The Financial and Environmental Crise...

The Financial and Environmental Crises are connected

Posted in the Top Stories Forum

Since: Jul 13

Chicago, IL

#1 Jul 17, 2013
The Financial and Environmental Crises are connected
The new math for the new accounting

Currently, the laws of nature and the rules of business are in direct collision. Every financial transaction has an environmental impact and the environment is embedded in every financial transaction. But these environmental impacts are not yet included in business rules, regulations or accounting. This omission has left society with a massive environmental debt.
In my book, Environmental Debt: The Hidden Costs of a Changing Global Economy, I expose the link between our financial and environmental crises — from the cost of coal to the impacts of extreme weather on taxpayers. I use the term “environmental debt” to explain the cost of polluting and/or damaging actions that will cost other parties (people, business, governments) real money in the future. We can pay now or pay later — but we will pay. Through our public, private and individual spending, we are already in the hole for environmental degradation.

For example, China recently calculated that its annual environmental degradation costs it 3.5 percent of its GDP, or about $250 billion a year. Environmental degradation costs Pakistan 6 percent of its GDP and Colombia 3.7 percent.(The United States has made no such calculation, although President Obama has recently suggested researching the “social cost of carbon”.) This is real money paid by real people, governments and institutions. What makes this environmental debt even more fraught with danger is that it is often irreconcilable. Once an ecosystem is destroyed, it cannot necessarily be resuscitated. This is the precipice on which we now perch.

If we recalculate the costs of all business by embedding the costs of air, water and carbon pollution as well as habitat destruction, we will end up changing our consumption practices and production protocols. What is cheap now (conventional agriculture, virgin paper products, meat, all gizmos, and, in the United States at least, gasoline) will become more expensive because the full impacts of their production, usage and disposal will be incorporated into their prices. This would translate to coal costing about 23 cents/kWh versus its current average price of 8 cents/kWh. And no burger would ever cost a buck again.


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