Protecting the environment can boost the economy

Sir

In attempting to sustain natural ecosystems, we should not assume that imposing a price on goods and services that adversely affect the environment will also have a negative effect on the economy. Placing a value on ecosystem services certainly changes the relative cost of various actions, but approaches being developed in other areas indicate that not all costs must necessarily rise.

Take the case of carbon emissions. Revenues from the sale of emissions permits to power-generating companies can be returned to the economy through funding of research into clean-energy technologies, say, or by returning money to the consumer — for example, under a 'cap-and-dividend' system that pays dividends to all taxpayers (whose environment is being damaged). This would alleviate the regressive nature of increased energy costs being passed on to consumers. For those purchasing 'green' power (wind, solar and hydro) generated with minimal carbon emissions, net costs would decrease.

Likewise, vehicle purchases could be governed by a 'feebate' system: those producing above-average emissions would cost more, the extra 'fee' being used to provide rebates to buyers of less-polluting vehicles.

There is no reason why ecosystem services could not be priced using comparable systems. For example, the fees paid for new development projects might be based on their environmental impact relative to some average, making developments cheaper if they can preserve valuable ecosystems or sequester carbon, and charging more to those that do not. Although goods and services having large adverse effects on the environment would increase in cost, those with minimal adverse effects would become relatively, or even absolutely, less expensive. And that, of course, is the whole point.

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Shindell, D. Protecting the environment can boost the economy. Nature 459, 321 (2009). https://doi.org/10.1038/459321b

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