“The nation behaves itself well if it treats its natural resources as assets which it must turn over to the next generation increased, and not impaired, in value.” Theodore Roosevelt, American Museum of Natural History, New York City

Brexit dominates our waking thoughts.  Whether we are Leavers or Remainers, most of us are agreed on one thing: this is a crucial moment in history.  Our future, our children’s future, will be shaped by the events of the next few weeks.  Our jobs, our public services, our culture … for the British, there is nothing that is now more important.

Or is there?   Even in these dark days of national self-sabotage, something is happening that is deeper and more irretrievable than Brexit.  Which is?  Climate change and its consequences.

Scarcity value

Human-induced climate change epitomizes perhaps better than anything else the attitude to the natural world shown by the ‘developed world’ since the Industrial Revolution.  This attitude is that the natural world is there to be exploited for human benefit, and if the process of exploitation leads to any problems, then it’s up to people in the future to sort them out as they arise.  The subject of economics has given this attitude a theoretical legitimacy as follows: trading of goods leads to price formation; and if a good becomes scarce in the future, then the price will automatically tend to rise to reflect its ‘scarcity value’.  The rise in price will discourage further consumption of the good in question, and also to encourage alternative goods to be traded and consumed instead.

Armed with this economic framework, we have dug up coal, drilled for oil and natural gas, used them for heating, transport and electricity generation, and pumped carbon dioxide into the atmosphere, all the while ‘growing’ our economies and generally relying on market prices to keep demand and supply in balance.

There is however a snag: there is no guarantee, as a limited resource is gradually consumed and its price rises, either that it can be quickly replenished or that an alternative can be found.  In the case of fossil fuels, we have not really worked out how to replace them for space heating or for transport, though some progress has been made in replacing them with renewables for electricity generation. Meanwhile, a large proportion of the earth’s hydrocarbons that took around 2,000,000,000 years to form in the Earth’s crust has been consumed within a space of 200 years.  That’s an extraction rate which is 10,000,000 times as fast as the rate at which they are produced naturally.

All the while, prices for hydrocarbons have been modest, because they have not yet become scarce.  The legitimized tendency to use up limited natural resources until they become scarce can be seen in several other contexts.   For example, the Great Barrier Reef is thought to be around 500,000 years old, but half of it has now been destroyed by climate change in a period of 50 years, while the remaining half is thought to have another 30 years to go.  Arctic ice, Antarctic ice and equatorial rainforests might similarly disappear, perhaps not quite as quickly, but still within this century at current rates of change.  Natural systems simply cannot respond that quickly to human exploitation.  In the case of CO2, the oceans will eventually absorb the excess we release into the atmosphere, but ocean circulation is measured in hundreds or thousands of years, far too slow to keep pace with our economic activity.  By the time hydrocarbons become scarce or world temperature rise forces politicians into meaningful action (the ‘resource’ here being the atmosphere’s capacity to absorb carbon dioxide without spiralling temperatures), it will be too late.  Scarcity pricing does not work for natural limits.

Replacement value

Long before climate change was an international concern, Theodore Roosevelt identified the need to replace natural resources that we consume.  Somewhat ironically, his statue stands in a museum in New York City, surely one of the world’s leading icons of unsustainability.

It is never too late though, and we can translate Roosevelt’s sentiment from desired behaviour to practical economics by assigning not just scarcity value but also replacement value to our natural inheritance.  Here’s the idea: the price of a natural good should cover the cost of its replacement.  For oil, given its very long geological development time, such a cost would be very high indeed, meaning that the remaining stocks largely stay in the ground.  For biofuels, combustion of which still produces carbon dioxide, the price should take into account measures such as reforestation and carbon capture that are sufficient to suck CO2 out of the atmosphere just as quickly as the combustion releases CO2 into the atmosphere.  Remember it’s the rate that matters.

The practicality of how replacement value might be implemented in the context of greenhouse gas emissions is a big enough subject for a separate blog.  In the meantime, I’ll just finish this one with a few thoughts on motivation.

A new story

For continued human existence to be sustainable, we will need a series of technological miracles or we’ll need to alter the way we live.  Currently most of us are wont to believe in the former, not very scientifically, because the latter seems too much like hard work and to go against the grain of our nature.  But that in turn depends on the story we tell ourselves about how to be happy.  So here is a germ of a replacement story.

Depression is increasingly normal amongst both young people and old.  To rediscover happiness (and, incidentally along with it, a chance of long-term survival), we need to re-invent our concept of happiness.  It is not much use if we look with envy upon those who have big houses and fly around the world.  Somehow we need to write a new story for ourselves, one in which envy is replaced by bemusement and a certain amount of sympathy.  In this story, it is a lonely and unfortunate state of affairs to live in a large dwelling on one’s own, having to worry about burglars and upkeep.  Instead, a more sociable and communal lifestyle means more laughter as well as higher occupancy rates.  Holidays are exciting because they are relatively rare, not tediously frequent and repetitive.   Food, wine and material goods all retain their savour from moderation in consumption.  To have any of these in excess is not to be privileged, it is to be burdened.

These are the germs of a new story that may be poorer in respect of property and travel and richer in respect of time and meaning.  I will try to build this story up in future posts.