Blueprint for a Better Planet
(Page 5 of 10)
Some of the looming costs associated with continued
fossil-fuel burning are virtually incalculable; the
outcome, unacceptable. What is the cost of inundating half
of Bangladesh's rice land by a 1-meter rise in sea level?
How much is this land worth in a country the size of New
York state with a population half that of the United
States? And what would be the cost of relocating the 40
million Bangladeshis who would be displaced by the 1-meter
rise in sea level? Could they be moved to another part of
the country? Or would they migrate to less densely
populated countries, such as the United States, Canada,
Australia and Brazil?
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Another challenge in creating an honest market is getting
it to value nature's services. For example, after several
weeks of flooding in the Yangtze River basin in
1998—flooding that eventually inflicted $30 billion
worth of damage and destruction—the Chinese
government announced it was banning all tree cutting in the
basin. It justified the ban by saying that standing trees
are worth three times as much as cut trees. This
calculation recognized that the flood control service
provided by forests was far more valuable than the timber.
Forests also recycle rainfall inland. About 20 years ago,
two Brazilian scientists, Eneas Salati and Peter Vose,
published an article in Science stating that when
rainfall from clouds moving in from the Atlantic fell on
the healthy Amazon rain forest, one-fourth of the water ran
off and threefourths evaporated into the atmosphere, to be
carried further inland to provide more rainfall. But when
land was cleared for grazing, the numbers were
reversed—with roughly three-fourths running off and
one-fourth evaporating for recycling inland. Ecologist
Philip Fearnside, who has made a career of studying the
Amazon, observes that the agriculturally prominent
south-central part of Brazil depends on water that is
recycled inland via the Amazon rain forest. If ranchers
convert the Amazon into pasture, he notes, there will be
less rainfall to support agriculture.
Once we calculate all the costs of a product or service, we
can incorporate them into market prices by restructuring
taxes. If we create a market that tells the truth, we can
avoid being blindsided by faulty accounting systems that
lead to bankruptcy.
RESTRUCTURING TAXES
Economists have widely endorsed the need for tax
shifting—lowering income taxes while raising taxes on
environmentally destructive activities—in order to
create an honest market. These taxes reflect the indirect
costs of an economic activity to society. For example, a
tax on coal would incorporate the increased health care
costs associated with breathing polluted air, the costs of
damage from acid rain and the costs of climate disruption.
Nine countries in western Europe have begun tax shifting,
known as environmental tax reform. The amount of revenue
shifted so far is small, just a few percent, but enough
experience has been gained to know it works.
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