Do we really need to pay more to save the environment?

11888996166_2a8ef99842_kThis article was originally published in Business Green.

If I were the type to shout at my radio, I would have spewed righteous vitriol at the Today programme last Thursday morning. Ahead of the launch of the government’s long awaited 25 Year Plan for the Environment, Environment Secretary Michael Gove was interviewed by Nick Robinson about his ‘big vision’ for dealing with the large environmental challenges that lie ahead. Introducing the segment, Robinson asserted: “The question any politician has to face in this field is this: on the one hand, people say they want less plastic and they cheer on David Attenborough, but do they want to pay 25p more for their cup of coffee?”

Apart from misunderstanding the mechanism by which a charge for plastic-lined coffee cups would work (as people would be financially rewarded for environmentally beneficial behaviour, the relevant question should have been: “Are people willing to modify their behaviour and save themselves 25p to benefit the environment?”), this line of questioning epitomises the short termism that fails to appreciate a bigger environmental and economic picture.

Despite the discourse that has dominated the media and policy making for too many years, the truth is that efforts to protect the environment can, in some instances, save consumers money. More significantly, green investments we make on an economy-wide level can save us all considerable amounts of money in the long run.

Examples of win-wins are all around us
Instead of shouting at the radio, though, I set to writing this column to highlight the fault in the dominant narrative and the cost benefits of environmental action. It hasn’t been difficult to do because there are so many examples that prove that looking after the environment makes economic sense.

As a very small sampling of our recent reports show:

  • EU ecodesign measures to improve the performance of lighting, vacuums, boilers and computers have already saved households £160 a year while cutting environmental impacts
  • Manufacturers have seen a 75 per cent increase in input prices over the past 15 years, and, across the economy as a whole, the fastest growing companies are those that actively manage their environmental impact; and
  • Natural Infrastructure Schemes by which farmers are paid to improve flood risk management could save substantial sums compared to the cost of dealing with severe flood events: we have calculated that a group of 10 upland farmers using just 10 per cent of their land could save £4.7m compared to business as usual.

These examples illustrate the compelling point made in a much more comprehensive examination of the economics of environmental protection in Lord Stern’s authoritative, 700 page report on climate change.

The Stern Review on the Economics of Climate Change concludes, simply: “The benefits of strong and early action far outweigh the economic costs of not acting.” This 2006 report called for investment equivalent to one per cent of global gross domestic product (GDP) per annum to prevent climate change, a figure that has already gone up to two per cent. Failing to invest now means we will pay more in the long run, at least five per cent of GDP a year forever, and perhaps as much as 20 per cent.

Realisation is dawning
On a positive note, though, there are signs that government has, at least in some respects, realised this. The Clean Growth Strategy, launched in October, explicitly reframed climate action not as a burden to painfully undertake for the sake of future generations, but as a significant economic opportunity. “This progress [on the growth of wind energy and electric vehicles] has altered the way that we see many of the trade-offs between investing in low carbon technologies,” the plan stated. It added that “it is clear that actions to cut our emissions can be a win-win: cutting consumer bills, driving economic growth, creating high value jobs and helping to improve our quality of life”.

Going back to last Thursday’s Today programme, despite the interviewer repeating several times that consumers must “pay up if you want a cleaner environment”, there was one sensible point made. Criticising Robinson for trying to put the economy and environment in opposition, Michael Gove pointed out: “There is no tension – in fact, there is every harmony – between thinking seriously about the environment and long term economic sustainable growth.”

Rather than continually asking if people will “pay up” for environmental benefits, the question should instead be framed as “Are people willing to make this investment to protect the environment?” Then, the answer would surely be, unequivocally, yes, and, in the long run, we’d be saving money, as well as the planet.

[Image: Dun Mill house and flooded mill stream by Gillie Rhodes from Flickr Creative Commons]

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