Amidst the politics and ideology, it’s easy to lose sight of the basic principles of an environmentally sustainable economy. So here are Herman Daly’s three golden rules for keeping the economy safely within the boundaries of the biosphere:
- Exploit renewable resources no faster than they can be regenerated.
- Deplete non-renewable resources no faster than the rate at which renewable substitutes can be developed.
- Emit wastes no faster than they can be safely assimilated by ecosystems.
The first refers to things such as water, timber or fish, natural products which we can draw from, but need to steward carefully to keep stocks in balance. We’re not very good at that at the moment, since overfishing and deforestation create profits today and good stewardship can only promise profits tomorrow. The role of economics here is to find ways of valuing those natural resources. Those natural assets need to move onto the balance sheet, so that when timber is gained, the loss of the forest is measured and accounted for.
The second principle refers to managing depleting resources. There aren’t very many of these, and the most important ones are fossil fuels. One of the key messages of peak oil is that we need to use the last decades of oil to fuel the transition beyond it, and put the infrastructure in place to do without it. The case of helium is a smaller scale example of the problem of managing declining stocks and encouraging alternatives.
So far progress is pretty slow on moving beyond fossil fuels, but oil and gas have been very cheap for a long time. Prices have risen steeply in the last decade or so, and the alternatives are being developed. Since there is no direct substitute to oil however, this is more complicated and it won’t be solved by markets alone. There will need to be incentives to move into renewable energy, and deliberate planning to create new transport infrastructure.
The third principle is where we’ve blown it most seriously, on CO2 in particular. The earth can absorb a vast quantity of CO2 into the oceans and the forests. Unfortunately we’re not only emitting more carbon than can be absorbed, we’re also eroding the planet’s capacity to absorb it through deforestation and ocean acidity.
The nitrogen cycle is also out of balance, but less well known. Run-off from industrial farming creates unnaturally nutrient-rich waters, where algae blooms so prolifically that it crowds out everything else. The result is ‘dead zones’ in the oceans. Currently this kind of damage is an externality, off the balance sheet and unconsidered. Ecological damage needs to priced into the equation – Australia’s recent carbon tax is one way to do that.
Those three rules aren’t an exhaustive list for a sustainable economy. There are economic or social limits such as debt or inequality too – but these are the ecological ones in a nutshell.