Carbon Trading Perhaps

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We need wider measures of development to include sustainability in all its complexity. We should deduct from current GDP a sum for depleting its resource bank and for this we use an ISEW (Index of Sustainable Economic Welfare ). This assumes GDP measures the value of welfare from current output. We then remove the monetary value of pollution and global warming. Also we deduct a figure from GDP for renewables and non-renewables depleted. Thus China’s rapid growth would look less good on an ISEW when we deduct air and river pollution and using up its vast coal reserves.

We add capital stock built up in the form of infrastructure and industrial capital as well as human investment. Also we must remove forced or defensive expenditure by the state. This includes taking away spending on defence, commuting, insulation against aircraft noise pollution, costs of car accidents etc. We do not increase welfare with these but simply keep ourselves stable. An Isew would make an allowance for non paid domestic work like do it yourself or childcare etc. It is only sustainable if we can replace used forests and energy sources etc.

This focus might act like the HDI to pressure countries into taking effective action – renewables, recycling and encouraging efficiency in use. Criticism of ISEW- These more complex measures of development have not caught on in general use like GDP or HDI, partly as they are too complex. They are expensive to undertake, and like CBA it is difficult to agree on what is important and what is not. Should we put more weighting on ecology, or less as this may not be human development.

Should we worry more about equity or less. A key issue then is how much weighting to give to each aspect and also what is the monetary value of each. Thus differences in assumptions and values placed, what we include or not all make huge differences to the outcome for each country. Again like CBA and HDI we can defend these measures as they put pressure on governments to reform. They make people think in more complex ways about the point of fast growth or development and what the implications are of achieving it.

We do know that GDP figures alone are not good alone as they simply measure the money value of production and consumption, not whether any given GDP produces god benefit or not for people. There is too much government failure in the world so any improvements in analysis of sustainability issues should lead to a more prefect allocation of resources for these vital issues. Rationality should replace bias, politics and government failure – the same point for CBA. Population and sustainability- Fast growth of population makes present development difficult and future environmental damage much greater.

Population growth does threaten to compromise the future. However we can reduce this through government policies that educate women to give them a wider role than just having children and policies that encourage and enable birth control. Population growth threatens land fertility, water supplies and forests etc. Often population growth is faster than GDP growth so living standards fall. Technology, organisation, improved supply of bank loans etc can increase food output however quite rapidly so we should concentrate on ways of easing this problem with sound policies on output an birth control.

Clearly rural neglect is part of the problem. Rising incomes in the poor world will cut birth rates and mean less pressure on the land if it is more productive per acre. Urban migration from this overpopulation and rural neglect is putting immense pressure on water, health and crime. This is not sustainable. Carbon Trading Perhaps the most difficult problem is global warming, which must be tackled globally to bring in the developing world. If permits are given fairly to poorer nations they will gain a surplus as they have not industrialised.

This could be a form of aid and would still restrict world carbon emissions f there is a tight world limit and the polluting countries like the US, Europe and China have to buy these permits. This is a big if. Carbon trading is growing, but the big polluters have yet to agree. The poorer countries argue for large quotas of permits, the rich countries disagree, the poor say we should pay for new technology to cut emissions and pay to plant vast forest. No binding agreements have been made yet. The world faces its biggest challenge to sustainability.

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