Thursday, November 21, 2013

Monetary debt and ecological debt

Here is a thought-provoking article at ENN regarding the notion of "ecological debt".

Here is some additional context from the US EPA. 

3 comments:

Jeanne Metivier said...

Concerning the debt-for-nature swap we have studied in class and that relates to the ecological debt, I was wondering how organizations such as Nature Conservancy or any other organizations that play a role as broker in the transaction, are financed. I looked on their website to find information about that but could not find it. Is it only donations or do governments also invest in those?

Gustav Rowan said...

The idea of erasing debt of developing countries by ordering developed nations to take ownership and responsibility for acts of heinous pollution or natural destruction abroad is a solicitor of sustainable resource use practices. There are countless cases of the developed world exploiting the developing world for its resources and with this type of debt swap proposal, society as a whole will win. If sustainability of resources is to be reached then we must figure out how to put everyone on a more even playing field and this innovative concept may be just what is needed to get the attention of the developed world.
In my Environmental Geology class we were all recently required to submit a “Carbon Footprint” and the results as a whole were dire. The carbon footprint exercise indicates the number of Earths resources that would be required for everyone on the planet to live as you live. There was not a single person in the class that lived within the boundaries of the resources that even three Earths would provide for their lifestyle to be considered sustainable.. These numbers show clearly that we, in the developing world, are living outside of our fair share and it would only be fair to compensate those who are suffering because of it.
This proposal is one that ties into many aspects of our course. The reason that these countries are forced to destroy their natural splendors in order to extract the resources below boils down to their discount rate. If a developing country needs money now to pay off debt that is only increasing, then its government will be forced to do whatever it takes; and that includes destruction of the environment. Developed nations capitalize on the high discount rates of the developing world in order endlessly consume at a cheap rate and this creates a negative externality. This proposal calls to action those responsible for exploiting the high discount rates of the developing world and creating this negative externality.
This idea of paying for overusing resources reminds me of Coase and how his theory advocates for the developing world to pay for non-sustainable lifestyles. If developed countries are forced to pay for their own overuse of resources then they will in turn benefit if they use fewer resources. In my notes I have written, “With a negative externality, an unregulated market will be inefficient and will overproduce and underprice a good relative to what is best for society.” The negative externality of pollution and detriment to environments abroad will be internalized by the markets of the over consumers. Markets will be driven closer to Q*soc which will allow for a higher price to be accepted for a smaller quantity of resources which is better for society as a whole. This proposal relates to externality theories that we discussed at the beginning of the semester and is an attractive alternative to the later topic of debt for nature swaps when hoping to conserve the environment of the developing world.
This is in a sense the opposite of a debt for nature swap in that the natives can do even more with their land and resources than beforehand and still receive just compensation. This type of progressive brokering and call to action of the over consumers would create necessary incentives to live more sustainably. From an economic as well as environmental standpoint, this type of proposal looks like an obvious solution to many of the problems that we uncovered this semester. These types of proposals have the potential to impact the lifestyles and reduce exorbitant resource use while also creating benefits for those developing countries that can explore new ventures without the burden of a sky-high discount rate bullying them to extract all the resources they have.

Zoë VanDerPloeg said...

This whole idea of creating a system for netting out monetary and ecological debt reinforces another idea we've indirectly touched on when talking about carbon trading, ITQs, etc. For a lot of these programs to work to their fullest extent, there needs to be some kind of all-encompassing global coordination beyond just the UN or conservation agencies. The global foot imprint method could even be used to allocate shares of world resources to countries and then allow some sort of gigantic cap and trade system for all different types of resources.
This is immensely complex and probably not feasible in the foreseeable future. But it's cool to think about.