Incentives for Private Sector Environmental Development

From Nicholas Stern:

Incentives. We have to be aware of these technological issues in order to think about the right kinds of incentives to put in place. There is a challenge in asking oneself how much of a role government or groups of governments should play in developing technologies. Technologies are ideas; they’re public goods. The global atmosphere is a public good, and the technologies to reduce emissions are also public good. So there’s a challenge there in determining how far the public sector should play its role. But I think it’s fairly clear that most of the action—choosing how to save energy, choosing how to reduce carbon—will be made by the private sector. The big question is how does a government set the right kind of incentives for the private sector.

Now, the private sector is actually quite specific on this point. Its slogan is that the incentive structure should be loud, long, and legal. But “loud, long, and legal” is actually the vulgar phrase for “clear, long, and credible.” If you’re thinking about investments in the kinds of infrastructure and durables that we’re talking about, the incentive structure needs to be clear, long-term, and credible. And putting those kinds of incentive structures together is actually quite difficult. You have to try to bind yourself going forward in a way that governments find it quite difficult to do—a problem the economists have studied right across the board in other areas, including monetary policy, competition, and so on. We have to try to put together those kinds of structures.

Clear, long-term, and credible incentives for the private sector to develop environmentally positive technologies are a great idea. Sounds like the incentives that heavy polluting industries have been working with for decades.

Daily Additional Reading:

***"The Changing Climate on Climate Change," By Jospeh Stiglitz
***"The Heat it On" from The Situationist, quoting a great LA Times article explaining that we'd all take global warming more seriously if global warming had a mustache.\
***Greg Mankiw, who pointed me towards a few of these stories.

Environmental Diversions, 1

***In the time it takes you to read this, 123 people have been born, 33 people have died, and 20,000 tons of carbon have been spewed into the air.

***Some Environmentalists have too much time. This guy built a hobbit hole!

Thanks Marginal Revolution for pointing out NYtimes story on Property Rights and environmental improvements in Niger:

From colonial times, all trees in Niger had been regarded as the property of the state, which gave farmers little incentive to protect them. Trees were chopped for firewood or construction without regard to the environmental costs. Government foresters were supposed to make sure the trees were properly managed, but there were not enough of them to police a country nearly twice the size of Texas.

But over time, farmers began to regard the trees in their fields as their property, and in recent years the government has recognized the benefits of that outlook by allowing individuals to own trees. Farmers make money from the trees by selling branches, pods, fruit and bark. Because those sales are more lucrative over time than simply chopping down the tree for firewood, the farmers preserve them.

Yet another example of medium- to long- term economic benefits from proper resource management.

Much Ado About Nothing

Brilliant!

This "Demonstration about Nothing" was covered by every news organization in Estonia.

"WHAT DO WE WANT? WE WANT IT!
WHEN DO WE WANT IT? NOW!"

What Is Sustainability

From The Sustainable Business Institute:

What is Sustainability?

Sustainability is the ability to meet today's global economic, environmental and social needs without compromising the same opportunity for future generations.

What is Business Sustainability?
Business Sustainability is the opportunity for business to improve its profitability, competitiveness, and market share without compromising resources for future generations.

Sounds About Right.

France + UN =

French President Jacques Chiraq Proposes a United Nations Environmental Office. Heres what he had to say:

"The planet is sick. The symptoms are its increasingly frequent extreme reactions - hurricanes, floods and droughts. Nature is sick. Species are dying out at an alarming rate. We have proof that human activity is causing these disorders. The day is fast approaching when runaway climate change will spin out of control. We have almost reached the historic point of no return."

I agree.

Here is what he wants to do about it:

"This United Nations Environment Organization will act as the world's ecological conscience. It will carry out impartial and scientific assessment of environmental dangers. It will have policy-making terms of reference giving it the legitimacy to implement action jointly decided. It will lend greater weight and greater cohesion to our collective endeavours."

To Quote Dennis Mangan:

"One can only hope that they're as inefficient as the real French police."

I certainly don't hope they're so inefficient. I know they will be. Simply look at the equation:

French Police + United Nations

Don't worry major poluters, you've got the French AND the UN on your back.... And yet for some reason, I don't think they need to worry.

Sustainable Spin

Many of you probably know that Wal-Mart, after taking years of abuse for its exploitative practices, is in the middle of a major sustainability-washing PR campaign called "Sustainability 360" Perhaps the greatest truth in this whole movement is in the numbers: 360 degrees, one full rotation of spin before continuing to move along the original trajectory.

After examining the report it looks like Wal-Mart is fully aware of the improved medium- to long-term benfits of sustainable business practices, and even more aware of immediate warm-fuzzy consumer response to talking about these practices.

Despite my skepticism of said corporation, Wal-Mart does have the resources to blow through the cost barrier involved in initial investment in green building. I only doubt they have the wear-with-all to actually doing something positive enough to counteract the pain and suffering they have caused to small business owners.

Check this our for a story on the challenges of retail sector development in developing markets.

Thanks to the Private Sector Development blog for pointing out the Wal-Mart link.