12 August, 2021 / Analysis
The history of environmental economics: How far have we come and what does the future hold?
By Danielle Skerrett, content marketing manager, Performics
Conventions and reports from the 1950s to now
As the world and the people in it continue to recognise the need for a more sustainable way of living, how does environmental economic policy contribute to this?
Dating as far back as the 1950s, this particular branch of economics has shaped many policies and conversations that exist today, from the Korean War and ground-breaking environmental papers such as Conversation Reconsidered by John Krutilla, to UN conferences and the emergence of young climate activists.
Following the Korean War, the US experienced a severe shortage of critical supplies and materials needed to rebuild the country. The Paley Commission was created in 1951 to answer concerns around the future availability of raw materials should the country experience another war. This led to the creation of Resources for the Future (RFF) in 1952, which was the first foundation dedicated to advancing environmental and natural resource economics.
The 1960s saw the release of a ground-breaking paper by one of the RFF’s pioneers, John Krutilla. The release of Conversation Reconsidered in 1967 helped to shine a light on the economic value of natural and undisturbed resources such as rivers and forests outside of material gain.
The first UN event on international environmental issues took place in the 1970s and thanks to the United Nations Conference on the Human Environment, member states continue to gather to this day. In Stockholm in 1972, this world-first event resulted in The Stockholm Declaration and the Action Plan for the Human Environment, each containing important principles and recommendations for participating governments to follow.
The autumn of 1987 saw the release of another revolutionary paper, this time created by the World Commission on Environment and Development (WCED). It was in Our Common Future, more commonly known as the Brundtland Report, that the all-important term ‘sustainable development’ was first coined.
Another UN Conference is held in 1992, this time in Rio de Janeiro, which saw government leaders join together to find ways to stop depleting natural resources and polluting the planet. The United Nations Conference on Environment and Development, also known as the Earth Summit, resulted in Agenda 21 – a comprehensive action plan for sustainable development.
In 2007, a report was published outlining the main contributors to climate change. The IPCC Report on Climate Change concluded that it is ‘unequivocal’ that global warming is occurring and that it is 90% probable that this is the result of human emissions of greenhouse gases.
See also: – IPCC report draws ‘line in the sand’ for decarbonisation of finance
In 2012, member states met once again for the Rio20+ Conference. This event is thought of as the catalyst for sustainable development with 700 voluntary commitments made from participants in total. Just three years later, in 2015, the first legally binding commitment to mitigating climate change is created. The Paris Agreement saw 196 parties agree to limit global warming to below 2 degrees Celsius, with the aim to achieve a climate-neutral world by the middle of the century.
In recent years, we’ve seen young activists, such as Greta Thunberg, using their voices for good – campaigning to world leaders to pay more attention to climate change, asking that they treat the climate crisis as an emergency and divest in harmful fossil fuels.
What does the future of environmental economics look like?
Economist Paul Romer believes governments must consider “a structure for the economy that encourages ways to make money that are not harmful”. In the wake of the Covid-19 pandemic and with countries across the globe experiencing more extreme weather conditions as a result of the climate crisis than ever before, how will governments around the world rebuild their economies and move forward towards a more sustainable future? Chair of the Commission on Growth and Development, Michael Spence, believes a collective approach is needed deep-rooted in “engagement, values, changes in behaviour, [and] education”.
Part of the Bonhill Group.