Sunday, December 28, 2003

Eco-Economy Post Lost

Ouch. Just wrote a post on-the-fly elaborating on the previous post and it just disappeared when I pressed "Post". Gone. This is the first time Blogger has actually lost something for me, and, if they don't find it, it will be the last. Normally, I wouldn't care that much. But I didn't have another copy, just sort of wrote on the fly. Blogger has wasted my time, and caused me higher blood pressure, at least temporarily. Hopefully, they find that post, but in the meantime, I'll just explain what I was writing about.

I've been reading Lester Brown's Eco-Economy, and he makes a great point about the value of "natural" goods and services. A good example of this is a forest's ability to forestall soil erosion on adjacent arable land by controlling groundwater flow.

When forests are removed, the adjacent land areas then become subject to changed groundwater flow and the resulting threat of soil erosion. To prevent this, human activities must step in the breach, and these have definite value as figured by our economic system. Therefore, if there is value to these services, irregardless of who performs them, then we have a new agent in the free market, and it's nature.

If we don't factor in these prices, which is not rocket science but by nature imperfect (though the ideas behind this show the price mechanism in our current economy to be even more imperfect), then economic goods and services will not be properly valued, i.e. will be underpriced, and the result will be costs taken on by other economic goods and services that will be adversely affected.

In addition, these additional costs are not always internalized by affected economic actors, but are often shunted off to state and taxpayer intervention. So the logging industry, for example, implicitly operates on the assumption that the price of its product will be picked up by other industries and the state (taxpayers). Whether this is out of ignorance, ambivalence, greed, or avarice is not important - the reality is clear and documentable.

This is a danger to free markets, since these can only operate with greatest efficiency, and true to promise, by the price mechanism accurately reflecting the value of economic goods and services. Since this is not the case currently, free market defenders should advocate that we take steps to begin measuring natural goods and services, as a recognition that we need to measure all good and services, irregardless of who is performing them, or change the theory to fit the facts and reality.

No altruism, or allegiance to environmentalism, is necessary. This is a matter of free markets and information determining accurate prices. Nothing more, and nothing less.