The financial crisis that's shocked world markets, sapped retirement accounts and dried up credit for businesses and individuals alike is about the only headline that seems to matter recently. It's the dominant theme in the presidential campaign, and has its fingers in every pocket book, bank account and business deal in the U.S., and the world.
Even while the enormity of the crisis, and our ability to prevent calamity, remain uncertain, analysts are beginning to consider the implications of the crisis for the environment. Here's a look at what some are saying:
The most salient argument against setting strict limits on greenhouse gases for years has been that it would impede economic growth. But there's been a growing movement -- embodied most aggressively first by former vice president Al Gore and now championed by Democratic presidential candidate Barack Obama -- turning that notion its head.
Investing in clean energy technology and energy efficiency improvements -- under a strict cap on carbon emissions - are seen as the lever that can lift the economy out of its slump by creating new industries, millions of new jobs and new technologies that can be created and manufactured in the U.S. and exported abroad.
Cathy Zoi, the head of Gore's Alliance for Climate Protection (a.k.a. the We campaign), told Reuters: ""My very strong belief is that we need to reorient our investments toward this transition to a clean energy economy, and it will be the engine of growth for getting us out of the doldrums that we've gotten in right now."
One point that this line of thinking doesn't address: Where does all the money come from, if private investors are withdrawing and governments are pouring their treasury coffers out to shore up private banks? Which leads us to ...
When the $700 billion Wall Street bailout grew into an $850 billion package loaded with incentives for leery lawmakers facing re-election, green tech advocates were rewarded with long-sought after renewals and expansions of renewable energy tax credits that should foster the solar energy, wind power and other clean tech industries.
Those tax incentives have been key to the recent growth in those industries, since investors are otherwise unwilling to put their money into projects that require a lot of up-front capital, but which will only pay off over time. The incentives have kept the renewable energy sector competitive with the heavily subsidized fossil fuels sector, and -- the thinking goes -- increasing tax incentives will help foster the innovations in renewable energy needed to make them cheaper than pumping oil or mining coal in the long run.
But, as a Marketplace report points out, that theory requires not only government breaks, but private investment. The financial crisis has everything to do with banks refusing to lend to one another -- let alone new potentially risky business ventures like opening a new solar thin film factory."Some of the investment banks that were providing financing for many of these very large solar projects, such as, unfortunately, Lehman Brothers, are no longer viable entities," Eric Wesoff, of GreenTech media, told Marketplace.
Assuming that the United States and the world will have the resources and political will to tackled global warming, what is the best strategy? The predominant strategy discussed has been to enact cap-and-trade regulations that limit the overall emissions and allow individual polluters to trade credits for the CO2 they pump into the air.
But after watching mortgage-backed securities and other derivatives tank the world economy, maybe setting up another complicated new market isn't the best strategy. At least, that's the way Jeffrey Sachs, a noted Columbia University environmentalist economist sees it. Like many economists, he instead favors a carbon tax, as he told Reuters:
"Having a lot of people engineer financial instruments for carbon when there are much more direct ways to do this strikes me as not really a great investment. I'm also not so keen on sending our best and brightest off to do more financial engineering. I think the kind of (financial) meltdown we have right is a little bit of an example of how we've taken a generation of young people and put them in tasks that don't really solve social problems."
While it might not seem possible to someone casually glancing at his 401(k), there are bigger -- and more expensive -- problems society faces than the financial crisis.
That's the point a new Deutsche Bank study, commissioned by the European Union, makes.
Deforestation alone costs us more than the trillions that have disappeared from financial markets, according to the study, as detailed by the BBC. Forest loss alone costs the world as much as $5 trillion every year.
This is only the latest in a string of studies in recent years that seeks to account for the monetary value of "ecosystem services" -- like the clean air we breathe, the clean water we drink and the carbon kept out of the atmosphere, thanks to forests.
The BBC report, however, may have been penned before the latest financial news hit the wires. The Wall Street meltdown has led to a loss of $2.3 trillion this week and $8.3 trillion over the past year.
Hopefully, it's easier and quicker to regrow Wall Street than a forest.
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