Preoccupied With Green Efficiency, We Suppress Green Shoots
Why do obsolete practices and beliefs persist? Inertia, fatigue, entrenched power, and lack of vision all impede their displacement in creating the systems and societies that reflect today’s challenges and opportunities. The paradox is that the seeds of systemic shifts are all around us, ready to displace the obsolete, if we simply see the challenges and solutions differently.
Look at forest practices, for example. A recent story in the New York Times entitled There’s a Booming Business in America’s Forests. Some Aren’t Happy About It delivers an object lesson in the challenges in overcoming the obsolete. American forests are being cleared for the production of wood pellets that will be exported to growing European (and other foreign) markets driven by regulation that mandates use of renewable sources of energy over fossil fuels. This is the latest chapter in a recurring saga (including an earlier wave of biofuels) that has accelerated resource consumption, more greenhouse gasses, and higher consumer prices. Production and trade of these “climate friendlier” fuels has been deemed less harmful than alternatives by some countries, but they are accelerating the negative climate and economic dynamics they purport to mitigate. This is of course taking place in the context of plummeting prices for solar energy.
The perverse acceleration of a market that should no longer exist in environmental terms, in the case of pellets and biofuels, is enhanced by an efficient trade system.
We are in an era of accelerating environmental degradation, loss of biodiversity and resilience. The additional knock-on effects of increased fires, shifting environmental patterns, and water loss led the Guardian newspaper to headline a recent article, Is This the End of Forests as We’ve Known Them? Whether harvested forests will recycle or re-establish any semblance of native biodiversity anytime soon (magical thinking) or whether they will come back at all (questionable) should be a sobering warning to change course for citizens, businesses, and governments.
Except, the externalities are killing us
The perverse acceleration of a market that should no longer exist in environmental terms, in the case of pellets and biofuels, is enhanced by an efficient trade system. Indeed, the system seems to work as designed with countries of differing natural resources and regulatory regimes finding a nice, profitable co-existence. Except, the externalities are killing us.
Imagine what could happen with a border carbon adjustment on traded goods. Wood pellet trade would surely be near the front of the line for offsetting tariffs. The BCA concept has knocked around for years and who knows whether it will happen. In the meantime, Yale professor William Nordhaus floated a simple and elegant proposal to this challenge in 2020 in an article for Foreign Affairs entitled The Climate Club in which he proposes coordinated commitments among member countries and penalties for those who do not participate, using tariffs as a potential lever. It’s time — now while the Biden administration has some momentum and a commitment in principle with China — to seriously explore such a mechanism.
At the business and community levels, what do these forest mowing jobs produce? According to neighbors, lots of noise and destruction, a few jobs, and then they will move on. Surely we can do better than that.
These are not factory farming, cash crops, or get rich quick types of strategies. But they are providing environmental, social, and monetary values that lead to better lives and healthier environments over the long run.
There are some serious creatives already working on making forests more valuable for humans and productive to local communities. Look at the work of Afforestt, an India-based company, that works intensively to restore plots of land to native vegetation providing healthy environments and economic potential. Agroforestry is a growing trend across the world which recognizes the value of complex forest and agricultural systems and brings both communities and ecosystems closer to mutually enriching synergy.
These are not factory farming, cash crops, or get rich quick types of strategies. But they are providing environmental, social, and monetary values that lead to better lives and healthier environments over the long run. Some may protest that these examples are fine for those in the developing world, but not OECD countries. But this trend is everywhere, though it looks a bit different depending on where you go.
Landowners in the US are leading in regenerative agriculture and long-term strategies for restoration and productivity. Funded by entities like the Iroquois Valley Farmland REIT, or collaborative efforts that bring together forest interests, insurers, governments and others in creating vehicles like the Forest Resilience Bond being coordinated by Blue Forest Conservation, there is better life and big business if private actors, government, and markets build the reality together.
The only thing limiting these innovations is our imaginations and the markets to support them.
Similar mechanisms are being developed in other areas, including a Family Forest Conservation Program instrument developed by the American Forest Foundation that works to connect private landowners with carbon buyers (they own more than half the forest land in the US).
The only thing limiting these innovations is our imaginations and the markets to support them. Markets are movements and these movements are approaching their critical mass. Governments can play a critical role in supporting their realization.
As with many things, the temptation is to think of adding more regulation, but to solve many of these problems we can subtract, for example, in some of these cases eliminate subsidies and tax breaks for destruction of natural habitats and stop advocating at the international level for such trade.
The applications of these kinds of approaches represent the best of innovation in our modern economies — and they can be highly productive and profitable — if the right regulatory preferences and financial systems are in place to scale them.
Imagine all the incentives we have put in place to support the pellet factories and the trade rules that facilitate the exhaustion of natural resources in what is essentially regulatory arbitrage. Imagine repurposing them to create the conditions for local, regional, regenerative solutions to flourish? We can still trade, just with different preferences. No brainer, right? It should be.
Then, we must re-regulate for what we want: thriving, environmentally positive local businesses that lead to flourishing communities? We can create the objectives and the conditions to achieve them. No need to ban forest companies, simply remove the subsidies and increase the obligation to be carbon neutral, or negative, at source. Better yet, provide incentives and financing for local entrepreneurs who will strengthen the values quality of life for the communities in which they reside.
Don’t dismantle trade, it’s useful, and people all over the world depend on it. Instead, empower innovators and reform trade policy in a way that supports flourishing local economies and ensures that small and virtual businesses that depend on global markets can thrive.
Employ creative solutions for local economic opportunity and even clean up our messes with approaches like that of Louis Licht at Ecolotree, in Iowa who uses trees for phytoremediation, or in the work of Mycocycle, a company launched by Joanne Rodriguez and inspired by the work of Peter McCoy as chief Mycologist and Science Advisor to mobilize mushrooms and related organisms to clean up the many toxics we produce.
The applications of these kinds of approaches represent the best of innovation in our modern economies — and they can be highly productive and profitable — if the right regulatory preferences and financial systems are in place to scale them.
Don’t dismantle trade, it’s useful, and people all over the world depend on it. Instead, empower innovators and reform trade policy in a way that supports flourishing local economies and ensures that small and virtual businesses that depend on global markets can thrive. If a climate club can take hold, it will open many new opportunities for a race to the top in higher quality provisions that benefit consumers. Couple this with domestic small business innovation support strategies that are economy-wide, and it is a winning strategy.
There is so much innovative potential that is untapped. Today’s Third Horizon Pioneers are working with one hand tied behind their backs, discriminated against through distortive and misguided subsidies, abatements and incentives that take us where we don’t want to go.
Those tables should be turned. Isn’t that a better wager than to expect societal gains from the further impoverishment of natural resources, and by extension all of us collectively?
