In part 1 of this essay, we examined the poor job our current free market system does of putting a value on benefits we receive from the natural world, and incorporating those benefits into the prices we pay for goods and services. In part 2, I will propose some policies that might help correct the current momentum.
To effectively internalize the costs of losing the ecological richness we have enjoyed to date in America and elsewhere, I would suggest that we need a combination of stronger regulatory controls over the protection of natural areas along with economic disincentives for consumers whose actions degrade biodiversity and the health of ecosystems.
Programs that work
Addressing the regulatory aspect first, creating a greater number of ecological reserves, parks, or protected forests where harmful activities would be prohibited may be one of the techniques least disruptive to our economy. Setting aside areas identified as contributing to known services, which can’t be provided to society through any sort of practical artificial means, should be the first areas protected. For example, this might mean identifying and restoring more rivers and adjoining forestland in order to improve water quality, fish habitat, and recreational opportunities.
The economic impact would consist of taxes to set up and maintain protected areas, but the cost would be distributed across the population and the long-term benefits to society would likely be great. What is important to consider is that without protecting biodiversity at the ecosystem level, any benefits of regulation are not likely to be realized.
Programs that don’t work so well
If we look at the Endangered Species Act (ESA), we can see how one method of internalizing costs largely doesn’t work. ESA, while incredibly important, is an expensive law to implement, protecting a relatively small number of species. ESA does protect biodiversity, but it can be seen as a failure as a means of protecting many of the benefits we receive from biodiversity. Imagine if a similar number of millions of dollars was directed to protection at the ecosystem scale. The benefits we might see could include tangible benefits to humans, while at the same time ensuring species’ survival.
Because biodiversity is not static or constant, and since we receive different services from having unique compositions of biodiversity located in various ecosystems, some instances of biodiversity may benefit humans more than others. As a result, economic disincentives need to be designed in a broad manner.
A tax structure, not tax minutiae
It would likely be too complicated to set up individual market rules for every imaginable service that exists or may be discovered in the future. A general tax on consumption may be a better technique (http://ecologic.eu/3755 ).
Most of the things we use, such as the wood we cut down for space to grow crops or build houses, the mountaintops we explode to find coal, the wetlands we destroy to build shopping malls, the toxic metals we refine to put into appliances that may only last for a year or two, all contribute in some way to impacting biodiversity. A tax structure shifted more toward charging for what we consume would be one way to internalize the costs of losing biodiversity. When the tax reaches the level that consumers rethink the types of luxury items they buy, and that reconsideration translates to healthier ecosystems and fewer species disappearing, we will know that a better balance has been achieved.
Resistance is short-sighted
Without a doubt, any effective internalization of the value of biodiversity will be difficult to achieve and will meet stiff resistance from those who don’t understand its importance or who feel that they will be adversely impacted economically. Addressing the issue of reshaping our tax structure, some people will pay less while many may need to pay more for such a goal to be realized. Most people do not like paying taxes despite the real benefits that they produce through such things as social programs, infrastructure and environmental protection. Also, the ideas in this country regarding the accumulation of wealth and the rights of the individual may not mesh well with the notion of having to pay higher taxes to protect species. As for setting aside land and bodies of water for conservation purposes, we’ve already seen the kind of resistance that should be expected. Private landowners and developers too often despise the need to protect wetlands or habitat critical for endangered species. Large corporations will spend millions of dollars lobbying to open up enormous tracks of land for resource extraction; this can be seen in efforts in recent years by oil companies to allow drilling in the Alaskan National Wildlife Refuge, or in the extraction of coal in Appalachia or oil shale out west.
The underlying problem is that many people see only the short-term economic benefit of eco-invasive activity. If ecosystems and biodiversity are protected only until we realize there is something of value underneath them, protecting every habitat in the world won’t add up to much in the end.
The inevitable global village
Clearly the problem facing biodiversity is great, and the task becomes even more daunting when we attempt to internalize all of the cross-border issues that can affect the survival of species. Beyond just addressing the value of biodiversity in our own country, we need to bring other countries on board and integrate the costs that a growing population, climate change and deforestation will have on the distribution and survival of species. Global thinking is the next step. Paradoxically, global thinking starts – and ends – with cleaning up our own thinking, our own back yard, and our own industry.
Chris Watts currently serves as an Environmental Regulation Expert at Actio Corporation in Portsmouth, NH. He is pursuing advanced studies in Environmental Science at Johns Hopkins University, Baltimore, MD.