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The Hidden Costs of Cheater Economics on Human Health & the Future of Life on Earth

by Brent Blackwelder

BlackwelderIn a true cost steady state economy, the real costs of goods and services would not be disguised, hidden, or kept off the accounting ledger. The former head of Friends of the Earth England, Tony Juniper, makes a significant contribution to the discussion of a true cost economy in his new book What Has Nature Ever Done For US? How Money Really Does Grow on Trees.

Cheater economics enables polluting products to be sold cheaper than many clean products. Cheater economics includes subsidies for fossil fuels, pesticides, and toxic chemicals. Cheater economics tolerates pollution externalities, as economists have noted. For example, many damages caused by air pollution from coal-fired power plants are not incorporated into the price of coal but simply borne by the victims. The act of mountain top mining eliminates forests and streams while air pollution from burning coal results in loss of crops, damage to buildings, health problems, and mercury contamination of fisheries, etc.

Here is a sample of the astonishing set of ecological costs stemming from economic activities that damage or rearrange ecosystems that are presented in What Has Nature Ever Done For US?

Vultures in India

Photo Credit:  Nagarjun Kandukuru

Perching vulture in India. Photo Credit: Nagarjun Kandukuru

India has almost lost its total population of 40 million vultures as a result of anti-inflammatory drugs injected into cattle and water buffalo. The vultures consumed the carcasses of these and other dead creatures and accumulated a fatal dosage. Now 12 million tonnes of animal flesh that vultures consumed annually is left rotting, fed upon by growing packs of dogs that have caused a massive outbreak of rabies among the human population. The annual medical costs exceed $30 billion as a result of the demise of the vulture population, which had previously provided free of charge essential garbage/carrion collection services.

Pollinators of Human Food Crops

About two thirds of the world’s food crops require animal pollination and one trillion dollars of the $3 trillion annual sales of agricultural products are dependent on animal pollinators such as honey bees and bumblebees. Certain pesticides are killing off these crucial pollinators. In the 1980s, extensive use of pesticides in part of Sichuan, China, eliminated the bee pollinators. Today in this region, about 40,000 people now have to pollinate apple and pear trees by hand.

The United Nations Food & Agriculture Organization (FAO) reports that in 146 countries, 90% of the food supply is provided by 100 crops. What is significant is that 71 of these 100 crops are pollinated primarily by wild bees. These crops include squashes, cherries, plums, cucumbers, strawberries, and pears.

Destruction of Ocean Fisheries via Subsidies

Ocean fisheries contribute $274 billion for global GDP but various countries provide $16 billion in subsidizing fishery harvesting practices that are highly damaging to fish stocks: i.e., the equivalent of killing the goose that laid the golden egg.

Photo Credit: Jim Winstead

Mangrove in Thailand. Photo Credit: Jim Winstead

Mangrove Forest Loss & Coastal Flooding

One square kilometer of mangrove forest is worth between $200,000 and $900,000 annually. Destruction of coastal mangrove forests, as occurs with Asian shrimp farms, eliminates the storm protection barrier that is increasingly important in the face of sea level rise.

High Health Care Costs as Result of Destroying Natural Areas

To deal with the poor health of people in the polluted Gateshead area in Northeast England, a group of British public agencies in 2004 initiated a program of walks in a 360 hectare mixed forest zone. Tony Juniper reports that these walks were very effective in improving patients’ health and were far superior to the alternative of exercise in a gymnasium.

A growing body of evidence points to the health benefits from interactions with nature. Dr. William Bird, a British doctor, ran a diabetic clinic in the 1990s in Oxfordshire where he initiated a very successful program of health walks in natural areas. But the sad fact is that natural areas are declining in many urban areas. In Sheffield, England, the “roaming” range for children has declined over 5 generations from six miles when the great-grandparents were children to about 300 yards today for children. The health costs of destroying natural areas globally is simply a pollution externality for developers and extractors and is shoved off on the public.

Pharmaceuticals & the Loss of Tropical Rainforests

Experts estimate that between a quarter and a half of the $640 billion global pharmaceutical market is based on natural genetic diversity. Tropical rainforests contain a significant portion of the genetic diversity on earth, but despite the grave concerns about deforestation, an area the size of Germany or Montana was lost between 2000 and 2013.

To establish a true cost economy, we must get the ecological price right on products and services. The examples presented in Juniper’s book illustrate the extraordinarily large benefits provided by nature but neglected in today’s economic accounting. These compelling illustrations can be of great benefit in pushing toward a paradigm shift in current mainstream economic thinking. They are straightforward matter-of-fact descriptions of externalities that are undermining the life-support ecosystems of the Earth.

The Securities and Exchange Commission (SEC) should be requiring companies to disclose their pollution externalities annually so as to alert investors and the public to the true cost of their products. However, not only will a steady state economy depend on accounting for these costs and putting an end to cheater economics, but will also depend on changing our macroeconomic policy goal of continuous growth. Only then can we begin to stop the destruction of our planet and ensure our health and the environment are protected for generations to come.

Three Glimmers of Hope for an Economic Transformation

by Brent Blackwelder

BlackwelderEcological economists, top scientists, and even a few financiers have put forth powerful arguments for moving to a steady state economy. Sometimes described as a true-cost economy, a sustainable economy, or a spaceship economy, the steady state offers a positive alternative to the delusion of endless growth.

Viewed from an environmental perspective, the need to transform the U.S. and global economic systems is becoming more urgent by the day — if you scan the headlines about global warming, biodiversity loss, and natural resource depletion, you’ll quickly get the picture. It turns out that the most important environmental policies of any nation are its economic policies. For example, there is no chance of stabilizing the ongoing climate chaos if the major economies of the world continue to reward fossil fuel usage and fail to include pollution externalities in their prices. In a true-cost economy, however, clean energy would be the cheapest, and fossil fuels would be too expensive to use.

Given the severity of the problems we face and the strong potential for steady state policies to solve them, the question is, “Why are nations failing to embrace this positive alternative?” There are many obstacles standing in the way of a sustainable economy. The skeptic would assert, “You are asking the most powerful nations in the world to change the cherished economic system they have been functioning under and embrace an economic system which no modern nation has ever used. It is a wild fantasy.”

There’s some merit to the skeptic’s argument — the suggested economic changes seem like a paradigm shift akin to those seen over the centuries in physics and astronomy. But given the unpredictability of paradigm shifts, we can encourage incremental steps toward an economic transformation.

A number of experts have laid out such steps. For instance, the economist Peter Victor has illustrated how Canada could achieve a sustainable economy. But even with a blueprint in hand, it’s questionable whether Canada or China or the U.S. or Brazil or India would ever start constructing such an economy.

Part of the problem stems from the international economic infrastructure. The continued push for economic expansion from global bodies such as the World Bank, the IMF , the G-8, the World Trade Organization, undermines intellectual support for the transformation from cowboy economies to spaceship economies.

Another obstacle comes from the extractive industries and the way they exert influence within governmental bureaucracies. These industries are propping up a business-as-usual approach to economics. If this approach continues, we can expect collapses around the world stemming from food and water riots, weather disasters, and ongoing erosion of life-support systems worldwide.

It’s tough to come up with plausible ways of overcoming these major obstacles, but three recent developments provide some much-needed hope. They may be long-shots for breaking through the resistance and spurring the transformation to a new true-cost economy, but they offer a chance.

Economic output and energy use are highly correlated. Data shown are for 175 countries in the year 2007. Sources: U.S. Energy Information Administration and the World Bank.

Economic output and energy use are highly correlated. Data shown are for 175 countries in the year 2007. Sources: U.S. Energy Information Administration and the World Bank.

The first glimmer of hope is emerging from the energy changes happening in Germany, which has become the world’s leader in electricity produced from solar and wind sources. Germans are aiming to generate half of their electricity from renewable sources within ten years. If the most powerful economies in the world were to replicate Germany’s energy policy, it would not only be a shift in the energy sector, but also a monumental shift in economics, given the way economic growth and energy consumption are connected.

The second glimmer of hope comes from growing concern about caring for creation on the part of religious congregations from many faith traditions. More and more religious organizations, liberal and conservative, are pointing to the excessive consumption in the global economy as destroying God’s creation. What if Pope Francis surprised everyone and included population stabilization on his agenda. His text could align with Genesis by envisioning a flourishing of all life on earth. That is why the blessing “be fruitful and multiply” is first given explicitly to all the animals on the planet.

A third glimmer of hope is arising from the surge of public outrage over corporate tax dodging and subsidies. Stories of financial fraud and abuse are popping up in the news coverage. The Economist’s Special Report on Offshore Finance (February 16, 2013) highlights the trillions of dollars stashed in offshore tax havens.

It’s scandalous that some of the wealthiest corporations in the world, such as General Electric, Apple, and Google, are paying little or no income tax. It’s equally scandalous that U.S. corporations continue to receive taxpayer handouts. The anger and unrest spurred by this situation offers a good opportunity to change the way businesses operate.

The obstacles to a establishing a true-cost, steady state economy are daunting, but now’s the time to get on board with efforts to overcome them. People are responding to the challenge and taking positive actions all over the world. I’ve summarized three of my favorites here, and I’m hopeful that you know of plenty of other efforts to create an economy that will work for people and the planet.