I spent this summer at my home in Iowa, in part remembering what it is to be connected to nature. I went biking and saw deer on almost every ride. I canoed 100 miles on the Upper Iowa River. I worked in the woods with my father, trimming trees and caging saplings to protect them from deer.
It was a joy to realize how much I appreciated natural things after being without them en masse for most of my last three years. There is a certain understanding of life that cannot be gained without seeing it lived without humans.
This understanding, and the benefits we derive from nature's processes and cycles such as producing oxygen and filtering water, can hardly be valued. Perhaps you are not familiar with these processes and cycles or cannot fully appreciate their constant maintenance work on our world. In that case, note that in 1997, 13 economists published a paper in "Nature" that valued them at $33 trillion.
Various writers in the most recent issue of "Adbusters," an anti-materialism counterculture magazine, addressed this issue. They also noted that our economy only measures trees when they are cut down and rivers when they are dammed.
Yes, the billions of dollars in nature-oriented tourism are counted by our GDP. But nature's processes and cycles are not, and market transactions that weaken or disrupt them do not have that aspect of their effects factored into their value. Nor is the degradation of future eco-tourism or degradation of quality of life done by, say, opening a National Park for oil drilling.
Here, the incomplete applications of classical economic theory have cost us. Such a theory must be fully applied by including social and environmental effects of market transactions.
You might be surprised to hear that a failure so obscure, academic and systemic was actually being addressed by our government a decade ago.
In 1992 the Bureau of Economic Affairs began research on "integrated accounts," hoping to include clean air, water, climate effects, and costs of mineral extraction into our GDP and other national accounts. Their work, later backed by an independent review by National Academy of Science economists, found the "true returns" for mineral investments from 1958 to 1991 fell from 23 percent to around 4.5 percent. Basically, the social and environmental costs of the mineral industry nearly outweighed the benefits, reducing them by 80 percent.
But I doubt you would be surprised to hear these efforts to re-frame our national accounts (GDP, GNP, etc.) to include social and environmental effects were squelched by special interests. After two years of work by the BEA, Rep. Alan Mollohan, D-W.V., stepped in to protect his state's coal industry. Chairing the Appropriations subcommittee, he saw to it that funding for the project was cut. So when a confinement facility for 5,000 hogs is built on sinkhole-prone ground and the local cancer rate triples in 20 years, the GDP, our primary measure of "progress," only increases in response.
Yet there have been other efforts made to quantify social and environmental costs into contemporary economic thinking. The United States Green Building Council, a coalition of building industry leaders, has developed a four-tier system for assessing the "green"-ness of new buildings.
Different aspects addressed include energy conservation, waste and emission reduction, and using recycled and recyclable materials. It is called Leadership in Energy and Environmental Design, and it finally put objective standards behind the idea of green buildings.
The USGBC has no authority other than it has the only certification system for green buildings. This should be important to business leaders because green buildings have demonstrated that they can be a boon for business. They result in savings in utility expenses, thus saving natural resources.
But their more pleasant work environments, with better lighting, climate control, and cleaner air, also increase productivity and reduce absenteeism rates. All told, Gold and Platinum-certified buildings - those that meet the USGBC's highest standards - could result in savings of $67.31 per square foot over 20 years, after accounting for additional building expenses.
As figures from Leadership in Energy and Environmental Design show, until we expand our "progress" indicators to measure social and environmental issues, we will never understand what is truly best for our economy, our environment, and ourselves.
Not surprisingly, integrated national accounts haven't become a campaign issue. I guess the media thinks who did what 39 years ago is more important to our future.
Rob Sand '05.5 reads "National Review" from time to time too.
