Berlin, and also invited to deliver a keynote speech to the Chinese Academy of Social Sciences in Beijing. To develop further awareness, Robert worked to launch a website called “Chomping Climate Change,” and worldwide interest in this work seems likely to grow well into the future.

In the1980s Robert married Jonmin. Their son Arthur is studying for his PhD in renewable energy at Leeds, England. Robert enjoyed mountain trekking and had recently completed his favorite trek in Nepal, with Jonmin and Arthur, when he died, December 28, 2013.