SUSTAINABLE DEVELOPMENT
Eco-taxation and Redistribution: An Effective and Fair Solution for Sustainability
High taxation on ecosystem services, with the equitable redistribution of these taxes, is the most effective strategy to initiate structural and systemic changes across society
How could we systemically and structurally transform our society to become sustainable — a society that is economically vibrant, socially just, and environmentally regenerative?
I have been pondering this question since I embarked on my journey in sustainability research nearly 14 years ago. I became aware of the various solutions and transition pathways suggested by a range of individuals — from accomplished researchers and experts to ordinary people. However, I recognized that most proposed solutions resembled patchworks and fell short of instigating systemic and structural changes at individual, organizational, national, and global levels — changes that are imperative for a timely transition by, say 2050. While not all, most solutions primarily revolved around reducing costs, aiming to make sustainable things more affordable
Then, my viewpoint shifted. I asked myself why unsustainability was cheaper rather than asking why sustainability was expensive. I realized that since we were not paying the true cost of our lifestyle, and unless we started doing so, the transition to a truly sustainable society would always remain many decades or centuries away. This led me to a solution that truly impacted my thinking: high eco-taxation and equitable redistribution. Eco-taxation, a generalized form of carbon tax, is collected on every ecosystem service that we use. As I mentioned in a blog post a while ago, such a policy ensures that the cheapest product or service is also always the environmentally sustainable one
I think it is the most effective policy approach for ushering structural and systemic changes across society. This will simultaneously force individuals and organizations to make sustainable choices without much regulation or awareness.
Some countries such as Canada already have carbon taxes that are redistributed to people based on their household income. However, the existing arrangement is ineffective for several reasons:
1. Limited scope: Currently, the focus is solely on carbon emissions, yet there are dozens of other crucial ecosystem services that need protection.
2. Insufficient carbon taxation: The level of taxation is arguably too low. While the exact amount is debatable, it likely needs to be substantially higher, perhaps over US $300–400 per tonne of CO2 eq.
3. Excessive Exemptions: The tax applies to only a segment of the economy, leaving out a broad array of other sectors.
Some might argue that such taxation is regressive, potentially leading to ‘poverty’. However, how do we define poverty? Traditional definitions focus primarily on economic wealth, overlooking a more comprehensive framework encompassing health (both mental and physical), social cohesion, and emotional well-being.
The redistribution of eco-taxes could be a significant step towards ensuring acceptable living standards for all. My ideal lifestyle involves minimal material consumption, giving me more time for personal growth, social interactions with friends and family, or even leisurely exploring my surroundings on foot. Though such a lifestyle might be seen as economically unproductive and perhaps a burden on GDP, it aligns with living contentedly within ecological means. What’s wrong with that? Shouldn’t this count for something in our reevaluation of what constitutes a meaningful life?
