ESA Position Statement on economic development

ESA released a position statement today on the proper place of ecological and environmental capital in the nation’s economy.  As the United States and much of the world try to recover from the current economic crisis, ESA recommends that long-term sustainability should be prioritized in the restructuring of business models and economic growth.

A key to this task, the statement says, is to take natural capital into account. Natural assets and ecosystem services — such as water filtration, pollination and carbon sequestration — lack a formal market and are often overlooked in policy and business decisions. Yet, the statement asserts, healthy ecosystems are the foundation for sound economies, sustaining human life with services such as food, fuel, and clean air.

The statement recommends that three things need to be recognized by policymakers and businesspeople in order to create an environmentally sustainable economy:

(1)   The value and economic impacts of ecosystem services. The statement recommends that decision makers should take natural capital into account when making economic calculations, citing as an example the World Bank’s concept of adjusted net saving, which calculates an economy’s rate of savings after factoring in natural resource consumption, pollution-related damages, and other environmental impacts. This creation of markets that value natural capital would drive more environmentally and socially sustainable investments.

(2)   Environmental externalities. Environmental impacts and resource shortages resulting from economic activity often impact people and communities far removed from the source; economists refer to these external effects as externalities. Agribusiness, for example, benefits from using nitrogen fertilizers but does not bear the costs associated with oxygen-depleted dead zones in aquatic ecosystems. Examples of internalizing these external affects include property rights for environmental assets, payments for ecosystem services and liabilities for environmental damage, including carbon tax or cap-and-trade systems.

(3)   Improved predictive capacity. Currently, the statement says, the capacity to predict future environmental costs of public and private investments are weak at best. The statement recommends improving these abilities, and says that such measures already exist in many national regulations and international agreements concerning human, animal and plant health. A recent example is the World Trade Organization’s Sanitary and Phytosanitary Agreement.

What are your opinions about environmental sustainability and economic development? Share your thoughts in the comments.