Fixing the Broken Compass: Finding Our Way to Natural Capitalism

“The real problem with our [current] economic compass is that it points in exactly the wrong direction,” he wrote. 'Most businesses are acting as though people are still scarce and nature abundant… But the pattern of scarcity is shifting; now, people aren’t scarce, but nature is.'

"If we are to solve perhaps the greatest challenge that global capitalism has created – climate change – it is essential that we reconcile our prevailing economic model to place more emphasis on the importance of natural capitalism. Here’s how:

"The first step is to build pricing signals into the market that reflect shifts in scarcity such as the external factors burdening our natural world. We are already making progress here.

"Assigning a price to carbon is perhaps the most obvious – and contentious – way to mobilize market forces to help tackle climate change. It’s interesting that most citizens of developed countries happily pay for trash collection services and don’t refute the need for waste companies to treat their refuse before releasing it into the environment, and yet applying a similar logic to carbon is still seen as controversial. Nevertheless, a number of states are taking a stand, and it’s reassuring to see early experiments in carbon taxes and cap-and-trade schemes in Canada, China, the European Union, New Zealand and on both seaboards of the U.S.

"Even without government, recent research from the Carbon Disclosure Project showed that an increasing number of U.S. companies are now placing an internal price on carbon when evaluating potential projects — citing climate change risk. Businesses and investors are calculating their possible returns on certain assets with a notional carbon price in mind, acknowledging that formal pricing is likely to become a reality eventually.

"Make no mistake: whether enforced by local government policy, encouraged by a long-promised global deal on climate change in Paris in 2015, the result of prescient corporate planning, or simply in response to an extreme weather event like the one that recently put portions of New York City under 10 feet of water, the march towards putting a hard financial value on carbon emissions is underway and gaining momentum, whatever the critics would like to think."

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