The world has bigger problems than terrorism.
Last year, the U.S. National Academy of Sciences concluded that humanity's collective demands first surpassed the earth's regenerative capacity around 1980. Its study estimated that our demands in 1999 exceeded that capacity by 20 percent. We are now satisfying our excessive demands by consuming the earth's natural assets, in effect creating a global bubble economy.
Bubble economies are not new. American investors got an up-close view of this when the bubble in high-tech stocks burst in 2000 and the NASDAQ declined by some 75 percent. Japan had a similar experience in 1989 when the real-estate bubble burst, depreciating stock and real-estate assets by 60 percent and leaving the once-dynamic Japanese economy dead in the water.
These bursts primarily affected people living in the United States and Japan, but the global bubble economy that is based on the overconsumption of the earth's natural capital assets will affect the entire world. When the food economy bursts, it will raise food prices worldwide. The challenge for our generation is to deflate the economic bubble before that point.
Unfortunately, since September 11 2001, political leaders, diplomats and the media worldwide have been preoccupied with terrorism and, more recently, the invasion of Iraq. Terrorism is certainly a matter of concern, but if it diverts us from the environmental trends that are undermining our future until it is too late to reverse them, Osama Bin Laden and his followers will have achieved their goal in a way they could not have imagined.
Mega-threats currently being neglected include climate change, eroding soils, aquifer depletion and expanding deserts. All are threatening the livelihood and food supply of hundreds of millions of the world's people. These issues do not even appear on the radar screen of many national governments.
Thus far, most of the environmental damage has been local: the death of the Aral Sea, the burning rainforests of Indonesia, the collapse of the Canadian cod fishery, the melting of the glaciers that supply Andean cities with water, the dustbowl forming in northwestern China, and the depletion of the U.S. Great Plains aquifer. But as these local environmental events expand and multiply, they will progressively weaken the global economy, bringing closer the day when the economic bubble will burst.
Humanity's demands on the earth have multiplied over the last half-century as our numbers have increased and our incomes have risen. World population grew from 2.5 billion in 1950 to 6.1 billion in 2000. The growth during those 50 years exceeded that during the 4 million years since we emerged as a distinct species.
Population growth and rising incomes together have tripled world grain demand over the last half-century, pushing it from 640 million tons in 1950 to 1855 million tons in 2000. To satisfy this swelling demand, farmers have plowed land that was highly erodible?land that was too dry or too steeply sloping to sustain cultivation. Each year billions of tons of topsoil are being blown away in dust storms or washed away in rainstorms, leaving farmers to try to feed some 70 million additional people, but with less topsoil than the year before.
Demand for water also tripled as agricultural, industrial and residential uses climbed, outstripping the sustainable supply in many countries. As a result, water tables are falling and wells are going dry. Rivers are also being drained dry, to the detriment of wildlife and ecosystems.
Fossil fuel use quadrupled, setting in motion a rise in carbon emissions that is overwhelming nature's capacity to fix carbon dioxide. As a result of this carbon-fixing deficit, atmospheric CO2 concentrations climbed from 316 parts per million (ppm) in 1959, when official measurement began, to 369 ppm in 2000.
The sector of the economy that seems likely to unravel first is food. Eroding soils, deteriorating rangelands, collapsing fisheries, falling water tables and rising temperatures are converging to make it more difficult to expand food production fast enough to keep up with demand.
The question is: Can the world's farmers bounce back and expand production enough to fill the 100-million-ton shortfall, provide for the more than 70 million people added each year and rebuild stocks to a more secure level? In the past, farmers responded to short supplies and higher grain prices by planting more land and using more irrigation water and fertilizer. Now it is doubtful that farmers can fill this gap without further depleting aquifers and jeopardizing future harvests.
Farmers around the world are facing two new challenges: rising temperatures and falling water tables. Farmers currently on the land may face higher temperatures than any generation since agriculture began 11,000 years ago. They are also the first to face widespread aquifer depletion and the resulting loss of irrigation water.
The global average temperature has risen in each of the last three decades. The 16 warmest years since recordkeeping began in 1880 have all occurred since 1980. With the three warmest years on record coming in the last five years, crops are facing heat stresses that are without precedent.
Higher temperatures reduce crop yields through their effect on photosynthesis, moisture balance and fertilization. As the temperature rises above 94 degrees Fahrenheit, photosynthesis slows, dropping to zero for many crops when it reaches 100 degrees. When temperatures in the U.S. corn belt are 100 degrees or higher, corn plants suffer from thermal shock and dehydration. Each such day shrinks the harvest.
High temperatures also impede the fertilization needed for seed formation. Researchers at the U.S. Department of Agriculture and the International Rice Research Institute of the Philippines have together developed a rule of thumb that each one-degree-Celsius rise in temperature above the optimum during the growing season reduces grain yields by 10 percent.
These recent research findings indicate that if the temperature rises to the lower end of the range projected by the Intergovernmental Panel on Climate Change, grain harvests in tropical regions could be reduced by an average of five percent by 2020 and 11 percent by 2050. At the upper end of the range, harvests could drop 11 percent by 2020 and 46 percent by 2050. Avoiding these declines will be difficult unless scientists can develop crop strains that are not vulnerable to thermal stress.
The second challenge facing farmers, falling water tables, is also recent. With traditional animal- or human-powered water-lifting devices it was almost impossible historically to deplete aquifers. With the worldwide spread of powerful diesel and electric pumps during the last half-century, however, overpumping has become commonplace.
As the world demand for water has climbed, water tables have fallen in scores of countries, including China, India and the United States, which together produce nearly half of the world's grain. Water tables are falling throughout the northern half of China. As the water table falls, springs and rivers go dry, lakes disappear and wells dry up. Northern China is literally drying out. Water tables under the North China Plain, which accounts for a fourth or more of China's grain harvest, are falling at an accelerating rate.
In India, water tables are also falling. As India's farmers try to feed an additional 16 million people each year, nearly the population equivalent of another Australia, they are pumping more and more water. This is dropping water tables in states that together contain a majority of India's one billion people.
In the United States, the third major grain producer, water tables are falling under the southern Great Plains and in California, the country's fruit and vegetable basket. As California's population expands from 26 million to a projected 40 million by 2030, expanding urban water demands will siphon water from agriculture.
Scores of other countries are also overpumping their aquifers, setting the stage for dramatic future cutbacks in water supplies. The more populous among these are Pakistan, Iran and Mexico. Overpumping creates an illusion of food security that is dangerously deceptive because it enables farmers to support a growing population with a practice that virtually ensures a future drop in food production.
The water demand growth curve over the last half-century looks like the population growth curve, except that it climbs more steeply. While world population growth was doubling, the use of water was tripling. Once the growing demand for water rises above the sustainable yield of an aquifer, the gap between the two widens further each year. As this happens, the water table starts to fall. The first year after the sustainable yield is surpassed, the water table falls very little, with the drop often being scarcely perceptible. Each year thereafter, however, the annual drop is larger than the year before.
In addition to falling exponentially, water tables are also falling simultaneously in many countries. This means that cutbacks in grain harvests will occur in many countries at more or less the same time. And they will occur at a time when the world's population is growing by 70 million a year.
No one knows when the growth in food production will fall behind that of demand, driving up prices, but it may be much closer than we think. The triggering events that will precipitate future food shortages are likely to be spreading water shortages interacting with crop-withering heat waves in key food-producing regions. The economic indicator most likely to signal serious trouble in the deteriorating relationship between the global economy and the earth's ecosystem is grain prices.
Food is fast becoming a national security issue as growth in the world harvest slows and as falling water tables and rising temperatures hint at future shortages. More than 100 countries import part of the wheat they consume. Some 40 import rice. While some countries are only marginally dependent on imports, others could not survive without them. Iran and Egypt, for example, rely on imports for 40 percent of their grain supply. For Algeria, Japan, South Korea and Taiwan, among others, it is upwards of 70 percent. For Israel and Yemen, more than 90 percent. Just six countries?the United States, Canada, France, Australia, Argentina and Thailand?supply 90 percent of grain exports. The United States alone controls close to half of world grain exports.
Thus far the countries that import heavily are small and middle-sized ones. But now China, the world's most populous country, is likely to soon turn to world markets. When the former Soviet Union unexpectedly turned to the world market in 1972 for roughly a tenth of its grain supply, following a weather-reduced harvest, world wheat prices climbed from $1.90 to $4.89 a bushel. Bread prices soon followed.
If China depletes its grain reserves and turns to the world grain market to cover its shortfall, now 40 million tons per year, it could destabilize world grain markets overnight. Turning to the United States would present a delicate geopolitical situation in which 1.3 billion Chinese consumers with a $100 billion trade surplus with the United States will be competing with American consumers for U.S. grain. If this leads to rising food prices in the United States, how will the government respond? In times past, it could have restricted exports, even imposing an export embargo, as it did with soybeans to Japan in 1974. But today the United States has a stake in a politically stable China. With an economy growing at seven to eight percent a year, China is the engine that is powering not only the Asian economy but, to some degree, the world economy.
When I projected in 1995 in Who Will Feed China? that China would one day turn abroad for part of its grain, the U.S. National Intelligence Council launched the most detailed assessment of China's food prospect ever undertaken. The council was concerned precisely because such a move by China could drive up world grain prices and destabilize governments in developing countries.
When grain prices began to climb in 1972-74, it did not take long for a politics of food scarcity to emerge. Pressure from within grain-exporting countries to restrict exports in order to check the rise in domestic food prices was common.
For the world's poor?the millions spending 70 percent of their income on food?rising grain prices would be life-threatening. A doubling of world grain prices today could impoverish more people in a shorter period of time than any event in history. With desperate people holding their governments responsible, such a price rise could also destabilize governments of low-income, grain-importing countries.
In early September 2002, the Canadian Wheat Board announced that it had no more to sell. This abrupt withdrawal from the market?even before that year's drought-reduced harvest was complete?illustrates the kind of action that exporters can take when confronted with scarcity. Instead of letting the world market allocate scarce supplies of high-quality wheat, the Board decided that it would protect domestic supplies, then sell only to traditional clients, leaving others to fend for themselves. In late October, Australia?also experiencing a severe drought?announced that it would ration wheat and barley exports among its best customers, excluding everyone else.
Historically, the world had two food reserves: the global carryover stocks of grain and the cropland idled under the U.S. farm program to limit production. The latter could be brought into production within a year. Since the U.S. land set-aside program ended in 1996, however, the world has had only carryover stocks as a reserve.
Food security has changed in other ways. Traditionally it was largely an agricultural matter. But now it is something that our entire society is responsible for. National population and energy policies may have a greater effect on food security than agricultural policies do. With most of the three billion people to be added to world population by 2050 being born in countries already facing water shortages, childbearing decisions may have a greater effect on food security than crop planting decisions. Achieving an acceptable balance between food and people today depends on family planners and farmers working together.
Climate change remains the wild card in the food security deck. It is perhaps a measure of the complexity of our time that decisions made in the Ministry of Energy may have a greater effect on future food security than those made in the Ministry of Agriculture. The effect of population and energy policies on food security differs in one important respect: population stability can be achieved by a country acting unilaterally. Climate stability cannot.
Unless we quickly reverse the damaging trends that we have set in motion, they will generate vast numbers of environmental refugees?people abandoning depleted aquifers and exhausted soils and those fleeing advancing deserts and rising seas. In a world where civilization is being squeezed between expanding deserts from the interior of continents and rising seas on the periphery, refugees are likely to number not in the millions but in the tens of millions. Already we see refugees from drifting sand in Nigeria, Iran and China.
We are already looking at the potential wholesale evacuation of cities as aquifers are depleted and wells go dry. Sana'a, the capital of Yemen, and Quetta, the capital of Pakistan's Baluchistan province, may become the early ghost towns of the 21st century.
A reversal of the basic trends of social progress of the last half century has long seemed unthinkable. But now the number of hungry may be increasing for the first time since the war-torn decade of the 1940s.
The failure of governments to deal with falling water tables and the depletion of aquifers in the Indian subcontinent could be as disruptive for the 1.3 billion living there as the HIV epidemic is for the people in sub-Saharan Africa. With business as usual, life expectancy could soon begin to fall in India and Pakistan as water shortages translate into food shortages, deepening hunger among the poor.
The world is moving into uncharted territory as human demands override the sustainable yield of natural systems. The risk is that people will lose confidence in the capacity of their governments to cope with such problems, leading to social breakdown. The shift to anarchy is already evident in countries such as Somalia, Afghanistan and the Democratic Republic of the Congo.
Business as usual?Plan A?is clearly not working. The stakes are high, and time is not on our side. There is mounting evidence that our modern civilization is in trouble. The good news is that there are solutions to the problems we are facing. The bad news is that if we continue to rely on timid, incremental responses, our bubble economy will continue to grow until eventually it bursts. We need a new approach?a Plan B?an urgent reordering of priorities and a restructuring of the global economy in order to prevent that from happening.
We need a massive mobilization to deflate the global economic bubble before it bursts. This will require an unprecedented degree of international cooperation to stabilize population, climate, water tables and soils?and at wartime speed.
Our only hope now is rapid systemic change?change based on market signals that tell the ecological truth. This means restructuring the tax system: lowering income taxes and raising taxes on environmentally destructive activities, such as fossil fuel burning, to incorporate the ecological costs. Unless we can get the market to send signals that reflect reality, we will continue making faulty decisions as consumers, corporate planners and government policymakers. Ill-informed economic decisions and the economic distortions they create can lead to economic decline.
Business as usual offers an unacceptable outcome?continuing environmental degradation and disruption and a bursting of the economic bubble. The warning signals are coming more frequently, whether they be collapsing fisheries, melting glaciers or falling water tables. Thus far the wake-up calls have been local, but soon they could become global. Massive imports of grain by China?and the rise in food prices that would likely follow?could awake us from our lethargy.
Stabilizing world population at 7.5 billion or so is central to avoiding economic breakdown in countries with large projected population increases that are already overconsuming their natural capital assets. The keys here are extending primary education to all children, providing vaccinations and basic healthcare, and offering reproductive healthcare and family-planning services in all countries.
Shifting from a carbon-based to a hydrogen-based energy economy to stabilize the climate is now technologically possible. Advances in wind-turbine design and in solar-cell manufacturing, the availability of hydrogen generators and the evolution of fuel cells provide the technologies needed to build a climate-benign hydrogen economy.
On the energy front, Iceland is the first country to adopt a national plan to convert its carbon-based energy economy to one based on hydrogen, while Denmark and Germany are leading the world into the age of wind. Denmark, the pioneer, gets 18 percent of its electricity from wind turbines and plans to increase this to 40 percent by 2030. Germany has developed some 12,000 megawatts of wind-generating capacity. Its northernmost state of Schleswig-Holstein now gets 28 percent of its electricity from wind. Spain is also moving fast to exploit its wind resources.
Japan has emerged as the world's leading manufacturer and user of solar cells. With its commercialization of a solar roofing material, it leads the world in electricity generation from solar cells and is well-positioned to assist in the electrification of villages in the developing world.
The Canadian province of Ontario is emerging as a leader in phasing out coal. It plans to replace its five coal-fired power plants with gas-fired plants, wind farms and efficiency gains. This initiative calls for the first plant to close in 2005 and the last one in 2015, with a resultant reduction in carbon emissions equivalent to taking 4 million cars off the road.
Stabilizing water tables is particularly difficult because the forces triggering the fall have their own momentum. Arresting the fall depends on quickly raising water productivity. It is difficult to overstate the urgency of this effort. Failure to stop the fall in water tables by systematically reducing water use will lead to the depletion of aquifers, an abrupt cutback in water supplies and the risk of a precipitous drop in food production. In pioneering drip irrigation technology, Israel has become the world leader in the efficient use of agricultural water. This unusually labor-intensive irrigation practice, now being used to produce high-value crops in many countries, is ideally suited where water is scarce and labor is abundant.
In stabilizing soils, South Korea and the United States stand out. South Korea, with once denuded mountainsides and hills now covered with trees, has achieved a level of flood control, water storage and hydrological stability that is a model for other countries.
The U.S. record in soil conservation is also impressive. Beginning in the late 1980s, U.S. farmers systematically retired roughly 10 percent of the most erodible cropland, planting the bulk of it to grass. In addition, they lead the world in adopting minimum-till, no-till and other soil-conserving practices. With this combination of programs and practices, the United States has reduced soil erosion by nearly 40 percent in less than two decades.
Thus all the things we need to do to keep the bubble from bursting are now being done in at least a few countries. If these highly successful initiatives are adopted worldwide, and quickly, we can deflate the bubble before it bursts.
Adopting Plan B is unlikely unless the United States assumes a leadership position, much as it belatedly did in World War II. The nation responded to the aggression of Germany and Japan only after it was directly attacked at Pearl Harbor. But respond it did, and after an all-out mobilization, the U.S. engagement helped turn the tide, leading the Allied Forces to victory within three-and-a-half years.
In his State of the Union address on January 6, 1942, one month after Pearl Harbor, President Roosevelt announced ambitious arms production goals. The United States, he said, was planning to produce 60,000 planes, 45,000 tanks, 20,000 anti-aircraft guns and six million tons of merchant shipping. He added, "Let no man say it cannot be done."
The year 1942 witnessed the greatest expansion of industrial output in the nation's history?all for military use. Early in the year, the production and sale of cars and trucks for private use was banned, residential and highway construction was halted and driving for pleasure was banned.
In her book No Ordinary Time, Doris Kearns Goodwin describes how various firms converted. A sparkplug factory was among the first to switch to the production of machine guns. Soon a manufacturer of stoves was producing lifeboats. A merry-go-round factory was making gun mounts; a toy company was turning out compasses; a pinball machine plant began to make armor-piercing shells.
In retrospect, the speed of the conversion from a peacetime to a wartime economy is stunning. Winston Churchill often quoted Sir Edward Grey, Britain's foreign secretary: "The United States is like a giant boiler. Once the fire is lighted under it, there is no limit to the power it can generate."
This mobilization of resources within a matter of months demonstrates that a country and, indeed, the world, can restructure its economy quickly if it is convinced of the need to do so. Many people?although not yet the majority?are already convinced of the need for a wholesale restructuring of the economy. The issue is not whether most people will eventually be won over, but whether they will be convinced before the bubble economy collapses.
The key to restructuring the economy is the creation of an honest market, one that tells the ecological truth. The market is an incredible institution?with some remarkable strengths and some glaring weaknesses. It allocates scarce resources with an efficiency that no central planning body can match. It easily balances supply and demand and it sets prices that readily reflect both scarcity and abundance. But the market also has three fundamental weaknesses. It does not incorporate the indirect costs of providing goods or services into prices, it does not value nature's services properly, and it does not respect the sustainable-yield thresholds of natural systems such as fisheries, forests, rangelands and aquifers.
With the sevenfold expansion in the world economy over the last half-century, the failure to address these market shortcomings and the irrational economic distortions they create will eventually lead to economic decline.
As the global economy has expanded and as technology has evolved, the indirect costs of some products have become far larger than the market price. The price of a gallon of gasoline, for instance, includes the cost of production but not the repair bill from acid rain damage. Nor does it cover the cost of rising global temperature, ice melting, more destructive storms, or the relocation of millions of refugees forced from their homes by sea-level rise.
If we have learned anything over the last few years, it is that accounting systems that do not tell the truth can be costly. Faulty corporate accounting systems that overstate income or leave costs off the books have driven some of the world's largest corporations into bankruptcy, costing millions of people their lifetime savings, retirement incomes and jobs.
We now have a faulty economic accounting system at the global level, but with potentially far more serious consequences. Economic prosperity is achieved in part by running up ecological deficits, costs that do not show up on the books. Some of the record economic prosperity of recent decades has come from consuming the earth's productive assets?its forests, rangelands, fisheries, soils and aquifers?and from destabilizing its climate.
For gasoline, calculating the true costs to society means including the medical costs of treating those who are ill from breathing polluted air; the costs of acid rain damage to lakes, forests, crops and buildings; and, by far the largest, the costs of climate change. Higher temperatures can wither crops and reduce harvests. They can melt ice and raise sea level, inundating coastal cities, low-lying agricultural lands and low-lying island countries. The interesting question is: What is the cost to society of burning a gallon of gasoline?
Some of the looming costs associated with continued fossil fuel burning are not only virtually incalculable, but the outcome is unacceptable. The World Bank reports that a one-meter rise in sea level would inundate one-half of Bangladesh's riceland. How much is this land worth in a country that is the size of New York state and has a population half that of the United States? And what would be the cost of relocating the 40 million Bangladeshis who would be displaced by the one-meter rise in sea level?
Another challenge in creating an honest market is to get it to value nature's services. For example, after several weeks of flooding in the Yangtze River basin in 1998?flooding that eventually inflicted $30 billion worth of damage and destruction in the basin?the Chinese government announced that it was banning all tree-cutting in the basin. It justified the ban by saying that trees standing are worth three times as much as trees cut. This calculation recognized that the flood-control service provided by forests was far more valuable than the timber in them.
Once we calculate all the costs of a product or service, we can incorporate them into market prices by restructuring taxes. If we can get the market to tell the truth, then we can avoid being blindsided by faulty accounting systems that lead to bankruptcy. As Øystein Dahle, former vice president of Exxon for Norway and the North Sea, has pointed out: "Socialism collapsed because it did not allow the market to tell the economic truth. Capitalism may collapse because it does not allow the market to tell the ecological truth."
The need for tax shifting?lowering income taxes while raising taxes on environmentally destructive activities?in order to get the market to tell the truth has been widely endorsed by economists. The basic idea is to establish a tax that reflects the indirect costs to society of an economic activity. For example, a tax on coal would incorporate the increased healthcare costs associated with breathing polluted air, the costs of damage from acid rain and the costs of climate disruption.
With this concept in hand, it is a short step to tax shifting?that is, reducing taxes on income and offsetting this with taxes on environmentally destructive activities. Nine countries in Western Europe have already begun the process of tax shifting, known as environmental tax reform. The amount of revenue shifted thus far is small, just a few percent. But enough experience has been gained to know that it works.
One of the better-known changes was a four-year plan adopted in Germany in 1999 to shift taxes from labor to energy. By 2001, this had lowered fuel use by five percent. A tax on carbon emissions adopted in Finland in 1990 lowered emissions there seven percent by 1998.
Environmental tax reform is spreading, with the reform process now under way throughout Europe, with isolated cases elsewhere. The United States, for example, imposed a stiff tax on chlorofluorocarbons to phase them out in accordance with the Montreal Protocol of 1987. At the local level, the city of Victoria, British Columbia, adopted a trash tax of $1.20 per bag of garbage, reducing its daily trash flow 18 percent within one year.
Environmental tax shifting usually brings a double dividend. In reducing taxes on income, labor becomes less costly, creating additional jobs while protecting the environment. This was the principal motivation in the German four-year shift of taxes from income to energy. The shift from fossil fuels to more energy-efficient technologies and to renewable sources of energy reduces carbon emissions and represents a shift to more labor-intensive industries. By lowering the air pollution from smokestacks and tailpipes, it also reduces respiratory illnesses, such as asthma and emphysema, and healthcare costs?a triple dividend.
Tax shifting also helps countries gain the lead in producing new equipment, such as new energy technologies or those used for pollution control. For example, the Danish government's tax incentives for wind-generated electricity have made Denmark, a country of only five million people, the world's leading manufacturer of wind turbines.
Some 2500 economists, including eight Nobel Prize winners in economics, have endorsed the concept of tax shifts. The editorial board at the Economist has also recognized the advantage of environmental tax shifting and endorses it strongly: "On environmental grounds, never mind energy security, America taxes gasoline too lightly. Better than a one-off increase, a politically more feasible idea, and desirable in its own terms, would be a long-term plan to shift taxes from incomes to emissions of carbon."
In Europe and the United States, polls indicate that at least 70 percent of voters support environmental tax reform once it is explained to them.
Just as there is a need for tax shifting, there is also an urgent need for subsidy shifting. Each year the world's taxpayers underwrite $700 billion of subsidies for environmentally destructive activities, such as fossil-fuel burning, overpumping aquifers, clearcutting forests and overfishing. A 1997 Earth Council study, Subsidizing Unsustainable Development, observes that "there is something unbelievable about the world spending hundreds of billions of dollars annually to subsidize its own destruction."
Some countries are eliminating or reducing climate-disrupting subsidies. Belgium, France and Japan have phased out all subsidies for coal. Germany reduced its coal subsidy from $5.4 billion in 1989 to $2.8 billion in 2002?lowering its coal use by 46 percent. China cut its coal subsidy from $750 million in 1993 to $240 million in 1995.
Further shifting coal and oil subsidies to the development of climate-benign energy sources such as wind power, solar power and geothermal power is the key to stabilizing the earth's climate. Shifting subsidies from road construction to rail construction could increase mobility in many situations while reducing carbon emissions.
In a troubled world economy facing fiscal deficits at all levels of government, exploiting these tax and subsidy shifts with their double and triple dividends can help balance the books and save the environment. Tax and subsidy shifting promise both gains in economic efficiency and reductions in environmental destruction, a win-win situation.
History judges political leaders by whether they responded to the great issues of their time. For today's leaders, the issue is how to deflate the world's bubble economy before it bursts. This bubble threatens the future of everyone, rich and poor alike. It challenges us to build an eco-economy.
Among national political leaders, none has articulated the new agenda better than UK Prime Minister Tony Blair. He believes that environmental degradation is the issue for our generation, noting that climate change is "unquestionably the most urgent environmental challenge." Arguing that the Kyoto Protocol was not radical enough, he calls for a 60 percent reduction in carbon emissions worldwide by 2050. Summing up, he calls for a "new international consensus to protect our environment and combat the devastating impacts of climate change."
French President Jacques Chirac, a political conservative, has suggested the creation of a world environment organization to coordinate efforts to build an environmentally sustainable economy.
Some corporate leaders are also beginning to urge efforts to deal with global poverty. Juergen Schrempp, CEO of DaimlerChrysler, said in a speech at the U.S. Chamber of Commerce that the world needed a new Marshall Plan. The question for the industrial world, he said, was not, "Can we afford another Marshall Plan?" but rather, "Can we afford not to have another Marshall Plan?"
There is a growing sense among the more thoughtful political and opinion leaders worldwide that business as usual is no longer a viable option, that unless we respond to the social and environmental issues that are undermining our future, we may not be able to avoid economic decline and social disintegration.
We have the wealth and know-how to avoid catastrophe. What we do not yet have is the leadership. And if the past is any guide to the future, that leadership can only come from the United States. By far the wealthiest society that has ever existed, the United States has the resources to lead this effort.
Unfortunately, the United States continues to focus on building an ever-stronger military as though that were the key to addressing these mounting threats. A reordering of priorities means restructuring the U.S. foreign policy budget. The challenge is not just to provide a high-tech military response to terrorism, but to build a global society that is environmentally sustainable and socially equitable. Such an effort would more effectively undermine the spread of terrorism than a doubling of military expenditures.
We can build an economy that does not destroy its natural support systems and a global community where the future needs of all the earth's people are satisfied. This is entirely doable. In the words of Franklin Roosevelt, who called America to greatness during a different crisis, "Let no man say it cannot be done."
Lester R. Brown is the founder and president of the Earth Policy Institute in Washington, D.C. This article comes from his book Plan B: Rescuing a Planet Under Stress and a Civilization in Trouble, published this September by W.W. Norton.