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Environmental Economics: The New World Order by Erica Gies Environmental News Network, January 18, 2002

Whether it's soul pleasing or not, the fact is money makes the world go 'round. Economics is the driving force in our global community. As such, it is important to analyze the way the mainstream economic system functions and to consider whether that system is sustainable.

Unsurprisingly, the answer is no. Our current economic system is based on continual growth and is fueled by the harvesting of natural resources. Because the Earth's resources are finite, our current economic system's days are numbered.

Fortunately, some forward-thinking economists have considered these snags in the dream and have proposed an alternate scenario to a future where wars are fought over water and food. Their school of thought is called environmental economics, which advocates paying a fair market value for resources rather than exploiting them from the poor ŕ la colonialism and some forms of capitalism. Under this ideology, value is ascribed to ecological resources left intact. For example, a forest can be more valuable than the sale of its wood by promoting eco-tourism and by recognizing the value of vegetation in combating global warming. Polluters can be made to pay. Instruments can be developed to measure consumerism and waste.

Redefining Progress is a San Francisco–based nonprofit that "develops policies and tools to reorient the economy so it will value people and nature first." It has created an alternative to the traditional measure of the economy, the Gross Domestic Product, which simply adds up all the money we spend and calls it economic growth. Redefining Progress' Genuine Progress Indicator (GPI) attempts to quantify social and environmental capital. It subtracts costs associated with crime, pollution, family breakdown, resource depletion, long-term environmental damage, and commuting and adds benefits like volunteering and parenting that the GDP ignores. The GPI also measures income distribution, changes in leisure time, defensive expenditures, the lifespan of consumer durables and public infrastructure, and dependence on foreign assets.

The environmental economics movement is growing. The EPA has developed the National Center for Environmental Economics (NCEE). And the World Bank talks about the importance of attributing value to environmental effects. It explains, "… valuation is often needed because market prices do not exist or are difficult to measure…. recent advances have greatly increased the range of environmental impacts that can be monetized."

Progress is built on the exchange of ideas, so please contribute your expertise to this discussion by clarifying these issues or by referring your fellow readers to resources on environmental economics. Write to earth@enn.com.