A corporate perspective on global warming and pollution

December 16, 2014 by Joshua
in Nature

I hear people consistently say that if the climate warms the market will correct it. I think they mean that they expect new technologies will help solve the problem and that market forces will lead costs of pollution to drop and so sustainable energy sources will become more affordable.

In a corporate context, “correction” almost always means that some companies or divisions will lose many and some may go bankrupt, but the lean will survive.

I hope the rest doesn’t sound too down. I’m just following a concept I hear a lot. I don’t think people understand what they’re saying when they say it.

I don’t know if people realize that when you talk about the population, the equivalent of a correction would be a population decreasing. If you plan for such a “correction” you could achieve a population decrease by lowering the birth rate. But most economists and business people consider growth essential for the economy, including population growth, so nobody wants to plan the population decreasing, so any correction they envision seems like it would require the birth rate not decreasing.

Maybe the population will level off or decrease on its own. The rate of increase is decreasing, but the population is still increasing, and nothing I’ve heard suggests the rate of leveling correlates with the maximum the planet can sustain comfortably. It happens to be leveling off, but it can still overshoot some limit of sustainability. I don’t know if everybody realizes a market solution to global warming, pollution, and other environmental degradation could involve a lot people dying.

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2 responses on “A corporate perspective on global warming and pollution

  1. I think that there’s a conflation of terms in what you’re describing though, I’m inferring that the corporate interpretation of a market correction for global warming is the creation of new technologies that will make the forces of global warming more efficient, so if human capital is the issue, more investments in health technologies that prolong human life would make sense. But what isn’t clarified in your post is whether or not that’s the biggest market correction that global warming and pollution would affect, at least as far as businesses are concerned. If for example, a business model for say, Coca-Cola, which presumably depends on water treatment plants and would clearly be affected by an environmental issue like water scarcity, predicts profits for Coca-Cola to decline by 40 percent in 40 years, there would be no way that they could afford to not actively innovate around environmental issues…just my very long two cents

    • If I understand you, I agree that climate change and pollution affect more than population. I value human lives above most things, so I consider population a bottom line. I figure before environmental change “corrected” large populations it would “correct” markets. My main point, though, is not that there will be market corrections but that the equivalent of a market correction for a population is people dying.

      I think of a market correction like Wikipedia says, “A market correction is a rapid change in the nominal price of a commodity, after a barrier to free trade has been removed and the free market establishes a new equilibrium price.” I’ve only heard the term to describe a drop in price.

      People talk tough about “corrections,” like they’re difficult but they happen and your firm has to handle them to survive.

      If we optimize how we live to get the most number of people on the planet, a “correction” would mean we would no longer be optimized, meaning the planet couldn’t support as many people. People who talk tough about enduring corrections when they talk about business would be talking about human population. That tough talk may apply to business where if the business dies its employees still live even if they lose their jobs, but applied to populations means people die.

      In operations you learn that the more you optimize, the less resilience your system has. Otherwise small problems can affect the whole system.

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