Tuesday, February 28, 2006

What to do with toxic consumer products?

Something I’ve been concerned about for a while is the nasty toxic chemicals in lots of ordinary household electrical products that wind up in landfill. Pretty much anything with a rechargeable battery has these nasties and apparently 70% of the toxic heavy metals in landfill comes from electronic products.

There is very little being done about this problem in Australia as far as I’m aware, with responses limited to a few voluntary industry schemes. The mobile phone industry has a scheme where anyone can take old mobile phone batteries to any mobile phone retailer for recycling and apparently Sony recycles any household batteries if you take them in to their stores or offices).

Europe has always been the leader in this area with requirements that manufacturers take responsibility for dealing with the products they’ve produced when they’ve reached the end of their useful lives.

Now it seems California may leapfrog ahead of the game:

California would require manufacturers to phase out the use of hazardous materials in making cell phones, iPods and other electronic devices under a bill introduced by a state lawmaker.

The bill unveiled Thursday by Assembly Member Lori Saldana, a Democrat from San Diego, would apply to any electronic or battery-operated device. The bill, which was introduced Wednesday, would require manufacturers to stop using the substances in devices sold in California by 2008.

"We know that the manufacturers of these products are able to produce them without including harmful toxic materials," Saldana said in a written statement. "California deserves to be included among the markets that receive this cleaner stream of consumer electronics."

California already requires manufacturers of video displays in devices to phase out the use of toxic materials.
What’s the best way to deal with this issue? The European option has always seemed very sensible to me: make manufacturers responsible for taking back and dealing with what they produce. That way they can choose how best to deal with heavy metals – either not use these materials in the first place or use them and then re-use or recycle them at the end.

However, if consumers will inevitably dispose of these in household garbage anyway and if, as Saldana claims, manufacturers can make these products without harmful materials (at little extra cost?), then it makes more sense to simply ban these materials altogether.

It will be interesting to see if these laws pass and – if so – whether the so-called ‘California effect’ means that other countries get non-toxic iPods too. California is sufficiently wealthy and populous that consumer product companies cannot afford to ignore the market entirely so its regulations affect regulations elsewhere. So, if Apple wants to sell its iPods in California, it must decide whether to make two products – one for sale in California and one for the rest of the world – or to make all iPods comply with the new California law.

Tuesday, February 21, 2006

Car parking levies – do they reduce congestion?

Melbourne has this year introduced a levy on car parking spaces in the city centre and owners of car parks will have to cough up the first fee next week. The fee is a flat fee of $400 per space per year, doubling to $800 next year and then rising with inflation (indexed to CPI).

Essentially it applies to all commercial spaces. Residential spaces are exempt - as are visitor spaces, loading bays, disabled spaces, spaces provided free by bodies such as schools, hospitals and churches, and some others.

The stated aims of the levy include reducing peak hour traffic congestion, pollution and greenhouse gas emissions in Melbourne’s CBD and encouraging the use of public transport.

This got me thinking: Do car parking levies really work? Is this likely to make any real difference to Melbourne’s city traffic congestion?

It’s difficult to find any hard data on the effect of car parking levies – most of the information comes from self-serving submissions by car parking operators and property owners asserting that car parking fees make no difference to congestion and will make all businesses flee the city in terror, taking their jobs and money with them etc etc. I imagine it’s very hard to isolate the effect of car parking levies from the host of other influences on traffic in cities.

The relevant stats that I could uncover suggest the following:

  • There is a response from commuters to higher car parking charges: a Vancouver study (PDF here) suggested that each $3 increase in parking fee reduced the probability of driving to work alone (as opposed to carpooling or using public transport) by about 10%. Another study from the University of California (Berkely) (PDF here) suggested an average price elasticity of demand for parking of –0.32 (which if my maths is right would suggest that a doubling in price would reduce demand by about a quarter). There must be some Australian studies on this surely?
  • In Sydney, according to some figures, 7.7% of vehicles travelling through the City of Sydney each day use off-street parking (which would be affected by a levy - another 7.5% use on-street parking and 85% is through-traffic). This figure is probably higher now that the cross-city tunnel has diverted some of the through-traffic out of the city. Still, if we’re generous and say that parking levies are passed onto parking users and result in 25% of those users switching to other modes of transport, that still only reduces congestion by about 2% (although it might reduce peak hour congestion by substantially more than that because many more peak hour users are commuters who will require parking).
  • Everyone agrees it’s a solid source of revenue. There’s some bickering about how fair it is, but taxing people who drive to work in the CBD of a large city seems intuitively a pretty progressive tax (many of my acquaintances work in the city and few of them drive to work – those who do are certainly the wealthier ones).

Here are my thoughts on its likely effects on congestion:

  • Demand for parking is fairly inelastic – it will take a large increase to induce much change in behavour.
  • A parking levy will mostly be passed through to consumers (because demand is inelastic).
  • This increase in price will have a small impact on demand for parking, encouraging some drivers to use other modes of transport. (A very high fee would have a substaintially larger effect of course).
  • If it is true that about 8% of city traffic uses off-street parking in the city (92% of city traffic is just through-traffic or uses on-street parking), a parking levy will have a very small impact on congestion overall. (We need other measures to catch these other drivers – tolls for driving through the city and obviously fees for on-street parking).
  • However, it might have a higher impact on peak hour congestion, as a greater proportion of peak hour users are commuters who will park their cars all day in off-street parking.
  • It is a solid source of revenue. It is progressive, targeting relatively wealthy individuals, it is relatively non-distorting (because it targets a product the demand for which is inelastic) and any ‘distortions’ probably act to counteract market failure due to the unpriced public good of driving in the city. It’s easy to administer. It also has a ‘polluter pays’ effect which gives me a nice warm feeling (though I acknowledge that there are probably better ways of targeting the polluters here).
  • If car park levy revenues are used to improve public transport, that is something that could have a substantial effect on congestion. Part of the reason for the inelasticity of demand for parking is that public transport is not a perfect substitute for car travel but if its reliability, speed, comfort and convenience are improved, it becomes a better substitute.

In summary, car parking levies seem a good source of revenue to direct towards public transport but on their own are probably a relatively ineffective method of reducing inner city traffic congestion.

Wednesday, February 15, 2006

Spooky monetary economics

Here at Oikos we like to go easy on the analysis and focus on the big issues.

The latest post at Institutional Economics talks about the Reserve Bank of Australia's recent statement on monetary policy. I'm sure there was some insightful analysis there (something about relative valuation levels coming back down to earth or something) but I missed it because I was fixated by the above graph of the ratio of Sydney house prices to house prices in other Australian capital cities over the last 12 years.

Has anyone else noticed the top half looks just like a map of the top half of Australia??


Tuesday, February 14, 2006

Happiness and wellbeing in Australia: some dodgy analysis

There was a bit of a flurry in the media and the Aussie blogosphere yesterday with the publication of the latest "Australian Wellbeing Index", which for the first time compares happiness across Australian federal electorates.

Comparing anything between geographical areas always brings out our latent tribalism, parochialism and schadenfreude.

The (Melbourne based) Age crowed:
VICTORIA is the happiest state in Australia and some of its most contented people live in Melbourne's wealthiest suburbs.
while the Sydney Morning Herald lamented:

IS IT aircraft noise, John Howard's long reign, or being overworked and underpaid that makes the so-called chardonnay socialists of Sydney's inner west the most disgruntled people in Australia?

A new survey that compares the wellbeing of people in all 150 federal electorates reveals the safe Labor seat of Grayndler… tops the national list for all-round unhappiness.

Here’s my guess: it’s not aircraft noise, John Howard or being overworked. In fact, I doubt whether Sydney residents are disgruntled at all – it’s just the way the survey is compiled. Here’s a clue in the SMH article:

The scorecard, known as the Australian Unity Wellbeing Index, is based on how satisfied people feel with seven areas of their life - standard of living, health, relationships, what they are achieving in life, safety, community connection and future security.

It shows the happiest electorates tend to have a lower population density, a high proportion of people over 55, more females, more married people and less income inequality. Importantly, they have a strong sense of "connection to their community".

Hm. An index that rates people’s happiness based partly on ‘community connection’ then finds that happy people tend to have a strong sense of ‘connection to their community’.

If we actually have a look at the report on the index itself, we see why that might be.
Subjective wellbeing is measured by the Personal Wellbeing Index. This comprises seven questions that ask "How satisfied are you with ------>?" The specific items people rate are their standard of living, health, relationships, what they are achieving in life, safety, community connection, and future security. The numerical rating scale offers 11 choices from 0 (completely dissatisfied) to 10 (completely satisfied). The PWI is the average rating across the seven items (domains).

There’s the rub. The index arbitrarily decides the 7 things that makes us happy and weights them equally. So there’s a big danger of circular reasoning: we decide that community connection contributes to 1/7th people’s happiness, so we ask them about how happy they are with their level of community connection. Then we tally up the results and, wow, people who rate their levels of community connection satisfaction low tend to be 1/7th less happy.

Here’s a suggestion. People in the inner city of Sydney don’t care too much about connection with community, at least in the traditional sense of having a chat to your neighbours over the back fence. If they did, they wouldn’t live in a fairly anonymous city of 5 million people. But the study decides that, for everyone in the country, community connection makes up one-seventh of our happiness.

Further, if you look at the results across different geographical areas, they’re actually all reasonably close together. Grayndler, the lowest in the country, scores 69.43 and Wide Bay, the highest, scores 78.55. Here’s another thing: because happiness with health and relationships are fairly randomly distributed across electorates (with some notable exceptions), these don’t contribute much to differences in the index. Which just increases the emphasis in the index on things that do differ, like ‘community connection’ and ‘safety’. Satisfaction with safety contributes another 1/7th to one’s subjective happiness, according to the survey. And, again, perceptions of safety are naturally going to be lower in ‘the big city’.

Now it may very well be that community connection does correlate well with happiness on other measures – but this study can’t tell us that, because it starts out with that assumption embedded in it. So drawing the conclusion from this study - as the Age and SMH do - that connection to community is an 'important' contributor to our happiness is completely invalid. It contributes exactly 1/7th to our happiness - because the survey decides at the outset that it does.

Now, I think surveys like this that move away from our obsession with GDP are a good thing, and I think this survey makes an important contribution to our understanding of happiness and wellbeing. The survey report contains some really interesting analysis of things that are correlated with this particular measurement of happiness.

But you also have to recognise its limitations and the most important one is that when you have a survey that has arbitrarily chosen questions, categories and weightings, you introduce arbitrary biases and you have to be very cautious of how you interpret the results.

No doubt the researchers are aware of this. But the media pundits who want to use it as a geographical scorecard aren’t. So let’s also be very cautious of their analysis.

Monday, February 13, 2006

Australian government censoring climate scientists?

Why does Australia always seem to follow everything the US does?

A few weeks ago there was furore in the US about allegations that the Bush administration censored leading NASA climate scientist James Hansen.

Now, ABC online reports that three CSIRO scientists have accused the Australian Government of trying to censor their public comments about climate change.

One says he was asked not to write in a government publication about the potential for millions of people to be displaced by climate change. Another says he was told not to make any comments indicating he disagreed with government policy on emissions. A third says that government censorship "happens all the time" and that he was recently told by his corporate centre that the Prime Minister's department had requested the CSIRO "not say anything about ethanol".

The Environment Minister denies these claims and says he'd welcome a CSIRO investigation into them. The story is on Four Corners tonight and should be interesting viewing.

It all reminds me of the cartoon above, which I saw on the US Environmental Economics blog.


Well I watched the show last night and, I don't know, it seemed like a bit of a beat up. What seemed to clear to me from the show was:
  1. CSIRO is petrified that if it annoys government, it might lose funding.
  2. CSIRO management tells its scientists what they can and can't talk about when they're representing CSIRO (eg, presenting at conferences on behalf of CSIRO). It may be that scientists also feel they can't make any adverse comments in their personal capacity, but there was no evidence of that in the show.
  3. The form of those restrictions seems to be that they can talk about science but not government policy. For example, they can talk about the impact of emissions and the need to reduce them but shouldn't comment on what the government should do to reduce them.
  4. It wasn't clear from the show what the case was where the science is part of the policy debate. For example, it's one thing to tell scientists (as was alleged in the show) not to advocate carbon trading - that's not really a scientific debate (although there are scientific issues involved). It's a different thing to tell them not to talk about the pros and cons of ethanol from a scientific point of view (which was also alleged) - this is a policy debate but the science is right at the centre of it.

Now, I don't think what CSIRO is doing is a good thing at all - I think the organisation should be big enough to handle its scientists expressing their professional views about policy options. But it's not really a scandal. There was never any suggestion in the show that scientists were ever asked not to talk about the results of their climate research. Nor was there any evidence that these directions came from government or indeed from outside the organisation itself. This is quite different from what was going on in NASA.

In my view, we should be very worried if the government or CSIRO is censoring the science but there are enough groups running with the policy debate to not be too worried if CSIRO scientists aren't participating in it. CSIRO really needs to sort out, however, what their apparent policy of "talk about science but not policy" means when the science is central to the policy.

Anyway, the full transcripts of the interviews are online at the Four Corners website, so have a look and decide for yourself.

Friday, February 10, 2006

Biodiversity trading

Photo montage: UniServe Science

I've been meaning to write about biodiversity trading and banking schemes for some time now, because such a scheme is being proposed in New South Wales.

Anyway, I will be writing about this lots over the coming months because it's a concept that really pushes the boundary of what trading schemes can achieve - people are justifiably sceptical of the very idea of 'trading' biodiversity - which means that it's both exciting and controversial.

For now I'll just flag it and point you to the NSW Department of Environment and Conservation website which contains an interesting background paper on the concept and a discussion paper outlining the current proposal.

Enjoy your weekend!

Thursday, February 09, 2006

Public transport - some good news from Melbourne

Beth reports that Melbourne City Council last night released its draft transport strategy and it contains some good news for public transport in the city centre.

Picture credit: City of Melbourne

Wednesday, February 08, 2006

Conservation vs logging: Battle of the dollars Part II

As I reported earlier, the Tasmanian Land Conservancy has purchased a large tract of land in Recherche Bay from its private owners, saving it from logging. What would environmental economics say about this development?

The ‘Coase theorem’ represents the traditional economic solution to environmental conflicts. Coase argued that if property rights are well-defined and enforced, bargaining between parties ensures that the optimal outcome is achieved, regardless of who holds the rights. According to one description of the theorem:

Many disputes over resources stem from the fact that no one owns them. Or -- nearly as bad -- everyone owns them, as in the case of public property. However, these disputes could be resolved if the unclaimed resources were divided up as private property. Now if someone wants to use your property, you could charge them a fee. Or if they abuse your property, you can sue them. Assigning property rights greatly enhances the ability to resolve disputes over the use and abuse of resources.
The Recherche Bay deal is perhaps an example of how this idea might work, sort of: environmentalists have gotten together money to buy an area of Tasmania’s historic Recherche Bay to protect it from logging by the notorious Gunns company. I’ve been following this story for a couple of months now and it’s been interesting. (Check out the reports in the weeks leading up to the deal on ABC news online.

I’m excited it’s succeeded but is it a triumph for free-market environmentalism? I’m not so sure. In my view, it’s succeeded despite the barriers to an optimal solution that a ‘free’ market throws in its way: a playing field that in this case is tilted against private conservation.

Here are some of those barriers.

Transaction costs

It’s a big deal for conservation groups to raise money from thousands of people to buy such an area. They need to advertise and lobby and beg and cajole to get it, they need to collect the money and hold it safely and issue thousands of receipts. They need to set up a trust to buy the land, work out how to manage it in perpetuity, work out who will negotiate with the landowner and so on.


If conservationists buy and save this area, who pays and who benefits? The generous benefactors pay, all sorts of other people benefit. I’ll benefit because I’d like to visit there one day and I’d like it there to be trees there when I do. I’ll benefit just from the warm inner glow I get knowing that a special place won’t be logged. Neighbouring residents benefit from. Historians and people of French and Australian heritage benefit from being able to visit or perhaps just watch a documentary about an unusual place where the French explored and almost made a decision to colonise Australia.

But will all these people pitch in their $5 or $10 or $100 to save the area? Not likely. Many of the beneficiaries may not even be aware of the benefits they receive. So it could well be that preserving this area is worth well in excess of the amount that conservation groups can raise.

Tax treatment

Tax treatment for conservation in Australia is complicated. It is improving, but there are many aspects of buying land for conservation that are not tax deductible. Donations to the trust that buys it will be, but payment for the land won’t (I think) nor the ongoing cost of managing the land for conservation.

So a group of conservationists face high transaction costs, free rider problems and difficult tax issues. On the other hand, where one logging company wants to buy the land to log it, it faces much lower transaction costs (only one party to organise and negotiate), very few free riders (it pays but also keeps the profits) and using land for primary production attracts very concessional tax treatment.

The property rights solution works sometimes but usually there’s too many embedded biases for it to produce an optimal outcome on its own.

In a later post I’ll talk about ways we can reduce some of the barriers to private conservation.

Conservation vs logging: battle of the dollars

Environmental economists’ ears prick up when they hear about conservationists buying out areas of land to protect them from logging or mining. In an economist’s ideal world, resources are used best when they go to those who will value them most, which means the highest bidder.

So it's interesting (and exciting as an environmentalist!) to hear about the purchase by Tasmanian Land Conservancy of the stunning Recherche Bay in Tasmania, which was due to be logged this year.

I've been following this story for a while and it's been full of political intrigue.

Stay tuned for some thoughts from an economic perspective.

Tuesday, February 07, 2006

Moving beyond Kyoto?

Nicholas Gruen has a nice piece at Club Troppo on the economics of climate change, the politics of Kyoto and the idea of an international agreement to impose domestic carbon taxes as an alternative to targets and international emissions trading.

Monday, February 06, 2006

Hooray, there’s uranium in our water!

It’s a funny world. ABC news online last week reported on an ‘exciting’ accidental discovery of high levels of uranium in groundwater in Western Australia’s wheatbelt and two days later reported that high levels of uranium in water near Alice Springs is suspected of contributing to kidney damage in the local Aboriginal community:

A group carrying out research into salinity in the Western Australian wheatbelt has stumbled on unusually high concentrations of uranium in the local groundwater.

The Cooperative Research Centre for Landscape Environments and Mineral Exploration made the discovery and has now received financial support from two hopeful junior exploration companies. The centre's chief executive officer, Steve Rogers, says while uranium mining remains under a State Government ban, mining companies are still keen for clues to potential deposits.

Dr Rogers says apart from the mining potential, the find has broken new scientific ground."We compared them to a database from the United States Geological Survey and the concentrations we see are higher than anything that anybody has ever seen in the United States, remembering that these are concentrations of uranium that are actually dissolved in water," he said. "So this is very exciting from our point of view."

My questions:

  • The Cooperative Research Centre for Landscape Environments and Mineral Exploration is established, regulated and mostly funded by government. Why is public money going towards exploring for a mineral that would be illegal to mine?
  • How is finding high levels of a highly toxic radioactive substance in water in an important agricultural area that produces a lot of our food ‘exciting’? Particularly when that substance is suspected of causing renal damage when dissolved in water sources.
  • What does the excitement and funding from exploration companies say about the attitude of the mining companies and government bodies that make up the CRC to Australia’s laws? Is their attitude that those laws can be changed to suit them if the right pressure is applied?

Thursday, February 02, 2006

The Kyoto vacuum: markets step in

It's been disheartening to say the least to witness the attitudes of the US and Australia to action on global warming.

The failure to commit to the Kyoto Protocol might not be so bad if these countries had some other realistic suggestions for global action. Judge for yourself, but in my view the Asia-Pacific Partnership on Clean Development and Climate is not a realistic alternative. Its focus on a few technological fixes is either naive or dishonest (let's face it, it's dishonest).

We need governments to commit to regulating their industries to reduce emissions sharply and fairly quickly. Industry isn't going to do it on its own.

Nevertheless, it's been encouraging to see alternatives emerging to fill the vacuum of political leadership that we're suffering at a national level. Lefties would call it people power, righties would call it the market, but however you see it, consumers or citizens are stepping up to the challenge and demanding change - and businesses are starting to respond.

Two developments this week have caught my eye.

Yesterday, the Carbon Disclosure Project entered its 4th stage - and it's much bigger than the last one.

The Carbon Disclosure Project or CDP is an initiative on behalf of fund managers who together manage more than $30 trillion. That's a lot of cash. They've written to 1,933 of the world's biggest companies (up from 500 last year) requesting detailed information on their activities and policies with respect to climate change.

Why are fund managers interested in this? Because climate change is going to be big business - it's effects are going to threaten some businesses, the demand for emission reductions are going to threaten others, while demand for clean energy and carbon offsets is going to present enormous business opportunities.

According to Reuters:

"There are business risks and opportunities (from climate change) that have implications for the value of investments in corporations worldwide," said Paul Dickinson, CDP project coordinator.

The investors have demanded disclosure on companies' risk from extreme weather events, often associated with climate change, and about their emission of carbon dioxide... and for their strategies to cut emissions.

Detailed information on emissions is seen even more key this year given high energy prices, increasing the attractiveness of companies which are less carbon and energy intensive, or which have active programs in this direction.

"It's a question of institutional investors taking a well-informed view of the profitability of companies based on energy consumption and (carbon) emission performance," said Dickinson. "You could take a view that climate change will be good for green technology companies... [while] unprepared companies could find themselves in the firing line of policy as political demands harden on the need for CO2 cuts [and] a blase attitude to climate change could also risk reputational damage.
And earlier this week came news from the US of the first State-based emissions trading scheme (in Illinois). It's voluntary (I'll leave it to you whether that's good or bad) and basically allows farmers and other landowners to earn credits by adopting various conservation measures. These can then be sold to companies and organisations who have committed to reducing their greenhouse impact by offsetting their emissions.

Essentially the scheme just represents a credible certification program and a sort of clearing house for funding of conservation projects. It's being overseen by the Chicago Climate Exchange which already runs a similar national program (I think the novelty of the Illinois one is that it has government sponsorship and involvement).

There's a growing number of these sort of initiatives (I'll research and report on the Australian ones in the next few weeks) and I find it very encouraging. I don't think it's a substitute for national political leadership but I think it will be a precursor to political action, once our pollies wake up and see that there is a political will for this, that business can do it and that there are feasible mechanisms. Then just watch them claim these initiatives as their own.

Wednesday, February 01, 2006

The real environmental vandals: accountants

It seems to me that many environmental problems are caused by accountants.

Ross Gittins has a piece in today's Sydney Morning Herald about the running down of our public infrastructure. It's been fairly easy to observe in Australia in recent years what he describes:

WHAT happens when politicians keep promising the electorate new and better government services, but also reinforce the belief that we're already overtaxed - and, for good measure, adopt the attitude that it's a terrible thing for governments to borrow? The short answer is, something's got to give. To make that inconsistent trio of propositions add up, there's got to be something somewhere that's being squeezed. Something that's not terribly noticeable. A path of least resistance.

For some time now, the more alert among us have suspected that the meat in the sandwich may be public works. That the politicians may be making heroes of themselves and proving they can do the impossible by quietly running down the quality and adequacy of public infrastructure.
Well, maybe the more alert among us - or maybe just anyone who's caught a bus or train in the past few years.

Gittins describes how a lot of public infrastructure, particularly at local government level, is being quietly run down to save money. These assets are depreciating at a rate of $1 billion a year but Councils are only setting aside half this amount for their repair and replacement.

The situation is "akin to a family that doesn't make sufficient provision for replacing worn-out parts, let alone saving enough to buy a new car when it reaches the end of its economic life" - which is the point where repairing the car is more expensive than replacing it. And the present backlog of $6 billion to bring assets up to a satisfactory standard is "equivalent to driving a vehicle with serious structural and mechanical problems that have not been attended to".
This raises the question, why?

Because, although in some cases it may be obvious to the public that council assets are run-down or even dangerous, for the most part the problem is hidden.

The issue has been easy to ignore because infrastructure typically has a life of 50 to 60 years and only a small proportion has required renewal so far. Councils have been able to fund the operation and routine maintenance of assets, with a limited amount of renewal. The crunch is still some years off. "By the time infrastructure condition is at such a bad state as to be noticeable to the community, it will long have passed the optimal time for renewal".
It seems to me there's something much bigger than public infrastructure that's being squeezed right now. Something big and not very noticeable and harder than infrastructure to account for.

It's assets that we take for granted because, unlike a sewer or a dam or a road or a railway line, they don't have a monetary value ascribed to them. But they have an enormous value.

These assets are rivers, forests, catchments, oceans, ecosystems. All over the world they're becoming seriously degraded. I think people notice it and think it's a bit of a shame. But what policy makers, governments and business are not really noticing is the huge drain on our wealth that it represents. These ecosystems are not just nice to look at and visit, they provide our resources and absorb our garbage. Eventually they'll get to the stage where we have to spend massive amounts of money repairing and replacing them. If we can do so at all.

But right now, they're just quietly being run down.

This is one reason why environmental economics is important. Putting a dollar value on a forest or river is kind of gross. But putting a dollar value on the economic services they provide is the only way to realise how much wealth we're squandering by running the level of those services down.

Which brings me back to accountants. It's not really their fault of course. But if a company tried to count the profits from selling stuff they manufactured while leaving out the hidden costs of depreciation of the equipment they used to manufacture it, their auditors would jump on them. Companies account for depreciation of their assets.

So where are the environment's auditors? When are we going to start accounting for the environment, for our natural assets?