Sustainability: Proximate vs. Ultimate Costs

The world economy is in the midst of wrenching change.  Increasingly convincing science tells us the human population - and our industrial growth - are approaching the limit of what Planet Earth can provide.  At the same time, our markets - the drivers of wealth, health, freedom, and personal achievement - demand that we act upon the challenges we face now, not in the future.  It's this tension that underlies many of the challenges in transitioning to a "sustainable" economy, whatever that means.



Easing the tension will require a method of applying future costs to today's costs.  This is exactly what Europe is trying to do by implementing a carbon cap-and-trade market.  Theoretically, if the future costs of carbon production today can be priced into today's carbon creation price, then the gap is bridged.  It's a good idea, and a good start, but the carbon markets of today suffer from critical shortcomings.

Foremost of these shortcomings is an argument over the actual future cost of today's carbon production.  After all, it's not easy to predict the effects of higher carbon levels in Earth's atmosphere.  First, one would have to count up all the types of changes that higher carbon could cause.  Should weather be included?  if so, then the costs of future hurricanes and floods need to be included in the price.  What about rising seas?  If Manhattan, Boston, and Miami need to build dutch-style systems of levees and locks to protect themselves from rising seas, should that be counted as a cost of carbon, or an opportunity for economic growth?

Well, surely the challenges we will face in future - whether from weather, disease, or disasters - will have costs and be drivers of economic growth through innovation & employment.  That's how our economy, and indeed nature, work.  It's a relentless arms race, each step a reaction to a current condition in the environment.  And with each step a re-allocation of resources and - in the best cases - more efficient use of what's available in order to do whatever needs to be done.

Needless to say, it's ridiculous to propose counting the dollars created, less the dollars spent, over the march of human technological evolution.

But most sustainability supporters don't require anything so precise in order to decide which way we need to go as a global economy.  I suspect that most people who want to see business be more sustainable see in their minds something similar to the tragedy of the commons: when individuals share a common resource, they tend to take an amount which - if everybody else took the same amount - would soon render the commons bare.

The tragedy of the commons is also a perfect example of the tension between proximate and ultimate costs.  And because our markets, and yes, our planet's very own ecological systems, deal in the proximate - the now - we humans are not alone in our selfish ways.  I've wondered if it's possible to escape this mind-set.  And wondered if there's any reason to try and escape it.  At the moment, I believe the tragedy of the commons, the hegemony of now, must in some way be a law of physics.

So is it possible to embrace the fact of the tragedy of the commons, that we will always value what's here now far more than what may come in the future, while at the same time not rendering the commons bare?

Finding an answer to this question is the self-assigned task of today's social entrepreneurs.  These businesspeople are driven to prove that they can grow company profits while rejuvenating the commons, even in an environment where others aren't playing such a high-minded game.  And yet many experiments in many fields, both in labs and in minds, have shown this goal to be attainable only in rare and unstable circumstances.  So is the goal of today's social entrepreneurs attainable?  Or is the goal simply one to which one aspires?  Or perhaps some envision a fundamental shift in the way our entire global market operates: into a market that accurately sums the future costs of the resources we consume today, and includes those costs in the price.

Look around today's marketplace, and you'll find companies espousing any and all of the above visions of the future.

But I can't help but ask myself: when it comes to my own company, Wine on Deck, will I ever be forced to decide between the destruction of my company, or making a decision I know isn't healthy for the commons?  So far, I don't think I've had to violate my ideals to grow my company.  But I don't doubt the time will come when that fateful decision will have to be made.  And I'd also bet I'll have to make these decisions more than once.

hmmm....