It was a Bad Idea in 1489…

No amount of natural capital accounting would change the behavior of the power companies, because environmental protection is not their motivation.



By Eve Mitchell

Some things get better with age — fine wine, farmhouse cheese. Some just don’t.

It’s all the fashion these days to talk about a “new” way to ensure that companies involved in food production are held accountable for the environmental damage they do. Often called natural capital accounting or offsetting, the theory is that if we attach a notional price to, say, healthy soil and clean water, then companies can use that information to account for any damage they do, or be somehow rewarded for avoiding this damage.

Among the several difficulties with this approach are that (a) it isn’t new and (b) it doesn’t work.

To the folks promoting this stuff: please convince me that this isn’t an extension of the Enclosures and Clearances on a global scale, because it sure feels like it.

Quick history lesson: in the 15th century, Tudor England saw an escalation in the conversion of public lands (known as commons, a history still reflected today in names like Clapham Common or Ealing Common) to private control, usually to facilitate sheep pasturing by new landowners seeking to profit from British wool, then a growing global commodity. Once the land was “enclosed,” the people who previously grew food or grazed animals on these commons were excluded, and many were evicted from their homes, lost their livelihoods and were criminalized as paupers and vagrants — all for “the greater good”, of course.

By 1489, laws were being passed against enclosures, but the profit motive of the elite persisted, and by the 1700s the drive to “improve” land in Scotland led to a period of violent removal of people from their ancestral homes to make way for more profitable sheep production. The Clearances are remembered bitterly, and the ruins of abandoned homesteads can still be seen in the Scottish Highlands.

Anyone with a passing knowledge of history knows that these times are not remembered with words like “harmony” and “justice.” Yet some seem bent on extending the enclosures today, using natural capital accounting to fix an arbitrary price to elements of the natural world (often based on economic modeling rather than facts). Often coupled with offsetting schemes riddled with fraud and lack of accountability, these are used as a figleaf over the newly acquired right to pollute (for those who can afford it), without having to bother about things like getting the informed consent of the people affected, some of whom are from cultures that may well not do private property.

The chorus of pleas to use natural capital accounting as a means to ensure that big corporations pay for bad behavior is mistaken. Corporations don’t pay — they pass costs on to their customers to maintain their profit margins and payouts to shareholders. When those customers are, well, everyone, and when the stuff they are buying is air or water, it doesn’t take long to see who is going to feel the sharp end of the stick as the bills for cleanup and maintenance arrive.

Without a legal requirement on a company, the niceties of environmental protection and social justice simply don’t outrank the drive to return the highest possible profit to shareholders, because this is how the board of a company retains its position. We call that legal requirement “regulation,” but the current atmosphere is making sensible regulation rarer than it should be, and people still pay.

Case in point: in the UK, provision of electric power was privatized in the 1990s, and the market is now dominated by the Big 6 domestic energy providers. The Energy Company Obligation (ECO — cute, huh?) was placed on power companies in early 2013 to force them to deliver energy efficiency measures to help reduce energy usage and improve the UK’s carbon emissions. It didn’t last a year.

By December, the UK government, faced with public anger at spiraling home energy bills and accusations that companies are misleading the public about their profits, is moving to lift the ECO burden from companies for two years and to shift it to the public purse. Energy bills will still be higher than last year, and may go up further if companies’ costs rise — and what’s more, we’ll pay twice as our taxes do what the energy companies say they can’t afford.

No amount of natural capital accounting would change the behavior of the power companies, because environmental protection is not their motivation. The political contortions we see now are inevitable when the political elite are beholden to big business for campaign contributions. We should be smart enough to stop doing this and to set reasonable rules by which companies may play — and then enforce them. Rule#1: desire for private profit must not prevent anyone accessing what everyone needs.

The great food cultures of Europe are rightly famed. People travel from far and wide to savor regional Italian specialities, or to immerse themselves in the hundreds of cheeses produced by France. These food cultures are founded on time, care, provenance and the tradition that links ancient generations to future ones. None of these unique traits can be priced in any sensible meaning of the word, and we risk losing them if we forget the lessons of history in a cash-obsessed race to the bottom.