Climate Change and Future of Economics - Can we put Nature on Balance Sheet?
Published 05th December 2010 - 0 comments - 1343 views -
Pavan Sukhdev, head of the UN Green Energy Initiative, was ‘creative’ while facing questions like: What is the World worth? Or, can we put a price to Nature? These questions came as part of a Center for Policy Development (CPD) seminar in Sydney, Australia on 8 May, 2010. Admitting that traditional economics fall short of handling such questions, Pavan took an unorthodox approach.
Since we cannot put a price on biosphere or Nature, let us take the whole natural world including all living and non-living systems, ecosystems etc participating in life, this puts us humans in the picture, we transact and therefore we have one economy. If we now compare the nearest earth-like planet, Mars – there is no atmosphere there, no biosphere therefore, no life, no humans, no transactions and no economic activity whatsoever. So the net worth of Martian economy is zero. On a comparative basis therefore the worth of our world is 1 minus zero whole divided by zero, that is, infinity. Amid peals of laughter Pavan feigned to wrap up his talk and go.
Jokes aside, this demonstrates the limitations of the traditional growth based economy that values activities and resources in a way incapable of handling the emerging scenario of climate change. I already blogged about Natural Capitalism and it looks like that economists are already finding it difficult to project a multi-dimensional world on a single and orthodox dollar axis. Pavan spoke about an example for a small area in Thailand where a mangrove forest was considered to be converted into a shrimp farm. From a traditional point of view this was a right economic choice but when the cost of environment and value of life is taken into consideration the choice clearly changed from private profit to public good and conservation, rather than conversion becomes the right economic choice.
When such environmental costs are neglected, the net worth of Climate Change or Environment Degradation worked out as 2.25 Trillion dollars till 2009 and a whopping 33% of this value is towards profits of some 3000 companies who carryout global business. Pavan concluded that it cannot be a good business proposal when the working cost of the business so heavily outweighs the value of the products or services that the businesses generate.
The future of economy, just like the technologies (as proposed in my previous blog), need a paradigm shift. And for that economy to be practical and the market to be consumer friendly, a drastic change in our life-style is necessary.
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