Efforts to curb unbridled growth that's killing the planet
'Natural capital' of resources viewed as more vital than economic growth
by Carolyn Lochhead
January 04, 2014
Source: San Francisco Chronicle
Fresh-faced tech millionaires snap up glitzy new condos in San Francisco. Across America, construction is up and unemployment is down. Consumers are buying. The economy is growing.
Yet instead of applause, voices from across the political spectrum - Berkeley activists and Beltway conservatives, Pope Francis and even some corporate CEOs - offer a critique of economic growth and its harm to the well-being of humans and the planet.
Ecologists warn that economic growth is strangling the natural systems on which life depends, creating not just wealth, but filth on a planetary scale. Carbon pollution is changing the climate. Water shortages, deforestation, tens of millions of acres of land too polluted to plant, and other global environmental ills are increasingly viewed as strategic risks by governments and corporations around the world.
"The physical pressure that human activities put on the environment can't possibly be sustained," said Stanford University ecologist Gretchen Daily, who is at the forefront of efforts across the world to incorporate "natural capital," the value of such things as water, topsoil and genetic diversity that nature provides, into economic decision making.
The efforts are "mostly behind the scenes," Daily said. "No one is going out really trumpeting this work. It's kind of quiet, but really rapid and intensive innovation" around the world.
"Everybody basically understands why we need to change our ways," she said. "The big question now is how."
Mainstream economists universally reject the concept of growth limits. As Larry Summers, a former adviser to President Obama, once put it, "The idea that we should put limits on growth because of some natural limit is a profound error, and one that, were it ever to prove influential, would have staggering social costs."
Since World War II, the overarching goal of U.S. policy under both parties has been to keep the economy growing as fast as possible, forever. Growth is seen as the base cure for every social ill, from poverty and unemployment to a shrinking middle class. It is seen even by some as the path to a cleaner environment, generating the means for pollution cleanup.
Last month, Obama offered a remedy to widening income inequality: "We've got to grow the economy even faster."
Yet from the Bay Area to Beijing, many leading thinkers are questioning the premise that growth, with no consideration for its environmental consequences, automatically equals prosperity.
Officials in Seoul are promoting sharing over ownership to help address pollution as well as parking, transportation and housing shortages. China, the bad boy of soaring economic growth and rapacious environmental destruction, is developing a companion metric to gross domestic product that would measure the value of nature. If approved in March, the new indicator would be used alongside GDP to gauge the performance of local and regional Chinese officials, with potentially far-reaching implications, Daily said.
As the world economy grows relentlessly, ecologists warn that nature's ability to absorb wastes and regenerate natural resources is being exhausted. "We're driving natural capital to its lowest levels ever in human history," Daily said.
For example, scientists estimate that commercial fishing, if it continues at the current rate, will exhaust fisheries within the lifetime of today's children. The global "by-catch" of discarded birds, turtles and other marine animals alone has reached at least 20 million tons a year.
"It's not just a bummer for us to not get sushi," said Annie Leonard, founder of the Story of Stuff project, a Berkeley effort to curb mass consumption. "We are approaching the planet's limitations. So when I see the media barrage about buying more stuff, it's almost like a science fiction movie where there is this huge contextual information, we are undermining the very ecological systems which allow life to continue, but no one's allowed to talk about it."
A full world
Nineteenth century economists assumed that the economy would stop growing naturally, reaching "a very pleasant steady state," said UC Berkeley economist Richard Norgaard, chairman of the Delta Independent Science Board advising California on water issues, and a member of the Intergovernmental Panel on Climate Change. "People would have more time for the arts and less time spent working."
Sometime in the 20th century, the idea that the economy must grow became a truism, he said, yet "there is no theoretical reason why the economy has to keep growing."
An economic model pioneered by University of Maryland economist Herman Daly provides an alternative, if untested, path. A former senior World Bank economist, Daly believes that economic growth has transformed what was an "empty world," where nature was abundant and the human presence small, into a "full world" where human activity has reached the limits of Earth's capacity to absorb wastes and generate resources.
"It's really just common sense once you think about it," said Paul Craig Roberts, an assistant Treasury secretary in the Reagan administration and one of the founding theoreticians of supply-side economics. "Of course for most economists, paying attention to ecology is not anything they do."
Modern economic theory treats nature as a free good. The planet delivers resources such as air and water, and absorbs the wastes of economic activity, allowing perpetual economic growth and ever-rising consumption.
"It's an assertion that finite resources can support infinite growth," Roberts said. "This of course contradicts physics," he said, and represents a "very stunning shortcoming" of modern economics.
Daly proposes a "steady state" economy for countries that have achieved material wealth. Using tools such as carbon taxes on fossil fuels, the economy's material production and consumption would be capped at the Earth's capacity to cleanse and replenish itself. Higher consumption would be replaced by higher quality of life.
In Daly's concept of an empty world, fish catches were limited by the number of boats in the water, reflecting a scarcity of man-made capital. In today's full world, boats are abundant, but the fish catch is limited by the fish remaining in the sea. It is nature's capital that has become scarce.
This is not a theoretical concept.
In October, Florida sued drought-stricken Georgia, accusing the state of siphoning upstream water to quench the booming Atlanta suburbs. The water withdrawals killed the oyster beds in Apalachicola Bay and the livelihoods of people who depended on them.
Worried about climate-induced sea level rise and water shortages, Dow Chemical is conducting a pilot project at its plant in Freeport, Texas, the largest single-company chemical complex in North America, to assess how nature contributes to its bottom line. In a first-ever collaboration with an environmental group, the Nature Conservancy, the company is exploring coastal marsh and dune restoration to shield its plant against storm surges, and paying nearby homeowners to switch from lawns to native landscaping.
Water "was previously considered an almost limitless, free or low priced commodity," said Dow's latest report on the project. "It is simply not an option to run out of water."
Some experts point to rapid growth in the so-called sharing economy as a way to reduce consumption and ease pressure on the environment. Battered by the recession, young people in some cities are sharing cars instead of buying them, noted Julian Agyeman, a professor of urban and environmental policy at Tufts University near Boston. He thinks this model could spread to many consumer goods, such as power tools that sit unused in people's basements.
"How about having the utility of these wonderful products that technology and science have given us, but not necessarily owning them?" Agyeman said.
Mainstream economists dismiss such schemes as utopian.
"We keep expanding and we keep growing, and I've not heard one president say we've got to go to zero growth, with higher unemployment, and live on a simpler scale," said Sterling Burnett, an analyst with the conservative National Center for Policy Analysis in Dallas.
Conservatives acknowledge that markets fail to reflect environmental costs, but insist that when nature becomes scarce enough, markets will assign value to its benefits, just as farmers pay beekeepers to pollinate their crops.
A different gauge
Burnett said a monetary value could be placed on some things in nature, "maybe the waste-cleaning of a stream," but not whole ecosystems.
"Values develop in markets as resources become scarce," he said. "We've proven time after time that we can drastically alter ecosystems so that they are no longer recognizable, such as New York City or any modern metropolitan area, and yet humans don't only survive, they thrive."
Still, some governments in the U.S. and around the world are taking steps to assign value to nature's "goods."
Maryland and Vermont have adopted a genuine progress indicator, or GPI, which includes environmental factors. Sean McGuire, leader of the Maryland GPI Project, said the measure highlights how economic growth contributes to such things as pollution in Chesapeake Bay or increased traffic congestion. Oregon, Utah, Colorado and several other states are looking at the measure.
The United Kingdom, led by conservative Prime Minister David Cameron, has pledged to make natural capital "hardwired into economic decision making." Bhutan pioneered a "gross national happiness" indicator that includes pollution and wildlife. The Organization for Economic Cooperation and Development is working on models to incorporate environmental concerns into economic policy.
Stanford's Daily pointed to efforts in Latin America, funded by governments and corporations, to pay farmers to restore and protect watersheds. The approach may soon be tested in Kenya and India.
China is paying 120 million households to restore watersheds after disastrous flooding in 1998 that was magnified by deforestation and farming on steep slopes. Daily called China's efforts "really quite staggering."
The biggest-ever U.S. project in restoring natural capital is under way in the Gulf of Mexico, where Hurricane Katrina and the British Petroleum oil spill awakened concern about the environmental vulnerability of 50 million people, 600,000 jobs and $234 billion in economic activity in oceanfront states.
The region receives 40 percent of the drainage from the continental United States, mainly from the radically re-engineered Mississippi River. Marshlands and barrier islands that protect the gulf states are rapidly turning to open water. Each year, fertilizer runoff from the Corn Belt forms a giant dead zone in the gulf.
Just 0.1 percent of the gulf region's old-growth cypress forests remain, and just 20 percent of its bottomland hardwood forests. Eighty-five percent of its oyster reefs have been destroyed.
Under legislation called the Restore Act, recently passed by Congress with bipartisan support, billions of dollars in criminal and civil penalties from the BP oil spill will go to environmental restoration. The states are awaiting a court decision on as much as $29 billion in civil damages under the Clean Water Act, said Robert Bendick, director of the Gulf of Mexico program for the Nature Conservancy.
Expanding such efforts would be a departure from the current U.S. economic growth model. But economies are not fixed and unchangeable, said UC Berkeley's Norgaard.
Efficient economies come in many different forms, he said. The United States had a centrally planned economy in World War II, then a mixed Cold War economy that built the Interstate Highway System and established social welfare programs like Medicare. Today's more free-market economy took root in the 1980s.
"Economies aren't natural," Norgaard said. "We build them to do what we need to do, and we built the economy we have."