Friday, November 21, 2014

Environmentalism Reconsidered - Connecting Carbon & the Economy

Strengthening the ties between carbon and the economy

We need only to strengthen the ties mildly, between the abstract representation of human endeavor (the monetary system) and the environment to gain alignment between human action and natural systems. We have successfully globalized the monetary system in a manner that permits efficient international interaction; we need now to imbue that system with a connection to the natural world. The key is full and equitable participation.

To date efforts in linking the economy and the environment have been curtailing participation by creating a circumstance where major emitters are deterred by structural disadvantage in proposed solutions. Had the world approached Kyoto purely on the basis of environmental concern, Kyoto would have had a greater chance of acceptance. Proponents however, chose to engage in redistribution by placing the majority of the burden on first world countries and relinquishing responsibility from other countries. The Cap and Trade proposals were as much a redistribution program as an environmental program. Their justification for this approach was that the first world countries had created most of the problem so they should pay the biggest penalty, the underpinning was a social justice imperative of the “rich should pay”; this may sound fair but political realities drove the refusal of major players. This is an example where the social justice movement scuttled environmental progress. We can learn from the past, but only the future matters, and asking people to accept disadvantage in the future is sure to meet strong residence. Placing a price on carbon is an effective means to link the economy to the environment; the key is its universal application.

The Kyoto protocol was a starting point in the process of creating a worldwide link of the economy with the environment, the creation and negotiations of the cap and trade program needed to take place at the world trade organisation, perhaps as an extension of the Doha or other trade talks. While this would bring another level of complexity to the Doha process, it would be the best place for Cap and Trade to be developed, as Cap and Trade development would have taken place in the context of the multitude of other considerations in the development of a world trading system. The WTO is keenly aware of the asymmetry of prosperity and the influences it has in generating a world trading system, as such their expertise provides the greatest opportunity for the successful development of a cap and trade system.       

The flow of capital can provide some illumination as to the possibilities for the effective connection between the environment and the economy. The international clearing bank effectively manages the most complex transfer of funds to and from countries in an almost instantaneous fashion. The financial system is a complex entity and yet there is an international organisation that provides for the flow of capital instantaneously anywhere in the world. The emergence of this organisation happened because people prosper as a result of its creation and operation. A similar mechanism can function to facilitate as seamless a circumstance for cap and trade and other programs; the key though is universal benefit.   

There are many examples of existing organisations that can provide a conduit for the strengthening of the connection of the financial and real economies with natural systems, fostering universal attachment in the context of pursuing prosperity. Yet the environmental movement, I believe under the influence of social activist interlopers, have chosen to demonize these promising institutions. Rather than seeing an existing functioning entity with capabilities that satisfy green causes, they have chosen instead to reinvent the wheel absent considering the functionality these organisations represent.

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