With GEAR in reverse on green issues, SA needs an economic policy on the environment
25 November 1997
Time Magazine published a special edition this November dedicated wholly to "saving our precious planet" as the "biggest challenge for the 21st century". In its articles, among them by US Vice President Al Gore and former USSR President Michael Gorbachev, there was a clear admission that economic activity is the main offender on environmental impacts.
Yet South Africa's official macro-economic strategy, the so-called Growth, Employment and Redistribution (GEAR) policy, makes virtually no mention of environmental issues. With planning for the 1999 elections already underway, political parties would do well to put an economic policy on the environment firmly on their campaign agendas. In a series of articles, Money Values will suggest what their discussions could revolve around.
Such a policy would make sense for several reasons:
An economic policy on the environment should address three levels: national economic policy; trade and industry; and community economics.
At a national policy level, the government should institute an investigation into the social and environmental consequences of the GEAR macro-economic strategy. This is particularly important given its similarity to World Bank / IMF structural adjustment programmes which have come under severe international criticism for their negative impacts on the societies and ecologies in which they have been imposed. At the very least, sustainable development and environmental protection should be integrated into the GEAR policy.
The government should also institute a programme for supplementing and adjusting the national accounts to factor in environmental impacts. Gross National Product (GNP) and its related national accounts are widely employed as the measure of a country's progress. However, these measures add instead of subtract expenditure related to environmental degradation. For example, when the Exxon Valdez oil spill or Chernoby nuclear accidents occurred, their respective country's GNP grew, implying that they were better off as a result.
True social welfare needs to be measured by adjusting GNP to take these negative impacts on society into account, such as has been done by ecological economist Herman Daly's Index for Sustainable Economic Welfare (ISEW). The ISEW paints a very different picture of the US and UK economies, with the ISEW having declined since the 1970s, despite GNP continuing to rise. These national accounts should also be supplemented with other measures of progress and welfare, such as the UN's Human Development Index.
The government should begin to measure the economic value of its environmental assets, resources and services (e.g. forests, water, topsoil, animal populations), and maintain these in a National Register. Presently, much of the natural environment is given a zero-value either because it has simply been taken for granted or because it is difficult quantify its contribution to the economy.
However, there are numerous studies which have begun to make these estimations, and the environmental values have proven to be substantial. For example, recent research on the price of 12 of Nature's "free" services placed their economic value at three time global GNP. There are also a growing number of examples of countries with national environmental and resource accounts and environmental valuations. Together they are enabling the government and business sectors to make more informed decisions in the best long term interest of society and the environment.
In the next article, I will look at economic instruments, trade and industry and community economics, and their interface with the environment.