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BlindSpot Frequently Asked Questions 1. Why a new economic instrument? 2. How would precycling insurance operate? 3. Efficiency and viability? 4. Capitalism, growth, globalisation and sustainability? 5. Climate issues? 6. Waste issues? 7. Values and ideals? 8. Implementation?
Aren't taxes sufficient? Taxes have been used since around 2800BC in Ancient Egypt. If they were going to be used to create sustainability this probably would have happened by now. Some taxes have social or ecological benefits, making prices of some damaging activities higher and subsidising some helpful activities. However taxes are also used by governments to implement their favoured policies, which can involve large investments that perpetuate unsustainability (for example on war-making, fossil-fuel infrastructure, airports, nuclear power and mixed waste incinerators). Even if governments were capable of investing sustainably (which is demonstrated by few if any nations) the level of intervention required for a sustainability correction of all prices in all sectors would equate to central planning of the economy which is not politically conceivable in most countries. A sustainability correction of the market can thus happen only within the market (such as by precycling insurance) and all government intervention (including taxes) is limited to particular problem areas where political will exceeds the lobbying power of vested interests. Which instruments can make a level playing field with fair competition between all sectors? All government-run instruments (such as emissions trading and taxes) are limited to particular problematic sectors due to the central-planning obstacle discussed above. However a level playing field with fair competition for all producers can be achieved only by an intervention that includes all significant producers in all sectors globally. Since a government-run instrument is ruled out the only other option is a market-based instrument in which government sets the regulatory framework but does not handle the funds. Since such an instrument must also be relatively simple to understand and operate in order to work on a timescale compatible with politics and the urgency of the issues. Precycling insurance is the only known instrument to fulfill these criteria. How would precycling insurance operate? Would product prices rise? Many product prices could decline, such as refurbished or remanufactured goods which gain new materials supplies. Since repairs should be subsidised, currently expensive product purchases could be replaced with cheap services. Producers who choose not to offer waste-free products should expect their higher priced items to be outcompeted as consumers find that the cheaper products are also the least waste-based. Precycling insurance should replace some taxation, such as VAT, so overall most product prices should decline. Who would run and oversee the system? Precycling insurance could be offered by existing insurers or by any other type of organisation that receives accreditation by government. Since this is a 'producer responsibility' system, producers would make the first assessment of their waste risk, based on whether the product can become new resources for people or nature and whether the producer has contributed to the sufficient technical or ecological capacity. Insurers would assess a premium which would then be invested in ecological, technical and societal capacity to prevent waste (ie precycling or sustainable development). Insurers may invest directly or through non-governmental organisations (again accredited by government). Investments with a commercial return should generate funds for reinvestment. The whole process should be open to public scrutiny on the web, to support efficient monitoring by insurers and government. What would change? Many changes would not be obvious. A precycled weedkiller still kills weeds and its biodegradability isn't noticed. A precycled vehicle or toaster or house would look like one due to become rubbish (though it would most likley work better). Changes would be stimulated by the price mechanism. For example, fossil fuels would become more expensive, reflecting the likelihood that they will end up accumulating as pollutants (including CO2) in the atmosphere. The precycling insurance premium would not enter government coffers but would be invested in the many means of preventing fossil fuels becoming waste; such as energy efficiency measures, introduction of renewable energy, ecosystem expansion and payments to nations who preserve fossil fuel deposits. What about product components and ingredients? Most product components and ingredients are themselves products and would be covered by their producers. For example if a production process wastes part of an ingredient this would affect the premium for that ingredient. Air and water which is polluted as part of a production process means that part of an ingredient is being wasted which would be reflected in the premium for the ingredient. Premiums would be assessed from a producers contribution to waste risk, so they would not pay again for a waste risk already assessed for a component, though they may pay if their product combines previously recyclable components. Over time even complex products such as electronics and cars could be wholely recyclable/biodegradable and if the producers take care of the processing then no precycling premiums need be paid. What about activities? There would be no premiums on activities, just products. Activities are influenced by precycling insurance on the products involved in the activities. For example, driving to the woods would involve a possible premium on the fuel, the car and the road infrastructure, depending on whether each is designed to end up as waste. Precycling insurance helps manage global impacts such as loss of resources, nature and climate though effective international action on destructive activities such as overfishing, soil depletion and burning/clear-cutting forests would help. Local impacts would still be managed separately by for example congestion charges, emissions standards and MOT checks. There is no need to eliminate impacts to achieve sustainability, only those that nature and society cannot cope with. How about housing development for example? Precycling insurance would apply to the house and all components including fuels to run it. Precycling insurance does not assess all impacts (too complex for use in a market mechanism) but uses waste risk as a proxy for impacts (see waste/sustainability question below). Issues which are not picked up by premiums (such as community, non-violence, biodiversity etc) can be managed in investing premiums since all sustainability improvements build capacity for preventing waste. House components would be dismountable and movable, recyclable or biodegradable. Premiums on fuels would favour low embodied energy materials and high energy efficiency of design. Premiums should be able to support advice on sustainable building and refurbishment, including expanding on-site ecological capacity. Precycling insurance would not replace building regulations but would support the viability of more ambitious regulation. 3. Efficiency and viability? Large scale resource recycling might be inefficient, expensive or environmentally unsound? Remaking resources through either the economy or nature currently appears unsound since the costs are not built into product prices. Consequently in general: nature's ecological capacity is being lost rather than built; recycling infrastructure is distant or missing; many products are designed only to become waste; and societal expectations are low. If product pricing reflected the risk of waste then a flow of funds would be generated to invest in the necessary changes and preventing waste would become far easier. Local recycling infrastructure would allow materials handling to be more efficient that the increasingly long-distance transports of products and wastes. Unsustainable incineration of mixed wastes would no longer be needed. Large energy savings from using recycled rather than extracted resources would be achieved. Would precycling insurance mean excessive red tape? Growing environmental awareness breeds ever more environmental laws, which tackle problems one piece at a time. The underlying hope is that as more problems become obvious and urgent, further laws will be enacted until one day society becomes sustainable. However this incremental approach is self-limiting; as red tape (regulation) and compliance costs rises, so does resistance to further red tape and taxes. There is little appetite for centrally-planned economics and this is unlikely to change with any level of ecological desperation. An alternative is to allow both government and the market to both do what they do best; using markets to allocate resources efficiently without systematically turning them into wastes, and government to oversee the process. Does precycling insurance mean bigger or smaller government? Smaller: a corrected market would automatically do much that government previously attempted to do with regulation, taxes and subsidies. Government would have an important role in legislating for precycling insurance and ensuring fair and efficient operation. Since problems which are prevented require far less attention and spending, it should be possible to significantly reduce taxes whilst still spending more on society's needs. The scale of tax reduction sought may be comparable to European value added tax (VAT, up to 20% of product prices). 4. Capitalism, growth, globalisation and sustainability? What about globalisation and long-distance lifestyles? Energy is cheap only because the price neglects to pay either the costs of preventing damage from waste or the costs of damage from waste (including climate change). Once these costs are included, via precycling insurance or any other way, long-distance transport will become less attractive. There would be less dependence upon energy inefficient transport such as aircraft and private cars and far greater provision of more energy efficient options such as shared/public transport and local activity. Precycling is no particular threat to globalisation; large scale corporate success need not be founded on large scale loss of resources. Will this correct the inequalities of capitalism? Probably not but it should help. Precycling insurance would signal a global cultural shift, from acquisitive materialism to a shared endeavour of sustainability with a realistic prospect of being achieved. This may be expected to tip the balance between individualism and cooperation as more people do what they can. Taking care of those who need help is a form of precycling and would be supported by precycling insurance, individual action and governments. Precycling will have succeeded culturally if it supports a redefinition of status whereby people gain respect not for what they can keep for themselves but what they can give away. 5. Climate issues? With climate change, is it more important to focus on energy or resources? A focus on energy invites partial and counterproductive 'solutions' such as nuclear power or the incineration of mixed wastes. It even tends to miss the big opportunities for saving energy which depend on strong communities, non-disposable products and avoiding avoidable wars. If the economy were designed instead to ensure that resources did not end up as wastes then fuel resources which didn't become waste in the air would not add to climate instability. Ultimately, physics tells us where to focus. Whilst new energy arives constantly from the sun, the amount of matter is fixed; so turning ever more matter into waste is no recipe for success. How does precycling help address climate change? Must fuels that are partly precycled by nature be included? If precycling includes using less fossil fuels, how is it different from a strategy of incrementally reducing problems? 6. Waste issues?
How can an instrument based on waste deal with all sustainability issues? The complexity of the economy-ecology-society system is commonly seen as an obstacle to solutions. However by use of systems thinking it is possible to look for interventions that change the 'rules' of the system so that the complex interactions work better. With a suitable intervention, complexity helps rather than hinders. (Methods which 'map' complexity' such as life cycle analysis are too slow and technically ambiguous to underpin any market-based sustainability instrument.) Precycling insurance would cover all sustainability issues by changing key 'system rules' so that; waste becomes new resources, funds become available on the scale of the problems, and all people are 'empowered' to take part. If waste is seen ecologically (rather than as a narrow disposal issue) it can serve as a thread to connect all sustainability issues. A society which prevents all waste does not just reuse bottles, it prevents all major problems. 7. Values and ideals? What about peace? Industrialisation has produced not just modern culture with mass-produced waste, it has brought also violence and wars on an industrial scale. Non-violence and sustainability have generally been pursued separately, despite the fact that unsustainability creates violence (for example by competition for scarce resources) and that sustainability both requires and enables non-violence (not least by redirecting funds wasted on weapons and fighting). Precycling offers three key shifts: 8. Implementation? What about the UK Sustainable Development Commission? How could precycling insurance be introduced? Precycling insurance would be most effiently implemented everywhere simultaneously, which would avoid the administrative effort of calculating cross-border corrections to premiums. Precycling insurance is registered as a prospective global policy with the Simultaneous Policy organisation. See their policy page. The use of precycling insurance is suitable for development by any of a range of international bodies and may be introduced by international treaty. It is also possible to phase in precycling insurance, with an initial focus on more advanced economies, significant producers and accumulative substances. Want a world that works? Return to: top of page, home page, BlindSpot reviews, BlindSpot tools. | |
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