Ecocapitalism

The ecocapitalist perspective suggests that sustainability and environmental conservation are entirely compatible within capitalist social relationships. Initial use of the term ecocapitalism has been attributed to green political parties. The term has often been employed to show contrast with ecosocialism. The comparison would likely be soundly rejected by ecosocialists, whose central premise is that capitalism is a root cause of much ecological degradation. For some, ecocapitalism is inherently a contradiction in terms. For critics of free market capitalism to accept the unity of the prefix eco- with capitalism, the ecological content would need to fundamentally transform capitalism as it is widely practiced today. However, for free market enthusiasts, capitalism would remain largely unchanged in ecocapitalism. The prefix in this case would represent new opportunities to seek profit from ecologically friendly goods and services—a notion that has also been labeled “free market environmentalism” and shares an ideological foundation with green neoliberalism.

A range of ecocapitalist perspectives emerged by the late 1980s: Some radical versions argued for ecological taxes or ecotaxes to replace all other taxes, whereas more conventional positions discussed tradable permits or economic liabilities for polluters. Ecocapitalists advocated improved policy instruments to resolve environmental problems, particularly in situations where public goods, such as the global commons (e.g., oceans, atmosphere), are difficult to protect. Different strains of ecocapitalism were fundamentally the same in that they each called for more accurate valuation of natural capital, which was identified as the base that other wealth and capital built on. Ecocapitalists thus sought to determine a quantifiable value for ecological assets compatible with neoclassical economics. By assigning a value to natural goods and services, a price premium could be calculated accurately for each potential use. Ecocapitalists reject state subsidies that encourage production systems that destroy natural capital; for example, by causing a reduction in the ability of the Earth to perform essential environmental services, such as nutrient cycling or waste filtration.

Ecocapitalists also promote the use of eco-friendly business. This version of ecocapitalism has gained popularity over the past decade. Based in a fundamentally different ideology than earlier applications of the concept, ecocapitalism has come to be used in a nonspecific manner to refer to any merger between environmental consciousness and entrepreneurialism. Ecocapitalism has since been construed to mean many different things. When production focuses on the lowest-cost ways to achieve environmental reductions, [Page 112]large-scale producers may drive out small, local producers, as has sometimes occurred with industrial-scale organic agriculture. The overall sustainability of the production system can be compromised as broader and more holistic—and often more expensive—social and ecological goals are undermined.

Often employed as an example of green business, wetland and biodiversity banking allow for offsets that mitigate negative environmental effects so that development projects can move forward. To do so they must create improvements in another similar and proximate wetland or by protecting a comparable habitat. Offset opponents argue that such policies follow a “polluter pays” principle that permits ecological degradation if the developer can pay the price.

The Kyoto Protocol is often used as a positive example of ecocapitalism, as the sale of carbon credits is supposed to contribute to the reduction of global greenhouse gas emissions. More than 250,500,000 Certified Emission Reductions were offset under Kyoto's Clean Development Mechanism by January 2009. Advocates contend that carbon trade is internalizing costs that were previously external while at the same time incentivizing shifts to better environmental practices. In contrast, critics contend that the market is ill equipped to deal with pollution and may create perverse economic incentives, such with a loophole that allowed companies to earn carbon credits to destroy HFC-23. More HFC-23-emitting plants were then established, even though this path was more expensive overall than not producing the HFC-23 in the first place. A second criticism waged at the Kyoto Protocol is that an agreed-on goal was sustainable development in host countries, but many projects do little more than target emission reductions. They are restricted in what they can achieve because of cost constraints generated by competition to produce low-cost carbon credits for highly competitive global markets.

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