Parties on both sides of the global-warming debate have called the UN Climate Change Conference recently held in Copenhagen, a failure. Instead of producing a legally binding treaty to reduce greenhouse gas emissions, a majority of participating nations merely agreed to “take note” of the Copenhagen accord as a non-binding agreement to commit to significant emission reductions by next year and to fund environmentally “vulnerable” countries. US President Barack Obama echoed UN officials’ remarks before he left Copenhagen but despite his promises, he still lacked congressional approval of either emission reduction targets or environmental foreign aid, and a recent survey shows that a growing number of Americans oppose both measures. Americans may well take Obama’s closing remarks as both a threat and a wake-up call. Out there we have been informed time and again by scientists that something must be done to slow the deterioration in the atmosphere.
Thus, for the past centuries the burning of fossil fuels, such as coal and oil, and deforestation have caused the concentrations of heat-trapping “greenhouse gases” to increase significantly in our atmosphere. These gases prevent heat from escaping to space, somewhat like the glass panels of a greenhouse.
Greenhouse gases are necessary to life as we know it, because they keep the planet’s surface warmer than it otherwise would be. But, as the concentrations of these gases continue to increase in the atmosphere, the Earth’s temperature is climbing above past levels. So what is Copenhagen conference doing to help focusing our efforts to mitigate he damage? Some critics fail to see progress in this direction. So what about tiny Malta? Do we fit in and how?
Locally , a lot of attention has been given to climate change and the resulting air pollution of late. Typically we read about the controversy of testing buses and heavy vehicles for their exhaust emissions and the use of correct fuel mix. We still hanker for the solution of black dust precipitating in the Fgura area from mysterious sources. Samples have been gathered and analysed, however a conclusion, nor a solution are still not in sight. Equally, many articles have been written and theories discussed in the media on the need to properly account for the cost of sustainable environmental well-being.
How much are we paying for the damages inflicted on the island’s atmosphere? Is there anyone counting the cost? Not really! except for the medical costs of the alarming numbers of citizens suffering from respiratory ailments.
In overseas journals one reads about the desire to incorporate a national regime to cater for Green or sustainable accounting which incorporate environmental assets and their sources. Once implemented, this also means that we cannot avoid taking notice of similar adjustments to corporate accounts. Gradually we are becoming aware of the need to start measuring environmental and natural resource accounting. As a general rule, one finds that conventional national accounts largely ignore the costs of say pollution and other damage to the ecology. This does not mean that local pressure groups do not raise their voices when they are aware of infringements to the sustainability of the environment particularly when these measures threaten to undermine the sustainability of economic performance and growth. What is so vividly missing is the difficult part of costing the environmental degradation as an ‘external’ (social) cost of economic activity. This accounting concept hones on capital maintenance, as applied to the biosphere, in recognising the need to maintain the stock of natural capital for future generations. Typically one expects that sustainable cost is deducted from the accounting profit of polluting agents calculated by using I.F.R S accounting principles to arrive at a notional level of sustainable profit or loss. In rare cases where the sustainable cost exceeds the accounting profit the degree of un-sustainability is conveniently measured in monetary terms. To quote a vivid example one can mention the environmental damage to garigue in pristine areas when MEPA approves this to be dug up to make way for luxury villas and condominiums. The value of the villas and flats when finished is added to the gross domestic product (GDP) attributed to the construction industry, while no deduction is made for the loss of that ecological asset and all the non-market services it provided. Again, when farmers spray crops with pesticides parts of which occasionally permeates the water table, the farming community boosts the GDP in terms of produce , but no deduction is made for the health costs associated with the water pollution. The list of examples goes on in Malta but no account is taken of the cost. At an international scale, one reads figures published by the World Bank for the depreciation of several natural resources such as oil, natural gas, minerals. This is not to mention the deleterious effect on the atmosphere in enriched doses of carbon dioxide acting as a deadly pollutant. As a frequently quoted example we find that in contrast, in the Indian subcontinent, even while GDP per capita has increased, proper green accounting reveals degradation in sustainability has resulted in a decline in wealth per capita. The decline has occurred because relative to population growth, investment in produced capital and improvements in institutions have not compensated for the degradation of natural capital. So the answer is blowing in the wind that we should seriously start considering going green accounting.
Back to Malta, these weaknesses in recognizing the costs of our pollution can be described as environmental externalities, a major example being the pollution to air, water and soil caused by excessive farming and animal husbandry on small parcels of arable land. Living in the densely populated islands ,we witness some of the damage caused by pollution is invariably reflected in reduced output, as in the case of diminished agricultural output due to polluted soils and untreated water extraction from illegal bore holes. As can be expected, environmental damage arising from dirty beaches and uncollected rubbish in villages directly affects human welfare. Yet, the national accounts of these islands mask this cost to remedy the medical consequences.
For example, children bathing in areas where the air is polluted by heavy emissions of speed boats and other pleasure crafts are often more susceptible to viruses and coughing which may resurface when schools open. So does the solution lie in applying the theory of green accounting. If implemented the leap in knowledge is a harbinger of hope. Linked to this is the drive to reduce the consequences of pollution particularly from burning fossil fuels by slowly converting to alternative clean energy.
Yet green accounting dictates that the alternative cost to convert arable land to raise corn, or sugar cane for distilling into bio fuels has to be carefully assessed. So the writing on the wall is pointing to start reducing our carbon footprint (which is causing irreparable damage) and one palatable way is the ample use of bio-fuels. The green accounting theory defines sustainable cost as the hypothetical measure of restoring the earth to the state it was in prior to a plan for heavy planting of energy crops. Yes switching to organic solutions to generate energy heralds its own problems and costs. In Thailand the government is subsidizing the cost to farmers of vast tracts of waste land to be converted to produce oil palm. Studies show that bio-fuels produce up to 60 per cent less carbon dioxide than fossil fuels.
Bio-fuels are also making the headlines through bad publicity because land previously used for food crops are being turned over to bio-fuels. To properly account for the green cost of such large scale plantations, one can factor in the 43 per cent rise in global food prices.
To conclude the introduction of green accounting on a national scale helps us to focus on the concept of capital maintenance, which also applies to our natural environment, air quality, biosphere. Only thus can we maintain a healthy balance sheet for future generations.
