Financially advantageous approaches to preserve the ecosystem.
By Dennis Bushnell
NASA Langley Research Center
The human approach to solving problems is short-term minded. For gradual evolutionary changes and issues with minor long-term impacts, such a tactical approach has proved successful.
Encouraging this near-term focus are the amygdala, the part of our brain that keeps us conservative; and desire to hold on to power, both financial and political, on the part of current status quo “winners.” The overall result is a reluctance to change, risk aversion, and short-term fixation.
Although we have studied climate change and ecosystem degradation driven by human activity, official denial has prevailed until rather serious changes started to become apparent.
Evidence of such changes includes extreme floods, storms, diseases, fires, ocean level rises and circulation changes, species extinctions, and temperature increases.
In fact, during the Permian extinction, ocean circulation changes increased anoxic ocean conditions, resulting in an overgrowth of cyanobacteria. These blue-green algae produce hydrogen sulfide, which, in small percentages in the atmosphere, is poisonous to humans and takes down the ozone layer.
Indeed, climate change is much more than warm days and wet feet, but there are ways to mitigate its effects. In his book Drawdown, Paul Hawken provides an extensive compilation of approaches to climate change. He discusses more than 80 ways to palliate its consequences with an estimated total monetary savings of approximately $73 trillion over 30 years.
Fundamentally, humans have been too successful as a species. We have pursued ever greater population numbers and economic growth without considering the finite size of our planet and the resources available in it. The ecosystem provides the essentials for life, such as water, air, food, soil, plants, and minerals, and we are degrading it seriously at our peril. Major effects include shortage of fresh water, extinction of species, pollution, deforestation, and loss of topsoil and wildlife habitat.
Sustainable growth is only possible via technology and approaches to maximize resource utilization, and/or controlling population. For many centuries, as humans depleted local resources, we have simply moved to other regions where supplies were available, but that is no longer an option as these practices are degenerating the entire planet.
There appears to be general agreement that we are short approximately 50% of a planet now, and as world population continues to grow and living standards rise, projections include a shortfall of some 3 planets.
Altering technology and approaches to adapt to such growth is termed “sustainability,” and its various alternatives include green growth, reusability, and the circular economy. It also involves the valuing, protection, and strengthening of what are called “ecosystem services.”
The purpose of this report is to consider the examination and application of financial gain incentives to greatly accelerate the development of sustainability for the entire ecosystem. This financial approach is responsible, for example, for the now hugely successful growth in generation and storage of renewable energy.
During the past few decades, technology has reduced the costs of renewables, and prices are still decreasing. However, as a matter of fact, not much really happened with regard to application and utilization of renewable energy until it was the best solution, financially speaking.
The major determinant of renewable energy application has always been financial gain, not the climate downsides mentioned. It’s noteworthy that inexpensive renewable energy – that is, green electricity generation – and storage solutions are pivotal keys or enablers for climate change mitigation, as electrification can be applied widely to the other major processes that produce CO2, such as transportation and industrial and commercial operations.
There are 2 obvious high-level sources of financial benefit for both the ecosystem and climate. One approach strives to mitigate the trillions of dollars of negative effects that will result from ecosystem degradation and climate change if the current negative trends continue, while the other aims to alter technology and approaches to situations with the potential to yield greater profits.
First, we’ll examine the current financial approaches to climate. Second, we’ll address similarly the rest of the ecosystem to reach sustainability, enable a circular economy, and promote green growth, abandoning ecosystem degradation in the process.
Changing business practices
Keeping current business models may result in an estimated average loss of 7% (or more, depending on temperature rise) of global gross domestic product (GDP) by 2100. On the other hand, working to reduce impact on both ecosystem and climate is projected to increase global GDP some 5% by 2050.
Changes for the financial and ecosystem good will come with some consequences, and there will be winners and losers. The big winners with the shift toward renewable energy are manufacturers catering to this industry, and the general public, with reduced climate impacts across the board, cheaper energy bills, and cleaner air.
Losers thus far, due to availability of lower-cost options for energy generation, include coal- and nuclear-based power producers. Similarly, as renewable energy production becomes more efficient and storage solution costs continue to decrease, the gas and petroleum industries will be affected, too.
Consequently, as we change our ways to reverse current environmental trends, there will be financial difficulties to be considered and solved. For example, the stock market value of the US coal industry in 2011 was approximately $37 billion. As of 2019, it’s worth about $2 billion.
Historically, there have been concerns regarding the costs of environmental remediation. However, actions have shifted to concerns regarding the even greater cost of not taking action, along with the financial loss that will result from not taking advantage of the opportunities associated with remediation approaches, even if specific major industries are negatively affected.
An indication of this 180º shift is seen in the increasing importance of environmental performance in the evaluation of top management. Governor of the Bank of England Mark Carney has said that companies that don’t adapt to the challenges of climate change will go bankrupt without question. The value of the rapidly growing global green economy in 2015/2016 was ~$7.87 trillion.
Prospective financial losses
Negative climate changes in the form of floods, droughts, fires, etc, directly affect local and regional economies due to loss of human lives and interrupted productivity. In addition, the disbursement of insurance money, also tied to natural disasters, accounts for some 11% of US GDP.
Furthermore, estimates indicate that a 2º C temperature rise would reduce GDP by 15%, and a 3º C rise would reduce it by 25%. In 2100, temperature rise is slated for 4º C, producing a 30% reduction in GDP. In the US, this temperature rise means $23 trillion will be lost.
In this regard, the US economy could shrink 10% to 25% by 2100, depending on the promptness and effects of positive reaction. Without a doubt, fields such as agriculture, fishing, health services, mining, supply chains, real estate and land/labor work would benefit greatly from more stable climate.
Estimates of the cost of CO2 emissions on the economy were on the order of $100 per ton in 2018. With 37 billion tons emitted, the result was $3.7 trillion/year. On societal costs, this equates to approximately 4% of GDP.
Other estimates of the social cost of carbon range from $220 to upwards of $500 per ton of CO2 emissions, depending on what costs are included. Now, given the cost of raising children, in terms of reducing carbon emissions at the personal level, having 1 fewer child saves the most in CO2 emissions by far – 58 tons/year.
Given the obvious manifestations of climate change, consumers are increasingly demanding climate-friendly operations and products across the board, which has resulted in loss of business for those that do not adapt to these demands.
In terms of public health, it’s estimated that almost 25% of all diseases are caused by adverse environmental exposure.
The yearly cost for unmitigated climate change would total at least 5% of GDP, but it could be as high as 20%. What’s more, warming of 6º C could lead to present value loss of $43 trillion, or 30% of the global total.
Since 1980, extreme weather has cost $1.6 trillion. In contrast, over the course of a decade, US Environmental Protection Agency (EPA) regulations cost $45 billion but produced $640 billion in benefits.
Prospective financial gains
Renewable energy generation is at or below cost parity with fossil carbon fuels, and prices are still plummeting. Energy storage markets are huge and growing rapidly, and costs keep decreasing. Battery prices have fallen some 85% over the past decade, leading to cheaper electricity and electric transportation, reaching new markets, and reducing the cost of living and manufacturing.
Investment in renewable energy in the past decade is calculated at $2.5 trillion, jobs have increased in related fields, and health issues from fossil fuel pollution along with cooling water requirements have been reduced.
The benefits of shifting to renewable energy also extend to other realms. Less costly energy, for example, enables more profitable desalinization, aluminum production, ocean mining, etc.
Also, distributed energy, including at-home energy generation, constitutes a more reliable and less expensive system. Energy conservation developments have permitted more efficient buildings that produce their own energy.
In agriculture, there are potentially huge profits in switching from traditional practices to halophyte/saline methods. These allow for utilization of currently unexploited planet resources such as deserts, wastelands, and saline/seawater environments. This approach would:
• Produce biomass for replacing petroleum for petrochemical feedstock.
• Produce massive amounts of food while freeing up a sizable portion of the 70% of the fresh water now used for agriculture.
• Produce biofuels.
• Absorb major amounts of CO2.
• Address resource challenges related to land, water, food, energy, and climate.
• Reduce agricultural costs and the need for water conservation.
Reportedly, investing $1.7 trillion in climate change mitigation over the next 10 years would yield $7 trillion in economic returns due to avoidance of negative climate effects and the increased productivity of new equipment.
Ecosystem degradation comes with negative financial implications for society. Major personal, commercial, industrial, and agricultural losses can be expected due to depletion of natural resources, such as loss of topsoil, fresh water shortages, deforestation and extinction of species, and pollution, including trash and industrial waste.
Avoiding ecosystem degradation could save some 9 million human lives per year from deaths related to pollution (ozone, carbon monoxide, NO2, SO2, ammonia, lead, etc), which is 15 times the number of deaths from wars and 16% of global deaths/year.
It’s estimated that 9 out of 10 people in the world breathe highly polluted air. Pollution costs some $4.6 trillion to the global economy. Marine plastic pollution alone costs up to $2.5 trillion/year.
The world’s terrestrial ecosystem services, which are considered based on variables, have been valued on an annual basis to be approximately equivalent to the annual GDP, and the cumulative loss of biodiversity and associated ecosystem services between 2000 and 2050 could be equivalent to 7% of the 2050 world GDP.
Estimates indicate that, between 1997 and 2011, the world lost up to $21 trillion in ecosystem services due to land cover change and/or degeneration. Ecosystem services vital to human well-being, such as crop pollination, water purification, flood protection, and carbon sequestration, are worth between $125 and $140 trillion/year, which is 1.5 times greater than the global GDP.
Reversing ecosystem degradation
Growing salt-tolerant plants, such as halophytes, using saline water in unused areas has immense advantages, including the following:
• Utilization of wastelands and deserts, which make up 44% of the land area, and seawater (97% of the planet’s water resources). This could be our last major play regarding the ecosystem.
• Seawater contains 80% of the nutrients needed to grow plants, and researchers are developing new techniques to extract nitrogen from the air, thus requiring less fertilizer.
• Economics are very favorable because advanced technology is not required, and cultivation uses inexpensive land and water. The shift to halophytes could occur relatively soon.
• Halophyte cultivation would free up 70% or more of the total fresh water used for conventional glycophyte agriculture and for direct human use, thus solving both water and food problems.
• Cultivating halophytes would similarly eliminate the necessity of using arable land and freshwater for biofuels and for providing petrochemical feedstocks for plastics and other industrial products. It is literally green energy and chemicals.
• Halophytes sequester up to 18% of their CO2 uptake in their deep roots (5 tons of CO2/ha), removing this gas from the atmosphere.
• Seawater contains trace elements essential to healthy human physiology, which we have largely depleted from arable land due to overuse.
Currently, the University of Nottingham in the UK is attempting to use atmospheric nitrogen for agriculture, aiming to spend far less on fertilizers, eliminate runoffs, and reduce oxygen loss in oceans.
Other forms of ecosystem degradation such as the highly-polluting hard-rock mining can be reduced by switching to ocean mineral extraction using inexpensive renewable energy. Recycling – also known as the circular economy – is another environment-friendly practice that works with nearly any material, including solids, liquids, and gases. Companies doing this usually operate locally and at ultra-low costs.
On less than a half-acre and with help from developing technologies, individuals and communities could grow their own food, recycle on site, use distributed energy generation, solve their printing needs, practice tele-education and tele-medicine, and use 5-sense virtual reality (VR) for applications like tele-traveling.
This would eliminate the need for physical travel, as tele-workers and those in the “gig economy,” which is based on flexible jobs connecting to customers through online platforms, can live just about anywhere. And going forward, some may not need a job at all since these opportunities could result in huge personal financial independence.
The ongoing major shift in wealth generation from exploiting natural resources to inventing things has far smaller effects in the ecosystem. Various adaptations and resilience approaches to ecosystem preservation promoting positive climate changes have overall benefits estimated at $7 trillion.
McKinsey and Company, in its Sep 20, 2019 issue of the Shortlist, estimates business opportunities of up to $60 billion/year related to new approaches to plastics recycling.
Manufacturing is already being transformed by 3D printing, as various parts are produced at the individual level. This reduces waste, enables use of new/different materials and much more complex/optimized designs and functionalities, all this at greatly reduced costs while using 90% less materials.
The US green economy’s estimated worth is $1.3 trillion/year, or 6.8% of our $19 trillion/yr economy. There are greater returns in the green economy than in the stock market. Estimated yearly GDP climate losses are some 4% of GDP.
Therefore, the total effect of the green economy and loss mitigation is around 11% (4+6.8) of GDP, or nearly $2 trillion. The global green economy is approximately $8 trillion. Reportedly, there was a $10.4-trillion private investment from 2009–2019 in the global green economy.
Because of massive reductions in the costs of renewable energy and storage solutions, favorable financials and increased profits are currently on a path that could fix climate in a few decades. Given the huge economic value of the ecosystem and the major financial upsides of various mitigation alternatives, it is more than conceivable that these approaches could also fix the rest of the ecosystem issues.
These considerations, options, and experiences refute the long-held conventional wisdom that fixing the ecosystem/climate issues would be extremely costly and detrimental to economic growth.
In fact, considering both the avoidance of financial downsides and evolving markets for mitigation approaches, and their offshoots, fixing the ecosystem and climate is the way forward to excellent financial growth and success.
And, although it will require changes, these are either already under way or available for financial
So, yes, the intimately related decarbonization, circular economy, and green growth are achievable in the mid-term, and they’re financially advantageous. In the case of climate, there was minimal progress until the profitability became apparent.
That same power of financials can – and should – be successful in regard to improving the outlook for the rest of the ecosystem.
Dennis Bushnell is chief scientist at NASA Langley Research Center, where he is responsible for technical oversight and advanced program formulation. His major technical expertise includes flow physics and control, drag reduction and advanced configuration aeronautics. Bushnell is a fellow of AIAA, ASME and the Royal Aeronautical Society and a member of the National Academy of Engineering.