Eco-Economy

Building an Economy for the Earth

Lester R. Brown

• Publisher: Routledge
• Year: 2013
• eBook ISBN: 9781134205332
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

In 1543, Polish astronomer Nicolaus Copernicus challenged the view that the sun revolved around the earth, arguing instead that the earth revolved around the sun. His paper led to a revolution in thinking.

In Lester Brown's brilliant and invigorating account of the industrial economy, he shows how a rethink of its fossil fuel-based, throwaway ethos is necessary to ensure that it works with, not against, the natural environment.

The issue now is whether the environment is part of the economy or the economy is part of the environment. Brown argues the latter, pointing out that treating the environment as part of the economy has produced an economy that is destroying its natural support systems.

One of the foremost experts on the new economic opportunities, Brown shows the vast economic potential and environmental gains that exist from eliminating the waste and destruction of current consumption. He describes how the global economy can be restructured to make it compatible with the earth's ecosystem so that economic progress can continue, with high standards of living and secure employment for all, while conserving resources and restoring the environment.

In the new economy, wind farms replace coal mines, hydrogen-powered fuel cells replace internal combustion engines, and cities are designed for people, not cars. Eco-Economy is a map of how to get from here to there. It is an essential guide to the economy of the 21st century and will be compelling reading for business readers and environmentalists alike looking for ways to build a better future.

1

The Economy and the Earth

In 1543, Polish astronomer Nicolaus Copernicus published “On the Revolutions of the Celestial Spheres,” in which he challenged the view that the Sun revolved around the earth, arguing instead that the earth revolved around the Sun. With his new model of the solar system, he began a wide-ranging debate among scientists, theologians, and others. His alternative to the earlier Ptolemaic model, which had the earth at the center of the universe, led to a revolution in thinking, to a new worldview.¹

Today we need a similar shift in our worldview, in how we think about the relationship between the earth and the economy. The issue now is not which celestial sphere revolves around the other but whether the environment is part of the economy or the economy is part of the environment. Economists see the environment as a subset of the economy. Ecologists, on the other hand, see the economy as a subset of the environment.

Like Ptolemy’s view of the solar system, the economists’ view is confusing efforts to understand our modern world. It has created an economy that is out of sync with the ecosystem on which it depends.

Economic theory and economic indicators do not explain how the economy is disrupting and destroying the earth’s natural systems. Economic theory does not explain why Arctic Sea ice is melting. It does not explain why grasslands are turning into desert in northwestern China, why coral reefs are dying in the South Pacific, or why the Newfoundland cod fishery collapsed. Nor does it explain why we are in the early stages of the greatest extinction of plants and animals since the dinosaurs disappeared 65 million years ago. Yet economics is essential to measuring the cost to society of these excesses.

Evidence that the economy is in conflict with the earth’s natural systems can be seen in the daily news reports of collapsing fisheries, shrinking forests, eroding soils, deteriorating rangelands, expanding deserts, rising carbon dioxide (CO₂) levels, falling water tables, rising temperatures, more destructive storms, melting glaciers, rising sea level, dying coral reefs, and disappearing species. These trends, which mark an increasingly stressed relationship between the economy and the earth’s ecosystem, are taking a growing economic toll. At some point, this could overwhelm the worldwide forces of progress, leading to economic decline. The challenge for our generation is to reverse these trends before environmental deterioration leads to long-term economic decline, as it did for so many earlier civilizations.

These increasingly visible trends indicate that if the operation of the subsystem, the economy, is not compatible with the behavior of the larger system—the earth’s ecosystem—both will eventually suffer. The larger the economy becomes relative to the ecosystem, and the more it presses against the earth’s natural limits, the more destructive this incompatibility will be.

An environmentally sustainable economy—an eco-economy—requires that the principles of ecology establish the framework for the formulation of economic policy and that economists and ecologists work together to fashion the new economy. Ecologists understand that all economic activity, indeed all life, depends on the earth’s ecosystem—the complex of individual species living together, interacting with each other and their physical habitat. These millions of species exist in an intricate balance, woven together by food chains, nutrient cycles, the hydrological cycle, and the climate system. Economists know how to translate goals into policy. Economists and ecologists working together can design and build an eco-economy, one that can sustain progress.

Just as recognition that the earth was not the center of the solar system set the stage for advances in astronomy, physics, and related sciences, so will recognition that the economy is not the center of our world create the conditions to sustain economic progress and improve the human condition. After Copernicus outlined his revolutionary theory, there were two very different worldviews. Those who retained the Ptolemaic view of the world saw one world, and those who accepted the Copernican view saw a quite different one. The same is true today of the disparate worldviews of economists and ecologists.

These differences between ecology and economics are fundamental. For example, ecologists worry about limits, while economists tend not to recognize any such constraints. Ecologists, taking their cue from nature, think in terms of cycles, while economists are more likely to think linearly, or curvilinearly. Economists have a great faith in the market, while ecologists often fail to appreciate the market adequately.

The gap between economists and ecologists in their perception of the world as the new century begins could not be wider. Economists look at the unprecedented growth of the global economy and of international trade and investment and see a promising future with more of the same. They note with justifiable pride that the global economy has expanded sevenfold since 1950, raising output from $6 trillion of goods and services to $43 trillion in 2000, boosting living standards to levels not dreamed of before. Ecologists look at this same growth and realize that it is the product of burning vast quantities of artificially cheap fossil fuels, a process that is destabilizing the climate. They look ahead and see more intense heat waves, more destructive storms, melting ice caps, and a rising sea level that will shrink the land area even as population continues to grow. While economists see booming economic indicators, ecologists see an economy that is altering the climate with consequences that no one can foresee.²

As the new century gets under way, economists look at grain markets and see the lowest grain prices in two decades—a sure sign that production capacity is outrunning effective demand, that supply constraints are not likely to be an issue for the foreseeable future. Ecologists, meanwhile, see water tables falling in key food-producing countries, and know that 480 million of the world’s 6.1 billion people are being fed with grain produced by overpumping aquifers. They are worried about the effect of eventual aquifer depletion on food production.³

Economists rely on the market to guide their decisionmaking. They respect the market because it can allocate resources with an efficiency that a central planner can never match (as the Soviets learned at great expense). Ecologists view the market with less reverence because they see a market that is not telling the truth. For example, when buying a gallon of gasoline, customers in effect pay to get the oil out of the ground, refine it into gasoline, and deliver it to the local service station. But they do not pay the health care costs of treating respiratory illness from air pollution or the costs of climate disruption.

Ecologists see the record economic growth of recent decades, but they also see an economy that is increasingly in conflict with its support systems, one that is fast depleting the earth’s natural capital, moving the global economy onto an environmental path that will inevitably lead to economic decline. They see the need for a wholesale restructuring of the economy so that it meshes with the ecosystem. They know that a stable relationship between the economy and the earth’s ecosystem is essential if economic progress is to be sustained.

We have created an economy that cannot sustain economic progress, an economy that cannot take us where we want to go. Just as Copernicus had to formulate a new astronomical worldview after several decades of celestial observations and mathematical calculations, we too must formulate a new economic worldview based on several decades of environmental observations and analyses.

Although the idea that economics must be integrated into ecology may seem radical to many, evidence is mounting that it is the only approach that reflects reality. When observations no longer support theory, it is time to change the theory—what science historian Thomas Kuhn calls a paradigm shift. If the economy is a subset of the earth’s ecosystem, as this book contends, the only formulation of economic policy that will succeed is one that respects the principles of ecology.⁴

The good news is that economists are becoming more ecologically aware, recognizing the inherent dependence of the economy on the earth’s ecosystem. For example, some 2,500 economists—including eight Nobel laureates—have endorsed the introduction of a carbon tax to stabilize climate. More and more economists are looking for ways to get the market to tell the ecological truth. This spreading awareness is evident in the rapid growth of the International Society of Ecological Economics, which has 1,200 members and chapters in Australia/New Zealand, Brazil, Canada, India, Russia, China, and throughout Europe. Its goal is to integrate the thinking of ecologists and economists into a transdiscipline aimed at building a sustainable world.⁵

Economy Self-Destructing

The economic indicators for the last half-century show remarkable progress. As noted earlier, the economy expanded sevenfold between 1950 and 2000. International trade grew even more rapidly. The Dow Jones Index, a widely used indicator of the value of stocks traded on the New York Stock Exchange, climbed from 3,000 in 1990 to 11,000 in 2000. It was difficult not to be bullish about the long-term economic prospect as the new century began.⁶

Difficult, that is, unless you look at the ecological indicators. Here, virtually every global indicator was headed in the wrong direction. The economic policies that have yielded the extraordinary growth in the world economy are the same ones that are destroying its support systems. By any conceivable ecological yardstick, these are failed policies. Mismanagement is destroying forests, range-lands, fisheries, and croplands—the four ecosystems that supply our food and, except for minerals, all our raw materials as well. Although many of us live in a high-tech urbanized society, we are as dependent on the earth’s natural systems as our hunter-gatherer forebears were.

To put ecosystems in economic terms, a natural system, such as a fishery, functions like an endowment. The interest income from an endowment will continue in perpetuity as long as the endowment is maintained. If the endowment is drawn down, income declines. If the endowment is eventually depleted, the interest income disappears. And so it is with natural systems. If the sustainable yield of a fishery is exceeded, fish stocks begin to shrink. Eventually stocks are depleted and the fishery collapses. The cash flow from this endowment disappears as well.

As we begin the twenty-first century, our economy is slowly destroying its support systems, consuming its endowment of natural capital. Demands of the expanding economy, as now structured, are surpassing the sustainable yield of ecosystems. Easily a third of the world’s cropland is losing topsoil at a rate that is undermining its long-term productivity. Fully 50 percent of the world’s range-land is overgrazed and deteriorating into desert. The world’s forests have shrunk by about half since the dawn of agriculture and are still shrinking. Two thirds of oceanic fisheries are now being fished at or beyond their capacity; overfishing is now the rule, not the exception. And overpumping of underground water is common in key food-producing regions.⁷

Over large areas of the world, the loss of topsoil from wind and water erosion now exceeds the natural formation of new soil, gradually draining the land of its fertility. In an effort to curb this, the United States is retiring highly erodible cropland that was earlier plowed in overly enthusiastic efforts to expand food production. This process began in 1985 with the Conservation Reserve Program that paid farmers to retire 15 million hectares, roughly one tenth of U.S. cropland, converting it back to grassland or forest before it became wasteland.⁸

In countries that lack such programs, farmers are being forced to abandon highly erodible land that has lost much of its topsoil. Nigeria is losing over 500 square kilometers of productive land to desert each year. In Kazakhstan, site of the 1950s Soviet Virgin Lands project, half the cropland has been abandoned since 1980 as soil erosion lowered its productivity. This has dropped Kazakhstan’s wheat harvest from roughly 13 million tons in 1980 to 8 million tons in 2000—an economic loss of $900 million per year.⁹

The rangelands that supply much of the world’s animal protein are also under excessive pressure. As human populations grow, so do livestock numbers. With 180 million people worldwide now trying to make a living raising 3.3 billion cattle, sheep, and goats, grasslands are simply collapsing under the demand. As a result of overstocking, grasslands are now deteriorating in much of Africa, the Middle East, Central Asia, the northern part of the Indian subcontinent, and much of northwestern China. Overgrazing is now the principal cause of desertification, the conversion of productive land into desert. In Africa, the annual loss of livestock production from the cumulative degradation of rangeland is estimated at $7 billion, a sum almost equal to the gross domestic product of Ethiopia.¹⁰

In China, the combination of overplowing and overgrazing to satisfy rapidly expanding food needs is creating a dust bowl reminiscent of the U.S. Dust Bowl of the 1930s—but much larger. In a desperate effort to maintain grain self-sufficiency, China has plowed large areas of the northwest, much of it land that is highly erodible and should never have been plowed.¹¹

As the country’s demand for livestock products—meat, leather, and wool—has climbed, so have the numbers of livestock, far exceeding those of the United States, a country with comparable grazing capacity. In addition to the direct damage from overplowing and overgrazing, the northern half of China is literally drying out as aquifers are depleted by overpumping.¹²

These trends are converging to form some of the largest dust storms ever recorded. The huge dust plumes, traveling eastward, affect the cities of northeast China—blotting out the sun and reducing visibility. Eastward-moving winds also carry soil from China’s northwest to the Korean Peninsula and Japan, where people regularly complain about the dust clouds that filter out the sunlight and blanket everything with dust. Unless China can reverse the overplowing and overgrazing trends that are creating the dust bowl, these trends could spur massive migration into the already crowded cities of the northeast and undermine the country’s economic future.¹³

The world is also running up a water deficit. The overpumping of aquifers, now commonplace on every continent, has led to falling water tables as pumping exceeds aquifer recharge from precipitation. Irrigation problems are as old as irrigation itself, but this is a new threat, one that has evolved over the last half-century with the advent of diesel pumps and powerful electrically driven pumps.

Water tables are falling under large expanses of the three leading food-producing countries—China, India, and the United States. Un...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Acknowledgments
• Table of Contents
• Foreword
• 1. The Economy and the Earth
• I. A STRESSED RELATIONSHIP
• II. THE NEW ECONOMY
• III. GETTING FROM HERE TO THERE
• Notes
• Index