The great nature sale
The green economy the UK government and others are pushing at Rio is based on the idea that we are trashing the global commons because we don’t value it properly. Therefore, they say, we need to put a financial value on nature and the services (clean air, water, resources like trees, food, fuel) it gives us. Then we can bring these things into the market and pay the proper price.
At first glance, this might seem like a good idea. Proponents of the false green economy often sound like they are saying all the right things. They appear to accept the need to protect the environment and reduce carbon emissions, and they talk of placing a proper ‘value’ on nature. But they are confusing value with price, and by doing so they open the door for green markets that price everything but value nothing.
Forest carbon markets
The idea behind this is that if the carbon stored in forests is valued and quantified, forests will be seen as more valuable standing than they would be cut down. Companies will have to earn the right to cut down trees or emit carbon either by planting new trees somewhere else (plantation) or by instituting better forest management in order to cut down on logging.
But the problem is that these programmes have actually opened the door to the legal destruction of rainforests. They have also led to the confiscation of land from local people who often do not have formal ownership deeds to the land they have used in common for generations.
This has led to the criminalisation of indigenous communities who stand accused of ‘illegal’ logging for continuing practices they have employed for centuries. In some cases this happens while trees are cut on an industrial scale by logging companies that have purchased the right to do so
For example, in Uganda over 22,000 people were evicted from their land at gunpoint to allow UK firm New Forest Company to plant trees to earn carbon credits.
Ecosystem services and biodiversity banking
Markets in ecosystems and biodiversity are a next step on the route to the total commodification and ‘marketisation’ of nature. The arguments for this are put forward in a report called The Economics of Ecosystems and Biodiversity (TEEB), written by a team led by Pavan Sukhdev, a former banker at Deutsche Bank.
The report argues that in order to protect the natural world we must consider it in financial terms. This means that forests and rivers become ‘natural capital’ and natural processes such as pollination by bees become ‘ecosystem services’ provided by corporation Earth. Of course, in order to pay for these services there must be a reliable way of quantifying their economic value. To do this, the report advocates the use of a technique called ‘benefit transfer’ to extrapolate the financial value of a given ecosystem from a database of other ecosystems sharing similar characteristics.
If implemented, these ideas would result in ‘biodiversity banks’ and speculators trading in financial instruments derived from the artificially assigned value of ecosystems. Nascent markets in biodiversity already exist and a number of ‘wetland banks’, which trade in the financial value of wetlands as ecosystems, have already been established in the USA.
Biodiversity banking could allow financial speculators to buy derivatives linked to ‘biodiversity bonds’ which would pay out only if the population of a certain endangered species stays above a defined threshold. In other words, speculators would be betting on the likelihood that a given species will become extinct or not.
Global water markets
As water is becoming increasingly scarce due to climate change, some business leaders are anticipating that great profits could be made through the establishment of a global financial market in clean water. This could lead, for example, to water speculation, in the same way that we currently have food speculation.
I expect to see a globally integrated market for fresh water within 25 to 30 years… Once the spot markets for water are integrated, futures markets and other derivative water-based financial instruments — puts, calls, swaps — both exchange-traded and OTC will follow.
-William Buiter, chief economist, Citibank
WDM has previously campaigned against the privatisation of water utility services in the global south. The involvement of private companies from the global north in water distribution has led to sharp rises in household bills in poor countries and little improvement in water access. For example, in Tbilisi, Georgia, the privatisation of the state-owned water company in 2007 resulted in a 262 per cent rise in tariffs between 2007 and 2010.
The impact of speculation on commodity markets has been food price spikes, leading to hunger and malnutrition. Water and people’s access to water should not be dependent on the whims of financial markets.
Food and energy sovereignty
A true green economy would embrace economic justice – the right of poor communities to determine their own path out of poverty, and an end to harmful policies which put profit before people and the environment. It would reverse the tide of commodification and financialisation, reducing the role of the market and the financial sector.
One aspect of this is the adoption of stronger regulations on both the global and national level and solid legal barriers to activities that cause social and environmental damage.
Such regulation could include the adoption of new global taxes on the highly polluting aviation and shipping sectors or the adoption of stricter, enforceable international standards on the protection of the environment. It could also mean the introduction of limits to speculation on food and a reversal of the regulatory race to the bottom between poor countries in order to attract foreign investment.
But regulation is only part of the story. The more fundamental principle of a truly green economy relates to the concept of the commons and the idea that there are some things that are too important to be determined solely by the fickle world of markets.
The concepts of food and energy sovereignty are part of the exciting alternative vision of the green economy. Under food sovereignty, food is treated as a right, not simply another asset or commodity to be used, traded or speculated on for profit. Food sovereignty is about democratising the food system.
Similarly, energy sovereignty recognises energy as a human right. It also seeks to return the control of energy to users, rather than remote corporations that seek to profit from it regardless of its impact on consumers or how it is generated.