Environmental action driving global economy

Around the world, innovative responses to climate change and other environmental problems are affecting more than $100 billion in annual capital flows as pioneering entrepreneurs, organisations, and governments take steps to create the Earth’s first “sustainable” global economy.

Why not send a car pollution bill at the end of each month to every driver? Perhaps this would motivate car owners to demand more fuel-efficient and less-polluting cars.

This is one of the major arguments of the latest book by WorldWatch Institute titled: State of the World 2008: Innovations for a Sustainable Economy.

To maintain the competitive advantage, entrepreneurs have come up with innovative responses to environmental problems and ‘clean tech’ has rapidly become a growing recipient of world’s third largest venture capital after Internet and biotechnology.

State of the World 2008 gives evidence on how global economic activity has gradually destroyed its own ecological base.

The book cites recent studies that conclude that the damage from global climate change could equal as much as 8% of global economic output by the end of this century.

The book also takes note of breakthrough environmental initiatives by some of the major companies like Citigroup, Goldman Sachs, Walmart, etc.

For example in 2007 about $66 billion were invested in wind power, biofuels and other renewable energy sources. Toyota has become the fastest-growing and most profitable automaker in the world by putting fuel economy and environmental sensitivity at the heart of its strategy.

The book urges the governments across the globe to establish incentives in the market that promote innovation by the private sector. Specific recommendations include steering investment away from destructive activities such as the extraction of fossil fuels, promoting environmentally sustainable industries, adopting environmental taxes, etc.

What is needed is a serious commitment to the Polluter Pays Principle to offer incentive at every level in society for energy conservation, improved resource productivity, and innovation.

In the era of globalisation, even the business houses cannot ignore energy costs and pollution issues. As society commits substantial resources to finding solutions to environmental challenges there will be significant market opportunities for those who can bring solutions to bear.