SUNS  4357 Thursday 21 January 1999


Environment: New economic model needed for next century



Washington, Jan 19 (IPS/Danielle Knight) -- The global environmental decline that has become increasingly evident could undermine economies worldwide in the decades ahead unless there is a shift away from the wasteful use of raw materials and fossil fuels, says the Worldwatch Institute.

The special millennial edition of the Institute's latest `State of the World' annual report, explains that a new economic model using land, water and raw materials much more efficiently and based on renewable energy - such as wind and solar power - is needed for the next century.

"Our analysis shows that we are entering a new century with an economy that cannot take us where we want to go," says Lester Brown, president and founder of the Washington-based environmental think-tank. "The western industrial model - the fossil-fuel-based, automobile-centered, throw-away economy that so dramatically raised living standards in this century - is in trouble," he warns.

The report says the global economy cannot expand indefinitely if the ecosystems on which it depends continue to deteriorate.

While the global population has grown since 1900 by more than four billion - three times the number of people the world had at the start of the century - the natural ecosystems that support economies are falling apart, says the report. Oceanic fisheries, for example, are being pushed beyond their limits from a combination of pollution and over-exploitation.
Water tables are falling on each continent, rangelands are deteriorating from overgrazing, and many of the remaining tropical forests are on the verge of being wiped out, says the report.

Scientists believe the billions of tonnes of carbon that have been released into the atmosphere over the past century through the burning of fossil fuels - mainly coal, oil and gas - are causing the planet to become hotter and hotter.

The latest increases, in 1998, sent the average global temperature to its highest level since record-keeping began in the mid-19th century.
Higher temperatures are projected to threaten food supplies in the next century, even as more severe storms cause economic damage and rising seas flood coastal cities.

The early costs of climate change may already be evident, says the report. Weather-related economic damage of $89 billion in 1998 exceeded losses for the entire 1980s. In Central America, Hurricane Mitch killed an estimated 11,000 people, and Honduras suffered losses equivalent to
one-third of its annual gross domestic product (GDP).

While world energy needs are projected to double in the next several decades, world oil production is expected to peak within the next few decades.

"These trends cannot continue for many more years," says the report. "As the 21st century approaches, the big question is whether we can muster the ingenuity to change - and do so rapidly enough to stave off environmentally-based economic decline."

One key to reversing environmental degradation is to tax activities that cause it, according to the report. "By putting a price on these activities, the market can be harnessed to spur progress," it says. If coal burning is taxed, for example, solar energy becomes more economically competitive. And if auto emissions are taxed, cleaner forms of transportation become more affordable, says Worldwatch.

Some governments have been moving to limit the damage.

Costa Rica plans to generate all its electricity from renewable sources by 2010, while the Danish government has banned the construction of coal-fired power plants. Germany, now governed by a coalition of Social Democrats and the Green Party, has embarked on one of the most ambitious environmental tax reforms, says the report. It plans to reduce taxes on wages by 2.4 percent, while raising energy taxes by the same amount. "This is a landmark step that will push Europe's largest
economy in an environmentally sustainable direction," says the document.

In the last decade of the 20th century, Europe has also been leading the way in switching to alternative energy sources such as solar and wind power. In the last five years, Europe has increased its wind-power generation by 5,000 megawatts, half of it in Germany, whose northernmost state of Schleswig-Holstein gets 15 percent of its electricity from the wind. "Wind power, now one of Europe's fastest growing manufacturing industries, employs thousands of workers," the report points out.

Sales of other new energy technologies are soaring as well, according to the report. The production of solar photovoltaic cells has doubled in the last five years, propelled in part by the Japanese government's efforts to promote solar rooftops as a standard option for new suburban homes.

Fuel cells, which turn hydrogen into electricity, with water as the only by-product, are meanwhile being spurred by billions of dollars in investment capital, as companies pursue them as a replacement for everything from the coal-fired power plant to the internal combustion engine, says the report.

Many corporations are beginning to realize that a shift away from the fossil-fuel economy will create some of the next century's largest investment opportunities.

For example, Bill Ford, incoming of chairman of the Ford Motor Company, has plans to increase his company's profits by replacing the internal combustion engine that was at the center of his great-grandfather's success.

"There is a rising tide of environmental awareness," says Ford. "Smart companies will get ahead of the wave. Those that don't will be wiped out."