But Will the Planet Notice? How Smart Economics Can Save the World
Book by Gernot Wagner
Review by Abigail Hofmeyer
Issue 10 Winter 2012
How can you and I individually make a difference in reducing our environmental impact and contributing to a more sustainable future? Well, the reality is we cannot. For each one of us voluntarily foregoing the use of plastic bags, air conditioning, and even driving hybrid cars, there are billions of others who offset those benefits. Sure, reusing my bag gets me some cents off my grocery bill now and again and feels really good. Not having to fill up at the gas pump saves me some money too. But short of hoping to create a social movement, being a good Samaritan alone just won’t do. Depressing I know, so what can we do then?
Gernot Wagner, an Environmental Defense Fund economist, is a 21st Century strategic leader. He shows that the solution to climate instability can only be driven by guiding society as a whole through market forces in the U.S. and around the world—by designing triple bottom line into core strategic thinking. We have seen the effect money has on the world—most recently with the collapse of the housing and banking industry. It is the pursuit of wealth and status that make money the most obvious guide for motivating human behavior. With the appropriate regulatory guidance, the author argues that by putting the right incentives in place, the markets can shift triple bottom line practices into the policies and processes of organizations.
Of course, mentioning the words regulation and incentive leads many of us to think of government intervention and that nasty three-letter word—“tax.” However, Wagner has many alternative solutions to tax increases. For example, in handling the major issue of pollution, he advocates applying the economics concept of cap and trade; an approach that would limit pollution directly by implementing a cap—or as he likes to call it “doing well by doing good.” By capping total emissions and handing out allowances, regulators can then let companies trade those allowances in order to achieve the cheapest, most effective way of decreasing overall pollution. Companies who are polluting will need more shares and they will have to pay the full cost of their actions. The author explains that it is about liberating markets and consequently turning each and every one of us into a force for good.
The points that Wagner makes are powerful. Incentives receive the most effective responses. It’s not that everyone shouldn’t be cognitive or act in incremental ways to help the environment, but it’s about changing our system and creating a new business as usual. Economics is critical to solving our environmental problems. “Scientists can tell us how bad it will get. Activists can make us pay attention to the ensuing instabilities and make politicians take note. But when the task comes to formulating policy, only economists can help guide us out of this morass and save the planet” (p. 11). Wagner’s style is straightforward—built on strong evidence and sound economic theory. He possesses an innate ability to articulate his thoughts to a truly broad audience. From the most to the least experienced economic perspectives and regardless of which side of the political spectrum you fall on, his work is enlightening.
Getting several billion of us to behave differently means putting in place a system of at least a goal, that makes sense to everyone. Wagner truly stimulates thinking and encourages conversation about the role of strategic intent in defining and developing an economically, socially, and environmentally sustainable future.