Photograph by Amanda Friedman
Politicians and protesters will descend on Johannesburg this month for the Earth Summit, reviving a pressing question: Can capitalism make peace with environmentalism? Ecologist Gretchen Daily of Stanford University says that it can. In her recent book The New Economy of Nature: The Quest to Make Conservation Profitable,
she and co-author Katherine Ellison argue that economic self-interest is actually the best way to protect the global environment. She discussed this approach with associate editor Josie Glausiusz. How do you sell environmental awareness as good economics?
We see ecosystems as a kind of capital. If managed properly, like any other capital asset, they will provide a stream of benefits over time. These include not only goods like food and timber, but also life-supporting and life-fulfilling services like purification of water, flood control, stabilization of climate, pollination of crops, scenic beauty and provision of cultural and spiritual inspiration. Why now?
Because ecosystem capital is becoming scarce. We've been liquidating it and transforming it into other kinds of assets, like financial capital. When you cut down a forest, somebody makes off with the buck. But now we have more people and bigger appetites on a per capita basis than we've ever had before. We have an unprecedented demand for ecosystem services and also a decreasing supply. That scarcity confers potential economic value. Has this economic approach yielded any notable successes?
New York City is paying residents of the Catskill Mountains, where the city's water originates, to manage their activities in a way that maintains water quality. Now people are protecting streams from sedimentation during logging, upgrading sewage systems, and improving the health of livestock. City residents are also buying up and restoring sensitive land. New York has spent a little over $1 billion in watershed protection. By contrast, original estimates were that a water filtration plant would cost $6 billion to $8 billion over a ten-year period.
Another good example is in Costa Rica, which is where I spend a lot of time trudging around muddy farming landscapes, figuring out what birds and insects are surviving down there. They recently instituted a new policy of paying private landowners to restore or protect forest on their property. This program, which is financed through a 15 percent gasoline tax, has turned Costa Rica around from being the country with the highest deforestation rate in the world to being a country with one of the lowest. Right now, there is a net increase in forest cover in Costa Rica. What are the benefits to ordinary Costa Ricans?
They are getting investments from European corporations in forest restoration to offset the carbon dioxide emissions that occur in Europe. They are also getting investments by a consortium of international pharmaceutical companies interested in bio-prospecting in Costa Rica. And ecotourism is a huge source of revenue. Why should big corporations go out of their way to protect the environment?
I see three forces. One is the threat of government regulation. Second is corporate image a lot of people care about the environment, and corporations that have a nicer image are probably going to do better. There's also fear of citizen action. Home Depot, for instance which supposedly is the biggest consumer of wood products in the world was boycotted by Rain Forest Action Network, and that boycott was incredibly effective. That has pushed Home Depot to start looking for sustainably produced timber. What about global warming? Can corporations profit from preventing it?
Many different industries especially the oil industry and electric power are investing in so-called carbon offsets. A lot of new plants that are being built today are aiming to be "carbon-neutral," as they put it. That is, for every unit of carbon dioxide they anticipate they'll emit into the atmosphere over the plant's lifetime, they're trying to offset that by planting new forest, mainly in developing countries but also in Australia.
If they look at grand scheme of things, these investments don't really amount to that much in terms of a cost, and they are perceived to be well worth it, given that many executives in the energy industry do anticipate binding emissions reductions under the Kyoto Protocol on climate change. Kyoto seems dead in the water now, but science is not shifting at all, and many people do take it seriously.
A good example is the CEO of British Petroleum, John Browne. They've now dubbed their company "Beyond Petroleum." He's led the development of a program that is reducing BP's greenhouse gas emissions by much, much more than would be required under Kyoto. And on top of that, everything they've done has been profitable. They have become much more energy-efficient in their operations. For example, they don't flare natural gas out of oil wells. Do we not have a moral obligation to protect nature? Should conservation be purely profit-driven?
I certainly share that view. At the same time, I am a pragmatist. I worry that if we make conservation something to do solely for ethical reasons, that won't ever get the job done in the real world, being the real kind of species we are short-sighted and selfish. What the track record shows is that, number one, charity is not enough to keep our life support systems going; and secondly, that even with the pretty impressive array of global and regional environmental agreements that we've come up with since the 1970's, most of them are weak and ineffective. How do traditional conservationists react to your proposals?
When you first hear about it, it can smack of greed and sound crass. I guess that would be the reaction of many people in the conservation community. But I don't see it as crass. It's often presented as trying to put a price tag on nature, whereas I see the real challenge as being much more difficult. It's to redesign our institutions, so that rather than rewarding people for doing the wrong thing (by selling incredibly cheap sports utility vehicles in the U.S., for instance), we're rewarding people for doing the right thing. I see that as totally ethical. What do you expect the Earth Summit to achieve?
On the one hand, I get frustrated with these summits, because it seems they don't go very far. I am impatient; that's my nature. There is going to be a lot of inefficiency in the U.N. bureaucracy setting up the meeting, and a lot of hot air. On the other hand, I see these conferences as laying the groundwork for building a new mode of relationships. If we're going to address any of these global issues, it's going to be through cooperation, or we're not going to address them at all. Do you support the proposed international police force to catch environmental criminals?
It depends how it's implemented. It sounds a little scary, and police forces can be horrible things. But ecosystems are really valuable assets, because so many are publicly owned. Three-quarters of the world's forests are owned by governments, and nobody is out there protecting them. We can't lock up the environment, however. We have to reward behavior that protects it and discourage behavior that destroys it. All the evidence shows that people respond to economic incentives, and they don't respond that well even to the threat of a year in prison. How did you first become interested in ecology and the environment?
I grew up as a teenager in West Germany, and I remember being really stunned as a 12-year-old by the demonstrations that would go on over the environment, especially over acid rain. The idea that acid was falling out of the sky and killing these vast stretches of forest and these beautiful lakes in Sweden left a big impression on me. In high school I spent all my spare time working on a science project looking at pollution in a nearby river.
Then I just got hooked. We're living in a time that historically is unprecedented. We've got the tools to destroy civilization and hopefully the ingenuity to create some new tools to get ourselves out of this mess. Anyway, I find it fascinating. On the one hand depressing, but on the other hand, I just can't think of a better way to entertain myself between birth and death.