photo credit: mhalon

as according to Tohm Curtis

a new series outlining why Economic Rehab is crucial

What does ‘Economics’ mean…there’s some confusion as to whether it is a science or a philosophy? Wikipedia can provide some insight into the history of economics. I think though that maybe the simple starting point is:

Economics is the study of reality.

Okay so what do I mean when I say Economics is a study of reality? What I mean is that this is really what makes it a science. I would say the exact same thing of Physics, I would say the exact same thing of Mathematics. Bertrand Russell incidentally said ‘Pure mathematics consists entirely of assertions to the effect that, if such and such a proposition is true of anything, then such and such another proposition is true of that thing.’

In Physics this means Isaac Newton’s description of gravity as any two masses exerting a constantly attracting force on each other is true. That is what happens in reality. For Physics to work, you can’t have a law of gravity that has exceptions. A theoretical world where some people fall towards the earth and other people float up into the sky would not hold as science. The laws have to conform to reality. They must be based on observations of things that happen.

Economics supposedly represents a scientific reality. Just we seem to get surprised in Economics much more regularly than we do in Physics or Mathematics.

When Richard Dawkins talks about the difference between religion and science. He says that a science is capable of accepting that if you go your whole life believing one thing and then are presented with evidence to the contrary, the scientist accepts the new contrary position. Once the evidence has been peer reviewed, the new evidence is what is taught from then on.

However, he suggests a religion is something that holds its truths to be absolute and rejects any new evidence no matter how compelling.

So you can’t just have an ‘Economic Theory’ that doesn’t conform to reality. Because reality places constraints on what Economic Theory can be. Economics, as the study of the management of the household, is challenged by the reality of scarcity.

Both are wedge issues that CEO’s are making the most of as they nervously await their next round of share option bonuses. “If these wedge issues continue I will be able to cash out in time and retire with some real wedge of my own!” Rational beings cannot expect all 193 countries to agree on a trading system within the next 2 - 3 years. However, decisive, unilateral action is needed immediately and PM Rudd should be commended for showing this.

It was pleasing to hear Garnaut comment that if too many industries put their hand out, then a Carbon Tax will be preferred. We strongly support a Carbon Tax over an ETS. Then no industry can pay others so they can pollute (what an ETS allows by default). No speculators can distort the market. Little delay is required to implement it.

When property rights are created, a great danger lurks within an ETS in that speculative middlemen will seep into the market, snapping up carbon permits and enforcing scarcity onto the marketplace. This will force the price of carbon, and thus of related inputs, higher and higher. This in turn will undermine the ETS and possibly return us back to square one.

We can see this occurring after just the first 12 months of the ETS, with prices jumping higher than they should and the disadvantaged screaming. Investment banks will applaud the system whilst bank rolling new ski trips to Aspen. The ALP will announce another inquiry. Economic theory will be avoided yet again in preference for another piecemeal system that favours rent seekers over the productive economy.

A number of searches through the 586 page Garnaut report, jokingly subtitled No Pain, No Rain, fails to reveal any definition on the lifespan of each permit. The longer the time frame, the greater room for speculators to extort the market.

This could be avoided. A holding charge must be placed on all carbon permits. From this we can use our knowledge of Georgism to analyse how far we take it. Should the holding charge be placed only on those permits sold during the trading period? This would act like a Mill Tax, where any increase in the re-sale value is rightly captured by the government on behalf of the people. We must remember that we are not privatising the sky for the benefit of investment bankers and their speculative clients. Carbon is part of the Global Commons we were all lucky enough to inherit as our birthright.

Should we place a holding charge on all permits, this would inflate the price of carbon but deter speculators from even thinking about it. The extra revenue raised could be used to fund the abolition of payroll tax, indirect taxes like the GST or income taxes on lower incomes. This tax shifting would assist in keeping the prices of goods steady.

Looking at the big picture, the ETS is just the beginning of the Resource Rental system we are inevitably moving towards. The ability for behaviour to change is difficult when we are still paying more than any other generation for housing. The hours spent at work to pay the mortgage make it hard to remember the green shopping bags, let alone cycle or walk to the shops. The land banking speculators are forcing the sprawl further and further into the greenfields that should be soaking up our carbon. Our worldwide infrastructure deficit (ie lack of public transport, ageing transport, lack of affordable hospitals) sees society trapped in it’s ability to adapt to the looming climate shift. A Resource Rental system can alleviate these pressures by correcting the leakages prevalent in today’s post-autistic economic framework.

It’s only a matter of time before the content of these pages becomes vital for the survival of all living beings on planet earth. Stay tuned for the True Cost Economics Forum in September.

This year’s True Cost Economics forum saw both young and old dig deep within the pros and cons of carbon trading.

Keynote guest speaker Frank de Jong gave a compelling presentation on the importance of getting green Economics right. “We need to charge at the point of source so that we green the entire manufacturing process”. Carbon taxes over trading was his perogative, with tax shifting ensuring . Visit Frank’s Tools of Sustainability Tour report, including extensive multimedia page to download movies of talks and hear radio interviews.

Next was the politicians panel - ‘what do they see as possible and pragmatic’. The Greens Richard Di Natale said that the new Howard Governments Carbon Trading policy was a Claytons scheme - the scheme you have when you don’t have a plan - no targets, no objectives. Permits needed to be sold, not given away. Senator Lyn Allison (Democrats) snuck onto stage and soon jumped into the heart of the discussion by talking about the need for a number of Trading systems, including an Energy Efficiency Trading System, promoting financial incentives for manufacturers to produce energy efficient goods.

Then we had the youth panel on Policy Pathways, where Siska Waddington (SKM) gave a pragmatic response discussing the need to go with Carbon Trading, as Carbon Taxing sets no limit to the total amount of carbon. Carbon Trading incorporates sinks and offsets and gives us an objective. Also, the decision to go with Carbon Trading over taxes had already been made. This created some controversy as the view for a carbon tax was challenged. Well done Siska!

The last panel looked at the Policy Possibilities, where David Spratt (Carbon Equity) delivered a devastating presentation on the perils we face. He proposed that this urgency requires the need for a Carbon Rationing system. It certainly got the attention of the crowd! Donna Lorenz (Maunsell Engineering) stated that the carbon polluters, the smokestack industries, are hurting agricultural and rural industries that face the force of extreme weather ie recent floods in Newcastle. Adrian Whitehead from Zero Emissions Network finished off with a positive interpretation of policies making a difference. Included in this was the need for more localised communities, hinting at Frank’s desire for walkable communities linked by rail.

These presentations were so good that we have made them available for a short time:

Frank de Jong’s multimedia page (radio, TV footage)
David Spratt’s Why we must ration the future
Donna Lorenz’s Climate Change policy responses
Adrian Whitehead’s Climate Change Good Policy

Check the True Cost Reading page and keep informed with Earthsharing events by joining our mailing list.
See you next year as we continue to build a movement for a true ‘big picture’ reform.

True Cost Event Page

True Cost Economics is an economic model that seeks to include the cost of negative externalities into the pricing of goods and services. Products and activities that directly or indirectly cause harmful consequences to living beings and/or the environment should be accordingly taxed to reflect the somewhat hidden costs.

Natural resources need to be at the centre of our thinking, not written off as an ‘externality’ or mined for exorbitant profits.

The 2007 TCE Forum will feature Frank De Jong, leader of the Ontario Greens (Canada). He is an expert on environmental economics, having coined the term ‘the invisible green hand’ of market forces. Frank has over 20 years experience in Canadian elections and will bring a balance of political know-how and economic theory. As Frank says “Let the market do the hard work for us in changing our thinking towards environmental responsibility”.

Economics needs to direct the behaviour of consumers towards looking after the planet. Is Carbon Trading enough? A new economic paradigm is needed to ensure a liveable planet for future generations. It is time to discuss and plan for this evolution.

Frank De Jong will give his positive keynote “The Invisible Green Hand V the Time Famine”, then 3 panels will follow:
Policy Pathways: Carbon Trading v Carbon taxes. A crucial point in time demands we make the correct decision.
Siska Waddington (SKM)
Amanda McKenzie (Australian Youth Climate Coalition)
Tom Curtis (Earthsharing Australia)

Policy Possibilities: What are the cutting edge policy options? Also, the practical examples of effective green economics at work.
David Spratt (Carbon Equity)
Donna Lorenz (Maunsell Engineering)
Adrian Whitehead (Beyond Zero Emissions)

Policy Makers: What do the politicians see as possible and pragmatic? Is it genuinely possible to make policy that will stop runaway climate change? Eg, co2 below 550eppm
Senator Lyn Allison – Leader of the Australian Democrats
Evan Thornley – Parliamentary Secretary to the Premier (ALP)
Dr Richard Di Natale – Lead Senate Candidate – The Greens

15 minutes question time will follow each panel.

The Venue:
Swanston Hall - Melbourne Town Hall (to the left of the main stairs, enter from Swanston St)

Time
9.15 - 1pm

Science is leading the way with the evidence of global warming. The rapidly increasing cost of insurance is alerting us of the dangers to ignoring nature’s law.

The true cost of avoiding a transition towards a responsible economic system is quickly becoming apparent. Let’s insure against the power of nature by following the money trail and scientifically re-directing it towards a profitable future for all generations.

Free RSVP necessary

With climate change finally front and centre on the political agenda, we are at a unique point in time to assess our ability to change.

When capitalism began there was an abundance of nature and a shortage of goods. It made sense to prioritise the means of production. However today, with our rollercoaster summer taking us from 18 to 36 degree days, our growth fetish could soon become a famine.

Corporations and consumers must be brought back into balance with nature.

The Insurance Industry is on the front line to nature’s warnings. How long will it be until remote bush property in North-Eastern Victoria is un-insurable? Time is marching for million dollar coastal property and rising sea levels.

The big question is - can we rely on our present system to change behaviour quickly enough?

The European Emissions Trading System is facing a steep learning curve, allocating too many carbon credits in its’ initial 2005 – 2007 time phase, giving companies approval to pollute with a free conscience. Subsequently, prices per carbon credit plummeted 60%.

The dominance of smokestack CEO’s in Howard’s Climate Change panel is compounded by the short-term parameters that quarterly dividends impose on CEO thinking. Quarterly dividends must be reformed in favour of annual or even bi-annual returns.

The ‘New Westminster’ system we promote as democracy sees hundred of thousands of dollars in political donations soon returned as hundreds of millions in profits from a new loophole or government contract. One vote, one value has been replaced by one dollar for one decision.

This system of Lobbyocracy will eat itself and our planet in self-interest if we are not careful. It is imperative for change’s sake that public finance provides all the campaign money political parties require.

The market’s ability to change is limited by these economic and political factors. Big Business has become so dominant, so top heavy, that vested interests are hindering society’s ability to change.

Perhaps the biggest threat to change is the trend towards tax systems favouring speculation. Speculating in the gifts of nature has become second nature.

A recent ANU report by Leith & Simon found that the top 1% of the economy earn just 20% from salaried work.

Negative gearing and low capital gains taxes have given the thumbs up to skyrocketing property prices, encouraging the destruction of urban fringe forests and simultaneously curtailing the potential of small business and wage earners alike.

Inefficient tax regimes see endless urban sprawl and little social infrastructure. However, there is always a place for a gambling outlet. Typically the struggling middle to poorer classes move out to these McMansion-ville estates on the urban fringe, sapping their energy in drive-time traffic jams. When it comes to shopping they are too exhausted to remember their hessian bags, let alone walk or cycle to the shops. The rapid expansion of city borders gives government little capacity to fund the necessary public transport, further adding to the carbon wave.

For those of us lucky enough to own a home, the extra hours we work to pay off our hyper-inflated mortgages rob us of the full potential to live sustainably. Even with two wage earners per household, it’s hard to find time to behave responsibly. We need to reclaim our time to give us the headroom to re-train our behaviour.

This can best be done by reducing the lump sum on our mortgages.

True custodians of the future would transform our taxation system to a True Cost Economics system, with public revenue raised through a Resource Rentals system. Resources soon become precious when we are penalised for wastage. As a gift to all living beings, resource-based profits are now shared amongst the community, not just the shareholders.

Alaska’s Permanent Trust Fund delivers a citizen’s dividend paid from their oil wealth. It is the only US state to have reduced the wealth gap over the last decade.

The endless housing affordability crisis shows the crucial role of cheap access to land. The UN’s Global Land Tools Network is promoting a land value capture mechanism to recycle community created land rents (naturally increasing property prices) back into public hands. After all, society underwrites long-term property growth rates in the taxes they pay for new roads and schools. Spin offs from this reform include urban infill, self-financing public transport and a considerable drop in tax compliance.

Our current system subsidises wealthy property investors to hoard land. A land value capture mechanism such as a Site Rental ensures this crucial resource is used more efficiently. The yearly fee reduces the ability to sit on land, with the increased supply pushing mortgage prices down.

Calculations from the Land Values Research Group show that earth based revenues from land, water, oil, coal and the electromagnetic spectrum are sufficient to replace all taxes. With a yearly Resource Rental fee paid, hoarding of water permits for example, is discouraged.

This turns speculative money away from gambling on the planet and towards productive means.

Reinforcing this, a system of Environmental Trusts should be empowered to look after environmental treasures. An environmental bond for miners will ensure they leave the house in order. Free from political influence, these Trusts will be legally responsible to future generations.

Environmental Trusts can oversee our citizen’s personal carbon allowance. The embedded carbon in each purchase made will be deducted via a debits card from our yearly allowance. Corporations will continue the trading of carbon credits. However carbon credits must be bought within a marketplace, not allocated as Europe has done. With the carbon ceiling continually lowering, pollution becomes more costly and cleaner products favoured. Polluters also face a higher Resource Rental (ie for polluting water), further reinforcing the move to cleaner production.

The longer we rely on international agreements hamstrung by undemocratic structures and self-interest, the harsher will be our judgment in the annals of history. Each country needs to take the future of its’ people into its own hands. The reforms to Lobbyocracy and quarterly dividends will enhance long term decision making, whilst the improvements in taxation will provide an environmental reminder every time we pull out our wallets. We will also have time to think and behave responsibly with the speculative pressure taken out of the property market. Then we can all turn down the heat as quickly as possible.

Karl Fitzgerald

Countless indigenous peoples and social philosophers throughout history have reiterated the ageless wisdom that it’s plain wrong to own land. Land is the gift of nature, and should be the equal and common birthright of all humanity, yet we find that it’s bought, sold, and monopolised like a mere commodity.

We don’t just refer to agricultural land. The locational value of urban land is built up by the amenities and services provided by the surrounding population and its tax-funded infrastructure. By rights, land-owners should repay society for their exclusive use of such valuable land, and a system of regularly assessed land value taxation (some call it community ground rent) is the elegantly-simple means. We don’t just refer to agricultural land. The locational value of urban land is built up by the amenities and services provided by the surrounding population and its tax-funded infrastructure. By rights, land-owners should repay society for their exclusive use of such valuable land, and a system of regularly assessed land value taxation (some call it community ground rent) is the elegantly-simple means.

By tapping into this natural and equitable form of public finance, we would be able to phase out punitive taxes on honest (i.e. non-speculative) wealth production. In other words, “Pay for what you take, not what you make”.

Henry George (1839-97) is the inspiration for a revived Georgist (or Geoist) movement which has again taken up this noble cause, and is calling on fellow Greens to go further in their proposed tax reforms. As well as the current eco-taxes on air, water, logging, mining and fishing rights, we should be advocating taxes on users of:

a.. land
b.. the electromagnetic spectra
c.. air flight paths and geostationary orbits
d.. any other part of the Global Common (e.g. as the Dark Night Society proposes, there should be a tax on annoying security spotlights, on stadium lights which upset nocturnal animals, and on any lights which obscure the stars)

But land is the Biggie. Because of its unique qualities, land value taxation (LVT) encourages us to put land to its optimal use thereby minimising urban sprawl and wasteful agricultural practices. Similarly, LVT prevents land speculators from holding land idle in the expectation of future, ill-gotten gains.

At the moment, we’re born on to a planet where “all the seats are taken” so that we have to pay the former generation for permission to live. Rising land prices are not “healthy” or “buoyant” for the economy - rather, it makes the whole problem worse. However, when society collects the full rent of land, the market price of the land (not the improvements on top of it) will have been reduced to around zero (brevity disallows an explanation).

When the economy is turned right-side-up, there are lots more spin-offs, including important environmental safeguards. Furthermore, both tax collection costs and compliance costs will be a tiny fraction of the immensely wasteful burden they are today. And tax evasion will be a thing of the past - you can’t hide land!

Gone, too, will be the intrusive practices of the Tax Commissioner, prying into all aspects of our activities. We should be monitoring carefully those who use natural resources, not people’s personal affairs!

We could also afford to invest in public infrastructure such as public transport, as the enhanced land values which result will be “recycled” back into the public purse, rather than enriching landowners.

We belong to the Earth, not vice-versa!

By Crikey, this is no mere academic exercise, for the Common Wealth is currently being trashed precisely because these values aren’t being measured and accounted for. But there’s real hope, as you’ll see.

MEASURING THE VALUE OF A TREE - Karl Williams

Here’s a beautiful-sounding quote by David Bohn (who’s he?) on a poster that’s been up on my bathroom wall for about twenty years: “Wilderness should exist solely for its own sake. No justification, rationale or excuse is needed. For its own sake and no other reason.” Poetically-moving, yes – but the only problem is that I don’t believe it any more.

Two vastly different worlds must be drawn together. On the one hand, there’s a rapacious economic system that not only demands that Nature’s gifts be expressed in material (i.e. dollar) terms, but that their value be calculated (and significantly undervalued) by what the market is prepared to pay for them ….. and not a cent more. On the other hand, there are the Defenders of the Forest (and oceans, airs, gene pools etc.) who proclaim it sacrilegious to assign any grubby dollar value to living nature, as if it could be treated as a mere commodity.

They’re both wrong, but there’s a way out. These worlds can be drawn together – indeed, they *must* if we are to fully respect the natural world and, on the other hand, not indiscriminately stand in the way of the use – fully costed – of natural resources.

It was in a moment of exhilaration in nature, down in Tassie with K2 and Leo Foley, that I told those guys I’d spill my geoist thoughts and feelings on this monumentally-important subject. We’d just visited the dedicated souls who were defending a well-organised blockade of a logging road in the magnificent old growth that is the Weld Valley, south-west of Hobart. Perhaps only after one has been up close and personal, picking one’s way through the thick understorey, can one appreciate that this area is priceless …… almost!

No, it’s not literally priceless, and it’s not good enough for forest defenders to make such haphazard claims. Poetic flights of fancy might sound terrific at a book reading, but in a court of law or cabinet room, decision-makers must be able to compare apples and apples in a true cost-benefit analysis to properly carry out their responsibilities to all sectors of society.

The need is urgent. That voracious corporate predator, Gunns Ltd., has the Weld Valley (and countless others) in its sights, and all the ancient biodiversity of many such places have been set aside for total desolation by decision-makers who have no idea of how to truly cost natural resources. Indeed, our guide through the thick undergrowth that afternoon was Adam Burling, one of the “Gunns 20” defendants, who are being personally sued by Gunns for $6½ million for attempting to expose its ravenous and obscenely profitable practices.

Valiant though the blockaders’ efforts are, such last minute stopgap measures are high risk and high cost (in terms of both resources and the chance of criminal charges). When the whole system is working against those who seek to save our irreplaceable natural heritage, small groups of under funded conservation groups and individuals will usually be ground down. The Gunns Ltds of this world can muster massive legal machines (paid for by shareholders, and all tax-deductible) and have established all sorts of political connections in order to get the law on its side. Today, money talks and the law sucks.

Fortunately, Rin Tin Tin has run off for help, and geoist measures have come to the rescue, for our philosophy and ultra-practical economic and social system is nothing if not highly-refined in the science and art of valuation. Sure, some of it is work-in-progress, and the rough sketch given here needs a lot of polishing.

But the whole basis of a geoist economy is in monitoring and valuing the use of natural resources, and capturing the full economic rents of them for the benefit of all society. The other side of the coin is that no level of government has the right to monitor the activities and personal assets of people – taxation is legalised robbery, as well as outrageously intrusive. So let’s dispense with all that neoclassical economic nonsense and start to measure the real value of a tree. We’ll sharpen our pencil and first lay down all the different types of values which we’ll eventually factor into our calculation. A short, but not exhaustive, list would include:

the economic value of a tree, of course, such as the market value of its timber and potential wood pulp. Unfortunately, we rarely experience a free and a fair market, all-too-often suffering collusion, cartels, corruption, cronyism and kickbacks – all of which force the market price of the timber products down. It’s testament to a fraudulent economic system that we can pay less than $2 to get the massive Saturday Age newspaper, most of whose pages will never even be opened by purchasers, much less read. Not only do we pay too little for most of our wood products, we generally pay too little for our water, food and fibre in this country. While some are under the impression that they’d financially suffer from a system of natural resource charges, the opposite is true. We must remember that the charges imposed and collected will not be “thrown into the sea”, but will go into the public purse to be used where most needed. Only the squanderers will pay more – and few will be able to waste natural resources in future.

the value of climate-stabilisation, such as the grounding of carbon dioxide and the emission of oxygen. There are a host of “ecological services” delivered by a tree that are ignored by neoclassical economics, whose motto may as well be “If it isn’t a marketable commodity, it’s worthless.”

What price the sheer beauty of a tree? We all like to live in “leafy suburbs”, with access to established (i.e. well treed) parks and perhaps even views to forested mountains. The market, as currently configured, totally ignores such values. Call this value the aesthetic, recreational and, indeed, therapeutic value of trees. Would Matisse have been Matisse if he’d never encountered such Things of Beauty? Perhaps our very cultures would be vastly poorer if our ancestors had existed in barren, clear felled lands. What of the effects on the human spirit of contact with nature? Can you imagine someone – even a testosterone-driven 19-year-old kid – spending an afternoon in a forest or garden and then charging off to kick in a telephone box or tag a train?

Our very soil, the source of life in many respects, is retained to a large degree by trees and their understorey. Short-term slash-and-burn cultures (like ours!) know all too well how cleared hillsides often become eroded and agriculturally useless in as little as 3 or 4 years.

Rich biodiversity is a gift of our forests, with a wealth of untapped medicinal products of the trees themselves, plus the fauna to which they provide habitat. Again, it’s a tough call to try and put a $value on this, but we can now make well-educated guesstimates.

Where there’s more trees, there’s greater rainfall.

And then there’s the value of wilderness to humanity, which is a world apart from controlled and manicured gardens, however beautiful. I’m talking of spiritual value here, and the rhetorical question is “Can one know oneself without knowing the world in which one lives – including the world untouched by human hands?”

Wilderness areas often form the catchment areas of our water supplies, and thus contribute greatly to the quality of water supplies.

Let’s not completely disregard that opening quote – what about the intrinsic value of a tree? We should appreciate that it’s not just the value to humans for which we must account, but also the inherent value to the tree itself. Here’s an anecdote to illustrate which had a powerful impact on me at the time. Some years ago, I was hanging out with those amazing peaceniks, the Jains, in their principle home state of Gujarat, India. My dear companion, Dipak, had been showing me around one particular town when the sight and smell of the wild pigs had become too much for me. These creatures seemed to be everywhere humans lived, scavenging off rubbish and even excrement, and were not a pretty sight – or smell. “Why don’t the authorities just get rid of them? – it’d be very easy to round them up and shoot them painlessly” I declared to Dipak. His reply was short, simple but absolutely indisputable, “They have a right to exist.” And isn’t the intrinsic right of a tree to exist worth at least something?

So, how on Earth do we possibly begin to try and put a dollar value on such intangible, subjective, culturally-conditioned and nebulous factors? As we’ll see, to some extent we don’t have to! In many respects, geoism would protect our natural resources such that there’s already a built-in system of valuation in the first place – call it True Cost Economics.

With natural resources forming the basis of government revenue, it is therefore apparent to decision-makers that such resources should be protected as the goose which provides the golden egg of revenue flow for all society’s needs. Furthermore, such revenue streams might extend, it is calculated for most societies, to the real possibility of a Citizens’ Dividend when that revenue stream is in excess of our present spending needs. Then and only then shall we have governments who truly value the environment enough to protect it, rather than just dispensing the occasional environmental protection order to placate the electorate.

For example, take a patch of forest that is greatly appreciated and reasonably accessible to nearby land-holders. If that forest is clear felled or otherwise devalued, then the perceived benefits of holding such nearby land will be diminished …. and the assessed value of that land, and the revenue stream which would accrue to the government body responsible (be it local, state or federal) would be consequently reduced. There’s your inbuilt restraint on foolhardy state action!

But ordinary eco-taxes are based on the value of natural resources, so what’s new here?” some environmentalists might ask. And, of course, they’re right – but haven’t seen the full picture.

You see, proponents of ordinary eco-taxes, which are a very valuable but lesser substitute for geoism, usually don’t, at this stage of the game, see the Biggie – the need to apply them to land itself. Non-land eco-taxes, such as proper and fully-costed natural resource charges on water use or air pollution, are in themselves an ever-diminishing source of public finance. When you fully tax water, you quite rightly force water users to pay the full cost of water – and therefore to use water sparingly. But, with less water use, the revenue stream from water will, er, dry up. The same goes for taxes on other natural resources such as air pollution charges, fishing licences, mining & logging rights, etc. However, taxes on land don’t force land out of use, but rather force all land holdings to be put to its optimum use, because the land holders can’t afford to sit on land, paying the land value taxation (LVT), and not utilise it according to how the land has been zoned.

Further, by economically encouraging land to be put to its optimum use, it won’t mean that land will be “flogged” or overused. Rather, it will lead to urban infill as vacant or unused land is brought into production rather than having cities sprawling ever further. Valuable land near railway stations, shopping centres and universities will be much more intensively used, all leading to a much more compact cityscape, which is itself much more amenable to the provision of public transport. And when you have less sprawl, you have far less wastage of resources as infrastructure doesn’t have to stretch as far, and as commuting distances are reduced.

Speaking of public transport, the main (and almost unrecognised) reason we don’t have proper public transport infrastructure in Australia is because the massive cost of laying down the infrastructure is effectively a transfer of wealth from taxpayers to landholders. But when we collect the LVT, the enhanced values of land serviced by such infrastructure is “recycled” back into the public purse, enabling the hefty reduction of fares.

Enough of theory – let’s look at a hypothetical situation and crunch a few numbers, and make it interesting by taking a sizzling controversy. I live next to Melbourne’s jewel in the environmental crown, Sherbrooke Forest, so I’d like to assume that a geologist who’s bushwalking there one morning happens to stumble upon some intriguing signs which warrant further investigation. Lo and behold, he’s discovered a massive lode of highly concentrated and easily-excavated titanium, falling exactly within the 800-hectare boundaries of the forest.

As we saw, nothing is priceless, however sacrilegious that may sound. We need to somehow determine the value of what will be lost by the clearing of the forest, and compare that to what will be gained, taking into account all the intangibles that are currently disregarded.

Obviously, then, studies need to be made as to the value of the titanium deposit, and the usual geological surveys are performed, albeit somewhat restricted in this situation because of the forest cover.

So let’s say that the geologists do their studies and their fairly accurate estimate of the total economic value of the deposit comes in at around $500 million. At present, a fraction of this amount would be enough for government decision-makers to give the go-ahead to mine unless the affected area was a marginal electorate. In this case, the media is agog with furious debate, but there’s presently no means of properly evaluating the true costs of what would be lost if Sherbrooke Forest was sacrificed in favour of mining the titanium deposit.

It’s no surprise that such gross undervaluation of our natural assets exists, considering that our entire system of measuring economic performance is utterly perverted. Essentially, our national accounts have a profit and loss statement but no balance sheet. That is, the treasury - which should be the custodians of our nation’s assets – takes no account of what those assets might be and, for practical purposes, largely treats our environment as worthless.

It works like this. If a tract of forest is clear felled, then no account of the loss of the flora, fauna and all the related benefits is made. Indeed, trashing such natural resources will usually show up positively, as it results in “economic activity” as far as employment and exports are concerned. Similarly, the accounting for road accidents will not measure the human suffering nor the damage to property, but will rather show a boost to our GDP with the increase in measurable activity in hospitals, panel-beaters etc. It’s no surprise that a leading exponent for sanity in this all-important indicator is a dedicated geoist, Clifford Cobb, who has been a foremost contributor to the aptly-named GPI (Genuine Progress Indicator). I’ll leave it to you to Google on GPI yourself, assuring you that you’ll be well rewarded in terms of the insight and wisdom that Cliff and his collaborators have put into this analysis.

Meanwhile, back at the abacus, the minerals are worth $500 million and the true value of the forest is, as yet, an indeterminate amount. One of them has to go. Let’s start valuing.

Firstly, we must recognise that the proponents of mining can further claim that they’ll harvest the timber before they mine, and so we need to account for the value of the timber products (magnificent hardwoods in this case) and the related economic activity (x year’s work for x timber workers and associated industries). Conventional economics already handles this type of valuation pretty well, so we’ll skip this analysis and accept the approximate market valuation of $20 million here. So, in order to prevent the clear felling and mining of Sherbrooke Forest, the true value of the forest will have to be estimated to be at least $520 million.

The first-listed value above is “climate-stabilising effects, such as the grounding of carbon dioxide and the emitting of oxygen”. Now, to try and put a value on this isn’t so difficult as it’s actually a serious study of late - with the economic costs of climate change hastening such research, many well-funded studies have already been performed. It shouldn’t come as a great surprise that the calculated economic worth of some of the planet’s life-preserving biosystems have clocked in at some astronomical figures (quadrillions of dollars, by some measures). Such calculations are based on the economic cost of the consequences of climate change along with the costings of human measures to mitigate the effects of climate change.

Some of the more obvious costs of climate destabilisation and global warming are:

Rise in sea levels
Extreme weather events
Spread of tropical diseases
Damage to agriculture

One way of measuring the value of Sherbrooke Forest’s “ecological services” is to estimate the quantity of carbon dioxide (the main greenhouse gas) it absorbs, and apply that to the cost of carbon dioxide emissions.

The cost of such emissions have, fortunately, been brought to the fore in recent years with attempts to limit emissions by the application of carbon emission trading. The set of figures used by the Kyoto protocol is a widely-accepted model, although the costs vary somewhat according to various scenarios. To stabilise the emission of carbon dioxide in the long run, Kyoto deemed that each tonne of carbon dioxide emitted should be costed at around US$300. However, if the severity of experienced climate change requires that emissions be rolled back to 1990 levels, a tonne is costed at US$679.

Going further, if temperature increases start to spiral out of control, as some models predict, then more drastic measures need to be taken to clamp down on emissions. In such a nightmare scenario, to severely curtail emissions to try and limit temperature rises to about 2°C, a tonne should be costed at US$732. Nightmares have never been my bag, so I’m going to apply the Precautionary Principle and adopt this slightly higher figure – if it all turns to be a false alarm, the planet can have a rip-roaring carbon-guzzling party later. So we’re going to use the cost per tonne of US$732, which is about A$975 today.

The other side part of the equation is the carbon-absorbing capabilities of the forest. Let’s call on the NSW Dept of Primary Industries, which recently calculated that planting 100,000 hectares of new forest can take up to 2 million tonnes of carbon dioxide per year (or 20 tonnes/hectare) from the atmosphere.

Shuffling around on the abacus: 800 hectares @20 tonnes/hectare x $975 = $15,600,000/year. Converting this annual figure to a present value by dividing it by 5%, we arrive at a figure of $312 million, being the worth of the climate-stabilisation services of Sherbrooke Forest.

A brief word of explanation about this conversion. This annual value of a perpetual income stream can be converted into the present value (a lump sum) by a widely-recognised calculation using the prevailing interest (or capitalisation) rate. For instance, how much would you pay today to receive $1 per year in perpetuity if the current interest rate was 5%? Without getting sidetracked with explanations, you’d pay $1/0.05 or about $20.

Now, if this figure of $312 million seems excessive, then consider that, four years, ago the respected but somewhat conservative journal Nature published a paper that calculated the value of all the goods and services that the planet provides – it termed them ‘ecosystem services’ – were found to be worth almost twice the total GDP of the Earth.

Yet the valuation model used here is actually conservative when contrasted against some others. Go figure out every disaster that might occur due to failure of the biosphere, to lesser or greater degree, and calculate the price of insurance against all of it. Or, when faced with the looming possibility of ecological meltdown, estimate the cost of replacing the Earth, which may include finding and colonizing another planet.

The noted biologist, Robert Costanza, has taken this less conservative approach and, as one might expect, has arrived at astronomical values for the value of the entire Earth, at least in the hundreds of quadrillions of US dollars.

Moving right along, the second-listed value is that of “the sheer beauty of a tree” – to put a dollar value on is a somewhat curlier job, it seems, so subjective and elusive is such an assessment. But our task is actually much less complicated than it appears.

How much is a work of art worth? Simply, it’s worth whatever people are prepared to pay, and the market mechanism finds an equilibrium point at which buyers and sellers agree on a price. It’s basically the same deal with real estate. How can you put a price on a spectacular view? “Easy!” comes the response from any real estate agent in Sydney, who all know the going rates for greater or lesser views of the waters of Sydney Harbour (better ones fetching a premium of hundreds of thousands of dollars). Similarly, we can estimate the value of access to a railway station, the peacefulness of a certain neighbourhood, proximity to highly-regarded schools …. and views of, and ready access to, Sherbrooke Forest.

Using valuation methodology and software in constant development, valuers could estimate the premium that the market would pay for both very close and very distant access to Sherbrooke Forest, being the difference between property values today and when the mine site will be more of an ugly and noisy liability. Similar studies were done in London recently when estimating the boost to real estate values when the 10-station Jubilee underground line was constructed. Hardware Lane stocks the book “Taken for a Ride” which documents this fascinating study, revealing how British taxpayers shelled out about £3½ billion to construct the line, so that nearby landowners could have their land values boosted by almost £14 billion!

So we apply a similar methodology which shows, to pull a few figures from the air, that adjoining properties would fetch around $100,000 more if Sherbrooke Forest remained, that properties within 15 minutes walk would be worth $20,000 more, and so on. But let’s not overlook those distant western suburbs, whose residents still benefit – albeit in much lesser degree – in having an urban forest at their disposal for a Sunday drive. We’ll only assign $10 as the worth of the forest to them, but as there’s a few hundred thousand outer western suburb dwellings, we’re still looking at a few $mill here. We’ll assume, for convenience sake, that the value of country properties would be unaffected by the any mining.

So then: crunching, rather loosely, all these numbers, we estimate that Melbourne’s 2 million (almost) dwellings have their values enhanced by a weighted average of $100. Therefore, in terms of property values alone, Sherbrooke Forest is worth about $200 million.

But wait! – there’s more. The beauty of the forest is also worth something in terms of the therapeutic and social value of the trees, which we wouldn’t expect to be factored into land values, as estimated above. Now, if I was doing a full-on study, I’d be interviewing health resort managers about their estimates as to the contribution of fresh air and greenery to their patients’ recovery, as well as interviewing social workers and Outward Bound leaders as to the social benefits to screwed-up kids of the experiences to be had in such an accessible forest. I’d tabulate, corroborate and peer-review all this before presenting you with a guesstimate, but seeing I’m not paid a cracker for this job, I’ll just present you with a nice round $10 million value.

Which brings me to an important point: a verifiable, objectively-measured, indisputable valuation is better than a guesstimate such as this. And a guesstimate is better than a wild guess. But cop this, you skeptics: EVEN A WILD GUESS IS BETTER THAN NOTHING! For skeptics to dismiss even a wild guess and declare that no $ estimate can be made at all, and thus assign no value at all, is to effectively make an estimate of the value as zero! I can, with utmost certainty, declare that I can make a more accurate estimate than my opponents by, say, estimating the total value of the therapeutic and social benefits to be one lousy buck. To this, skeptics can raise no argument. Are you with me? For critics to dismiss the estimate of $10 million in this example, they would have to present alternative estimates and be forced to deal with these tricky, intangible areas – it’s just not good enough to ignore the problem and thereby effectively declare the value to be zero.

Onward geoist soldiers – the next value relates to the soil of the forest, much of which will be lost in the mining proposal. But we’ll concede a few points to the miners, accepting that they’ll retain most of the soil and use it elsewhere. However, some will surely be lost, plus there’ll be some lost to run-off which will silt up some waterways and Port Phillip Bay. Guesstimate of the damage: another $10 million.

Next is the value of any lost biodiversity. Admittedly, Sherbrooke Forest is not extensive in area and not unique and, to my knowledge, is not home to any endangered species, but we still need to factor in the Precautionary Principle. This is because our scientific knowledge is constantly updated as discoveries of myriad new species (especially invertebrates) comes to hand. Who knows what Sherbrooke Forest really holds, and what would be lost forever if it were mined? Applying the indisputable validity of the wild guess (compared to those who don’t even deal with the issue), the conservative guesstimate here is $1 million.

What of the value of decreased rainfall? We need look no further than Perth and surrounds, which has lost about a quarter of its rainfall in the last 30 years, basically attributed to less transpiration of water vapour through tree clearing. The economic cost of this can be calculated, in terms of lost production or of the cost associated in acquiring water from other sustainable sources, such as salinification. But, as the forest area under examination is relatively small here, we won’t research the guesstimates greatly. So, crunching loose numbers of $1000 per hectare (because of the lushness of the rainforest of Sherbrooke) and, for 800 hectares, an annual value of $800,000 for the extra rainfall generated in the region. Thus, the net present value of the annual worth of Sherbrooke Forest’s rainfall effect, $800,000, would be $800,000/0.05 or $16 million.

What, then, of the spiritual value of wilderness, whatever that means? How can one measure the benefits of any change or even transformation that sometimes occur when one is alone in nature? While such experiences often tend to be called priceless, we beancounters insist that everything has a price. The problem is not really different in nature from determining the value of goods or services in the market – what are people prepared to pay for them? For instance, those prepared to make many personal sacrifices in their efforts to preserve old growth (‘ken oath!) would, if obliged to sit down and estimate just how much the preservation is worth to them, be able to arrive at a dollar value even it’s no more than the value of their own time and resources sacrificed. Similarly, donations to organisations campaigning against forest destruction are also some sort of estimate of the value people attribute to the value of something not in their immediate vicinity.

Let’s pull some guesstimates out of the ether. Let’s assume that there would be around 1 million Melburnians and 50,000 others prepared to chip in an average of $100 each to try and save Sherbrooke Forest because of this feelgood factor it confers on them. But such money is usually donated where there is only a chance (let’s assume 50/50 chance) of the campaign succeed. Therefore, let’s say that 1,050,000 souls would donate $100 each if there was half a chance of saving the forest, then they may well donate $200 each to guarantee the safeguarding of Sherbrooke. Admittedly, there are all sorts of bells and whistles you could add to this simple model, but here we’re basically illustrating the overall process. DING!– we have another $210 million.

We score a big fat nothing on the water quality factor - as Sherbrooke doesn’t fall within any catchment area, it contributes nothing to the quality of our water supplies.

We’ve left the best until last – it’ll be a cracker of a calculation that nails the intrinsic value of the forest (that is, not the value to us humans, but the inherent value of the forest to exist in its own right). Again, it’s not crass or vulgar to make such an estimation, for there’s some sort of price for everything. Even human life has a price, despite all the rhetoric about life being infinitely precious. Thousands of Australians are killed each year on our roads, yet practically every life could be saved if we didn’t value commerce and convenience more than these lives, because this is what’s preventing authorities setting the speed limit at 30 km/hour (at which there’d probably be no deaths at all). Similarly, military commanders could divert resources to reduce the risk of injury and death to their troops but don’t, on the grounds of reduced effectiveness. Medical schemes, with limited resources, recognise similar limitations, especially if patients are elderly or have reduced quality of life. They’ll never tell you this, though – they have to maintain the absurd illusion that all life is priceless. The other illusion is that life will be saved (forever), rather than merely prolonged, as if death ain’t one out of one.

So what’s a human life – or, rather, the prolongation of a human life – worth? It must, I reckon, be expressed in terms of the ordinary human dimension – the cost borne by the rest of society to pay for its prolongation. I put it in terms of what an average-earning person could battle to save in one year (about $20,000), and multiply this by some factor, which I reckon is about 50 (the number of working years). In other words, the worth of one human life is equivalent to the lifetime savings of another.

So now we have the nice round figure of $1,000,000 – the value of (prolonging) a human life. In other words, most people would agree that a human life wouldn’t be worth prolonging if it came at any more than the cost of sentencing another human to a lifetime of unpaid wage slavery. Want to argue with this? Fine – just don’t avoid the hard call of ascribing a figure, and don’t then avoid justifying why you’re effectively going to put to hard work xxx people for xxx years to “save” this life.

Having doubts about what society will think of you? Oh dear. They’re not worth worrying about, really. Take my word for it and think for yourself. You’ll feel much better later.

So if we value the intrinsic life of a human, we can also do it for animals and plants and, with this guesstimate, we have a ball-park figure to use as a guideline. Taking account of the different life spans & lesser degrees of awareness (sorry, little microbes – you don’t rate), my bespoke software has spat out these numbers – an average of $512.30 for fauna and $1.45 for flora (over 1 year old – call me a seedist if you will). Applying guesstimates of 10 major fauna forms and 5000 major flora forms per hectare in Sherbrooke, we arrive an intrinsic value of fauna of $4,098,400 and for flora, $5,800,000 – a total of , say $10 million . Hmmm…. a guy could get a God Complex if he did this all day.

If dollar valuations like this $10 million sound too abstract, then we can make comparisons as a reasonability check. Contrasting this $10 million with the estimated valuation of the inherent worth of one human ($1 million), we see that we’re in the same ball park. That is, the worth of all living organisms in 800 hectares is equivalent to that of 10 humans. Personally, I think we’ve erred on the side of overvaluing human life, but let’s not get too bogged down here. Obviously, there is no one correct answer, only answers that feel closer to the truth than others.

So, adding up the worth of the trees and other life forms of Sherbrooke Forest, we have:

climate stabilisation ~ $312 million
amenities to landowners ~ $200 million
therapeutic and social value ~ $10 million
biodiversity ~ $1 million
increased rainfall ~ $16 million
spiritual value ~ $210 million
intrinsic value ~ $10 million

These add up to $759 million, which sounds more exact than it is, given the crudity of many of the guesstimates, but the point is that it seems that the true value of the forest is about equivalent to or greater than the value of clear felling and mining it (about $520 million). Given that the forest’s value is at least in the ballpark compared to the mining value, it should certainly force authorities to halt any mining and do its sums a lot more carefully.

Sure, you can bag the short cuts and subjective values used here, but how could anyone deny that this methodology is better than what’s in use today? Presently, it’s the market rules and the environment can go to Hell, and you couldn’t sit down and design a system any more clumsy, pig-ignorant and utterly corrupt as what we have at the moment. The proof positive of this is there for all to see who ventures to the logging coups where *our* natural heritage is being pissed up against the wall. Yes, these awesome tracts of old growth are only “worth” as much as some corporation will bids for them. And if that corporation is anything like Gunns Ltd, it’ll manage to have its trifling “market” bid accepted.

So, the state won’t get anything for a forest’s recreational, climate-stabilising, biodiversity-contributing, inherent value – just a fraction of the *economic* value. That is, the state – even if we assume there will be a fair market process whereby bidders will raise the price paid to the maximum the market should offer – will only get what the rainforest products are worth on the open market. If some corrupt, Third-world country is underselling Australia because it (or its dictatorial kleptocrats and their cronies) want quick bucks from the highest cash bidder, then the knock-on effect is that we’ll be offered even less. And if the rainforest is inaccessible, then the logger’s costs to build extensive logging access roads into the coups will effectively be deducted from their bid. So, as history has shown, when we factor in all the administrative costs and infrastructure that the state often provides to attract logging companies, we’re almost *paying* them to clear fell our forests for woodchips!

Are the enormity of the ecological and other services figures surprising when compared to what’s at stake? If we end up trashing the planet and making it uninhabitable, what’s the cost of reconstruction? Can you imagine the vastness of the task of even experienced reconstruction subcontractors completing the task of replacing Earth, even if they could do so without using Earth itself as a base?

Or try and grasp at the true $ value of the Earth from another perspective – by estimating the replacement costs for the Earth’s biosystems from a serious scientific experiment in total self-sufficiency. The so-called Biosphere 2 experiment involved over US$240 million being spent on developing the infrastructure to support 8 people for two years in a self-contained “bubble” environment. Despite these efforts from some of the world’s great scientific minds, the project failed and fresh air had to be pumped in to save the lives of the participants. So, by this guesstimate, the Earth is worth around A$320 million/8 people × 6.5 billion people on Earth = $260,000,000,000,000 (around 6500 times the world’s current GDP).

This represents the minimum value of the Earth using today’s technology. And, because the project failed, the true value of the Earth must be higher than this unimaginable amount. This seems like a fitting place to end.

As the South Pole effect blows its melting southerly winds upon our summer, the wake up call must be coming soon. With the evidence mounting up, young people are wondering what is causing the delay.There are reasons like there are seasons. Much has to do with the playing field government & businessmen must compete in. This playing field is governed by the laws of economics. Within this field, the morals of the businessman are cornered by the dictates of the market. This is because most must play by the rules of the sharemarket. A noose appears each 3 months in the form of quarterly dividend payments, for which the CEO must do all he can to achieve his profit objective. Elsewise he will endanger the share bonus scheme that has become as common as his ‘golden handshake’.

One of Government’s main roles is to manage the parameters of society’s behaviour. With melanoma levels peaking and extreme weather events scaring the daylights out of insurance companies, one wonders whether we can make up our own minds. Are we to accept that running for the shade on a sweltering day is the way of life in a modern world? Many people don’t have time to research the most environmentally useful product or importantly, the money to pay for organic, worker friendly goods. Beyond all this, do we really need the latest designed anything? Subsequently our common sense suffers and our rationality is limited, mainly because we have to work such long hours to pay off our mortgage.

The best way to change people’s behaviour is by the hip pocket nerve. “Charge society extra for environmentally unfriendly activities” they say. Social Justice experts become concerned because any eco-tax placed on the consumption of harmful goods and services leads to inflation. That means it will be a regressive tax and fall harder on the poor. It also concerns government as inflation is its number one enemy. Inflation leads to increased prices, reducingthe amount of stuff we can purchase and in the end causing more unemployment. This short-term fear generally overrides any long term need for change towards an economic system that can deliver greater generational equality.

A way through this is to look at the fundamental laws of economics. The grandfather of economics, Adam Smith, spent more than one third of his book talking on the importance of an effective tax system. Much of this has fallen upon deaf ears and a much sexier term, “the invisible hand”, has become the catchcry for all Smith’s hard work. Within Adam Smith’s words of wisdom grew the seeds that inspired another Classical economist – David Ricardo. He deducted the theory of economic rent. This was the formalisation into theory of the big ‘up yours’ that landlords can say when they hike up your rent by 10 or 15%. “Either pay what we want or you can move out to the boondocks”. We tenants have little alternative as the land has been locked up by a framework that encourages wealthy investors to hoard land as they know there is easy money in the long term. This is reinforced by a subtle system of subsidies from the poor to the rich (such as negative gearing and tax payer funded infrastructure that delivers windfall profits to nearby landlords).

These windfall profits occur in many other activities at present too. When a local community works together to build a safer locality, this adds to the local value of land. The same thing occurs when a few friends get a community garden together, producing organic food and setting up a trendy outdoor café. In time people will want to live closer to this new asset, leading to higher land values. In economic terms this increase is known as economic rent. We believe that since the public creates this economic rent, it should be re-cycled back into the community coffers. At present this rent is captured by those smart enough to play the system.

A True Cost Economics (TCE) system is needed to ensure the community gets what it deserves both now and into the future. This can be implemented to avoid inflation by moving beyond our 2 dimensional economic system of Neo Classical Economics (which only looks at labour & capital in economic equations) and into a system that accepts that we do live on a round, finite planet. What is needed is to go back to the Classical era where land was technically included in the equation as the third “Factor of Production”. This ensures the capturing of economic rent, allowing the government to cull the 13 – 15 different inefficient taxes we live with today (including Income Tax), streamlining the tax package. This can all be rectified by replacing them with a system of Resource Rentals, where a Land Value Tax (LVT) acts as the anchor for future revenue raising. This forms what we call Geonomics: the land-based economic system.

By pulling out these inefficient taxes prices will drop by at least 32% (ABS estimates). Other calculations say this could be as much as 50%. This drop gives us the ability for eco-taxes and resource rental charges to be set up to penalise anyone polluting the earth, ensuring that the true cost of our activities is represented in all that we do. By adopting this framework we can incorporate environmental costs without endangering inflation levels, removing the government’s reticence over inflation and meeting the Social Justice industry’s needs.

Now the great ‘Green Tax Shift’ can simultaneously fast forward the assistance to those in poverty and look after the planet. This occurs because under a Resource Rental system everyone must pay something back to society for the privilege of controlling that resource. No longer will the Packers be able to rort the tax system to boast of only paying $100 p.a in tax. In fairness, we must remember that it’s not their fault, they are just doing what the system allows at present.

If we were to go the whole 9 yards like Tony Blair & Bono keep professing, then we must establish real justice from the most basic of premises – the ability to own your own land so you can put a roof over your family’s head and/or find a cheap location to start a business from. This is a huge hidden issue of the times, with the locking up of the lands constricting our freedom to be self-employed, reducing employment opportunities and in the end limiting our options to working for the man. This is the great danger of globalisation that few look at. In the same year as the Seattle protests and the birth of the Global Justice movement (1999) there were 4770 foreign investments in Australia. Of these, 3700 were real estate investments (78%) worth an average of $14.1 million! (The Age, 24/12/1999)

When an LVT is implemented, ‘investment’ properties must become economical ie they must be rented out, they can no longer be left idle waiting for the capital gains delivered by society’s development. To see how much over-capacity there is in housing, especially flats, just drive by the Docklands at night. Even better, ask a friend who lives there. The real estate lobby’s figures may say 3% vacancy levels (REIV), but friends living there report anywhere from 20 – 40% vacancies. Imagine if these properties were forced onto the market? This is what will happen when a decent LVT (set at 10%) is implemented. The price of land would drop, probably by 20% plus with this increased supply. You can almost hear the screams of delight from the younger generations. Phew the great Australian dream isn’t a fantasy!

The Resource Rental system includes sharing a % of the wealth from all resources such as land, coal, water, gold, oil, gas & the electromagnetic spectrum. With at least 10% going back to the government, the community ensures it is getting a reasonable share of the ‘common wealth”. Any increase in value, such as that caused by China’s resource boom, means that the whole society, and not just the shareholders, benefit (BHP’s cash flow has increased 46% in just 6 months!). At the same time, any company that causes excess pollution must pay a % back to society (not a minimal amount that can be financially factored in ie no ceilings on any charges).

Environmental Scientists are helping the evolution towards a TCE system by developing the costing methodology for different resources ie water (see the writings of CSIRO’s Mike Young for a good start). These specialist fields can expand on the framework that Geonomics provides. Exciting developments in carbon trading are a representation of this, where the productive value of the carbon absorbed and converted into oxygen are valued. One hopes that in the future the Kyoto type carbon levels are continuously tiered downwards, ensuring that in time pollution rights cannot be exported.

The valuation of natural eco-systems is also an important development towards a TCE system. New York’s water quality has traditionally been naturally filtered by nature – plants, soil etc. An EPA warning on water quality forced NY to shape up this natural filtration as the alternative $6billion fee for a mechanised system reinforced to lawmakers how valuable nature was. This led to a million dollar buyback program of nearby farms & the tightening of environmental laws. Such savings see “Bio-Mimicry” as the new catchcry. Get business to study nature and replicate the millions of environmentally efficient methods it has worked out over the millennia ie adapting the sticky stuff mussels use to clamp onto rocks for commercial use. Let’s keep the pressure on to ensure that doesn’t become bio-piracy of indigenous customs. The problem at present is that much scientific funding is tied to political outcomes that are influenced by campaign funding, the so-called ‘lobbyocracy effect’ recently seen within the CSIRO. This curtails the study in vital areas that long term sustainability requires.

Global warming’s extreme weather will hit tropical areas harder, where resource wealth is concentrated and poverty more entrenched. This emphasises the need for a fairer distribution of these resources amongst the community to provide funding and support for the expected ramp up of natural disasters. A TCE system can do this and simultaneously simplify life for the business sector, reduce the pressures on the working class (lower mortgages) and reward those who are environmentally conscious with lower costs.

Investigate our websites to learn more about our position in the “radical centre” and keep posted on an upcoming visit by world leading Geonomics expert Alanna Hartzok in May 2006, speaking at the True Cost Economics Forum on Friday May 12th, 2006

Leading Author Peter Barnes has summarised the carbon capping system in 22 easy to read pages. Essential reading on one of our most important and eloquent thinker, the guide describes three different ways to cap carbon: cap-and-giveaway, cap-and-auction, and cap-and-rebate. It explains how, “if done right, a descending economy-wide carbon cap is the single best tool to fight climate change.” But it warns that, “if done wrong, a cap won’t reduce emissions sufficiently and will transfer hundreds of billions of dollars from families to corporate polluters.”

Read the full report here

The guide has been released with a Creative Commons license, which means it can be freely reproduced and circulated.