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From Financial Crisis to Sustainable Global Economy

Today we have an unprecedented opportunity to align economic, social and environmental goals.

This post first appeared on Reuter's Great Debate blog.

Much of the world’s attention is fixed on the brutal effects of the global financial crisis. But sooner or later---sooner we hope---the global economy will rebound. Markets will recover, and stocks will rise. Nature, on the other hand, does not do bailouts. The effects of today’s greenhouse gas emissions---like those of yesterday and tomorrow---will be permanent, at least in the timescales that we care about.

They are what will shape the lives and markets of tomorrow.

My view of sustainability is very simple: what can’t be sustained won’t be. It was impossible for real estate values to continue to rise much faster than economic growth. It had to end sometime... and it did. When the bubble burst, the consequences were severe.

The same lesson applies to the ecological sphere. We simply cannot continue changing the chemistry of the atmosphere, through rising greenhouse gas emissions, without inviting enormous consequences. We cannot continue to increase human use of fresh water at twice the rate of population growth. Not only are there are limits on available supplies, but in many places these are reduced by climate change and pollution. Nor can we continue to create coastal dead zones, in areas where hundreds of millions of people depend on fisheries, by releasing ever more nitrogen into the surface waters of the Earth.

Since these behaviours can’t be sustained, they won’t be. The key question is whether we choose a managed transition to sustainability, or wait until the bubble bursts. That choice will have a profound effect on tomorrow’s markets.

So what is the solution, the way forward?

Nations are making vast investments in stimulus packages as they seek to retool their economies and revive productivity. It doesn’t make sense to retool twice. We need to build for, and invest in, the economy of tomorrow.

Economic recovery around the world will be driven by thousands of firms in each country making decisions about what products to make, what technologies to use, and who to hire. It is essential that these decisions incorporate the risks and opportunities presented by a carbon-and-resource constrained world. It is critical that they create jobs in building the products that will help improve lives with reduced impact on the Earth’s resources.

The financial crisis has created an enormous opportunity for change. In the United States, the Reagan era, an era of unrestrained free markets, in which government was regarded, at best, as a necessary evil, seems to have ended. In its place, there’s a demand for government to be a source of solutions and a partner in implementation, particularly in dealing with the consequences of an economy that for the most part does not value the ecosystem services that underlie our well-being.

Right now is the best opportunity I have seen in 30 years as an environmentalist to align economic, social and environmental goals. The United States Climate Action Partnership, of which WRI is a founding member, and whose 26 corporate members include General Electric, Duke Energy, DuPont and General Motors, last week renewed and strengthened its call for the U.S. Congress to adopt a mandatory national cap and trade system to reduce current U.S. greenhouse gas emissions by 80 percent by 2050. The linked economic and environmental crises could have divided USCAP’s members, but instead it renewed their determination to find reasoned solutions to the climate problem.

On Inauguration Day, President Barack Obama also called for a new era of responsibility. I can’t imagine a more important place for us to reflect this call than in taking responsibility for the effects of our actions on the global environment. We have the technology to mitigate those effects, and to create a new economy.

We need to seize the moment.

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