Wednesday, April 8, 2009

The price is not right.... For whom ?

In this piece by Thomas L Friedman before the G-20 summit, he compares the mispricing of risk between financial systems and the environment...

My comments :

Firstly, he discusses more of market and less of environment and the line seems to be to draw parallels between two deteriorating systems, though one system does not have operational similarities with another, except for the generic "risk underpricing" phrase.

If it's a straight carbon tax, it's feasible.

If it's a regulation that directs the companies to include environ costs as part of their costing, it will be complex to get implemented. It would be difficult to fix which is which in costing, particularly when you leave it to the companies.

Either way, something on similar lines is much required and will have some benefits. Among other things, at least, it will enable environ friendly technologies to sound at comparable costs, not because their costs have come down but the environ-hostile energy options would become costly. Which eventually, by rise in volumes, might bring down the costs of environ friendly technologies.

Assuming it gets implemented perfectly, which might require a cost overhaul, may be in some cases, bloat the costs by a few times, it will push up the costs of goods and services. Should be fine for developed countries or even emerging economies like BRIC , who anyway are resource guzzlers. But, I think, the Third World countries will be at an undue disadvantage.

That is the reality anyway, might as well face it, we might say. True, but we want everyone to raise up and face the reality to which we have suddenly woken up to, and we want it to happen with the same suddenness. Most often in practice, people put survival before nice things like environ care, those who are struggling for survival that is. Survival as an individual is a more basic instinct than the more philanthropic priority of survival of the race.

Every infrastructure plan to reach the last mile in those countries will present before us, the "green" version of the costs, which are high, and therefore, both the pace and quantum of benefits will become inversely proportional to such high costs, making it slower to reach those miles.

It will be like the grown-up daddies, expecting their kids to learn all that they didn't learn in their childhood, plus what they learnt as they grew up plus all the great things all kids should know, ignoring that the such persuasion itself can affect growth !!! Only till the kid asks the grandma, 'what did papa do when he was like me' ?

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Disclaimer: Views expressed in this blog are the blogger's personal opinions and made in his individual capacity, sometimes have a story-type approach, mixing facts with imagination and should not be construed as arising from a professional position or a counselling intention.