None Of The World’s Top Industries Would Be Profitable If They Paid For The Natural Capital They Use…

None Of The World’s Top Industries Would Be Profitable If They Paid For The Natural Capital They Use...


The notion of “externalities” has become familiar in environmental circles. It refers to costs imposed by businesses that are not paid for by those businesses. For instance, industrial processes can put pollutants in the air that increase public health costs, but the public, not the polluting businesses, picks up the tab. In this way, businesses privatize profits and publicize costs.

While the notion is incredibly useful, especially in folding ecological concerns into economics, I’ve always had my reservations about it. Environmentalists these days love speaking in the language of economics — it makes them sound Serious — but I worry that wrapping this notion in a bloodless technical term tends to have a narcotizing effect. It brings to mind incrementalism: boost a few taxes here, tighten a regulation there, and the industrial juggernaut can keep right on chugging. However, if we take the idea seriously, not just as an accounting phenomenon but as a deep description of current human practices, its implications are positively revolutionary.

To see what I mean, check out a recent report [PDF] done by environmental consultancy Trucost on behalf of The Economics of Ecosystems and Biodiversity (TEEB) program sponsored by United Nations Environmental Program. TEEB asked Trucost to tally up the total “unpriced natural capital” consumed by the world’s top industrial sectors. (“Natural capital” refers to ecological materials and services like, say, clean water or a stable atmosphere; “unpriced” means that businesses don’t pay to consume them.)



It’s a huge task; obviously, doing it required a specific methodology that built in a series of assumptions. (Plenty of details in the report.) But it serves as an important signpost pointing the way to the truth about externalities.

Here’s how those costs break down:

The majority of unpriced natural capital costs are from greenhouse gas emissions (38%), followed by water use (25%), land use (24%), air pollution (7%), land and water pollution (5%), and waste (1%).

So how much is that costing us? Trucost’s headline results are fairly stunning.

First, the total unpriced natural capital consumed by the more than 1,000 “global primary production and primary processing region-sectors” amounts to $7.3 trillion a year — 13 percent of 2009 global GDP.

(A “region-sector” is a particular industry in a particular region — say, wheat farming in East Asia.)

Second, surprising no one, coal is the enemy of the human race. Trucost compiled rankings, both of the top environmental impacts and of the top industrial culprits.

Here are the top five biggest environmental impacts and the region-sectors responsible for them:

None Of The World’s Top Industries Would Be Profitable If They Paid For The Natural Capital They Use...

The biggest single environmental cost? Greenhouse gases from coal burning in China. The fifth biggest? Greenhouse gases from coal burning in North America. (This also shows what an unholy nightmare deforestation in South America is.)

Now, here are the top five industrial sectors ranked by total ecological damages imposed:

None Of The World’s Top Industries Would Be Profitable If They Paid For The Natural Capital They Use...

It’s coal again! This time North American coal is up at number three.

Trucost’s third big finding is the coup de grace. Of the top 20 region-sectors ranked by environmental impacts, none would be profitable if environmental costs were fully integrated. Ponder that for a moment: None of the world’s top industrial sectors would be profitable if they were paying their full freight. Zero.

That amounts to an global industrial system built on sleight of hand. As Paul Hawken likes to put it, we are stealing the future, selling it in the present, and calling it GDP.

This gets back to what I was saying at the top. The notion of “externalities” is so technical, such an economist’s term. Got a few unfortunate side effects, so just move some numbers from Column A to Column B, right?

But the UNEP report makes clear that what’s going on today is more than a few accounting oversights here and there. The distance between today’s industrial systems and truly sustainable industrial systems — systems that do not spend down stored natural capital but instead integrate into current energy and material flows — is not one of degree, but one of kind. What’s needed is not just better accounting but a new global industrial system, a new way of providing for human wellbeing, and fast. That means a revolution ( via Grist).

If you like this idea, be sure to share it with your friends and inspire someone you know. Anything becomes possible with just a little inspiration…


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(18) comments

They would still be profitable they would just have to charge a lot more for their goods and services.

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Investigate each purchase you make especially food, clothing and household products! Support companies that look to recognize and reduce their “externalities”.

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What about all the paper mills that release toxins in middle of the night…. horrible

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Yes. And if they paid for the damage they do.

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So that means they are literally stealing from mother earth and the whole of humanity and living creatures on this planet.

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Tell me again who the takers are!

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BS. They do through taxes. Ecosnippets shoukd be honest.

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The profits are actually small compared to gross earnings, go look at an annual report from a few multinational companies and compare them to smaller companies.
How would any business grow if it didn’t make a profit?

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And/or clean up any/all pollution they create.

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Long past the time that they pay for the waste they produce.

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tell that to shareholders

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this is the dead giveaway that the whole system is created and run by psychopaths and sociopaths, and the shareholders keep voting them onto the boards, and the boards pay off government, to legally cross every moral ground we ever created to protect “our” resources and planet, in otherwords, we are our own worst enemies. I got into looking at “true cost economics” from doing the original “cost economics” to figure out what companies to invest in (a tool that looks at the behaviour of a single company (costs and expendature, which is usually always a lie or “estimate”); the industry as a norm (shows how much they are lying), and who they have in their pocket (lobby groups, targetted political agents) basically its completely corrupt, the whole system, and it corupts you when you get to invovled in it. Its also designed, to eventually fail, and shift pretty much all assets into the hands of a tiny few super wealthy familes (under the umbrella of a corporate entity). All governments planet wide are also corporate entities, they all have CEO’s or Presidents, they all have the same positions (though often a different name for the same job). And in the end, 99.9% of the worlds population, has to foot the bill, at every level (from polution and scarity of resources, toxic food and water, over priced housing, police state law enforcement – another corporate department i might add, they dont work for you) , and 0.01% is going to walk off with all of it, and they are planning to make the hunger games movie look like easy street. You think your phone is your friend? there is a reason apple doesnt pay taxes, its a way they are “paid” by governments to provide tracking data on every citizen. Join shopping tracking to get flybys? Did you know that every chip in every computer since the P2 has had an individual identifyer, combined with your network card, gives you a unique planet wide identifier. Pets never needed “chipping” but to get you used to the idea, it was made manditory and encouraged to except a technology that is an enemy of freedom. Now its “ok” to get a visa card chip so you can just “paywave” your hand at the beach bar, or a chip for your job, so you can enter the building.. gee i wonder if they are counting the time you spend in the toilet? (lol yup, they are). A lot of people are already chipped, without knowing it. Certain operations medically, you get a chip implanted in you identifying maker, date, “operator” (doctor) hospital, these chips can now “talk” to other chips, rather than the older ones that require medical readers. Microsoft had begun (legal?) 3rd world trials of a chip that is implanted into woman and remotely controls their fertility, presently it lasts 28 years, the plan is to implant it in girls at 10-12years old. Now, imagine a chip that can talk to your phone (without your permision) access the net and upload your medical data. it can tell a 3rd party what you are feeling, by the hormone levels in your blood. All of this is “legal” even if its not “moral” (remember the old name for psychopath is “moral imbecile”). We have allowed this to happen, we have allowed ourselves to be bought off with what is basically worthless manopoly money. yet.. how many of you simply go “oh well” and put your heads back in the sand.. most people are basically a month away from shooting the neighbour for their last roll of toilet paper, and dont know it. wake up folks..

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This is where capitalism falls down. None of these corporations economically factor in the environmental and societal damage they cause. History will judge this lack of rigour harshly (I hope).

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A story from 2011? This could be a new record

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When man agreed to ,,natural capital,, sold himself to money. If you agree to life beeing used, you agree apon your life being used.

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