How green should our economy be?

Following is a post from Professor Mike Young, Executive Director, Environment Institute University of Adelaide, who we invited to be a guest blogger as part of World Water Week.

Professor Mike Young

I write this blog as I fly to Stockholm to help launch the Water Component of a UNEP study on Green Economies.

In Australia, the need for and benefits of putting a price on greenhouse gas emissions are becoming understood.

Internationally, especially within the European Community, discussions have widened to focus on the benefits of shifting to a green economy. If it makes sense to put a price on carbon, then it probably makes sense to put a price on all forms of pollution and all forms of resource depletion.

Green economies are characterised by a suite of programs that seek to reflect the full costs of resource use and to make polluters pay the full costs of resource use. The cost of “externalities” – as economists like to call all the bad things we do to each other and to future people – are brought into the market place and become part of the cost of everything we think about doing.

After Australia has a carbon price in place, what other pollution charges should be introduced? How green should our economy be? Should it, for example, extend to include a wide array of arrangements that protect the erosion of biodiversity values?

In green economies, a considerable amount of effort and time is put into quantifying how the condition of all our renewable resources is tracking. When the direction is downwards, assessments are immediately made of the cost of reversing such trends. Is this something that Australia should be doing?

Green economies are characterised by a series of programs that encourage investment in the reclamation of a nation’s natural capital. The government’s programs that are investing in bringing health to the Murray Darling Basin, in the promotion of carbon farming and investment in biodiversity corridors clearly fall into this category.

Economic theory would suggest that as we consume non-renewable resources we should be investing more and more in the development of opportunities to use renewable resources. If we were in Europe many people would be calling for a significant mining tax and for some of the resultant revenue to be used to increase the productivity of our renewable natural resources. Food for thought.

UNEP’s green economy report can be downloaded here.

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