The Constant Economy E-Book

Zac Goldsmith

• Herausgeber: Atlantic Books
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 282

Veröffentlichungsjahr: 2009

Beschreibung

Since the industrial revolution, the economies of developed nations have grown at the expense of the natural world. But the earth's resources are finite, climate change threatens to dramatically transform how and where we live, and the global economic system is in disarray. One way or another we will have to change. The longer we delay, the more our societies will be at the mercy of events and the harsher the eventual adjustments. Fortunately, as this book shows, there is an alternative. Zac Goldsmith argues for the creation of what he calls a 'constant economy' - in which resources are valued not wasted, food is grown sustainably, and goods are built to last. The constant economy operates at the human scale, and above all it recognises nature's limits. He shows that almost every action needed to support the environment is already being carried out somewhere in the world, by companies, communities and governments determined to blaze a trail. Where they have done the right thing, their customers and voters have rewarded them. Practical solutions exist, and they are brought together and set out in this ground-breaking book.

Leseprobe

THE CONSTANT ECONOMY

Born in 1975, Zac Goldsmith joined the Ecologist magazine in 1997 and became its editor. In 2004 he received Mikhail Gorbachev's Global Green Award for 'International Environmental Leadership'. He is now the Conservative prospective parliamentary candidate for Richmond Park in London.

THE CONSTANT ECONOMY

How to Create A Stable Society

Zac Goldsmith

Atlantic Books London

First published in Great Britain in hardback and airport and export trade paperback in 2009 by Atlantic Books, an imprint of Grove Atlantic Ltd.

This electronic edition published in Great Britain in 2009 by Atlantic Books

Copyright © Ecology Grants Limited, 2009

The moral right of Zac Goldsmith to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act of 1988.

All rights reserved. No part of this publication may be reproduced, stored in aretrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of both the copyright owner and the above publisher of this book.

Every effort has been made to trace or contact all copyright-holders.

The publishers will be pleased to make good any omissions or rectify any mistakes brought to their attention at the earliest opportunity.

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A CIP catalogue record for this book is available from the British Library.

ISBN: 978 1 84887 396 4

Atlantic Books An imprint of Grove Atlantic Ltd Ormond House 26–27 Boswell Street London WC1N 3JZ

www.atlantic-books.co.uk

For Uma, Thyra and James

Contents

Preface  1

Introduction: The Case for Change  9

Step One: Measuring What Matters  23

Step Two: Power to the People  32

Step Three: The Precautionary Principle  47

Step Four: Food Quality, Food Security  68

Step Five: Save Our Seas  93

Step Six: An Energy Revolution  106

Step Seven: Getting Around  128

Step Eight: Built to Last  143

Step Nine: A Zero-Waste Economy  159

Step Ten: Playing Our Part  170

Conclusion  182

Sources and Bibliography  188

Acknowledgements  193

Index  194

Preface

The first British election fought on environmental issues was hardly an extravagant affair. It didn't capture the imagination of the public or the world media, nor was it fought by a recognizable political party. Yet in terms of the development and progress of green politics, it was a key event – even if the unlikely battleground was Suffolk.

In 1974, the global environment was, at best, a marginal concern. And in one of the most keenly contested general elections of the twentieth century, the second in the same year, it was going to take something startling for green issues to be taken seriously. My uncle Teddy – founder of the Ecologist magazine and member of 'People', which eventually became the Green Party – helped draw up a stark manifesto based around his magazine's Blueprint for Survival. It was obvious to him that he would need something more than mere argument, or even the snappy line 'No deserts in Suffolk. Vote Goldsmith' to attract people's attention. He needed a camel.

Teddy managed to find one, and it provided much-needed colour in an otherwise greyish political climate. As a stunt, however, it failed to pull in the voters, and Teddy – to no one's surprise – lost his deposit in style. Not only that, but a paper-waving official accused him of animal cruelty, citing the effects on the camel of breathing in car fumes. 'That's exactly my point,' Teddy declared. 'Imagine what it's doing to us!'

Thirty-five years later and there has been a seismic shift. Green concerns have moved from the fringes of political debate into the mainstream of government. But despite this progress, there remains an almighty gulf between what is said and what is done. Tony Blair, for instance, described climate change as 'the greatest long-term threat to our planet'. 'Inaction', he said, would be 'literally disastrous'. In charge for a decade, Blair had presided over a country that became neither less polluting, nor more prepared for environmental change.

There are nevertheless patches of good news from the world of politics – many of which are mentioned in the course of this book. The trouble is that most of them address only one, albeit immense symptom of the environmental crisis: climate change. They do little to address the fact that we are rapidly shifting from an era of abundance towards one of scarcity – a situation caused by a combination of massive population growth, an insatiable human appetite for consumption and an ever-shrinking resource base.

This might seem like a nightmarish vision of the future, but it is, in fact, a mathematical certainty. We cannot continue to consume the world's resources at the rate we are, without expecting them to run out at some point. But that very basic truth has almost no bearing on policy decisions. Governments shy away from tackling the issue, terrified of antagonizing voters with unpopular policies. The underlying assumption is that there is a straight choice between economy and ecology – and, ultimately, the economy always wins. But it's a false choice.

The recession has already cost many people their jobs, their savings and even their homes. In such times, concern for the environment necessarily slips down the agenda. But the right environmental solutions would help, not hinder people struggling to cope. And when we emerge, as we know we will, we can do so with an economy that is environmentally literate, where green choices that are currently available only to the wealthy become available to all.

Now is the time to decide what sort of economy we want to develop from the ashes of this recession. Instead of struggling to recreate the conditions that delivered it, we can choose to stimulate the development of a cleaner, greener and much less wasteful economy. We can build something new, something that will regenerate our stagnant economies, and which, unlike the growth model that has dominated for decades, can actually last. We ignored economists' warnings that we were living beyond our financial means. We cannot continue to ignore scientific warnings that we have been delving into nature's capital for too long. As one US conservationist has cautioned, 'Mother Nature doesn't do bailouts.'

Critics of the environmental agenda claim the cost of a green economy would be hundreds of billions, if not trillions of pounds. But they confuse cost with investment. For example, if I invest one hundred units in improving the energy efficiency of my local school, and save twenty units each year thereafter as a result, that represents a hugely rewarding investment opportunity. And the shift doesn't require 'new' money.

There should be no need for net tax increases to pay for our indulgence in things green. It simply requires bullish signals from government. If a proper cost is attached to pollution and waste, businesses will minimize both. And if the funds raised from taxing these activities are used to incentivize the opposite, we will see a dramatic shift in the movement of money towards the kinds of investments and activities that we need. With the right encouragements, whole sectors could flip. UK pension funds, for instance, control about £860 billion. Imagine the impact if they chose to invest it in the new green economy?

But it's not just the way that we invest that needs to be addressed, it's the way that we look at costs. As a young child, I would pilfer ice cream from my mother's kitchen and sell it at knock-down rates to passers-by on the streets outside my home. The cash tin overflowed, and I was delighted. With zero capital costs on the balance sheet, I'd turned, relatively speaking, an enormous profit. It was only when my clandestine enterprise was uncovered that I was forced to confront the subsidies my parents had unwittingly provided and discovered that I had, in fact, made a substantial loss. If polluting industries had to pay for the clean-up, they would see a similar effect on their balance sheets…

Our politicians need to understand that reconciling the market with the environment is our defining challenge. And that it is possible. By shifting taxes, removing perverse subsidies and creating clear signals, this will happen naturally. Opportunities will spring up, jobs will be created and we will enjoy the emergence of a truly constant economy. By and large, Westminster knows this, so why do they remain so reticent?

One of the factors that most inhibits politicians is a media that remains hostile to green issues. How else to explain the baffling experience of opening the Sun newspaper one day to find a photograph of myself next to the image of a pink vibrator and under the headline 'Goldsmith Wants to Ban Dildos' (because sex toys are energy inefficient)? No less than the Sun's main political editor angrily demanded that my ideas be 'dropped like a stone'. Of course he knew I'd never said anything of the sort. Indeed until the story appeared I had never spoken, let alone written, about sex aids. But for the Sun – and many other media outlets – green solutions are bad. They have to be bad, and they have to be stopped.

Of all the things to worry about, being accused of wanting to ban energy-inefficient vibrators isn't top of my list. However, what is worrying is the reluctance of some of the most powerful media outlets to look seriously at green issues. For vote-dependent politicians, the treatment of environmental policy by the papers is reason enough to pause. But while it's easy to point the finger at the papers, I believe greens themselves have to shoulder some of the blame.

During their days in the wilderness, greens had to talk up the impending ecological crisis. They felt they had to shock people and went out of their way to scare people into action. While the world was looking away, uninterested in their prognosis, there was little else they could do. But as the world finally began to take heed, green voices factionalized, splitting into two quite different camps – both of them, to my mind, wrong.

The 'lighter' greens took the softer, more culturally agreeable route to green consumerism. If everyone switched to energy-efficient light bulbs, and drove better cars and bought better food, they said, the world would be saved. It's an attractive philosophy, but one that is ultimately flawed. Yes, the more people use green goods, the better for the planet, but it would require the vast majority of the world's people to change their lifestyles for the planet to feel a measurable impact. For any number of reasons this will never happen. Green choices need to be the norm, not the expensive gestures of a few who are committed or wealthy enough to make them. For all their good intentions, in trying to promote their impossible world consensus, 'lighter' greens are simply letting politicians off the hook.

'Darker' greens took a different path. Years of tracking the brutal consequences of market failure have nourished in them an understandable contempt for the market itself. Like our foot-dragging politicians and reluctant media commentators, they also believe, wrongly, that we are faced with a choice between the economy and ecology. The only difference is that they favour the latter.

They have seen the market's transformative power, but they cannot imagine it being used for renewal, and they long instead for its replacement. But it is an illogical approach. Just as uncontrolled cell growth defines cancer, indiscriminate economic growth devastates the planet. The 'market' is no more to blame for environmental destruction than healthy cells are to blame for cancer. The problem is our failure to write the rules. Given that the market isn't going anywhere, that is what we must do.

But 'darker' greens have grown used to being at the radical fringe, and as mainstream society has crept closer, they have drifted away. Their alarm is extreme, their pessimism infectious and their disenchantment a dampener on the enthusiasm of ordinary people. When they identify solutions, they identify the hardest, most punitive solutions, and when they describe the challenge, it is invariably insurmountable. As a consequence, many people feel impotent and fatalistic in the face of the environmental challenge.

Both strategically and factually this is extremist dogma, and it provides environmental naysayers with the straw man they need to discredit the environmental agenda. We know we consume way beyond our means – if the experts are right, roughly three times beyond our means – but that doesn't mean we must live lives that are three times poorer. It means we should demand food that has travelled shorter distances, less packaging for goods, and products that will actually last. It means using taxes to protect natural capital, like forests and fisheries, so that we can continue enjoying the interest.

The temptation is to believe, as our politicians and much of the media believe, that if there's no pain, there can be no gain. For years, I certainly thought so – which might go some way to explaining why the Ecologist, which I edited for nearly a decade, became for a while, perhaps the world's gloomiest magazine. But my outlook was changed when I was asked by the British Conservative Party to help oversee a review of environmental policy with John Gummer MP.

Our job was to look for solutions both at home and abroad – to identify successful schemes and bright ideas. We discovered that almost everything that needs doing is already being done somewhere in the world. Looking at the portfolio of ideas we'd found, we saw that if we took the best of today in every sector and made it the norm tomorrow, we'd be halfway or further to our goal. I was struck by the simplicity of the solutions. Solutions that would actually help people cope with hard times, not add to their difficulties. Time and again, we'd stumble across something so obvious, and so effective, that we'd wonder why on earth it hadn't already been adopted.

Many of those ideas appear in this book. It is in no way exhaustive, but collectively these solutions offer a programme of action that could set us on course towards a healthy, constant economy; one that recognizes the inescapable link between nature and the economy, one that knows limits and can last.

Two hundred years ago, Edmund Burke, the father of conservative philosophy, said 'Society… becomes a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born. Each contract of each particular state is but a clause in the great primeval contract of eternal society.' It's difficult to imagine a more sensible approach, nor one further removed from that of our current political leaders.

British politicians, and the British people, have it within them to rise to this challenge. They have done it before. In 1939, a whole generation fought what seemed like an impossible battle – and won. After victory, in 1945, that generation joined with an unprecedented, government-led mission to build a pioneering welfare state, which lifted millions out of poverty and revolutionized the lives of ordinary people. The disaster of war spurred us on to create new priorities, and build a better country. Today, the impending ecological disaster gives us the chance to rise to that challenge again.

The country needs leadership from its politicians, but they will not provide it unless we – the electorate – send them a clear message. For doing the right thing, they will be rewarded. For doing the wrong thing, they will be sacked and history will be harsh in its judgement. It is up to them to act, but we must make them act.

This book is not a self-help guide for improving individual lifestyles. It is a political programme: a tool for voters, and a challenge to the political classes; a gauntlet thrown down at their feet. They know what is wrong, and they know they must act. Here is what they should do. Here is the programme. If they don't agree with it, they must provide another way of achieving these goals – and then they must put it into practice. What they can no longer do is avoid these issues. Future generations will not forgive them.

Introduction

The Case for Change

Whether we and our politicians know it or not, Nature is party to all our deals and decisions, and she has more votes, a longer memory, and a sterner sense of justice than we do.

Wendell Berry

The world is in trouble. As human numbers expand and the resource-hungry economy grows, the natural environment is suffering an unprecedented assault. Forests are shrinking, species are disappearing, oceans are emptying, land is turning to desert. The climate itself is being thrown out of balance. In just a few generations, we have created the biggest threat to the natural world since humanity evolved. Unless something radical is done now, the world in which our children grow up will be less beautiful, less bountiful, more polluted and more uncertain than ever before.

In 2005, the UN conducted a wide-scale audit of the planet's health. Its conclusions were stark. 'Over the past fifty years,' it reported, 'humans have changed ecosystems more rapidly and extensively than in any comparable period of time in human history, largely to meet rapidly growing demands for food, fresh water, timber, fibre and fuel. This has resulted in a substantial and largely irreversible loss in the diversity of life on earth.'

Between 1970 and 2003 the population of land species declined by nearly a third, and populations of tropical species declined by more than half. In the past thirty years, humanity has destroyed almost half the planet's original forests.

We are rapidly altering the very systems on which we depend. Without coral reefs and mangroves to act as 'fish nurseries', fish stocks simply collapse. Without certain species of bee or wasp, many plants cannot be pollinated and will not grow. Without rainforests, the planet loses not only thousands of as yet undiscovered species, but also a 'carbon sink' that helps slow climate change. Only through our destruction of these things have we come to realize just how irreplaceable they are.

At the root of all this is simple mathematics. The human population is growing, along with our hunger for resources – but the earth itself isn't. It's an uncomfortable fact, but it is nevertheless inescapable. Oil will eventually run out, and what remains is in the hands of countries we can't always rely on. The world's great breadbaskets are shrinking at an alarming rate, and water shortages now affect more than a hundred countries. All this, and there remains the biggest environmental challenge of all – climate change.

When Britain launched the Industrial Revolution in the eighteenth century, no one could have predicted that two centuries of rapid development, based on the mass consumption of coal, gas and oil, would eventually begin to change the climate of the planet. The energy that had made our advances possible, it seemed, was not without its consequences.

Few credible sources now deny that climate change is a very real phenomenon. What was once a marginal scientific debate has become the framing argument for all our discussions about the future. If even the most conservative predictions are accurate, the effects will be serious – just how serious depends on how fast we act now to stave off the worst of its effects. When an organization like the International Red Cross warns that aid will not be able to keep pace with the impacts of climate change, we should be concerned. Still more so when major financial institutions issue similar warnings.

According to German reinsurers Munich Re, the economic losses from natural disasters increased eightfold from the sixties to the nineties. About 80 per cent of this resulted from extreme weather-related events. The company now predicts that by 2065, damages will outstrip global assets. Insurers of the United Nations Environment Programme (UNEP), meanwhile, believe worldwide losses linked specifically to climate change will reach a yearly £184 billion in fifty years' time. Politicians may delegate these concerns to future generations. But it is the insurance industry's function to put a price on danger. Their warnings cannot simply be brushed aside.

With financial institutions already primed to react to the effects of climate change, the issue is no longer seen in purely environmental terms. As the Archbishop of Canterbury has said, 'the economy is a wholly owned subsidiary of the environment'. The one is inextricably linked to the other.

In his report to the British government in 2006, the World Bank economist Nicholas Stern described climate change's potential for major economic disruption and social chaos. The cost of delaying action, he said, is far greater than we can accommodate, and the longer we delay, the higher those costs will be.

While climate change is the biggest problem we face, it is in many ways just a symptom of our dysfunctional relationship with our planet. Even if climate change were not happening, we would still need to address the fact that our water consumption globally is growing at twice the rate of our population. We would still need to recognize the importance of food security as breadbaskets become deserts, water tables fall and our own farm base dwindles. We would still need to address the fact that we are dependent for our every need on oil – a finite resource to which access can never be guaranteed. We would still need to prevent the destruction of forests, coral reefs, wilderness areas and the species which depend on them.

We would still, in other words, have a big problem on our hands. And we would still need to act swiftly and with determination to prevent it getting worse.

Is it really as bad as all that?

It's sometimes hard to reconcile these relentless horror stories with the reality of Britain today: a reality in which life, for many people, is materially better than it has ever been. Two centuries of industrialization and economic growth have brought huge material progress. We have better homes, jobs, education and health care than ever before. We can fly to any nation in the world in a matter of hours. The Internet can find us almost anything at the click of a mouse. At this moment in time the nightmare vision of an environmental meltdown seems remote.

But the global economy does a very good job of hiding its consequences. It is a hugely effective system for delivering wealth, but it grows at the expense of the natural world; its fresh water, forests, hydrocarbons, fisheries and farmland. The effect is that almost none of the wealth it creates can be transferred to our children.

Mass Migration

If even the most conservative estimates relating to climate change are accurate, we will see a wave of human migration on a scale we have never before had to accommodate.

In 2007, the Intergovernmental Panel on Climate Change (IPCC) predicted that

By the 2080s, many millions more people than today are projected to experience floods every year due to sea-level rise. The numbers affected will be largest in the densely populated and low-lying megadeltas of Asia and Africa while small islands are especially vulnerable. Climate change over the next century is likely to adversely affect hundreds of millions of people through increased coastal flooding.

The International Red Cross produces an annual Disaster Report. A recent one tells us that in the seventies, the number of people whose lives were affected by natural disasters was about 275,000. In the nineties that figure jumped to 18 million – a 65-fold increase. The organization reports that 5,000 new environmental refugees are created each day.

And it's not just victims of the more shocking, visible disasters. Klaus Toepfer, ex-Director of the United Nations Environment Program (UNEP), has predicted that by 2010, the number of people on the move to escape the effects of 'creeping environmental destruction' will reach 50 million. The IPCC believes that number will swell to 150 million by 2050.

It's not hard to see how that might happen. Roughly 100 million people live in areas below sea level, and given that the vast Greenland ice sheet is shrinking by eleven cubic miles each year, their prospects aren't good. The World Glacial Authority has told us that seventy-nine of the eighty-eight glaciers it has studied are retreating.

But it's not just people in low-lying lands who should be alarmed. In Iran, 124 villages have been abandoned in recent years as a result of soil erosion. In China, the Gobi Desert is growing by 10,000 km2 each year. The UN calculates that worldwide, 250 million acres of good land are lost each year, affecting the food security of more than a billion people.

Environmental refugees now outnumber conflict refugees – and as a result, there is a campaign afoot to require the international community to formally recognize their status. But we only have to look at the social tensions created by a few hundred thousand immigrants to this country to understand that the movement of hundreds of millions, if not billions of people across borders is simply not possible.

Finding a way forward

There comes a moment where the news is so bleak that people are inclined to throw their arms in the air and simply give up. Faced with a barrage of bad news in relation to the global environment, people increasingly ask 'What's the point?' Even if Britain magically gets its act together, they say, what difference can that possibly make if other countries don't follow?

While the problems are indeed vast, they are not insurmountable. Solutions exist, relatively straightforward, even quite painless ones. But they need to be on the same scale as the problems.

We cannot, for instance, simply 'green consume' our way to sustainability. We can buy energy-efficient light bulbs and organic food; we can invest our money ethically, and growing numbers of people do. All of this is good news – but for such actions to make a real difference, they would need to be taken up by everyone, and realistically that just isn't going to happen in time.

It's not that people are uninterested in being part of the solution. Virtually every opinion poll on the subject shows that the majority of people genuinely value the natural environment. Time and again they express strong views on tackling climate change, protecting local landscapes and living sustainably. The trouble is, most green choices cost more. If you want to be environmentally friendly – drive a green car, take the train or eat good quality local food – the cost can be prohibitive. For many people, it's just not a realistic option. The challenge is to make it possible for everyone – not just the wealthy – to make green choices, and to save money doing it. And that requires government leadership.

Government can use the legislative process to encourage good behaviour and discourage bad. Government can harness the power of the market, and work with business to re-tool society for a greener age. Government can work with other nations to tackle international problems, like climate change. Government leadership will be the difference between success and disaster.

Politicians in Britain, as elsewhere, can see the rising tide of concern over green issues, and in many cases know what solutions are required. The environment has never been so high on the political agenda. It has moved from being the preserve of professional environmental organizations into the public sphere. Global businesses like BP, Shell and HSBC write open letters to the prime minister calling for stronger policies on climate change.

Yet few politicians are prepared to take the action needed. Nothing happens. Time ticks by, the situation grows more urgent – and government does nothing. Why?

Politicians are terrified of acting because they believe that tackling the looming crisis will involve restricting the electorate's choices. They believe that saving the planet means destroying the economy, and that neither business nor voters will stand for it. They fear the headlines of a hostile media. They fear, ultimately, for their jobs. It always seems easier to do nothing – to let the situation drift and hope that someone else takes the risk.

Such fears may be understandable. But they are wrong. The necessary changes need not be painful. They do not have to have a negative impact on our lifestyles. Almost everything that needs doing is already being done, somewhere. And where companies, communities and even governments have blazed a trail, they have not only done the right thing, they have been rewarded for doing the right thing. Genuine solutions are there, and they work. But they need to be radical, and most importantly they need to be fast.

Leadership, not headlines

Like the politicians, the public is aware of the scale of the problems we face. Increasingly, people will look askance at any party that does not have green issues at the heart of its manifesto. But we need to make sure we get it right. We cannot afford to extinguish the public's appetite for green solutions with a clumsy, badly planned or punitive approach.

Unfortunately, when politicians do promise action, they often pick the wrong solutions. They are either superficial attempts to grab headlines, or clumsy, unpopular measures that give green politics a bad name.

If a government is serious about the risks of climate change, it shouldn't build homes on floodplains. If it is genuinely concerned about the growth in emissions from aviation, it shouldn't plan to treble airport capacity. If it knows that fifteen of the world's seventeen fisheries are at the point of collapse, it shouldn't make policy as if those stocks are healthy and will last forever. If it wants to change consumer behaviour it shouldn't adopt clumsy so-called 'green taxes' that do little but anger consumers and businesses.

The lack of political commitment in Britain is increasingly leaving us behind. In France, President Sarkozy is taking a hard line on aviation, while Angela Merkel is driving Germany towards rapid emissions reductions with targets far higher than EU or UK levels. President Obama has promised to invest £61 billion in a 'Green New Deal' to stimulate the US economy, create 5 million 'green-collar jobs' and to accelerate the transition to a clean economy. Japan has said it intends to create a million such jobs, South Korea has promised to invest £38 billion in green technology by 2013, and Spain is planning to built 6,000 miles of high speed rail by 2020. If we are concerned about our 'global competitiveness', this is the competition we should be aiming to win.

That politicians now know the scale of the problems we face as a planet gives them a moral and a political imperative to take the necessary action. If they do not do so, they do not deserve the privilege of government. They must either act, or let others act. Business as usual is not an option.

The tools for change

Our defining challenge is to marry the environment with the market. In other words, we need to reform those elements of our economy that encourage us to damage, rather than nurture, the natural environment.

The great strength of the market is its unique ability to meet the economic needs of citizens. Its weakness is that it is blind to the value of the environment. Unrestrained, we will fish until the seas are exhausted, drill until there is no more oil and pollute until the planet is destroyed.

But other than nature itself, the market is also the most powerful force for change that we have. The challenge we face is to find ways to price the environment into our accounting system: to do business as if the earth mattered, and to make it matter not just as a moral choice but as a commercial imperative. Destruction of the natural environment must become a liability, not an externality. We shouldn't have to choose between the economy and the biosphere: we must combine them. That means rejecting economic growth based on environmental degradation, and rigorously applying the principle of making the polluter pay.

This is a fundamental principle. Put into practice – which is not nearly as difficult as it might sound – it would transform the economy overnight. Polluting companies would be at an economic disadvantage, and clean ones would be favoured by the market.

Today, the opposite is more likely. Dirty companies can offload the costs of their pollution onto the taxpayer, and regularly do. Global taxpayer subsidies to fossil fuels worldwide, for instance, are estimated to be in the region of £152 billion each year.

So what specifically needs to be done to reframe the way markets work? Firstly we need to use market-based instruments such as taxation. When these tools cannot work, we need to change the boundaries within which the market functions by using well-targeted regulation.

Taxation is the best mechanism for pricing pollution and the use of scarce resources. If the tax emphasis shifts from good things like employment to bad things like pollution, companies will necessarily begin designing waste and pollution out of the way they operate. People do not trust governments, so it's crucial that whatever money is raised on the back of taxing 'bad' activities is used to subsidize desirable activities. For example, if a new tax is imposed on the dirtiest cars, it needs to be matched, pound for pound, on reductions in the price of the cleanest cars.

The other major tool in the policymakers' kit is trading. Carbon emissions trading is a good example of a market-based approach which attaches a value to carbon emissions and ensures that buyers and sellers are exposed to this price. As long as the price is high enough to influence decisions, it can work.