No Global Industry Is Profitable If Natural Capital Is Accounted For

[JStu...@aol.com]

Concerned,

 

We must have all known this intuitively. 

Now we have some data to ponder.

 

In the coming decades as we try to keep the prosperity

myth alive (or has it become a religion?) as well as everyone fed and

employed (an impossibility) regrettably we will be forced

to continue mining natural capital at increasing rates.

That is until none is left.

Sigh

Jack

 

---

From: pop...@populationmedia.org
Reply-to: submi...@populationmedia.org
To: jstu...@aol.com
Sent: 4/24/2013 9:01:16 A.M. Eastern Daylight Time
Subj: Not A Single Major Global Industry Is Profitable If Natural Capital Is Accounted For

 

Dave Roberts, of Grist.org, recently covered the release of a report titled "Natural Capital at Risk: The Top 100 Externalities of Business". It was commissioned by the The Economics of Ecosystems and Biodiversity (TEEB) for Business Coalition and attempts to quantify environmental externalities (i.e. climate change, pollution, land conversion and depletion of natural resources), across business sectors and at a regional level. In a nut-shell, the report concludes that the profits of major global business sectors would be wiped out if the costs of environmental damage and unsustainable natural resource use were accounted for. Or, more simply: none of the world's top industries would show a profit if they were forced to pay for the full costs of their environmental impacts and withdrawals. None. The majority of unpaid environmental externality costs identified are from greenhouse gas emissions (38%) followed by water use (25%); land use (24%); air pollution (7%), land and water pollution (5%) and waste (1%).Roberts recalls the words of environmentalist Paul Hawken, who said "We are stealing the future, selling it in the present, and calling it GDP." The Robert's commentary is below, and here are two additional links; the first to the main website of TEEB and the second to a PDF of the full 80 page report: TEEB Website: http://www.teebforbusiness.org/ Full report: http://www.teebforbusiness.org/js/plugins/filemanager/files/TEEB_Final_Report_v5.pdf None of the world's top industries would be profitable if they paid for the natural capital they use       See: http://grist.org/business-technology/none-of-the-worlds-top-industries-would-be-profitable-if-they-paid-for-the-natural-capital-they-use/ The notion of "externalities" has become familiar in environmental circles. It refers to costs imposed by businesses that are not paid for by those businesses. For instance, industrial processes can put pollutants in the air that increase public health costs, but the public, not the polluting businesses, picks up the tab. In this way, businesses privatize profits and publicize costs.   While the notion is incredibly useful, especially in folding ecological concerns into economics, I've always had my reservations about it. Environmentalists these days love speaking in the language of economics - it makes them sound Serious - but I worry that wrapping this notion in a bloodless technical term tends to have a narcotizing effect. It brings to mind incrementalism: boost a few taxes here, tighten a regulation there, and the industrial juggernaut can keep right on chugging. However, if we take the idea seriously, not just as an accounting phenomenon but as a deep description of current human practices, its implications are positively revolutionary.   To see what I mean, check out a recent report [PDF] done by environmental consultancy Trucost on behalf of The Economics of Ecosystems and Biodiversity (TEEB) program sponsored by United Nations Environmental Program. TEEB asked Trucost to tally up the total "unpriced natural capital" consumed by the world's top industrial sectors. ("Natural capital" refers to ecological materials and services like, say, clean water or a stable atmosphere; "unpriced" means that businesses don't pay to consume them.)   It's a huge task; obviously, doing it required a specific methodology that built in a series of assumptions. (Plenty of details in the report.) But it serves as an important signpost pointing the way to the truth about externalities.   Here's how those costs break down: The majority of unpriced natural capital costs are from greenhouse gas emissions (38%), followed by water use (25%), land use (24%), air pollution (7%), land and water pollution (5%), and waste (1%). So how much is that costing us? Trucost's headline results are fairly stunning. First, the total unpriced natural capital consumed by the more than 1,000 "global primary production and primary processing region-sectors" amounts to $7.3 trillion dollars a year - 13 percent of 2009 global GDP.   (A "region-sector" is a particular industry in a particular region - say, wheat farming in East Asia.)   Second, surprising no one, coal is the enemy of the human race. Trucost compiled rankings, both of the top environmental impacts and of the top industrial culprits. Here are the top five biggest environmental impacts and the region-sectors responsible for them:       The biggest single environmental cost? Greenhouse gases from coal burning in China. The fifth biggest? Greenhouse gases from coal burning in North America. (This also shows what an unholy nightmare deforestation in South America is.)   Now, here are the top five industrial sectors ranked by total ecological damages imposed:       It's coal again! This time North American coal is up at number three.   Trucost's third big finding is the coup de grace. Of the top 20 region-sectors ranked by environmental impacts, none would be profitable if environmental costs were fully integrated. Ponder that for a moment. None of the world's top industrial sectors would be profitable if they were paying their full freight. None!   That amounts to an entire global industrial system built on sleight of hand. As legendary environmentalist Paul Hawken put it, "We are stealing the future, selling it in the present, and calling it GDP."   This gets back to what I was saying at the top. The notion of "externalities" is so technical, such an economist's term. Got a few unfortunate side effects, so just move some numbers from Column A to Column B, right?   But the UNEP report makes clear that what's going on today is more than a few accounting oversights here and there. The distance between today's industrial systems and truly sustainable industrial systems - systems that do not spend down stored natural capital but instead integrate into current energy and material flows - is not one of degree, but one of kind. What we need is not just better accounting, it is a new global industrial system, a new way of providing for human wellbeing, a new way of relating to our planet. We need a revolution.     Thank you,   Joe  --- Joseph J. Bish  Population Outreach Manager Population Media Center  145 Pine Haven Shores Road, Suite 2011 P.O. Box 547 Shelburne, Vermont 05482-0547 U.S.A. PMC Tel. 1-802-985-8156 PMC Fax 1-802-985-8119 Joe Bish Mobile: 1-607-354-4342  Email: joe...@populationmedia.org PMC website: www.populationmedia.org Follow us on Twitter  Become a fan of PMC on Facebook   We want to hear from you!  Check out our blog,  www.populationmedia.org/pmc-blog, where you can read and comment on the articles distributed via PMC's daily population email listserv.  Please note that it may take up to 48 hours for this article to appear on the website.

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[Cole Thompson]

Wow, this is good stuff, hard data (or at least solid analysis).  It's very depressing too of course.

Man, if we could just get our species weaned off of coal.  All I want for Christmas is a fusion breakthrough at the National Ignition Facility in Livermore, just over the hills here.

 I second your "Sigh"

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[Carl Bond]

The link has moved, for those who are interested in this topic:

http://www.naturalcapitalcoalition.org/js/plugins/filemanager/files/TEEB_Final_Report_v5.pdf

-Carl Bond

[Ishi Crew]

comments:

1. I havent read the 80 page report yet (i'm a slow reader) but likely have no basic issue with the analyses---its sort of common sense.    The same sort of conclusion is described by Daly and Cobb in their use of an alternative indicator to GDP.

    This is similar to the Piketty book on inequality----people have been noting this phenomena since the 80's when it became apparent (actually obvious----the trend  began in the 70's) .   So they are just rigorusly documenting the obvious. 

     Whitehead and Russel did this with arithmatic around 1910.  People basically knew that 1+1=2 but they wrote an 800 page book rigorously proving it. 

    I reccomend that everyone read all 3 of these books/reports.  Maybe even memorize them and one could devise tests to make sure people have done their homework. 

 

2.   I do think however that a corporation, like a country, or a community, or a person, is a somewhat artificial,  arbitrary, conventional or reified category---but all analyses makes up such categories --- species, races, tribes, communities, etc.  

   I think its possible if one were to do the same sort of analyses of a single human being ---possibly even a hunter gatheror---one would find they have a negative effect on natural capital.

   And remember , corporations are sustained by consumers---its not just them vs us.

   

2.  The Grist article's view that the term 'externalities' is somehow trendy and abstract or complex to me just shows how illiterate people are in some ways, and how bad the education system is in some ways.  I don't have an ipod nor know how to use one, so i am also illiterate in some ways. I have moslty forgotten C language, french, spanish, alot of math and science , since i don't use them.

    I think externalities is a fine term. (I also think opportunity cost, another economics term,  is a terible one because its redundant---like another version of the golden rule.   Who needs to reinvent the wheel, except to get a good job..)  

   The issue is partly what people should know and do.

   Saying 'we need a revolution' and implying we don't need (to examine) externalities to me is not particularily valuable, but I guess the eco-movement is largley based on PR geared towards slogans, simplification, etc. for 'average people'..

3. Naomi Klein is flying around the world promoting her book climate and capitalism.

Perhaps instead we should instead instaed a a little time off, take a breather, and get into a pensive mood---even not think about ISIS issues in iraq and africa,  and remember instead the kantian/descartian idea 'je pense' donc 'je suis'  either charlie or  the 3 french athletes who died in argentina after their plane crashed in the making of a reality tv show about survival in the wilderness.  They may have been our only hope for educating the world about sustainable living.

[Dingles Bell]

Well done for drawing attention to this, Joe.

Paul Hawken's neat summary: "We are stealing the future, selling it in the present, and calling it GDP"  is a great line, distilling the whole sorry mess in a few pithy words.  He is absolutely right, of course.

Ishi Crew's remark that: "... remember , corporations are sustained by consumers---its not just them vs us." is also a very realistic and down-to-earth approach.   Corporations and businesses are run, owned and managed by consumers and are also consumers themselves and public demand requires them to keep on producing for the benefit of public consumption.  Therefore, your comment, although accurate, namely that, " ... industrial processes can put pollutants in the air that increase public health costs, but the public, not the polluting businesses, picks up the tab. In this way, businesses privatize profits and publicize costs", I consider perhaps misses a critical point.  The taxes of corporations and businesses also contribute to the 'public cost'.  Whether they contribute enough is always going to be debatable and that gets into the economic anomaly of whether cutting corporate taxes is better than increasing them, given that cutting corporate taxes increases production - it encourages businesses to expand and provide jobs - while increasing taxes contracts production and increases unemployment.  I don't think arguing that is relevant here.

What is relevant is that consumers can hardly lay the blame for the raping of the planet solely at the feet of industry, just because industry's operations appear to be, prima facie, solely doing all of the damage, when in reality we are all responsible for the damage by demanding such production in our consumption of the goods in the first place.  On that note, I believe everyone should pay.  Better still, the solution must come from government, to encourage corporations and businesses to change their modus operandi.  That costs a heap of money in altering old and adapting to new processes, in re-tooling and building new production assembly lines, which business is not going to engage voluntarily across the board, without incentives.  Those incentives must, therefore come from government, which means the public still pays.  At the end of the day, anyone who believes you can "push" the cost onto the business sector is failing to recognise that it will always be passed down to the man on the street in any event, through end-product price loadings to cover those costs.   Even carbon pricing is passed down when it all comes out in the wash.  So rather than maligning business, I believe we must try to understand it and encourage it to change and likewise with encouraging governments to get on board and implement the necessary initiatives.

PB.

[Ishi Crew]

jingle bell jingle bell dingles bell rocks!   (i'm watching the remaining snow in my area melt----i love it but i'm tired of  falling down in it , especially since its half ice and i walk a trail next to a creek and i've slipped in and its hard to get out for me---i have to swim and when i get home people laugh since i'm totally soaked and chilly ). i do agree that 'everyone should pay' and i do a bit but i'm not willing to be a martyr---noone in my building (largely working class poor people) recycles so i dont either but i dont buy a lot of garbage. see 'tragedy of the commons' (science mag, around 1968)  by garret hardin (a reactionary but with a point).   only thing i would question or disagree with is that 'the government' needs to do somehing.  the government responds to consumer and business pressure.   there are many alternative things going on here from changing food choices (getting off of meat, junk food, etc.) to community gardens, putting solar on rooftops, etc. but people are still commuting in cars and they want new highways (even when the existing ones are falling apart). my 2 cents.  peace out (check out 'ishi' on wikipedia if you dont know it---wikipedia was started by a libertarian financier  on chicago's wall street. in general i dont like libertarians but it shows there is something in that ).

[Dingles Bell]

LOL!  You sound like a happy chappy, in spite of your misfortunes in the English chill.  Don't wanna make you envious, but I am sitting here in shorts and a T-shirt.  Early Autumn in Australia.

You are absolutely right of course.  Government only responds to pressure from the constituency.  However, I doubt the constituency can bring equal pressure on business.  It has a history of ignoring all pressure except fiscally driven pressure.  So I guess it is up to the people to pressure government to provide financial incentives for industry to invest in change and for government to spend the money to provide those incentives.  A hard one.  I don't believe in clubbing business with taxes to achieve the goal - such as carbon taxing - because it can be rorted, traded and passed down, besides it does hurt economies, making them uncompetitive against nations which have no such tax burden on their exportable goods.  So, I think government incentives for industry are important to persuade them to change.  

As far as what the people can do, only the purists voluntarily sacrifice their 'cushy' lifestyle, so again legislation must prevail to compel compliance.  How a government might 'sell' that legislation remains to be seen, but it must be done.  For example, start tackling the 'throw away' mentality and educating people to repair things, rather than throwing goods away which could be repaired, there being no necessity to replace them with a new one.  I think too that there could be legislation that outlaws manufacturers from creating goods with a "fail by date" - goods which once upon a time lasted three times as long, before the 'throw away' mentality took hold, e.g. 5 - 7 years on a washing machine now.  We had one that lasted 25 years - fully automatic, did everything the same and equal to the latest models and was twice as robust.  No such animal built any more.  Sewing machines, fridges, TV's etc., the  same issue applies. 

[biz modl]

hi folks,

 

the harris cultural model decision matrix is very clear: cultural selection is based on providing members with the shortest paths to satisfaction of their basic needs (subsistence, sex and love) at their lowest personal energy expenditure.  if you want people to select different options, those options have to be as easy or easier to take than the status quo. 

 

all the 'indirect' costs must be borne at the time of the option selection; otherwise, the option with the 'perceived' lowest personal energy cost will always be chosen.  thus, as long as a 'bad' choice is present at a lower 'perceived' cost, it will be chosen.  culture is a 'rigged' game J

 

people interested in changing culture favor different ways to rig the game.  if you are ideological, you try to change 'perception' (eliminate the option using values (shame or guilt));  if you are political, you try to change the rules (eliminate the option by force); if you are technological, you try to change the tools (eliminate the option by changing usage).   

 

in the end, all the cultural subsystems (infrastructure, structure and superstructure) have to be in synch - and believe me, that takes a long, long time J

 

have fun,    biz

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[Ishi Crew]

you dont know me. we kicked the english out of here several years ago. so i'm not 'sitting in an english garden waiting for the sun to shine'---i am the walrus like the beatles. i'm also not a happy chappy or happy camper---i'm lazy so when i go on a trip the first thing i do is 'get prepared'--hide all my food, sleeping bag and tent since its too heavy to carry. all i take is matches and lighters and stuff to read (usually light stuff like mathematical physics, sometimes a guitar so i can beg or pretend to play music) i have  traveled this way all the way from dc to guatemala and alaska. sometimes i'm not too happy (tho i like the song by pharrell williams) since i get hypothermia. (try sleeping out in -45 without a sleeping bag---you better know how to buuild a fire (jack london)). i agree with the idea of making various machines last a long time. my family has a refrigerator that has been operating in that place before they bought it around 1970. much of what i have is old and also i got it by finding it on the street.they now have a 5 cents charege for using plastic bags in the store---instead bring your own. its a start. 'pay your way'. i know a fair number of anarchists who dont believe in government. (except when it comes to their own pay check or university). i think its a mixed situation.   peace out.   (could you send me a gift package from australia? alll i want is a little sun, sand, coral reef, some sea snakes and octupuses and whales, 

a few ostriches, and anything else you can put in the box)

[Cole Thompson]

The snippet below from biz is the most succinct explanation I've seen on the challenge facing humanity in the 21st century:

"all the 'indirect' costs must be borne at the time of the option selection; otherwise, the option with the 'perceived' lowest personal energy cost will always be chosen.  thus, as long as a 'bad' choice is present at a lower 'perceived' cost, it will be chosen."

I have thoughts of my own on what to do about the problem, but for now, just wanted to say, well put.  The above is the problem economists should be wrestling with.

[Ishi Crew]

the 'harris model' is fine (though there are many similar models with different names, just as there are many variants of the golden rule deriving from different religious traditions).

 I  think the 'addiction model' is pretty good---people often 'know' or perceive the costs of being addicted to drugs, junk food, cigarettes, etc (or even TV etc.) but using that information to make different decisions for behavior is hard to do. 

its like beiong stuck in a traffic jam---you'd like to turn around but you can't because of the other cars. 

A sortuh simplisitc book called' nudge suggests you can help people change their perceptions and behavior using simple 'nudges'---if you dont want kids to eat junk food, you put broccoli in the cafeteria before the french fries.   

 In USA its graducally becoming clear that the costs of incarceration of petty drug crimes are greater than the benefits, so they are changng drug laws---prisons cost too much and having people waste time in them is a bad idea because when they get out they are not prepared for life in the nonprison world.

'Activists' of course 'nudge' society in various ways by throwing sand in the gears of standard practices. 

The main point is its all about 'percpetion' ,just as the notion of 'externalities' is in your benefit-cost formula. . I you dont think enslaved people have feelings there is no cost in using them as you aim for subsistance, sex, and love. But abolitionists changed some of those perceptions.  If you think you need a luxury car or jet to  get sex and love, and find it weasy to run a hedge fund you will do it.  But people can shame you, protest you, etc.  until the costs become too great and you find a bicycle or public transit will get you there.. 

[Dingles Bell]

" ... all the 'indirect' costs must be borne at the time of the option selection; otherwise, the option with the 'perceived' lowest personal energy cost will always be chosen.  thus, as long as a 'bad' choice is present at a lower 'perceived' cost, it will be chosen." ... and ... "...  all the cultural subsystems (infrastructure, structure and superstructure) have to be in synch ..." 

Marvin Harris, although an anthropologist by education, he could also be equally defined as a philosopher, given his expressed opinions on cultural materialism.  We could all get lost in the inordinate opinions of philosophers on the subject, stray from the realities and even forget them.  His observation that population structures, fertility and mortality rates are the principle mechanisms through which the homo sapien exploits the environment via each societies' infrastructure, I believe, is the quintessential issue.  He discussed the objectivity and subjectivity of why we do what we do.  We can get lost in that discussion as well.  

I don't disagree that tapping into 'why' society does what it does can certainly assist those who endeavour to bring change and influence in so far as how to 'style' their approach to successfully influence the masses, for  every known leader, good or bad, from Churchill, to Hitler, to Marx and Lenin have adopted the use of 'propaganda', but that is historically the problem, 'propaganda' - some of it right and much of it wrong, merely designed to realise a goal desirable to that particular innovator of change - which validates your remark that much of it is driven by 'perception'.  What am I getting at?  The lack of 'facts' to support many of these perceptions is the issue.  In other words, some are better at arguing their case than others, with or without facts to support them and this basically gets down to the 'quality' of the speaker and the speaker's ability to persuade society to adopt a perception.  The climate debate is a classic example.  Scientists, rely upon facts, yet in that debate we see them arguing the issue from diametrically opposed positions.  How can that be if all rely on facts?  The problem is the facts are not completely known, so the discussion is reduced to an ideological argument, which is bound to falter.  To suggest that economists can contribute to the argument, leaves me cold.  Historically, they have rarely been right about anything.  So, I am getting at the question of relying on facts.

The fact is that whatever a society's perceptions, whether the functions you refer to are 'in synch' or not, the undeniable truth is that we have over-populated the globe and before all else, we must reduce our rate of population.  What Western government is going to do what China did, i.e., regulate birth rates?

[Dingles Bell]

You are so right - I assumed too much.  Have no idea why I assumed you were in England.  Silly, now that I look back on the discussion.  Interestingly, you don't volunteer where you are.  Just curios. You are obviously a likeable maverick who enjoys testing your survival skills against the forces of nature.  Good on you!  Courageous! ... and no doubt this teaches you the very salient fact that nature, although it can be destroyed by the human footprint, it nevertheless, in a paradoxical way, still ignores us and will do what it will.

[Ishi Crew]

comments:  1.  now i remember marvin harris---he is a 'cultural materialist' just as marx was a historical materialist; there are quite a few variants on this theme currently in economics, as well as biology, and other fields.  In a way this is the way i have modeled things or think of them since i come from the 'physics tradition' (statistical mechanics). You describe a system using various physical parameters, write it down as an optimizing system, and find the way it distributes itself and its trajectory.  Rocks fall, entropy maximizes, the 'web of life' or ecology follows well known statistical patterns (gauss, pareto, power, zipf...)...

But the problem is 'humans and animals have motivations and feelings, so that formalism really doesnt explain everything or even much if it.  Thats why there are other schools in anthro besides Harris, which focus less on 'material' and more on 'ideological' properties which are harder to  quantify.  But they are being so---eg 'behavioral economics' in that field (essentially psychology), and cultural evolutionary theory in socio/biology. 

this is relevant to population and environment---the west may do like china and 'require' certain things but they try to 'nudge' or encourage them. Women's education has been promoted as one route, since they can figure out things to to besides staying home and have big families---unfortunately too often they then follow the classic male idea and become wealthy business people selling junk food or something. 

One criticism i have many 'progressive' groups like CASSE ---and i am familiar with many of them---is they have a bit of a tendency to be like many marxists and religious fundamentalists.  They devlop one 'big idea' or issue ----whether population, consumerism, economic growth, animal rights, inequality, poverty, crime, racism the rainforests, GMO etc (even anthrogenic global warming---and i basically believe the consensus and not the skeptics because scientifically my impression is the skeptics dont have as good arguments, though they are worth considering). Then they sort of try to get everyone on their band wagon.  And also, make money off it selling books, giving speeches, etc.

I think to would be better to take a more balanced approach--but the risk is you become a dilletante and cant get anything done.  Nowadays you almost have to have 'hook' (like the harris model) since people cant learn a whole lot of them, and then you have to 'push it'---maybe even hire lobbyists---so you can achieve some limited but accessible goal.

I also have this tendency to have push one big idea ---statisticall mechanics and complexity/chaos theory.  I do think it includes all the others (including economics, which i think is like biology, a field which is not really predictive but still has alot of information in it, as well as entertainment and aesthetic value).   But, what it doesnt include is things like making music (though it has theories of music, and art, and even sex and love---but the theories arent the same thing as doing it just as dissecting a frog is not the same as seeing one in nature).

It also doesnt include hiking and such (but it has theories of that true---'random walk' theory in math is one simple well  known version ---also related to the  'gambler's ruin' and drunkerd's walk problems, as well as proofs of classical general equilibriujm theory in econ.  peace out