cj#870> (fwd) Raachel #626: Sustainable Development, part 3


Richard Moore

: Thu, 26 Nov 1998 20:17:58 -0500 (EST)
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=======================Electronic Edition========================
.                                                               .
.           RACHEL'S ENVIRONMENT & HEALTH WEEKLY #626           .
.                    ---November 26, 1998---                    .
.                          HEADLINES:                           .
.                SUSTAINABLE DEVELOPMENT, PART 3                .
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When Adam Smith published THE WEALTH OF NATIONS in 1776, the
world was essentially empty from a human perspective, with fewer
than one billion human inhabitants.[1]  At that time, the planet
had abundant "natural capital" of all kinds --for example,
highly-concentrated metallic ores, oceans full of fish,
continents covered with trees to absorb carbon dioxide from the
atmosphere, and mysterious substances like petroleum oozing out
of the ground spontaneously.  The world of 1776 was short of
HUMAN capital --techniques for extracting minerals from the deep
earth, ships to catch fish efficiently, and machines to turn
trees into lumber, for example.

Now, says economist Herman Daly, the situation is reversed.[2]
Increasingly, natural capital is scarce and human capital is

** Today there is no shortage of huge ships to sweep nets through
the oceans to harvest fish --but the fish themselves are

** Chemical factories are abundant, producing a cornucopia of
useful chlorinated chemicals, but there is a shortage of natural
mechanisms to detoxify and recycle such chemicals.  As a result,
the entire planet is experiencing a buildup of chlorinated
toxicants and scientists are discovering new harmful effects in
wildlife and humans each year.

** Only recently, scientists concluded that the ecosystem's
capacity to remove carbon dioxide from the atmosphere has been
exceeded because of human activity.  As a result, they believe,
CO2 is building up in the air, pushing up the temperature of the
planet.  We are waiting now to learn the real consequences, but
more droughts, floods, and major storms must be expected, we are

In sum, natural capital --both sources and sinks --are becoming
scarce on a global scale for the first time ever.  The Earth is
no longer empty.  It is full, or nearly so.

Mainstream economists do not worry about shortages of natural
capital because neoclassical economic theory assumes that human
capital can substitute for natural capital.  To a certain limited
extent, this is true.  When copper becomes too expensive for
making telephone wires, we substitute glass in the form of fiber
optic cables (which we make by manipulating sand with large
quantities of energy and accumulated know-how).  However, Daly
argues, traditional economists have ignored the extent to which
the usefulness of human capital depends upon the availability of
natural capital.  Daly asks, quite sensibly, what good is a
sawmill without a forest, a fishing boat without fish and an oil
refinery without oil?  In truth, says Daly, natural and human
capital complement each other --we need them both to sustain our
economy and the natural systems that support us and the other
creatures.  This may seem obvious to most people, but to many
traditional economists it still seems like heresy.

As we have seen (REHW #624), there are two kinds of natural
capital --those that renew themselves (e.g., fish, trees) and
those that don't, at least not on a human time scale (e.g.,
copper deposits and petroleum).

How do you "improve" natural capital?  Renewable natural capital
can be replenished by not using it and by waiting patiently.
Fish stocks will replenish themselves if we refrain from
overfishing.  The same is true of forests.  In this new economic
perspective, frugality, efficiency, and patience once again
become prime virtues.  As Daly says, for ecological economists,
laissez faire takes on new, deeper meaning.

Somewhere in between natural capital and human capital is
"cultivated capital" --fish ponds, tree farms, and herds of
cattle, for example. Recent attempts to cultivate natural capital
may provide some limited benefits.  Tree plantations provide one
of the services of a real forest --trees to cut --but they do not
replace forest habitat or biodiversity.  Fish farms do produce
fish but they also require high-protein fish food, antibiotics to
fend against disease, and some means of handling concentrated
wastes.  Clearly, cultivated capital has severe limitations, and
it relies on natural capital for its limited successes.

The ultimate experiment in cultivated natural capital --or
ecosystem management, as many modern engineers and scientists
like to call it --took place between 1991 and 1993 in the desert
25 miles north of Tucson, Arizona.  Here, a group of scientists
built a complex ecosystem covering 3.15 acres under an airtight
glass cover and 8 of them tried to live in it for two years.  The
materially-closed system --nothing was supposed to go in or out
during the two years --was intended to replicate a tiny Earth,
complete with ocean, desert, grasslands, and woodlands.  The
experiment was called Biosphere 2 (the Earth is biosphere 1), and
it was a stunning failure.  From the beginning the Biospherians
encountered "numerous unexpected problems and surprises."[3]

Fifty tons of oxygen disappeared mysteriously from the closed
system, reducing oxygen levels to those typically encountered at
an altitude of 17,500 feet --barely sufficient to maintain human
consciousness. Carbon dioxide skyrocketed to levels that
threatened to poison the humans as well.  Levels of nitrous oxide
--laughing gas --rose high enough to interfere with vitamin B12
synthesis, threatening the humans with brain damage.  Finally,
oxygen had to be pumped in from the outside to keep the
Biospherians from suffocating.

Tropical birds disappeared after the first freeze.  A native
species of Arizona ant somehow found its way into the enclosure
and soon killed off all other soft-bodied insects.  As the ants
proliferated, creatures as large as snakes had to hide from them
or be eaten alive.  All seven species of frogs went extinct.  All
together, 19 of 25 vertebrate species went extinct.  Before the
two years was up, all pollinators went extinct, so none of the
plants could reproduce themselves. Despite unlimited energy and
technology available from the outside to keep the system
functioning, it was a colossal $200 million failure. The
scientists concluded, "No one yet knows how to engineer systems
that provide humans with the life-supporting services that
natural ecosystems produce for free.  Dismembering major biomes
[ecosystems] into small pieces, a consequence of widespread human
activities, must be regarded with caution.... the initial work in
Biosphere 2 has already provided insights for ecologists--and
perhaps an important lesson for humanity."[3]

Thus we know that cultivated natural capital has an exceedingly
limited capacity to provide the benefits that nature's own
natural capital provides.  We would be fools to count on
replacing nature's bounty with something of our own invention.
The Earth is our only home and we must protect it.

Non-renewable capital cannot be "improved" --it can only be
preserved. Thus to the extent feasible, our economy should shift
over to renewable resources, to be used at a rate set by nature's
rate of renewal. Non-renewable resources should be left alone, or
they should be liquidated thoughtfully to provide future humans
with a stream of income.  For example, arguably, dwindling
petroleum supplies should be invested in "solar breeder"
facilities --factories that make photovoltaic solar cells.  The
product of such a factory could be used to power the construction
and operation of more factories to manufacture more photovoltaic
cells, to make more factories to make more photovoltaics, and so
on, providing the next generation with a legacy that allows them
to tap into the endless flow of the sun's energy.

What public policies might help us make the shift to using
renewable resources at sustainable rates?

1) Stop counting the consumption of natural capital as income.
(See REHW #516.)  Depletion should never be treated as income.
It would be like burning the furniture to heat the house,
congratulating ourselves on the resulting warmth.  It will be
short-lived.  As preposterous as it may sound, most nations,
including the U.S., presently treat depletion of their natural
capital as if it were income, so far as national accounts are
concerned --a major accounting error.  Depletion is a cost, not a
benefit.  (The same is true of pollution --in calculating Gross
Domestic Product [GDP] we count pollution, pollution illnesses,
and anti-pollution expenditures as benefits, not costs. This is
clearly wrong and wrongheaded but the nation's economists still
endorse such a system --a sad commentary on the state of economic
"science" today.)

2) Tax labor and income less, and tax throughput more.  We will
always need governments to

** protect the weak from the strong and tyrannical;

** provide a safety net for those plagued by bad luck;

** protect the commons (such as the atmosphere) from thoughtless
or predatory individuals and businesses;

** level the playing field for individuals and businesses (making
sure, to the extent possible, that people start life with equal
opportunity, and that the competitive envi-ronment for businesses
is preserved against monopolies and oligopolies).

The present tax structure encourages businesses to substitute
capital and throughput (energy and materials) for workers.
Throughput depletes resources and creates pollution, so our tax
structure discourages what we want (jobs and income) and
encourages what we don't want (depletion and pollution).  This is

After we shift over to "green taxes" --which encourage jobs and
income and discourage depletion and pollution --we will still
need an income tax but not primarily to provide revenue for
government.  We will need an income tax chiefly to reduce
inequalities in income and wealth because huge inequalities
undermine the main goals of a democracy: equal opportunity, a
real voice in the decisions that affect your life, and a sense of
shared ownership (a "stake") in the community.

3) Move away from the ideology of global economic integration by
free trade, free capital mobility, and export-led growth.
Instead, move toward a more nationalist orientation that seeks to
develop domestic production for internal markets as the first
option, embracing international trade only in those instances
where it is clearly more efficient.

Herman Daly emphasizes this point again and again: free trade as
conceived by the current generation of political and economic
leaders will be disastrous because it is destroying the power of
national governments to control the destiny of their people.  "To
globalize the economy by erasure of national economic boundaries
through free trade, free capital mobility, and free, or at least
uncontrolled, migration is to wound fatally the major unit of
community capable of carrying out any policies for the common
good," Daly writes.[4]
                                                --Peter Montague
                (National Writers Union, UAW Local 1981/AFL-CIO)

[1] Herman E. Daly, BEYOND GROWTH (Boston: Beacon Press, 1996).
ISBN 0-8070-4708-2.

York: W.W. Norton, 1995), pg. 76.  ISBN 0-393-31495-2.

[3] Joel E. Cohen and David Tilman, "Biosphere 2 and
Biodiversity: The Lessons So Far," SCIENCE Vol. 274 (November 15,
1996), pgs. 1150-1151. And see William J. Broad, "Paradise Lost;
Biosphere Retooled as Atmospheric Nightmare," NEW YORK TIMES
November 19, 1996, pg. C1.  See also Peter Warshall, "Lessons
>From Biosphere 2: Ecodesign, Surprises, and the Humility of Gaian
Thought," WHOLE EARTH REVIEW (Spring 1996), pgs. 22-27.

[4] Daly, cited above in note 1, pg. 93.

Descriptor terms:  sustainable development; economics; herman
daly; beyond growth;

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