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Forum:15th May, 7.30 pm: How externalities drive climate change and will you be left holding the tab?

May 11, 2013

A presentation for Nature and Society Forum hosted by the Climate Action Canberra and the Public Health Association.
The forum is at the new Fenner School Building 48, Australian National University. For a picture of the building and map link see

Our reality and challenge
Despite 50 years of increasingly robust scientific evidence about global warming and a reasonable idea about the effects on humanity and the ecosystem, why do we continue to defer effective action? President Obama summarised this reality and the costs at his re-inauguration when he said’:
‘Some may still deny the overwhelming judgement of science, but none can avoid the impacts from ranging fires, and crippling droughts and the more powerful storms.’

The reasons for the lack of action are many. So too are the questions about accountability for paying compensation for those adversely affected and for the additional costs of delayed adaptation.

The neoliberal, unregulated market focussed, growth driven economic system is one factor. In this system corporations are pushed to externalize any cost they can to improve profitability. Such externalized costs include adverse environmental and social effects. Deregulation of the economy has permitted this market failure to happen by removing those price signals from transactions, despite the pro-market rhetoric of promoters of the system. This is not what Adam Smith meant; for him prices must reflect the full cost of the production and impact of goods so that consumers could make informed decisions and take responsibility for all their costs. Proper pricing did not permit externalized costs and so avoided environmental and social damage and made sure any such costs were born by the buyers / users and would therefore influence consumption decisions. The taxpayer, nor non-beneficiaries such as the environment and our future children, would not bear these costs.

Governments have failed in not maintaining regulation. In so doing they protect vested interests. The corruption of basic economics has induced overconsumption, resource depletion, worsening wealth inequality, expansion of the parasitic financial markets and with that economic crises and possibly collapse. Consumer focus on ‘me and now’, rather than the national, social or ecological interest of ‘we and forever’ is consequent to the exploitative marketing that we are relentlessly exposed to.

In doing this we are pressed for time. We are already accelerating dangerous climate extremes and feedbacks. As admitted to recently by the UN, World Bank, International Energy Agency, national Science Academies, the IPCC and industry leaders, the evidence is clear; under business as usual the planet will warm 4-6oC this century that will accelerate a range of dangerous climate extremes that will impact most bio-systems and their dependent societies. The risk of collapse is real. Nature is not waiting and not interested in us, except as just more substrate, and it always bats last.

Given that the suffering, costs and collapses from these extremes risk social instabilities; we must urgently reinforce the resilience of bio-systems and communities to buffer these extremes and:
1. Cool regions and the planet to offset the induction of and impacts from climate extremes.
2. Draw down carbon from the air back into stable soil carbon sinks to limit such extremes.
3. Transition agro-ecosystems and communities to resilient, sustainable low carbon futures.

While we have the science and practical means to do the above, none of these can be achieved unless and until the perverted price signals that deliberately encourage, protect and subsidize the ongoing exploitation, overconsumption, waste and pollution of our bio-systems and communities are removed and until the full externality costs of the above are included and paid in their price.

Our response imperative and actions.
One strategy to address this situation is to introduce a mechanism to re-internalize the costs on the environment and society by charging ourselves the real price and paying the full costs of our actions. In addition to pressing government to do this, a further tactic is to raise discussion in the community about who should pay for environmental and social damage caused by having the current costs externalized.

This discussion would occur within the broader context of existing case law and legislative regulation at national levels, and treaty obligations at the international level. Such regulation includes: competition policy, product liability, World Trade Organisation agreements, anti-dumping provisions, international environmental obligations and public health protections. Their aim to limit perversion of markets has been subverted. Our policies, prices and ultimately therefore courts need to enforce their intent, rather than protect externalization of the real costs.

We can look at the applicability of existing precedents from cases such as those involving James Hardie, BHP at OkTedi, on tobacco health warnings and international rulings on Union Carbide, Dow Chemicals, BP, and US tobacco.

The object of this project would be to create enforceable liabilities as a means to ensure full externality costs and risks of all products and services are reflected in a market price, that is to internalize costs, in order to correct the current market failure. This will drive innovations so that consumers and industry can transition to a sustainable, bio-sensitive, low impact future via a market that won’t protect the status quo.

Exploring the mechanism for creating this enforceable liability is the object of the workshop. Various avenues are available and include seeking a court ruling on who is responsible for compensation or damages for adverse effects of ongoing fossil fuel use, through to mounting an actual test case. Once a liability exists then the group wearing that liability will need to protect themselves from it. Whether it is a corporation who seeks insurance or a government who accepts the need to pay from tax revenue (or to legislate to avoid liability), the general public (taxpayers), boards, shareholders and parliaments get the opportunity to consider the implications for their budgets, profitability and due diligence responsibilities. How they chose to protect themselves is then their own business.

Please join your community in discussing these issues, options and action at the Nature and Society Forum at the ANU Fenner School 730pm on 15 May 2013.
For further information please contact:
Walther Jehne at
Peter Tait at

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