Environmental full-cost accounting

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International 'Climate Renegade'
Social Costs, Environmental Costs, War Costs of Oil/Gas/Carbon Add Up

The nation’s top science panel has just sketched a clearer way to set a fair price today for cutting tomorrow’s climate risks. Some of Trump’s advisers say the price should be zero.

Currently set at $36 per ton of carbon dioxide, the metric is produced using a complex, and contentious, set of models estimating a host of future costs to society related to rising temperatures and seas, then using a longstanding economic tool, a discount rate, to gauge how much it is worth today to limit those harms generations hence. (For context, the United States emitted about 5.1 billion tons of CO2 in 2015, out of a global total of 36 billion.)

... the social cost of carbon underpins justifications for policies dealing with everything from power plants to car mileage to refrigerator efficiency. The carbon valuation has already helped shape 79 regulations.

The strongest sign of a coming challenge to the social cost calculation came in a post-election memorandum from Thomas Pyle, who was then president of the industry-funded American Energy Alliance and Institute for Energy Research and who now leads the Trump transition team for the Department of Energy. In the memo, he predicted policies resulting in “ending the use of the social cost of carbon in federal rule makings.”

Economic models significantly underestimate climate change risks -- It’s almost impossible to calculate how many trillions of dollars it could cost.

Review of Environmental Economics and Policy

June 2018

Source: London School of Economics

The paper's authors, Thomas Stoerk of the Environmental Defense Fund, Gernot Wagner of the Harvard University Center for the Environment and Bob Ward of the ESRC Centre for Climate Change Economics and Policy at the London School of Economics and Political Science, draw attention to "mounting evidence that current economic models of the aggregate global impacts of climate change are inadequate in their treatment of uncertainty and grossly underestimate potential future risks."

They warn that the "integrated assessment models" used by economists "largely ignore the potential for 'tipping points' beyond which impacts accelerate, become unstoppable, or become irreversible." As a result "they inadequately account for the potential damages from climate change, especially at moderate to high levels of warming," due to rises in global mean temperature of more than 2 Celsius degrees.

The authors draw attention to "a major discrepancy between scientific and economic estimates of the impacts of unmanaged future climate change." They state: "These discrepancies between the physical and the economic impact estimates are large, and they matter. However, physical impacts are often not translated into monetary terms and they have largely been ignored by climate economists."

Social Costs, Full Costs of Carbon

From GreenPolicy friend Andrew Revkin: "This ProPublica article just scrapes the surface on why there's no easy answer in deciding how much to invest now to limit downside risk to future generations ... there’s probably no more consequential and contentious a target for the incoming administration than an arcane metric called the “social cost of carbon.”

US Climate Politics 2015-2017: Risks and Costs Are Real and Growing

"Thin Blue", Protecting National & Global Security


Thin Blue.jpg

Most Strategically Vital of Earth's Life Enabling Resources, the "Thin Blue" Atmosphere


SJS / Siterunner: A Case Study: External costs, 'externalities', have profound consequences when we look to the "Thin Blue Layer", the atmosphere of the Earth that comprises an ultimate element of environmental security.

The developing field of atmospheric science and Earth Science conducted from new space platforms and research missions is in its early stages even as the extent of emissions/externalities with profound potential for damaging the atmosphere are globally emitted by industrialization. These chemical compounds result in a human-caused 'atmospheric mix' that is, in ways yet to be determined, changing the future of the thin layer of atmosphere surrounding Earth. Although it should be manifestly evident that scientific study is a necessity at this point in history yet, in 2015, in the US Congress, a climate change 'denial caucus' acting in the House science committee proposed a number of severe cuts to space-based NASA Earth Science research. Only as a result of strong objections were the proposed cuts restored to the final 2016 US appropriations budget.

Environmental security is an essential element of national security, as we at GreenPolicy have been bringing forward in online discourse and political outreach. We join with our associated site, Strategic Demands, to advocate for policies that look more astutely at environmental security issues directly tied to national security issues that face each individual nations and the community of nations. The Paris climate agreement of December 2015 is a step in this direction, recognizing that the costs of climate change and 'externalities' produced by human action are a clear risk with potential for catastrophic cost.

The costs and questions we are addressing here focus on 'New Definitions of Environmental and National Security.'
The consequential realities are rising across the globe to become existential threats.


"Externalities" (Harmful Externalities)

In economics, an externality is the cost or benefit that affects a party who did not choose to incur that cost or benefit.

For example, manufacturing activities that cause air pollution impose health and clean-up costs on the whole society, whereas the neighbors of an individual who chooses to fire-proof his home may benefit from a reduced risk of a fire spreading to their own houses. If external costs exist, such as pollution, the producer may choose to produce more of the product than would be produced if the producer were required to pay all associated environmental costs. If there are external benefits, such as in public safety, less of the good may be produced than would be the case if the producer were to receive payment for the external benefits to others. For the purpose of these statements, overall cost and benefit to society is defined as the sum of the imputed monetary value of benefits and costs to all parties involved... Unregulated markets in goods or services with significant externalities generate prices that do not reflect the full social costs... to societies... (-- Wikipedia)

"Environmental full-cost accounting"

Environmental full-cost accounting (EFCA) -- Cost accounting that traces direct costs and allocates indirect costs by collecting and presenting information about the possible environmental, social and economic costs and benefits or advantages – in short, about the "triple bottom line" – for each proposed alternative. It is also known as true-cost accounting (TCA), but, as definitions for "true" and "full" are inherently subjective, experts consider both terms problematic.

Since costs and advantages are usually considered in terms of environmental, economic and social impacts, full or true cost efforts are collectively called the "triple bottom line". A large number of standards now exist in this area including Ecological Footprint, eco-labels, and the United Nations International Council for Local Environmental Initiatives approach to triple bottom line using the ecoBudget metric...

Because of this evolution of terminology in public sector use especially, the term full-cost accounting is now more commonly used in management accounting, e.g. infrastructure management and finance. Use of the terms FCA or TCA usually indicate relatively conservative extensions of current management practices, and incremental improvements to GAAP to deal with waste output or resource input... (Wikipedia)


SJS / Siterunner: In the founding Green Party Platform of the US, as I drafted in the mid-1990's, the thought was to find a way to deal with the economic problem of hidden, harmful costs of production/distribution supply chains and economics. True-price/full-cost accounting was a foundation concept on which we developed green ideas to deal with a wide-spectrum of environmental, green business challenges.

The smog in Los Angeles in the 1950's for example, which was as bad as any city internationally, had profound negative consequences, especially damaging children's health. The costs were significant and real, generational, as reduced lung capacity and in-air particulates led to a host of medical conditions. Political leaders like George Brown and Jerry Brown realized much was needed to be done and they went to work. I joined in, having opportunities to work with both men over the next decades. A high point was working directly with Jerry in the 1992 presidential campaign, especially on the campaign platform, a history-making challenge as we envisioned and pulled together the "We the People Platform-in-Progress"."

Update/LA Times-March 2015 -- "Clean air is good. Here's a tip of the cap to all who worked to make LA a model for clean air regs in CA, the nation, and green best practices that have been out in front, adopted by cities and states around the world... The kids and kid's health say Thanks!"

The beginnings of the US green movement in law and practice can be traced to the 60s/70s era and its green ideas, many of which came from California, and the subsequent foundation of environmental laws in California and the US.

SJS: As an extension of this decades of green work your GreenPolicy siterunner proposed in the drafting of the founding Green Party Platform of the US Green Party that special attention be given to "Eco-nomics" and to "externalities", adding to the Key Values and document language a focus on full-/true-cost accounting as a method to move toward 'smart' and sustainable eco-nomics and healthy growth. I wrote the following and then went on to address how economics/energy/policy could make a difference:

"SJS: 'TRUE-COST PRICING', which reflects the 'realistic' cost of products including ecological damage and externalities caused during the manufacturing process, must be adopted to achieve accurate financial accounting. Only with a shift in the way we are seeing, can we accurately assess our energy choices and costs – and the long-term impacts of the energy decisions we are making."
Greens support a major redesign of commerce. We endorse 'true-cost pricing'.

Excerpt from the US Green Party Platform - 2000:

Economic Sustainability and Eco-nomics

True-cost pricing and sustainability excerpt from US Green Party Platform 2000.png

SJS: Sustaining our quality of life, eco-nomic prosperity, environmental health, and long-term survival demands that we adopt new ways of doing business. Greens support a definition of sustainability where we openly examine the economy as a part of the ecosystem, not as an isolated subset in which nothing but “resources” come in and products and waste go out and never the economy and the real world shall meet.
The issues of damaging growth, as a result of ill-considered development, are many but clearly the need for smarter, greener ways to bring quality of life, security and progress are the challenge of our times.

In the U.S. and across the globe, based on 'out in front' green environmental precedents created in the law, regulations and practice, the changes, shifts, new directions for smart, well-managed and sustainable environmental policies are beginning to take effect even as fossil fuel, polluting, toxic producing industries and non-renewable energy companies look to roll-back progress.

The political issues and debates, such as the "precautionary principle vs cost-benefit analysis", will continue as green leadership and green best practices continue to push forward.

As issues arise in how best to rapidly adopt renewable energy, the full-costs of fossil fuels must be made known, discussed widely, and taken into account. Greens have a special role in this educational and shift in markets from fossil fuels to renewable alternatives. With essential full-cost information as a basis for decision-making, the renewable, clean energy market will fast become more extended and competitive.

This is key to overall goals to reduce greenhouse gases and grow resilient, sustainable economies. True-pricing and environmental full-cost accounting are green next steps.

It is time for a price on carbon.





Managing the Environment, Managing Ourselves: A History of American Environmental Policy --- 2006 --- by Richard Andrews

Environmental Policy: New Directions for the 21st Century --- 2012 --- by Norman J Vig, Michael E Kraft

American Environmental Policy: Beyond Gridlock --- 2013 --- by Christopher McGrory Klyza, Christopher David J. Sousa

The "golden era" of American environmental lawmaking in the 1960s and 1970s saw twenty-two pieces of major environmental legislation (including the Clean Air Act, the Clean Water Act, and the Endangered Species Act) passed by bipartisan majorities in Congress and signed into law by presidents of both parties. But since then partisanship, the dramatic movement of Republicans to the right, and political brinksmanship have led to legislative gridlock on environmental issues. In this book, Christopher Klyza and David Sousa argue that the longstanding legislative stalemate at the national level has forced environmental policymaking onto other pathways.

A Fierce Green Fire --- 2003 --- by Philip Shabecoff

"Aldo Leopold at 100" ---- Leopold Links / ASU

When the Earth Moved - April 15, Earth Day, 2013 / New Yorker

New Economic Visions: Beyond the Old Definitions

Green Ecological Concepts and New Eco-nomics

New ways to envision sustainable development and growth




Tag: Eco-nomics, a 21st Century paradigm in development @GreenPolicy360

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