If you get into a conversation about sustainability, and the talk turns to
economic issues, someone is probably going to mention a book called Natural
Capitalism: Creating the Next Industrial Revolution.
The bad news about the future, according to the book, published in 1999, is
that without a healthy earth we aren’t going to have a healthy economy
or a healthy society. The good news is that we can have all three by making
some logical changes.
Natural Capitalism was written by Paul
Hawken, the author of other influential books including The Ecology
of Commerce, and by Amory and Hunter Lovins,
authors and international consultants who founded the Rocky Mountain Institute
at Aspen, Colo., a public policy institute.
"In the next century, as human population doubles and the resources available
per person drop by one-half to three-fourths, a remarkable transformation of
industry and commerce can occur," write Hawken and the Lovinses.
"Through this transformation, society will be able to create a vital economy
that uses radically less material and energy. This economy can free up resources,
reduce taxes on personal income, increase per-capita spending on social ills
(while simultaneously reducing those ills), and begin to restore the damaged
environment of the earth."
The book is partially based on hundreds of case studies of innovative businesses,
and its opening page offers a glimpse of where the authors say we could go with
economic and technological trends already in place:
"Imagine for a moment a world where cities have become peaceful and serene
because cars
and buses are whisper quiet, vehicles exhaust only water vapor, and parks
and greenways have replaced unneeded urban freeways. OPEC has ceased to function
because the price of oil has fallen to five dollars a barrel, but there are
few buyers for it because cheaper and better ways now exist to get the services
people want...." The passage also describes impressive advances in providing
people with living wages, in creating stronger social networks and in other
aspects of life on earth.
Elsewhere in Natural Capitalism, the authors descend into technospeak
to make a key point. But you’ll get the idea:
"The environment is not a minor factor of production but rather an envelope
containing, provisioning, and sustaining the entire economy," they say.
"The limiting factor in future economic development will be the availability
and functioning of life-supporting services that have no substitutes and currently
have no market value."
Natural Capitalism advocates four principles:
1. Shifting from the traditional economic focus on productivity per unit of
labor to a focus on productivity per unit of natural resource use.
2. Building production systems that mimic nature (example: an agricultural production
system that recycles wastes, as nature does, rather than discarding them).
3. Transitioning from a goods-producing, "owning things" economy to
a "service and flow" economy (example: buying carpeting service from
a company instead of buying a carpet and discarding it when it wears out).
4. Investing in activities that protect or restore the ecosystems we depend
on.
"To me, the main point of the book is that traditional capitalistic accounting
systems are not designed to measure or encourage sustainable economic practices,
but with some key changes market systems can be used to help achieve a sustainable
future," said Bill Boggess, the head of Oregon State University’s
Department of Agricultural and Resource Economics.
"First," Boggess said, "we need to make sure that market prices
reflect the full costs of production and consumption, including resource degradation
and pollution costs. Second, we need to focus more on resource use efficiency
rather than the traditional focus on labor productivity. Finally, we need to
account for changes in resource stocks or inventories, like trees or topsoil,
as changes in net investment—assets—rather than as components of short-term
revenue—profits.
"These changes would help create a price system that would systematically
encourage both producers and consumers to change their behavior in ways that
would lead toward a more sustainable future. It would also create incentives
for businesses and consumers to actively search for new, more sustainable technologies
and lifestyles."
Some people looking at sustainability believe this kind of accounting shift,
from emphasizing labor efficiency to emphasizing natural resource use efficiency,
will occur through traditional free-market dynamics as natural resources become
more scarce and pollution more obviously an economic factor. But there are other
ways a society can move in that direction, it’s been noted.
One is incentives, a carrot-rather-than-stick approach. Incentives encourage
good behavior. For example, power companies can give credits for energy conservation,
or governmental agencies can charge lower fees for business activities that
protect or help improve the natural world we rely on.
Another approach, pollution taxes, encourages the good and discourages the bad.
One form of this is so-called "zero sum" taxing, where receipts from
taxes on "bad" business and individual practices like polluting are
used to subsidize "good" activities like increasing efficiency and
protecting natural resources. Some believe Oregon could chart a more sustainable
economic, environmental and social course by shifting its tax system in this
direction.
Tax shifts are working elsewhere, says This Place on Earth 2000,
a book published by Northwest Environment Watch, a not-for-profit research center
based in Seattle:
"Nine
European governments have begun reducing taxes on ‘goods,’ [desirable
things] such as paychecks, and replacing the revenue, dollar for dollar, with
taxes on ‘bads,’ such as toxic waste. And the move has helped both
economy and environment," says the book.
"There are some implementation issues with green taxes [a name sometimes
substituted for pollution taxes], though," says Paul Warner, the state
of Oregon’s legislative revenue officer and a former state economist. "The
challenge is to try to correctly price what the costs are. Maybe we can all
agree a certain thing shouldn’t be done. It’s bad for the environment.
But if you arbitrarily plug a cost in, and if you implement that in a nonsystematic
way, you may unfairly discourage one industry or another. Putting that in place
presents real challenges."
Warner offers a different option for a tax shift, though public elections in
recent decades suggest a majority of state voters may not agree with him.
"Our tax system is unbalanced and unique," he contends. "We are
the lowest state in the country in consumption taxes. We have no sales tax and
are highly dependent on the personal income tax. That makes up about 69 percent
of state tax collections, the highest percentage of any single tax in any state.
"I think probably in terms of the overall economy and tax system the greatest
good, at least in the short run, would come from finding a way to diversify
our tax system. The personal income tax encourages all kinds of consumption,
both good and bad, and discourages innovative, income-generating activities."