The Value of a Whale

On the Illusions of Green Capitalism

by Adrienne Buller

Reviewed by Simon Savill, 13th Sep 2024

We have known for decades about the ecological disasters occurring on our planet, from climate change caused by rising CO2 levels, habitat destruction on a massive scale and species depletions and extinctions. Why is it then that we have made so little progress in addressing these problems even though we know how little time that we have and despite widespread acknowledgement of the problem by politicians, companies and the general public?

This is the question that Adrienne Buller tries to answer and she thinks that much of the problem lies in the championing of "green capitalism" as the solution to the many problems that we face. The term is necessarily broad and includes a whole raft of ideas. These include carbon pricing and offsets, sustainability linked bonds, asset managers engaging with companies over ESG objectives (Environmental, Social and Governance) and even the idea of natural capital, assigning a monetary value to natural resources. This is where the title of the book comes from. It cites a study by researchers at the IMF (the International Monetary Fund) that came up with a value of $2m per great whale. This figure was based on the value of eco-tourism attributed to whales and also that over its lifetime, a whale on average stores the equivalent of 33 tonnes of carbon dioxide.

The Same Old Model?

Her arguments against green capitalism broadly fall into two categories. The first is that assessing the problems using a model of green capitalism radically constrains the possible solutions that can be employed. The second is that the solutions that have been tried have mostly proven to be ineffective.

Effectiveness or Cost Effectiveness?

The green capitalism model effectively means keeping the same economic overview that has led us to this situation but with a few tweaks around the edges. There is an underlying belief that cost effectiveness is always the best yardstick with which to assess action plans. But given the urgency and complexity of the problems, it may be that more radical action is required and so effectiveness should be a much more important measure. Sometimes you just have to stop the damage, even if it is painful to do so.

Tipping Points

This is particularly important given that the impacts that we are having do not occur in a linear fashion. This is the concept of tipping points, the idea that once you reach certain levels of, for instance, global warming, or habitat destruction, then the damage becomes irreversible. Buller gives the example of Thwaites glacier, the largest ice sheet on the Antarctic continent. This glacier is sometimes called the doomsday glacier and if it were to melt, it contains enough ice to raise global sea levels on its own by two feet (0.6m). Not only would this result in flooding in many low lying cities such as New York and London, but would be catastrophic for more vulnerable areas such as the Maldives.

Are We Nearly There Yet?

The real problem is that it is hard to predict exactly when you pass the point of no return because there are many complex interactions that occur. For instance, the Arctic is heating up much faster than the planet as a whole, due to a process called polar amplification. As the sea ice melts, instead of a white surface reflecting heat, you are left with the dark surface of the ocean, retaining the heat and so warming up faster. So you enter a feedback loop where the rate of change starts to accelerate. The IPCC (Intergovernmental Panel on Climate Change) has recently revised its guidelines and suggests that with temperature rises of between one and two degrees, ie where we are firmly heading, we are likely to reach a number of tipping points including some relating to Thwaites glacier and other parts of the cryosphere more generally. At two degrees, 99% of tropical coral reefs are likely to be lost. Given the extremely limited time left to act, and the potentially catastrophic effects of not doing so, it seems pretty difficult to argue that cost effectiveness should be the primary focus of our actions. Prevention is essential, cost effectiveness would be nice.

Results So Far? Could Do a Lot Better

Of course any discussion of cost effectiveness requires the assumption that the solutions are ultimately effective. Buller provides myriad examples to show that this has certainly not been the case for many of the green capitalist schemes introduced. Many of the clearest examples come from schemes which involve some form of offsetting. The most widely know is that of carbon pricing with the EU Emissions Trading Scheme being the best known. This involves the governments setting a limit on emissions, companies are given permits to emit certain quantities of CO2 and then any emissions above that have to covered by the purchase of offsetting credits. The EU reports that for industries covered by the scheme, reductions in emissions have been close to 40% since the scheme began; but therein lies the rub - so many industries have been excluded and permit grants have been so generous that over the first 15 years of operation, the impact of the ETS has resulted in a reduction of only 3.8% of the total EU emissions. Of course, there are different schemes around the world with different structures and different implied prices, but there seems to be some consensus that to be effective in reaching the goal of keeping warming to below 2 degrees, the global carbon price would need to be somewhere between $100 - $200 per tonne. It is currently around $35, higher in some countries and much lower in others.

The studies on the effectiveness of offsetting in relation to habitat destruction and biodiversity are even worse. Buller cites a report by the Nordic council of ministers evaluating the results of 500 biodiversity offsetting projects and found that the projects resulted in a 99% loss of habitat. She also relates the result of a review of biodiversity offsetting projects in Australia by the Nature Conservation Council which found that of the 8 projects evaluated, 6 resulted in poor or disastrous outcomes and the other two were only adequate.

The Wrong Direction?

But it is not only the lack of effectiveness that is the risk in many of these schemes. Buller quotes the climate scientist Kevin Andersen on the damage of offsetting: "worse than doing nothing", inasmuch as it "triggers a rebound away from meaningful mitigation and towards the development of further high-carbon infrastructures". A very real example of this has been replacement of coal with gas, reducing emissions but embedding future carbon emissions into the infrastructure rather than going straight to renewables.

A fundamental problem with offsetting schemes of all types, be it carbon, habitat or biodiversity is that for a functioning market to operate, the assets being traded have to be fungible, ie seen as the same or interchangeable. Particularly in the case of complex biological systems and habitats, the assumptions that would need to be made for this to be true would have to be heroic even by economic modelling standards. Even on what might be considered one of the easiest cases, a patch of forest, the difference between an acre of mature forest and an acre monoculture industrial planting is immense, especially when it come to long term viability and the impact on the habitat and on the animal life around it.

Fair?

Buller explains another objection to these types of offsetting schemes. By their nature, many of them involve the accumulation of large tracts of land by private companies which then sell permits generated from them. In practice this mainly means rich Northern Hemisphere companies acquiring land in poorer countries, often associated with the subsequent removal of either the indigenous people themselves or the removal of their historical rights to use the land. It could be seen as a modern form of colonialism. She gives a range of troubling examples, including problems in the Amazon, in India and Madagascar to name a few.

The fundamental argument is that the primary outcome of a championing of green capitalism is essentially a preservation of the status quo for the economic system that drove us here. The focus on cost effectiveness as the only important measure means that action tends to be unambitious and slow and results on the ground are secondary to creating new asset classes that can be traded and hailed as the holy grail of action without costs. Buller is also very conscious that entrenching this system of green capitalism does nothing to address the fundamental disparity between rich industrial countries and poorer developing ones. It is consumption within the rich countries that drives much of the habitat destruction in poorer ones and then it is companies from rich countries buying the land for offsets in poorer ones. There is also a clear shifting of emissions, pollution and other ills away from end users in the rich countries to the poor in the not so fortunate south.

Important

This is an important book. As climate change and sustainability move up the political agenda, it is vital to be able to distinguish between reality and marketing. For people outside of financial services or politics, it may be difficult to comprehend how little results or outcome matter when it comes to marketing a strategy or "solution" that happens to be profitable or politically expedient. My personal view differs from Buller in that I do believe that using economic incentives such as carbon pricing could be very effective if used properly. But the reason for their current ineffectiveness is something that I think that Buller would agree with. Ultimately, the shape of all of these mechanisms, incentives and action plans stem from the level of political will. The reason for ineffectiveness is not so much a lack of understanding as an unwillingness to take action that is opposed by powerful interest groups, either political or corporate. That is why potentially useful schemes or regulations are allowed to be watered down to such an extent as to become insignificant. But this is not a problem of using pricing incentives - it is one of implementation, and of guts.

The other issue that I would debate with Buller is the value of economic growth. I accept that there are a great many problems associated with the way that Northern economies have developed and that GDP growth should not be the only indicator that matters when looking at the health of a nation. But I equally think that it is very difficult to argue that in broad terms, increasing economic prosperity has not resulted in better lives for most people over time. This seems to me particularly clear in terms of health outcomes such as average age or infant mortality, access to education or civil rights. I am clearly not saying that each is exactly a direct result or that some of these cannot go backwards at times of particular political stupidity, but in general, over time it seems to be fairly well correlated. Designing a better, fairer system does not mean throwing out everything.

What I think we can all agree on is that however you want to dress it up, action on climate change and other environmental problems is ultimately a function of political will. The window we have to avert disaster is far too small not to take serious action, now. This is not going to be without cost but there is no other choice. If companies are encouraged to do things, they produce marketing documents. If they are regulated with meaningful penalties, they change their behaviour. It is time for governments to step up.

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