Nowadays, we can buy everything from education to healthcare to clean air. Some suggest pricing the environment, too. If we divide it up into parts that are sold to individuals or companies, they’ll take care of it better. Or if we use subsidies to give people an incentive not to pollute, it’ll be in their interest to move to low-carbon production. Sadly, it’s not that simple — how could we divide nature into easily priceable parts? And if we did, can its value necessarily be expressed in monetary terms?
Although an open market can determine the value of certain things, the environment is subject to what’s called market failure, or the fact that the market doesn’t always allocate scarce resources in the way that would generate the greatest social welfare. People who value the environment very highly on a personal level might not have the financial means to take part in this trade, so wouldn’t have their voices heard. Future generations who rely on the same environment that we live in today wouldn’t be part of setting a price on something that they won’t be able to live without.
What about incentivising people financially to stop damaging the environment? Some governments use so-called carbon offset systems. The set a limit on permitted carbon dioxide emissions, and distribute a number of permits to companies representing a part of this limit. If one company works out how to produce its goods using lower CO2 emissions than the permit limit, it can sell the remainder to another company who needs it. That way, someone’s made money, everyone’s got the energy they want, and the limit hasn’t been breached.
What’s wrong with this idea? People who know what they’re doing in financial markets can outsmart the system, working out ways to continue producing the same level of carbon dioxide and still make money off permits. Secondly, some would say that carbon offset systems are a distraction from a more systemic, grassroots-led solution to more sustainable economies. It comes back down to values, and whether we think any kind of money-based system can represent the importance of the environment, or not.