Sustainability and the Cosmic Soup II: Green Economics

Image via WikipediaBy Randhir Hurburun

Introduction

In the first article of this series, three sustainability principles were outlined: Conservation, smart business models and the measurement of profitability. From further research into evolving green technology, industry analysis and general business trends, one common theme emanated that has probably not received the attention it deserves: the economics of going green.

This is more than just the potential profits or cost savings from sustainable practices that is widely cited; the topic at hand is the moral responsibility to the planet, its non-human inhabitants and our future generations. For many of the Green entrepreneurs it's the allure of sizeable profits, and for the multinationals that pour millions into Green R&D, it's a reputation/business sustainability driver as the foremost incentive. But for the small-timers, the do-or-die corporations and the millions whose consumerist behaviors are encouraged every day, going Green doesn't always carry a direct, immediate or exclusive benefit and is probably of secondary consideration at best.

What is sustainability?

Although the first article didn't raise this question, the more that it's researched, the most elusive the concept of sustainability becomes. For most, the concept is merely about finding a replacement for fossil fuels. But imagine this utopian scenario:

It the year 2060, and the average human life expectancy is 85 years thanks to nanotechnology and other medical technologies of the day. The latest news report reveals sustainability metrics that are astounding: CO2 levels are at its lowest since 2023 when fossil fuel officially took the back seat to renewable and nuclear energy sources, and Wall Street is rejoicing while the green capitalists' smiles glean a pearly sparkle. On the Discovery channel a show is on about the orangutans in China. Or at least what they once were in their natural habitat. Now that they're extinct it's just a documentary, but your grandkids at least have the technology to experience them in virtual reality. Sadly, it doesn't raise their interest, much as Elvis didn't raise Generation Y's interest when they were growing up back in the early 21st> century. Once in a while you take a glimpse outside at the world that is pretty much the way they depicted in the science fiction movies, where you can't really distinguish the personality difference between the robots and real people, where everything that's present has defined function or purpose, and the ubiquity of information and communication portals provides a perfect excuse for never having to go experience for yourself.

We are at such an incredible level and pace of technological advancement that we have been convinced that a lot of the world's fundamental issues will be solved within the next few years with extraordinary scientific breakthroughs (e.g. nuclear fusion for 'clean' energy, nanotechnology for curing serious medical ailments, and biotechnology for resilient mass-scale food production). Indeed, a lot of these will materialize.

But sustainability is not just about the technology or its creation; it is a holistic concept and should not be considered as another 'opportunity of the decade', nor as a means to ease the global economic recession, as these are yet another vehicle to satisfy mankind's egocentric desire for material indulgence. It is simply a notion that we have a moral responsibility to preserve the planet and ALL of its natural inhabitants, and to ensure that our future generations get to enjoy the same in its elementary form.

Moral Leverage

As a magnificent function of the brain's reticular activating system, we tend to need heroes and villains to ascribe the good and bad things that happen in the world that were beyond our control or means. When a hero does a good deed, we further justify that he had the means, such as cash from a successful business, inherited the family fortune, was a top-of-the class MIT graduate or born on the planet Krypton. It was something we weren't given nor had access to that justifies why we were not the hero.

Similarly when something goes wrong, we look for the villain; the CEO who made the decision to dangerously exploit oil reserves thousands of feet underground, the amoral politician who allowed higher emission levels in the interest of receiving higher election funding, or the contradictory academics whose arguments on the fundamental issues of global warming give doubt to the merits of pursuing green technologies.

We are creatures of immense rational and emotional development to the extent that we can feel the pain of other's suffering, but just enough pain to excuse the inaction especially when watched on the television and the suffering is 7000 miles away, or just outside the limits of our neighborhood. We have an amazingly developed brain that allows us to 'mirror' the feelings of others in suffering; to feel as though such suffering was imposed upon us.

And then we have another amazing part of the brain called rationality that allows us to detract from that pitiful feeling, to go on with our daily lives without feeling so much guilt that it causes some action on our part to prioritize our needs for self gratification since that is foremost, we have to make it to the office on time to do a good job so we can make the 10% bonus next year, and with any luck, get noticed enough to make vice president in 20 year's time. Not that ambition should be malevolent, but realistically, we can have much more of an impact with the same effort in the natural world that we could ever in the corporate world.

Incentives

The third principle of sustainability cited in the last article of this series alluded to adopting a mindset of conservation and frugality, which is in stark contradiction to our developmental paradigm of consumption and indulgence. Not surprisingly, responses ranged from boredom (not another feel-good article on sustainability) to ignorance especially from hard individuals who have worked and studied all their lives to better their and their offspring's lives and who rightly believe that they have earned their share of the finer things in life, a little pampering now and then, and bragging rights corresponding with their secular advancement.

So, conventional teachings of conservatism, as widely preached by the Green pundits, will likely only change a few, while the rest will probably need to bear witness to a natural disaster of epic proportions before beginning to entertain the notion. And that's just in the developed countries; developing third world nations will continue intensifying the per-capita energy utilization with increasing living standards and affluence.

So the message of conservatism must be re-thought; growing your own corn and/or livestock in the backyard will probably be a fashion for the next couple of years but impractical and inefficient for the masses; energetically self-sufficient buildings a feat of sophisticated engineering with prohibitive capital costs those of average income. Anyways, the pursuit of abundance and wealth cannot and will not be thwarted by any call to environmentalism and sustainability; it is an aspiration pursued for centuries, and in the last few decades made quite realistic and achievable. So to find an incentive for the savvy investor, the eager entrepreneur or the professional with an MBA to change their ambitions, goals and dreams to conserve for the sake of something that isn't going to benefit them immediately, directly and exclusively, will be more than a miracle.

Green Capitalism

Green capitalism appears paradoxical. The notion of 'Green' conjures images of frugal living, minimizing our environmental footprint and the propagation of nature, while capitalism as we know it, is associated with money (first and foremost), with mass consumption, rapid development and paranoid competition as its brainchildren. The latter perception is probably sadly misguided; nonetheless the opportunity (and challenge) in the green revolution is to model guilt-free, voguish lifestyles and worldly goals that fuel the spirit of capitalism yet cunningly incentivize Green technologies and business models.

Given the way we live our lives today; that our raison d'être is to achieve higher education, pursue specialist careers and to amass immense personal wealth (and that the sunshine that we don't get to enjoy five days a week isn't something we should covet), we are now at the brink of the opportunity of our lifetime: Green Capitalism. The order of the day is to find the longest lasting battery for the fastest electric car manufactured from bio-degradable materials and to make a pile of dough along the way. And this is working fine for us, since it is the only way we know how to live our lives: make money off every opportunity, even off the mother of all catastrophes: the planet's.

In more practical terms this means finding opportunity in:

1. Commoditizing technologies for clean energy production: right now the emphasis is on the race to producing alternative energy sources whose production costs can compete with that of fossil fuels. With mass production and further research and development, it's a matter of a few years before this happens. But the race is on.
2. Sustainable food production: food production done at the expense of biodiversity, such as the tearing down of rainforests, is hardly a sustainable model at all. Novel ways of farming - such as urban agriculture, combined with bioengineering for better yields and resilience, can provide an ideal win-win-win situation of fresher, healthier foods to the customer(since proximity to the source is close), lower distribution cost (monetary & environmental) for the producer, and the environment (biodiversity preserved)
3. Smart business models: this means finding opportunity in non-traditional business models that improve the efficiency, combine, or eliminate components of the product life cycle - from raw material procurement, production, distribution, consumption and disposal. This satisfies the economic principle of maintaining scarcity - by 'novel' business models - while at the same lowering overall cost.

Conclusion

To make consumers aware of the total cost of consumption - taking all the intermediate life cycle costs into account - is a mammoth task, but it's necessary to satisfy the psyche of cause and effect, and to bring home the notion that every action has, to some extent, some effect on the environment. Perhaps this should be done using an 'entropy currency', which eliminates or discounts the cost/scarcity bias effect and shows the true effect of our consumption on the natural order - for instance the total cost of the energy from a gallon of gas wouldn't be all that much more than that of, say, that coming from a solar PV cell; however the increase in entropy in the case of burning fossil fuels is a few factors higher.

For now, the measurement of successful transition to sustainable living will come from the anecdotes of people changing the way they live: being as humble to the squirrel in the backyard as they are to the Wall Street CEO, to nurture the rose bush in the garden as much as that of their stock portfolio, and to revere the glory of the sunshine as much as the glory of their bank balance.

We are indeed capable of changing our lifestyles to adopt sustainable practices, but there probably aren't enough incentives for the masses to do so. But if you've read this article and think it's a good idea to become a sustainability practitioner, why not start straight away - and spread the word among a few of your peers. You just won't be getting paid for it.

Randhir Hurburun
BScEng (Chem), BCom, MBL (Cum Laude), PMP
mail@hurburun.net

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