It is one of the most pressing questions of our time:1
what is the relationship between financial and environmental
meltdown? Are the two crises the same thing, needing to be
dealt with together? Or do we, as even some business leaders4
suggest, have to fix the environment before we can fix the
economy? A slew of books, ebooks, pamphlets and journals
are tackling this thorny question.7
You might expect a strong “yes” from the greens to
fixing the environment ahead of the economy. And in The
Environmental Debt: The hidden costs of a changing global10
economy, long-time Greenpeace activist Amy Larkin does
make a cogent argument for this. The high costs of coping with
extreme weather, pollution and declining resources are, she13
says, catching up with capitalism. Our carefree attitude to the
“externalities” of wealth generation has run up an
environmental debt that is loading unsustainable financial debt16
on us all.
But environmentalists are not the only ones making
the link. In Wall Street and the City, there is similar talk that19
the worst fears of environmentalists are coming to pass. As
shortages of natural resources push up prices, a looming
resource crunch is manifested in market meltdown.22
Paul Donovan and Julie Hudson, economists for the
Swiss bank UBS, agree. They argue that “there is a second
credit crunch”, an environmental one. By ransacking global25
resources and enfeebling ecosystems, the authors say, we are
drawing down environmental credit as surely as reckless
spending on a credit card draws down financial credit. The two28
crunches have “a symbiotic relationship”, they argue: “The
party has to stop.”
The synergies between financial and environmental31
crunches may be complex, but at root, many economists argue
that reckless consumption, driven by easy credit, helped fuel
financial crisis. Environmentalists agree that the same34
consumer binge drove up environmental debt.
F. Pearce. What do we fix first – environment or
economy? Newscientist. July 8th, 2013 (adapted).