Why the environmental movement will fail, and how you can make money on it
Martin Westerman / ©2022
If you had let environmental groups pick your stocks since the first Earth Day, April 22, 1970, instead of paying high-priced “gurus” to pick them, you’d have long-ago made your fortune. Why? Because the environmental groups’ villains included aircraft, chemical, fossil fuel, pharmaceutical, tourism and other bedrock enterprises of the New York Stock Exchange, S&P 500 and mutual funds. Environmentalists would have picked you a winning portfolio at a bargain price.
More than 50 years after Earth Day #1, every country in the world still depends on fossil fuels to power its economy – from energy generation and leaf blowers to transportation and wars (currently, U.S. vs. “drugs” and Russia vs. Ukraine), all supplied by such climate change deniers as Shell, Exxon, BP and Gazprom. As the price of fossil fuels rises, economies decline; as they fall, economies rise.
Today’s Americans have bigger things to think about than the environment. As former Exxon CEO Rex Tillerson asked Exxon shareholders on May 29, 2013: “What good is it to save the planet if humanity suffers?”
One might find that statement ironic. Without a planet, there would be no humanity, hence indeed no suffering. And thus all human potential forever gone.
Economists in the early 1990s conservatively valued the environment’s benefits and savings (ecosystem services) at $33 trillion a year (Robert Costanza et al.), a number that dwarfed the $28 trillion generated by the world’s economies. But ecosystem services do not show up on any public or private entity’s balance sheets. No accounting standard (GASB or GAAP), or budgets or financial statements assess or account for oxygen production, carbon sink, erosion control, stormwater management, public health, property value enhancement, extreme weather moderation and more that the environment provides for free. In 2022 dollars, the $54 trillion value of Earth’s ecosystems still dwarfs all value that enterprises create (E-commerce? Only $5.5 trillion).
While irony informs environmentalists, it doesn’t inform investors. Even though the scale of “soft” green assets (the environment) dwarfs the scale of hard “grey” ones (built infrastructure), investments in “grey” assets dwarf those in green. Successful enterprises operate “in the black,” unsuccessful ones “in the red.” None operate “in the green.”
Following Rachel Carson’s 1962 expose book Silent Spring, the U.S. banned DDT, which major U.S. chemical companies had been producing. Yet, the Stockholm Convention on persistent organic pollutants (POPs) includes an exemption for DDT, where its benefits to control insect-borne illnesses “outweigh (human) health and environmental risks.” Where humans benefit, harming the planet and its life forms is an acceptable trade-off.
Americans’ balanced portfolios and wealth building are based on investments in enterprises that create more negative than positive impacts on the environment: the real estate, agribusiness, aircraft, automotive, asphalt, beauty, building materials, cement, chemical, clothing, coatings and paints, construction, defense, electrical and electronics, fast food, fossil fuels, furniture, glass, government, grocery, health care, hospitality, marine, medical, metals, mining, pharmaceuticals, plastics, tourism, treated wood and waste management industries.
Besides stuffing landfills, North America’s investment sweethearts have also created “forever chemicals” and substances that either do not, or take decades or centuries to break down in the environment: DDT, heat- and oil-resistant poly- and per-fluoroalkyl substances (PFAS), flame retardants (PBDEs), insulation liquids (PCBs), lethal radioactive waste (from the energy, military and medical establishments), and micro-plastics, phosgene, cyanide, herbicides (e.g., DuPont’s Agent Orange and Monsanto’s glyphosate), roadway paint, vehicle tire and rail brake dust, lead, arsenic, asbestos and mercury. Most of these products are now found in and harm humans, other fauna, flora, air, land and water. The U.S. is also the world’s #1 plastic waste contributor, and a chief contributor to the 50 million tons of electronic waste dumped every year worldwide.
“This isn’t personal; it’s business,” goes the saying. People can afford to be moral or immoral. Money is amoral. And survival of for-profits, non-profits, governments and economies depends on money.
Environmentalists have made the moral case, showing human impacts on polar bears and other animal s. But they have failed to get the monetary impacts incorporated into business and government balance sheets (via GASB and GAAP). They have come close with Ecosystem Service Valuation (ESV) – incorporating ES monetary values in nature restoration projects, and with Transfers of Development Rights (TDR) – land swaps between suburban and exurban landowners. The exurb retains a pastoral landscape by selling development rights to parties who add development density in other urban or suburban locations.
But the specialization inherent in capitalist economies challenges environmentalists. It has unwittingly separated end users, intermediaries and producers from the environment that provides the resources for their products and their survival on Earth.
One way to help reduce that separation is to extend private property rights to their end point: any material mined or produced on private property remains the property of the mining or producing company. Thus, any transfer through monetary exchange to intermediaries and end users would make possession of that property a limited-term lease, so the originator and/or its assigns would be responsible for the material’s ultimate disposition. This would internalize costs, and stop the transferring of disposal responsibility to others. But the opposite occurs.
Externalizing environmental costs has changed the planet’s weather patterns, as well as the migration and growth patterns of marine and land animals and plants. Rare bomb cyclones, heat domes, atmospheric rivers, thermal inversions, and wildfire seasons are now becoming common. The resulting destruction and dislocation costs are astronomical. But the U.S. economy regards payments for fire-fighting, damage recovery and resettlement, medical care, increased use of fuels and electric power for mitigation of heat waves (air conditioning) and cold snaps (heating), and even increased insurance premiums – as credits, not debits on the U.S. GDP. Our accounting systems are obviously flawed.
Thus, human commerce and exploration have unwittingly spread invasive species and diseases worldwide. Europeans since 1634 have brought smallpox, Yellow Fever, cholera, scarlet fever, and Spanish flu to the Americas. Also, polio, Asian flu, HIV-AIDS, SARS, Swine Flu, ZIKA, Ebola, H1N1, Norovirus, MERS and COVID. Likely next epidemics: monkeypox and avian flu. They have proliferated plant diseases, too: blights that killed the American chestnut, corn species, boxwood and other flora; fungus infections that killed oaks and larches; rusts and borer insects that are killing madronas, birches and other trees. All these diseases have generated widespread deaths, massive impacts to world economies, and profitable activities for chemical, pharmaceutical and bio-tech companies.
We eat unwittingly – more meat per capita today than in 1970, even as global bovine flatulence (methane) from the livestock and dairy industries adds more greenhouse gas emissions to the atmosphere than cars, aircraft, trains, ships and all other modes of transport. Meanwhile, U.S. factory farming of beef, pork and poultry generate more waste than local disposal systems can manage.
We drink and irrigate unwittingly. The U.S. Forest Service reports that half of our 204 freshwater basins cannot keep up with demand, and within the next 50 years, many parts of the U.S. could see their freshwater supplies shrink by two-thirds. Consumption-encouraging water agreements and government policies ignored potential extreme weather impacts, and the time, snow pack and rainfall required to replenish water supplies. Americans are boosting GDP in their search for more drinking and irrigation water – digging more wells, and building energy-intensive desalination plants, which deliver filtered water at about twice the price of fresh, but at 99.4% less than the cost of bottled. About 80% of their power comes from fossil fuels, 11% from renewables, and 9% from deadly-waste nuclear.
And we live unwittingly. Environmentalists assert that urban areas are the most ecological places to live. Today, nearly half of the world lives in them. But they present downsides: heat island effect, income inequity, economic and governance challenges, traffic congestion, poor air and water quality, aging infrastructure, supply chain issues, elimination of green spaces, commercially delivered invasive species, high living costs, increased homelessness and slum growth, drinking water and waste-disposal challenges, high energy consumption, high resident and worker stress, faster disease spreads, shorter lifespans.
Meanwhile, a population the size of Florida – about 21.5 million, is roaming the planet as “climate refugees” (U.N. High Commissioner for Refugees (UNHCR)). By 2050, a population the size of China – 1.5 billion, may be out there. The wrong perspectives here are (a) expecting humans will adjust to climate changes, and (b) viewing refugees as potential customers for housing, clothing, food and entertainment.
Environmentalists have succeeded since Earth Day 1970 in passing laws and creating agencies that have made significant progress in both addressing environmental problems, and improving human product efficiencies. But politics trumps the environment. Right-wing U.S. politicians and conservative justices, financed by the U.S. commercial, fossil fuel and agribusiness industries are now working through the North American administrative, judicial and legislative systems now to dismantle those agencies and laws.
All of this reminds me of a scene from the television series Battlestar Galactica (Episode #206), where the Cylon Symbiant whispers into her partner’s ear, “There’s one thing we know about human beings with certainty: they are masters of self-destruction.”
Art imitates life. In Sapiens, Yuval Harari notes that, “The moment the first hunter-gatherer set foot on an Australian beach (from Africa) was the moment that Homo Sapiens climbed to the top rung of the food chain on a particular landmass and therefore became the deadliest species in the annals of planet Earth.”
Most ironically, homo sapiens is the last of five hominid species that once walked the Earth. But its record of driving animal and plant species to extinction is second only to the meteor that hit Earth 66 million years ago and wiped out 97% of all life. While humans consider themselves uniquely intelligent, all Earth’s plant and animal species display intelligence – from basic instinct to near-human reasoning. Yet humans rarely recognize or communicate with those intelligences, and instead have asserted their own primacy, and exploited “lesser species” for their protein, ritual value and other assets. Often, groups of humans do not recognize the intelligence of other humans, or communicate with them if their belief systems or color differ from their own.
Humans should have long ago mastered the challenge of “Saving the Earth.” But polarized politics, stymied governments, patterns of commerce, land development, travel and conflict show that humans have little interest in or political will to change their habits.
The economy is providing well for them, and all welfare and progress depend on healthy economies. So the environmental movement will fail, but we’ll all make money on it — until the environment fails us.