Bad Technology vs Good Technology Alan Rudy ISS 310 Spring 2002 Tuesday February 25 Human vs Natural Capital Since the mid eighteenth century more of nature has been destroyed than in all prior history While industrial systems accumulate human made capital on vast levels natural capital on which civilization depends to create economic prosperity is rapidly declining Technology and its discontents Technology seems to have kept ahead of depletion providing apparently evercheaper inputs they only appear cheap Destroyed rainforests mountain of toxic mine impoverished villages eroded indigenous cultures environmental diseases cancer etc and the extraordinary volumes of pollution are not factored into the cost of production Neoclassical Economics Capital The traditional definition of capital is accumulated wealth in the form of investments factories and equipment Actually an economy needs four types of capital to function properly human capital in the form of labor and intelligence culture and organization financial capital consisting of cash investments and monetary instruments manufactured capital including infrastructure machines tools and factories natural capital made up of resources living systems and ecosystem services Today s Industrial System The industrial system uses human financial and manufactured capital to transform natural capital into the stuff of our daily lives cars highways cities bridges houses food medicine hospitals and schools Our Economy Capitalism as practiced today is a financially profitable non sustainable aberration in human development Our economy does not fully conform to its own accounting principles It liquidates its natural and human capital and calls it income It neglects to assign any value to the largest stocks of capital it employs the natural resources and living systems and the social and cultural systems that are the basis of human capital The present mindset Economic progress comes from free market systems where reinvested profits make labor and capital increasingly productive Competitive advantage is gained when bigger more efficient plants produce more goods for larger markets Growth in total output serves human well being Resource shortages elicit the development of substitutes A healthy environment is important but must be weighed against the need for economic growth Free enterprise and market forces allocate people and resources to their highest and best uses But Human beings already use over 50 the world s accessible surface freshwater have transformed 33 to 50 of its land surface fix more nitrogen than do all natural systems on land and appropriate more than 40 of the planet s entire landbased primary biological productivity And In the past half century the world has a lost 25 percent of its topsoil and a third of its forest cover At present rates of destruction we will lose 70 percent of the world s coral reefs in our lifetime host to 25 percent of marine life In the past three decades 33 percent of the planet s resources have been consumed Natural Capitalism I The environment is an envelope containing provisioning and sustaining the entire economy The limiting factor to future economic development is the availability and functionality of natural capital lifesupporting services that have no substitutes and currently have no market value Misconceived or badly designed business systems population growth and wasteful patterns of consumption are the primary causes of the loss of natural capital and all three must be addressed to achieve a sustainable economy Future progress can best take place in democratic market based systems of production and distribution in which all forms of capital are fully valued including human manufactured financial and natural capital Natural Capitalism II One of the keys to the most beneficial employ ment of people money and the environment is radical increases in resource productivity Human welfare is best served by improving the quality and flow of desired services delivered rather than by merely increasing income flow Economic and environmental sustainability depends on redressing global inequities of income and material well being The best environment for commerce is provided by democratic systems of governance based on the needs of people rather than business A One A Two RADICAL RESOURCE PRODUCTIVITY Radically increased resource productivity is the cornerstone of natural capitalism Using resources more effectively has three key benefits It slows resource depletion at one end of the value chain lowers pollution at the other end and provides a basis to increase worldwide employment with meaningful jobs BIOMIMICRY Reducing the wasteful throughput of materials and eliminating the very idea of waste can be accomplished by redesigning industrial systems on biological lines that change the nature of industrial processes and materials enabling the constant reuse of materials in continuous closed cycles and often the elimination of toxicity A Three A Four 3 SERVICE AND FLOW ECONOMY In essence an economy that is based on a flow of economic services can better protect the ecosystem services upon which it depends This will entail a new perception of value a shift from the acquisition of goods as a measure of affluence to an economy where the continuous receipt of quality utility and performance promotes well being 4 INVESTING IN NATURAL CAPITAL This works toward reversing world wide planetary destruction through reinvestments in sustaining restoring and expanding stocks of natural capital so that the biosphere can produce more abundant ecosystem services and natural resources Resouce Efficiency When engineers speak of efficiency they refer to the amount of output a process provides per unit of input Higher efficiency thus means doing more with less measuring both factors in physical terms When economists refer to efficiency however their definition differs in two ways First they usually measure a process or outcome in terms of expenditure of money Second economic efficiency typically refers to how fully and perfectly market mechanisms are being harnessed to minimize the cost of production Fiscal Economic Efficiency Some our governments are continuing to create and administer laws policies taxes and subsidies that preclude real efficiency Hundreds of billions of dollars of taxpayers money are annually diverted to promote inefficient and unproductive material and energy use These include subsidies to mining oil coal