Post-Earth Day Resolution: To Marketize Environmental Decisions

Apr 25, 2014

Every Earth Day is a reminder of how far we have come in protecting the environment that keeps us alive in this “ultimate closed-loop system,” namely our planet.  

But Earth Day also serves as a stark reminder of how far yet we have to go in removing the threats we have created to the survival of our species, and others. And, more seriously, how we continue to create more dangers that will shorten the time we and all other species have left on this planet.

Two of the biggest contributors to environmental destruction are highway overuse, expansion, and urban and rural sprawl. Forget smokestacks: the real dangers to our health and survival are from SUV-laden “country” driveways, “freeways,” auto-commute-dependent office campuses, and greenfield development. The results are the loss of life-sustaining open space, increased global warming, and the release of even more toxins into the atmosphere, ground, and water supply.

Highway growth and sprawl are connected into a spiral of harm. New roads prompt added sprawl development, which creates more congestion that slows traffic and generates more spot emissions, and then fosters the need for new roads to “fix.” Companies’ decisions to shift work and retail sites away from brownfield and transit-served locations and, in several high-profile cases, ending telework, accelerate this spiral, and shorten the timeframe in which we meet the unpleasant consequences.

New highways, campuses, and sprawl disfigure also blight the landscape. Case in point is LG’s plans to alter New Jersey’s Palisades with an office building that will tower above the treeline in order to give staff views of the Hudson River and the New York skyline. (Ironically, LG’s own technology has a solution: its wireless phones can enable its employees to work from anywhere, which would allow it to reduce the size of its offices, drop them below the treeline, and reduce commuting and resulting pollution).

No amount of green construction or green design can wipe away the stain of greenwash. Even electric vehicles (EVs) are environmental culprits because their use demands roads, whose asphalt and concrete bury open space and drown wetlands. The act of road building and maintenance contributes to environmental decline as it requires the extraction, processing and refining, transport, and application of materials with fossil fuels.

Here is the problem: yes, environmental damage, including auto overuse and sprawl is bad, but what can be done to prevent it? Measures like greenbelts, mass transit investment, mandatory emissions controls, open space preservation, pollution cleanup and fines, and regulations have had mixed success.

Moreover, with commercial and residential sprawl in particular there is an army of powerful builders, contractors, and developers who benefit from these practices and who accordingly “influence” elected officials to grant them approvals for their projects. A similar set of interests also convince officials that expanding highways is in their best interests. Helping to make such efforts successful are government transportation departments, many of whom are locked into the spiral of harm by their focus on vehicle mobility. These departments’ primary missions are to build and maintain roads. To many of them, the environment and environmentalists are obstacles. As roads get the biggest share of the budgets, decisionmakers and ambitious staffers have less interest in road alternatives like mass transit and telework.

Governments only see as far as the tax receipts and campaign contributions. The downstream impacts on the environment and the public’s health and transportation network in totality are not perceived as problems to fix with their budgets.

But the same goes for the home buyers, businesses and residents. None of them pay for the environmental, including public health, consequences of their choices because these costs and impacts are not factored into their building and property, materials, products, and transportation prices.

The environment then is treated as a “free lunch.” Only with this “feast” will hurt individuals, their families, and loved ones, now and their immediately succeeding generations.

But this “free lunch” also distorts the marketplace. The net result is a higher demand for bigger-footprint choices than would have happened if the environmental costs were factored into their prices and were made transparent to their buyers.

The only fair route forward, one that cannot be as easily roadblocked by others, is by monetizing or “marketizing” the environment by devising and assigning environmental costs, into products and services, including communications and transportation systems. In exchange, individual and business taxes, some of which are used for environmental cleanup and protection, would be reduced.

Companies and individuals can accept, or ignore, the social value of environmental sustainability. But they cannot dismiss the value of the environment when it is measured by monetary units. And by assigning environmental costs, countries that do so can argue that imports from countries that do not have such policies are subsidizing their goods, which puts trade pressure on those nations to change.

Marketizing can be implemented in two ways. The first method would be to add these “green fees” to purchase or lease costs, or to property taxes. The second, and more politically acceptable choice, is to allow businesses and individuals to deduct taxes for “green” decisions. They can include deductions for every employee who does not drive to work, less damaging marine and rail shipping (including intermodal), and for choosing to live or locate in brownfield (at least 20 years old) sites. Open space owners should be allowed to deduct taxes for keeping their spaces green as they confer environmental benefits.

While there have been other environmental monetization or marketization attempts, such as carbon taxes, they have fallen short because they have not been comprehensive, including not covering sprawl or lacking clarity on the effects (such as the link between air and water pollution and serious illnesses). Equally, if not more critically, these policies have not been adequately implemented with offsets, such as reduced general taxes, in order to lower impacts on individuals and businesses that would have given them more public support. The policy objective is to make the environment user-pay, and encourage users to make decisions accordingly, not to bankrupt users.

Determining how to marketize the environment will not be easy. There must be assumptions and compromises as to the metrics, costs, and who in the supply chain is responsible for which costs, while decisions have to be made on the right offsets. But the environmental, public health, and quality of life benefits are worth it and indeed they are essential. Marketization also has a dividend through spurring more demand for and innovation in clean and green-enabling technologies, including in communications and collaboration, energy, manufacturing, and transportation, which will boost the economy.

Time is running out though. Unless marketization is done fairly, and soon, the environmental consequences of not doing so will make the challenges of accomplishing marketization insignificant by comparison.

Brendan Read


Brendan Read is Senior Industry Analyst with over 25 years’ experience covering business, communications, staffing, and technology. He has worked in, prepared reports, and blogged on a wide range of topics including customer contact, CX, CRM, IoT, social media, supply chain, and BC/DR. He also has backgrounds in construction, manufacturing, materials, resource extraction, site selection, and transportation. He examines the broad economic, environmental, innovation, political, and social mega trends, and their impacts on businesses, markets, and society.

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