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New Economics of Sustainable Development- James Roberston

New Economics of Sustainable Development- James Roberston

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Published by: Eric Britton (World Streets) on Jun 24, 2011
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06/24/2011

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The normal rationale for the Polluter Pays Principle, and more generally
for environmental and resource taxes, has been that those who impose
costs on other people or on society or on future generations should be
required to bear those costs themselves: costs now externalised (borne
publicly) should be internalised (borne privately). Another equally
relevant principle has hitherto figured less prominently in discussion of
environmental taxes and charges. This is that people should pay "rent" to
society for the natural and societal resources they use: benefits now
internalised (enjoyed privately) should be externalised (enjoyed publicly).

Do these two principles amount to much the same thing? Are there any
significant theoretical or practical differences between the principle of
internalised costs and the principle of rent?

The calculation of costs to be internalised is fraught with the same
difficulties as those summarised at 6.2 above. In cases where the rights
to use natural and societal resources are marketable, such as a plot of
land or an airport landing slot, the calculation of rental values is more
straightforward. But even here there are questions to be clarified. For
example, today's market values will not take account of the interests of
future generations. Nor will equating "rent" with "earnings from
exploiting a natural resource in excess of costs of production and a
reasonable rate of return on fixed capital" necessarily do so either.73 It
depends on what is assumed to be reasonable!

However, "rental" payments could be appropriate for the following.
• land use,

73 UK Office of National Statistics, Pilot Environmental Accounts , August 1996, p45.

The New Economics of Sustainable Development

6 – From Growth to Sustainable
Development

www.jamesrobertson.com

96

• energy use,
• use of the environment’s capacity to absorb pollution and waste,
• use of space, e.g. traffic congestion, aircraft landing/take off slots,
space satellites,
• use of water, e.g. extraction, traffic (canals, rivers, oceans),
• use of the electro-magnetic spectrum,
• use of genetic resources, and
• use of the money system (related to "seignorage", the revenue
accruing to monarchs from issuing currency).
There is an international, as well as a national and local, dimension in
every case.

As a general rule, the arguments in favour of using the principle of paying
for benefits enjoyed, as a basis for raising public revenue from ecotaxes
and related taxes, may well turn out to be stronger than the arguments
for using the principle of internalising externalised costs. The key
question is: Which problems on the environmental agenda could not be
adequately addressed by the general principle of requiring people to pay
for the use of land and natural resources.74 This is a point which needs
to be explored further.

In either case, it will not be possible to calculate accurately or objectively
what the “correct” payments should be. That does not matter, any more
than that it is not possible now to calculate objectively what the correct
rates of income tax or value added tax should be. Having accepted that
people should pay for the benefits they enjoy from the use of common
resources (or for the costs they impose on other people), policy makers
should be content to take a rough and ready approach to the level of the
taxes and charges to be raised.

The level favoured by individual policy makers and policy-making groups
will, of course, depend on their stance on questions of political principle.
Should all citizens of a society and all people in the world, including future
generations, enjoy - as nearly as practicable - an equal share in the value
of common resources which they themselves have played no part in
helping to create? Or are there other principles of equal weight - e.g.
that people who now enjoy more than an equal share should continue to
do so, that society should be geared to allow successful people to take
more than an equal share, or that society as a whole gains from having a
privileged elite in this respect? The issues underlying these questions go
back at least to Thomas Hobbes and John Locke. They are for political
philosophers as much as for economists.

74 This question was suggested in a personal communication from Fred Harrison.

The New Economics of Sustainable Development

6 – From Growth to Sustainable
Development

www.jamesrobertson.com

97

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