A while ago, the French Chamber of Commerce in Great Britain invited me to write an article for their magazine’s (INFO) special edition on the Green Economy. Here’s the article, updated (Feb 2013) and with links added to further information
Why the Green Economy? Summary
Markets that exclude the impact on natural capital are distorted. Markets that exclude the costs of pollution are distorted. Markets that allow the Tragedy of the Commons are distorted. These distorted markets represent economic efficiency, and leave us all worse off.
The polluter-pays principle corrects the market distortion caused by unpriced pollution. Joint-stewardship agreements allow us to sustainably manage common resources, preventing the Tragedy of the Commons. Tracking changes to the value of our natural capital base is just as important as tracking transaction values: both represent changes to our wealth.
The Green Economy, in all those forms, is here because it fixes problems that have been accumulating for decades. Why the Green Economy? Because in the long run, the Green Economy leaves us better off, environmentally and economically.
Background to the Green Economy
The Green Economy is worth hundreds of billions of pounds (euro / dollars) each year; it spans many sectors including the most fundamental ones of energy, food and water supplies; and in the last fifty years, it’s gone from fringe to mainstream, growing in value and coverage each year. For example, in 2011, global investment in renewable energy was US$257bn; and there are electric cars on the market that can out-run a Porsche.
But the Green Economy has been around for quite some time, and its academic foundations, in the “polluter-pays principle” dates back to the early decades of the twentieth century. However, more recently, the problems have become global in scale, and the solutions have required international co-operation, for example in banning the industrial production of some of the worst ozone-depleting chemicals. The next wave of problems and solutions dwarfs what has gone before, requiring revolutionary changes to how we generate electricity, how we heat our homes and offices, how we power our transport systems, how we manage our livestock and fertilise our crops. The economic risks (and opportunities) are orders of magnitude greater than what has gone before.
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