I bang on a lot about how market economics is completely unsuited to our current environmental predicament. Here are a couple of practical – and potentially catastrophic – examples.
Now that we are growing crops for fuel instead of food, we have accidentally created a new nexus that markets have been quick to exploit – to all our costs. Now that corn is sought as eagerly by petrol companies as by food companies, the price of cereals for biofuels must converge with its equivalent in oil. However, even if, say, the USA converted all its crops to biofuels, it this would still barely touch its total fuel consumption, so the prices of cereals must move towards oil rather than vice versa – and the process of oil is currently a lot higher. So this will cause world food prices to rise – just as we complete the seventh year out of eight when we have consumed more food than we have grown, and prices are going up anyway.
Or how about this. In India, the city of Chennai – 7 million strong – is running out of water. So local water companies are buying the water from the farmers who till the surrounding land, who are happy to sell it because it is worth a lot more than any crops they might be able to grow by irrigating mere food. So sometime not long from now, when the currently falling water table has passed beyond practical or economic reach, there will be no more water – and no food either.
Nor is a Third World peculiarity. Cities in the USA (including San Diego, Las Vegas, Los Angeles, Denver, El Paso and many more) are perpetrating the same lunacy. Their water purchases run into hundreds of millions of tons and will undermine what is now invaluable farm land over decades and decades. And their purpose? To buy an unsustainable present in which vast quantities of water are squandered and paying for it with a truly terminal future.
But what can we expect if it takes 14 tons of water to make a ton of steel but 1000 tons to grow a ton of wheat, and the steel is ‘worth’ (treacherous word!) two or three times more than the wheat anyway?
Both classic examples of market economics, in which the commodity goes to the highest bidder, regardless of the consequences. Such a system cannot even see the consequences or distinguish human misery from a packet of cornflakes. Yet trade agreement after trade agreement places such arrangements ever more firmly in the driving seat.
And of course, if we don’t sort out a non-market mechanism for managing water soon, much worse will follow.