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Short article This article was first published in September 2007 by International Simultaneous Policy Organisation. A longer paper covering the same issues is being published by the NATO Advanced Research Programme. Save the world fast with economic reform Nations seek ‘security’ by together spending well over a trillion dollars each year on (at best) threatening each other. They talk for decades about cutting global emissions, without agreeing how to do it. People can be brilliant within narrow fields but, let’s face it, we’re collective dunces when it comes to the wider goal of making the planet more habitable. Without anyone ever really meaning to, we’ve locked ourselves into a global ‘game’ that looks set to end with no winners. New rules may work only when all significant players implement them at the same time; this is inherent to global problems. What else can our global situation tell us about the kinds of policies which may succeed where others have failed? The interconnectedness of global problems is often mentioned without quite saying what this means for policy-making. Almost any common list of global goals is now so deeply joined-up that it is not realistic for any single goal to be met without the other goals also being met. For example the level of cooperation needed for a stable climate will remain absent so long as the weak increasingly suffer and the strong increasingly invest in weapons. The most basic choice of framing the climate change problem around emissions, energy and carbon could lay behind our collective inability to address it. Global goals and global problems are ‘codependent’ and solutions may not appear in the same ‘boxes’ as the problems. The many expressions of human civilisation together with its living and physical basis is the most complex system known. Politics, finance, culture, society, technology, ecosystems and geology are interwoven into a grand tapestry affecting and affected by everyone. This complexity does not fall apart neatly into convenient parts for study by specialists. Policies which address parts of the global whole inevitably cut vital links and deliver only the illusion that a complex problem is being ‘managed’. Thinking about the whole global system What then can be done with complex interconnections? Appreciating the world as a whole is a spiritual tradition that has probably been around for as long as homo sapiens. Understanding the world as a whole is a branch of the scientific field of ‘systems thinking’ that has attracted increasing attention over recent decades. ‘Systems’ may sound remote, like playthings of corporate bosses and governments, when in fact every part of society is stuck tinkering with symptomatic details, leaving the potential of underlying leverage points vastly unexplored. Donella Meadows [1] defines leverage points as “places within a complex system Éwhere a small shift in one thing can produce big changes in everything”. Problems which don’t improve should tempt people to look beyond wish-lists of direct changes (more awareness here, fewer cars there, less emissions, etc) towards possible leverage points which could trigger the necessary direct changes. Climate strategies show what not to do. Climate change is separated out from other global conditions (“it’s a priority”) and all efforts are aimed at the direct variable of emissions levels. The dream is that nations will overcome their economic fears and agree to constrain emissions in time to duck irreversible climate instability. The fear of losing out economically is common to all global problems, which makes economics a fertile field for digging up leverage points. Since it’s little use asking people to do the right thing despite getting poorer, governments ponder price signals for changes they desire. They can do this with regulations, taxes, subsidies and issuing tradable permits to pollute. With government support, industry can also adjust price signals such as with deposit-refunds, producer responsibility subscriptions (e.g. the German green dot scheme) and obligatory insurance (e.g. public liability insurance). When any issue, sector or ‘solution’ becomes urgent enough governments consider targeting it with one of these economic instruments. This targeting approach creates market distortions (unfairness between sectors or nations) which impedes the use of any instruments and guarantees a small response to big problems. Despite this failure I know of no government that is researching economic instruments able to work across issues and sectors. Similarly governments doggedly pursue economic growth without researching whether the underlying growth model has passed its use-by date. Growth but not growth as usual Unsustainability has been a bonanza for growth, with price signals disconnected from ‘externalities’ (damage to society and the environment). This damage brings a catalogue of rising costs which, despite being unproductive, add to economic activity. The same damage also brings rising economic inactivity which is not measured at all by growth. Overharvested or polluted land and water, resources lost as wastes, people deprived of basic needs, and regions struck by conflict or disasters are all unavailable to contribute to growth. Economic inactivity and unproductive activity are steadily and quietly drowning future growth prospects. Yet so long as the damage remains reversible, politicians may be reassured that growth can continue, but not growth as usual. Conventional growth runs like a ‘conveyor belt’, turning free resources from nature into saleable products and then into accumulating wastes in the air, land and water (or ‘ecosystem waste’). Success with this ‘linear’ growth model means running the conveyor a bit faster every year; taking, making and dumping ever more, without meeting more people’s needs. Conventional ‘solutions’ try to slow down the conveyor by constraining its emissions (or other unwanted effects) when the underlying problem is that the entire model is obsolete. Growth can be generated instead from activity which meets needs, prevents rising concentrations of ecosystem wastes and generates new resources within industrial, ecological and geological cycles. In other words the linear economic model can be joined-up into a circular economic model, thereby tackling climate change and hundreds of other symptomatic problems at source. The physical and technical changes to achieve a circular economy are well-known, having been discussed at length as ‘sustainable development’ over recent decades. What has been missing is an economic instrument able to efficiently adapt the old model into the new. How should externalities be built into price signals? It’s no use trying to measure potentially unaffordable and irreversible damage. Global complexity means that damage cannot be accurately predicted nor allocated to those responsible. However it is possible to use the measurable risk of products ending up as wastes in ecosystems as a proxy (indicator) for unpredictable future damage, in the same way as insurance uses current risk factors to deal with unpredictable mishaps. The only difference with conventional insurance is that premiums would be spent not on damage but on preventing damage by investing in societal, industrial and ecological capacity to make new resources instead of wastes (ie investing in ‘precycling’ [2]). Dealing with waste before it piles up has far-reaching benefits, not just for recycling and not just for ‘waste issues’. Preventive insurance against unsustainability These investments could address most or all sustainable development issues if applied globally to all significant producers and products. Chemicals, fuels, equipment, houses, roads and most other human works take part in the economy of products. Even product components and most natural resources are products. Every product can be 'precycled'; all ecosystem waste is avoidable. Existing recycling insurance [3] can be generalised to encompass all options for preventing ecosystem waste. Introducing ‘precycling insurance’ [4] is a way of saying that externalities are better prevented than suffered. It says that changes are needed which match the urgency and scale of all global problems. However it does not prescribe how any business should work nor how anyone should live. Producers could avoid premiums by innovating to ensure their products have a future as a new resource (for people or nature) or they could just pay premiums which subsidise progress elsewhere. Energy and resource efficiency would rise (and continue rising without limit). Market choice would expand and the self-interest of customers and investors would stimulate change unimaginably faster than any attempt to constrain the economy. Premiums could be invested either by precycling insurers or through intermediaries according to some foreseeable principles. Investments should:
A stable climate without emissions caps Precycling insurance offers broad sustainable development, including rapidly reducing greenhouse gas emissions without the need for emissions caps or rationing. However, some legacies of unsustainability would remain, such as extreme inequalities of wealth, over-population and a cultural dependence upon violence when resolving conflicts. The last of these is driven by an unintended incentive built into economic growth calculations. Higher weapons spending by governments shows up as higher economic growth so warring nations falsely appear more successful. This disincentive to peace and security can be reversed simply by omitting weapons-related spending from Gross Domestic Product to define a Gross Peaceful Product (GPP) [7] from which economic growth would be calculated in future. Groups of nations could signal their peaceful intentions by adopting GPP, which would reward investment in non-combative security with higher economic growth and establish an international virtuous cycle of reduced threat and reduced weapons spending. Vast flows of funds could be redirected to where help is needed. With high-leverage interventions such as Gross Peaceful Product and precycling insurance, the economy can be adapted to entice people to live cooperatively with each other and with nature. Economic growth is not endangered if we do this, though we are if we don’t. References 2 O’Rorke M. Public information campaign on precycling. California: Prepared for City of Berkeley: 1988. 3 European Union. Waste Electrical and Electronic Equipment Directive 2002/95/EC. 2002. www.europa.eu.int/scadplus/leg/en/lvb/l21210.htm. 4 Greyson J. An economic instrument for zero waste, economic growth and sustainability. Journal of Cleaner Production. Elsevier, 2007;15: p1382-1390. www.blindspot.org.uk 5 Birkeland J. Positive Development: From Vicious Circles to Virtuous Cycles. (in press). 6 Holmberg J, Robèrt K-H. Backcasting from non-overlapping sustainability principles: a framework for strategic planning. International Journal of Sustainable Development and World Ecology 2000;7: 291-308. www.naturalstep.ca/resources.html 7 Greyson J. Systemic Economic Instruments for Energy, Climate and Global Security, in F. Barbir and S. Ulgiati (Eds.), Sustainable Energy Production and Consumption, Springer Verlag, NATO Science for Peace Series (in press). www.blindspot.org.uk Want a world that works? Return to: top of page, home page, BlindSpot reviews, BlindSpot tools. | |
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