market-based environmental conservation
TRANSCRIPT
-
8/14/2019 Market-Based Environmental Conservation
1/5
Carlos Rymer March 15, 2007
NTRES 431 Professor Steven Wolf
Restructuring Markets for Environmental Conservation
The world faces a difficult challenge that it must fully address during the 21st
century. The
environmental crisis, as predicted, will worsen during the first half of the 21st century as the
human population continues growing, ecosystems and biogeochemical cycles are changed and
degraded, the global climate is altered, permanent toxic chemicals are made more widespread,
biodiversity is lost, and natural resources become scarcer (WorldWatch Institute, 2003). It is now
recognized that this challenge will only be met if society addresses the social, economic, and
environmental dimensions of these different problems, and uses each dimension to enhance the
others (Vlek and Steg, 2007). With the unpopularity of government regulation of environmental
harm, market restructuring has been recognized as essential to solving environmental problems
through the competitive motive.
In a realistic market, aggressive competition and efficiency are promoted in order to
reduce total costs and increase the value of products and services (Hawkens, Lovins, and Lovins,
1999). In todays market, however, major flaws exist because the profit motive only treats
extractable products as valuable and therefore has led to widespread environmental degradation.
The market does not account for the value of ecosystem services that sustain life and lead to
extractable products (Daily and Ellison, 2002). This is why the market needs to be restructured.
Market logic, when applied to environmental conservation, aims to incorporate
everything that is known to be valuable into the actual costs of products and services. In this
way, aggressive competition among enterprises leads to efficient and sustainable use of natural
resources and ecosystem services, thus promoting environmental protection, not degradation
(Brown, 2001). Not only does it lead to environmental protection, but it also eventually lowers
-
8/14/2019 Market-Based Environmental Conservation
2/5
the total cost of products and services, which includes environmental and social values, because
a market promotes efficiency over time.
An excellent example of how the incorporation of all environmental and social costs into
markets works is fair trade, which includes products such as coffee, cocoa, and tea. These
products come from practices that are environmentally sound and protect human health. In
exchange, the cost of protecting human health and environmental services is incorporated into
the products, thereby reflecting the actual costs of those products. Part of the extra cost goes to
paying laborers the appropriate price of their work, and the rest goes into technical assistance to
continue sustainable practices (TransFair USA, 2006). Although the portion in this market that
incorporates the environmental and human costs is still very small, it is becoming increasingly
recognized as a way to meet environmental and human challenges.
This logic offers widespread opportunities ranging from reductions in greenhouse gas
emissions to sustainable use of forest resources to poverty alleviation. In theory, valuing
ecosystem services is the most effective way to address the environmental crisis through social,
economic, and environmental dimensions. However, there are constraints for the market to
actually begin valuing ecosystem services at a full scale.
Todays markets have largely continued leaving external costs out of the price of products
and services. The major constraint to this is that there are no incentives for enterprises to do this,
especially because the world population is largely apathetic to environmental problems. In order
for enterprises to value ecosystem services, there must be incentives across all markets for
intense competition with these values (Hawkens, Lovins, and Lovins, 1999). Restructuring the
market across the board is therefore highly necessary and must involve either government
orientation or consumer demand.
-
8/14/2019 Market-Based Environmental Conservation
3/5
In order to restructure the market to include the real cost of ecosystem services into
products and services, government must intervene to either mandate that the cost be included to
allow enterprises to protect environmental resources or change tax policies to ensure that the
price of products and services reflects the costs of ecosystem services (Brown, 2001). We cannot
expect the market to do this by itself because education is not at a level at which people can drive
the market towards large-scale changes to reflect the costs of ecosystem services. Instead,
government and the market must work together to incorporate such costs in a fair way in order to
ensure environmental protection (Brown, 2001). Given that this already happens to some extent,
such as through government subsidies and tax breaks for industrial agriculture or fossil fuel
companies, it cannot be considered as government regulation, where a mandate tells the
enterprise how it must change (Hawkens, Lovins, and Lovins, 1999).
Market restructuring will involve taxes that raise the costs of products and services to
reflect real costs; it will also involve distributing such revenues in a way that meets social,
economic, and environmental dimensions. Although the taxes should cover all products and
services regardless of fairness, as this is the competitive nature of markets, it should not mean
that people will be economically affected. Revenues from such taxes, as already hinted at, should
be used to conserve and sustainably use ecosystem services and promote improved life quality
for the entire population. Because such extra costs will include the price of ecosystem services
and human capital, as in the fair trade example, distribution of revenues should both account for
environmental protection and the socioeconomic needs of people, especially those who would be
most affected. This is different from other suggestions, such as a shift in the income tax (Brown,
2001), in that it makes full use of revenues rather than cutting funding for other needs.
-
8/14/2019 Market-Based Environmental Conservation
4/5
Today, the market is the main cause of environmental problems because it brings
products and services to people that originated from environmental degradation and that cause it
in the form of waste or pollution. Government mandate may not be the most effective way to
solve environmental problems, especially because government cannot effectively enforce
markets and because such a strategy would be biased towards the environmental dimension of
this crisis. It would be unfair to the social and economic dimensions.
Steering the market in a preferable direction through the incorporation of external costs
would make it account for ecosystem services through their real value. In effect, such a
restructuring of the market would create a state where environmental protection and human
growth are profitable and economically reasonable. Instead of extracting and leaving destroyed
ecosystem services, markets would work to protect and enhance ecosystem services while
sustainably extracting products. This would affect society by changing consumer behavior,
raising the education bar about environmental goods and services, and promoting a world that
fully recognizes that environmental growth is economic and human growth.
-
8/14/2019 Market-Based Environmental Conservation
5/5
Cited Literature
Gardner, Gary et al. 2003. State of the World 2003. WorldWatch Institute. W.W. Norton &Company: New York. Available at: http://www.worldwatch.org/system/files/ESW300.pdf.
Hawkens, Paul, Lovins, Amory, and Lovins, Hunter L. 1999.Natural Capitalism: Creating TheNext Industrial Revolution. Little, Brown and Company: New York.
Lester R. Brown. 2001.Eco-Economy: Building an Economy for the Earth. Earth PolicyInstitute. W.W. Norton & Co: New York.
TransFair USA. 2006.Environmental Benefits of Fair Trade Coffee, Cocoa & Tea. Available at:
http://www.transfairusa.org/pdfs/env.ben_coffee.cocoa.tea.pdf. Last Accessed: March 10,2007.
Vlek, Charles and Steg, Linda. 2007.Human Behavior and Environmental Sustainability:
Problems, Driving Forces, and Research Topics. Journal of Social Issues, Vol. 63 (1): 1-19.
http://www.worldwatch.org/system/files/ESW300.pdfhttp://www.transfairusa.org/pdfs/env.ben_coffee.cocoa.tea.pdfhttp://www.worldwatch.org/system/files/ESW300.pdfhttp://www.transfairusa.org/pdfs/env.ben_coffee.cocoa.tea.pdf