All eyes are on Wall Street as it completed another roller coaster week of financial turmoil. Can things get worse? Actually, yes.
The chronic degradation of our planet’s life support system is producing what could be termed a “subprime development” crisis. Its consequences, while less publicized, may ultimately far exceed those of the current market turmoil.
Last month’s meetings of world leaders at the UN Assembly to discuss progress in eliminating poverty provided a timely opportunity to address and learn from the striking parallels between these global economic and ecological crises.
Both crises are driven by a short-term-profit mentality—benefits reaped today at the expense of tomorrow’s generations. Both result from a value system that encourages us to live beyond our means. Both result in a mismanagement of assets due in part to misaligned economic and financial incentives and a lack of information to connect actions by the few with potential harmful outcomes for the many.
Subprime mortgages were the initial culprit in the financial crisis. The culprit in the global degradation of nature’s support system is subprime development—development that undermines nature’s capacity to continue providing essential goods and services.
All of us, and especially the poor, depend daily on nature’s bounty—for freshwater and food, shelter and building materials, pollination and medicines. Yet no less than two thirds of global ecosystem goods and services have been degraded by humanity’s heavy footprint. Dams to increase power supply to cities and irrigation to croplands are built at the expense of a river’s capacity to support fisheries or sustain wetlands that provide water filtration and food control. Agriculture expansion to increase food and biofuel production often contributes to deforestation, soil erosion and aquatic dead zones the size of New Jersey.
Two specific examples. The Brazilian Amazon was once “blue chip stock,” providing generous returns to citizen shareholders around the globe, continuously recycling carbon dioxide into oxygen, cleaning air and regulating regional and global climate. One fifth of this great asset has now been lost to loggers, farmers, and ranchers.
Likewise, coastal wetlands once provided storm protection insurance to southeastern Louisiana, acting as a natural speed bump. When Hurricane Katrina slammed into the Gulf Coast in 2005, that insurance policy failed, just as precipitately as AIG has collapsed, and with far greater human consequences. A prime contributor to the scale of the disaster was the loss of up to 40 square miles of wetlands a year for the last several decades.
The costs of the U.S. mortgage collapse and Wall Street bailout will fall primarily on taxpayers. In the ecological parallel, the poor are often the hardest hit. Of the two billion people living on less than $2 a day, three quarters live in rural communities that depend on natural ecosystems for sustenance and livelihoods. If subprime development persists, many will pay: first with their livelihoods, and then with their lives.
We have options to curtail ecological degradation. Recent evaluation, for example, shows the potential of using transferable catch shares to avoid the collapse of fisheries. We already have all the technologies we need to address global climate change, which is exacerbating ecosystem degradation in many parts of the world. We just need to deploy these technologies broadly, and with the same urgency poured into solving the global financial crisis.
The rescue package will require a unified approach that includes integrated risk management, subsidies to support ecological restoration, greater use of market-based approaches, application of new technology, and new ways to integrate risks to ecosystems and those that depend on them into all types of decisions—not just those taken by environmental agencies.
As on Wall Street, reform will require a sea change in attitudes, policies, institutions and behavior. Time is running out. No one-time government measure or golden parachute can bail out nature.