In Math We Trust

As Congress gets ready to debate an economic recovery package – and President Obama gets ready to sign one – they should use a simple test to determine who and what gets the money: Is the project friend or foe in regard to reducing greenhouse gas emissions and increasing America’s energy security?

At some point, our energy producers, road-builders, auto manufacturers, building contractors and other sectors of the economy need an unequivocal message from Washington that public funds must pass a strict litmus test from now on. Unless there are legitimate overriding factors of national security or economic trauma, public funds will no longer support global climate change and our dependence on fossil fuels.

In other words, when it comes to taxpayer money, the carbon economy need not apply.

If climate change and the prospect of more resource wars are as urgent a set of problems as we believe – and they are – then we simply cannot justify making them worse, particularly with the money taxpayers send to Washington with the assumption it will be spent for the public good.

At the moment, the Obama transition team is being inundated with ideas – many of them good – about how to stimulate the economy with near-term green investments. Joe Romm has featured one green shopping list developed by the Center for American Progress (CAP). The Presidential Climate Action Project has created an on-line library of the policy and investment ideas sent
to Obama by CAP and other elements of the “green community”.

By picking the best of these recommendations and applying some common-sense criteria (for example, has a proposed infrastructure project been given adequate environmental review; will it reduce or increase vehicle miles traveled; will it avoid development in floodplains
and other hazard areas; is it socially just; will it produce or prevent carbon emissions), Congress and the next administration can do a pretty good job constructing a rapid investment program that delivers both economic and environmental progress.

Longer term, however, we need a far more sophisticated, objective and transparent standard for allocating public funds. We should develop a performance standard that counts not only easily measured factors such as carbon emissions, water consumption and energy intensity, but also counts factors critical to sustainability but still considered unquantifiable.

Theoretically, such a standard would take much of the politics out of government spending and would let math do the talking. Public works projects would not be awarded based on the generosity of lobbyists or the seniority of congressmen and women. They’d be awarded based on a sustainability standard whose rules everyone knows in advance.

PCAP has proposed that Congress develop and require the use of such a standard (see Action Item 24) to measure the life-cycle net-energy, net-carbon, net-water, net-economic and net-ecosystem service impacts of a proposed public investment. Other factors could be scored, too, such as impact on national security (i.e., oil imports), balance of trade, and the cost of delay in reducing carbon emissions.

The problem is, our understanding of some of these factors is crude today. We have not yet learned to adequately quantify the economic value of many of the services the environment provides, from food production and water purification to carbon storage, recreation and pharmaceutical ingredients. No widespread consensus exists on some other important factors, such as the discount rate that should be applied in calculating the long-term costs and benefits of environmental investments or the “opportunity costs” of delay.

While it may be a little soon to be thinking about President Obama’s legacy, his administration should begin work as soon as possible on the tools the world needs to make objective and intelligent decisions that allow economic development and environmental sustainability to be mutually supportive goals.

Some efforts already are underway. For several years now, the Council on Environmental Quality has led an inter-agency project to develop indicators that can measure national progress on sustainability. CEQ should expedite and complete that work in the Obama Administration. The results, critical in their own right, would also advance the work on a public investment performance standard.

At the U.S. Department of Energy’s National Renewable Energy Laboratory, a new Strategic Energy Analysis Center is working to improve life-cycle cost assessments of energy technologies. That work, too, should be given high priority for funding.

Internationally, environment ministers from G8+5 countries have launched a project titled The Economics of Ecosystems and Biodiversity, or TEEB, to put numbers on the benefits of ecosystems and biodiversity worldwide and the costs of their degradation. Led by Pavan Sukhdev, the highly regarded senior economist from Duetsche Bank, TEEB has completed the first phase of its work to make a “comprehensive and compelling economic case for conservation of ecosystems and biodiversity.”

The U.S. should support this work. The degradation of natural capital is a clear and present danger. According to the United Nations Millennium Ecosystem Assessment, 60 percent of the ecosystems examined so far have been degraded during the last half-century. Forests have completely disappeared in 25 countries; another 29 countries have lost more than 90- percent of their forest cover. The world has lost half its wetlands since 1900. One-third of the world’s coral reefs have been badly damaged by fishing, pollution and coral bleaching linked to global warming. Species extinctions due to human activity are occurring at 1,000 times the rate of natural extinctions in the Earth’s long-term history.

“We are still struggling to find the value of nature,” Sukhdev says. “Nature is the source of much value to us every day and yet it mostly bypasses markets, escapes pricing and defies valuation. This lack of valuation is, we are discovering, an underlying cause for the observed degradation of ecosystems and the loss of biodiversity.”

Understanding the value of ecosystem services wasn’t important back when the human footprint wasn’t large enough to threaten them. Now it is. We are irreversibly degrading natural systems and wasting irreplaceable natural capital that are vital to our quality of life, using a system of economics that is blind to the damage.

“This is not just a national accounting problem – it is a problem of metrics which permeates all layers of society, from government to business to the individual, and affects our ability to forge a sustainable economy in harmony with nature,” Sukhdev says.

We need a new math, a replicable and universal ability to count more and to count differently. That’s a job the U.S. government should accept under its obligation to serve the public good.

In the meantime, by thinking holistically, sustainably and long-term, we can use the math we already have to make much more intelligent judgments about where public money is best invested.


William S. Becker is the Executive Director of the Presidential Climate Action Plan (PCAP), a project of the University of Colorado, Wirth Chair, charged with producing
a 100 day action plan on climate change for the next President of the United States, and the author of THE 100 DAY ACTION PLAN TO SAVE THE PLANET, available in eBook format from St. Martins Griffin.

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