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Isobel Lawson
Field Solar Consultant
Asked a question 9 months ago

Why does the current economy ignore environmental costs?

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The economy is based on the value of things and the wealth that money generates in trade and net assets. One measure of a country’s wealth, for example, is the Gross Domestic Product (GDP) and the per capita value of the GDP. The higher the per capita value of the GDP, based on a common monetary value for comparison, the better off the individual of a country is.

Issues with the environment have never been considered as part of the economy or part of the cost of trade and consumption – the environment is just as it is. It’s been taken for granted.

Damage caused by environmental catastrophes are a cost of the country when they happen to public property.

Private property is treated differently. Everyone knows that a catastrophe may happen so most people take out insurance so that they can get back on their feet if their property is damaged. Insurance is a large pool of money built up by individual and organisation contributions and shared out in the case of an event that caused damage to property.

Insurance is a lot like gambling except that you only win if you lose.

For many years insurance has played a central role in assuring contributors that if their property is damaged by a severe weather event they will be compensated.

The system is designed to assist people in times of need. It did not consider that people could cause the events that cause damage and needed to be managed as well. Weather events that damage property are generally regarded as “God’s will”.

It’s also very difficult to assess environmental degradation. It is only the consequence of the degradation that a cost of recovery can be determined.

The way that is considered appropriate to deal with environmental degradation, particularly as it can be judged by the emission of carbon dioxide, is to apply a carbon tax. The aim of the tax is to discourage an individual or a producer from purchasing or utilising a product that results in high carbon dioxide emissions by charging more for the product.

Consumers are very edgy when it comes to the cost of something they “have to have”. If a carbon tax was placed on motor vehicle fuel and electricity produced from fossil fuels then the consumer, the public at large, would have to foot the bill. It may convince some people to buy more fuel efficient cars and others to turn down the heating or air conditioning, but it results in consumer dissatisfaction.

Politicians don’t like unhappy voters so, although they know the cost to the environment, they would rather not apply a carbon tax.