Unitarian Universalist Church of Palo Alto

Earth Accounting

Reverend Darcey Laine
April 2, 2006
Palo Alto, CA

A few weeks ago, I was watching a Saturday Night Live sketch that starts with a couple sitting at the kitchen table worrying about their debt. Enter the sharp dressed expert to sell them his revolutionary new plan for managing debt — it’s called “Don’t buy stuff you cannot afford.” The couple is intrigued but confused.

“Let’s say I don’t have enough money to buy something, should I buy it anyway?”

“No”

“So I buy something I want and then hope that I can pay for it, right?”

“No, you make sure you have money, then you buy it.”

My husband and I laughed and laughed. We had worked really hard to end credit card spending and get our household budget balanced. But the next day we were talking about a trip we had been dreaming about for many months. I mentioned that a major car repair had wiped out our savings. I said, “If we don’t have any money… maybe we shouldn’t buy stuff.” There was a pregnant pause as the gears of our minds tried to shift from “we deserve this vacation we’ve been planning.” To thinking of a plan that matched the balance in our savings account. “It’s been a while since we’ve been camping” we realized, “and we’re lucky to live here in the Bay area with so many beautiful places we’ve never even explored.”

It felt positively countercultural to cling to a balanced budget. I went to college during the era when credit card companies were first targeting college students for credit cards. I’ve had credit card debt my whole adult life. The value of a balanced budget, the value of long term financial planning is hard to hear in our consumer culture above the noise of the advertisements for the latest toys and the message the immediate gratification is part of the American Way.

No wonder we are having trouble balancing our ecological budget. We could say to our people that clear-cutting forests is like spending the equity in our homes. We could say over-fishing our waters is like spending our capital reserves. We could say that allowing global warming to melt the mountain ice that fills our rivers and streams is like cashing in our 401K, but when many Americans are not even preparing for their own retirement, it’s a huge stretch to ask them to reserve resources for their children and grandchildren.

Think about the American business model. A timber company clear-cuts a stand of trees, then replants a single species augmenting with fertilizer and pesticide. 45 years later you’re ready to clear-cut again. Clear-cutting a forest looks great on your income statement. And a good looking income statement makes your company’s stock more desirable, and makes your shareholders happy. And the main job of a business is to keep shareholders happy. It’s all about net present value and quarterly earnings.

Spencer Beebe, founder and president of Eco Trust, offered a different model. The forests he fights to preserve comprise a complex ecosystem that includes incredible diversity of trees and animals, and is home to first nations peoples who have lived there for 12,000 years. There is a wisdom in the way the forest “does business” that comes from those millennium of evolutionary genetic learning about how to maximize wealth in that particular location. EcoTrust has created, as one of their ventures, a logging project which mimics nature. The trees are cut in small patches that mimic local wind storms, and then thins within the forest leaving space for the seedlings that thrive on the extra sunshine now available. The diversity of trees and species remain, the diversity of age of the trees persists. The flow of salmon and the lives of the native people continue. These older trees are worth more then the 45 year old stands harvested by timber companies. Beebe posits that after the first thinning his net present value is about 80% of that achieved with clear-cutting model, but at the end of the day, the forest, the ecosystem, the biodiversity continues. And there is no place on the balance sheets to account for this wealth.¹

This is a fundamental flaw in our accounting. For generations government and business have counted natural resources as free and limitless. And a century or so ago we really believed they were. The humans then inhabiting the planet could not see to the bottom of our coal mines, our oil wells, our rivers and lakes. Earth’s bounty seemed limitless. By the 1970s people were doing the math, and were able to project out to a time where all these resources could become scarce. There’s some debate, for example, about whether we will cross the peak of world oil resources in 5 years or 50 years, but even Oil industry calculations show that it is coming. But there’s enough gas a the gas station for me to fill my car today, so we continue this race to the bottom, and set up permanent military installations in Iraq to “protect the American way of life.”

Herman Dale, professor at the University of Maryland School of Public Affairs and former Senior Economist at the World Bank states that “Our current economic practices assume consumption is always a positive thing — even when it results in depletion of natural capital….We have habitually counted natural capital- from clean water and soil to forests and the biodiversity of species in the world — as a free good.”²   This creates what look like gains and profits, but are not really income, since it does not leave intact the capacity to produce and consume the same amount next year.

Since Dale spent his career in international finance, he sees this accounting reform expressed in 3 areas:

1. The System of National Accounts — which is how we determine our Gross National Product and Gross Domestic Product.

2. Project evaluation by international lenders — he says that “Undercounted user costs look like overstated rates of return for depleting projects, so that an international development project that degrades society and the environment can appear as ‘successful’ due to this mistaken system of accounting.”

3. The balance of payments accounting (how we compute trade surpluses and deficits) where exports of resources counts entirely as income, even if they deplete national capital.

Imagine how adopting these changes to our system of accounting, changes that show the depletion of natural resources as a true cost, would motivate a more truly sustainable economy!

Because really the ultimate accountant is the earth. People may be able to fudge the numbers they send to the IRS, but when the oil is gone, it’s gone. When the topsoil is gone, its gone. when the drinkable water is gone, its gone. It doesn’t matter if your check book says you have $1000 if it doesn’t match the statements you get from the bank. The laws of our physical reality are far less mutable than even hard numbers.

Two weeks ago I traveled to New Orleans with a group of clergy from around the country as a religious witness with Peninsula Interfaith Action, a grass-roots organizing network of which our congregation is a part. I will talk in more depth about this trip in the newsletter and in my sermon next month, but today I want to mention what I learned from the but the pastors and activists from rural Louisiana. They need our help, and PICO (the national network of organizations like PIA) has made a promise to support them. They brought this amazing map that showed how much of the marsh land has eroded over the past decades, and some really disturbing projections about how much we could lose in the next 20 years.

Apparently when we put in those levees to protect residents and oil developers, we stopped the natural renewal cycle for the marsh lands. For millennia, the sediment washed down river by the Mississippi flows into the marsh. After a time the sediment settles, and if new sediment doesn’t replace it, the land sinks, causing marsh plants to drown. And without those plant roots holding the soil, even more land is lost. The budget is not balanced. It turns out that in every other Gulf State a certain portion of taxes on oil revenue are set aside to restore the coastal lands lost in oil production. So PICO is asking for federal legislation providing parity for Louisiana, and helping restore the marsh lands that buffer New Orleans and the many small towns from even worse damage.

Now it’s true that the earth is amazing at self healing and at transforming. And the sun gives us new energy each day it crosses the horizon, but we have to give her the time and resources to do this healing. I don’t want to live paycheck to paycheck, ecologically speaking. If we deplete resources faster than they can renew themselves, we’re looking at a long dry summer, waiting for rain to fall before we can have a cup of water to drink. I want to make sure there’s something in my ecological retirement account, and I want to leave an inheritance to my children and their children, and the children 7 generations out. And if that means I have to postpone my big vacation (metaphorically speaking) that’s a trade I’m willing to make.

Okay, so changing international accounting practices, reforming the logging industry, and creating a funding base for restoring Louisiana’s coast land is probably too much for us to take on this week. But there are things we can do today and tomorrow that can make a difference.

Ironically, many of the things we can do to balance this earth-based budget are the things some of you did so diligently during the war. But now that consumables like gas and meat are so cheap, we don’t get that external reinforcement that these things are artificially cheap — if we had to pay the real cost each time we were at the gas pump or grocery store we might think twice. Acterra, our local peninsula environmental center, has adopted a plan for balancing their carbon emissions. They provide a website for individuals and businesses to calculate their CO₂ emissions, and to buy “green tags” (money contributed to support technology for carbon free energy) to offset our use. Of course the best way to be “carbon neutral” is to reduce our use of fossil fuels by driving less, but “green tags” help us go the rest of the way to balance that budget.

The Union of Concerned Scientists promotes 3 ways that individuals can most effectively increase the sustainability of their own daily life, to help balance the budget as it were.

The first is drive less

The second — eat less meat

The third — buy certified organic produce

Our daily actions have tremendous power when it comes to balanced budgets. If you do something every day, in 50 years you will have done it 17,800 times. Like brown bagging your lunch while you save up for your family vacation, take a minute to consider some small change you could make to your daily life to help balance our planetary budget. Could you car-pool to church? Could you have a cream of mushroom soup and a salad for lunch and save the chicken cutlets for dinner? Could you move a few dollars a week from the “eating out” envelope to the “grocery” envelope so you could always eat organic vegetables? (This is a great season to do it, because studies show that berries really retain those pesticides.)

Because a forest is not like cash in your wallet, it’s like your 401k, and your children’s trust fund. The wealth of this planet needs to last for all the generations of people and trees and salmon who will follow us. It’s my simple plan for reducing our debt: “Don’t buy stuff you cannot afford.” (ecologically speaking)

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Priority Actions for American Consumers

Transportation

• 1. Choose a place to live that reduces the need to drive.
• 2. Think twice before purchasing another car.
• 3. Choose a fuel-efficient, low-polluting car.
• 4. Set concrete goals for reducing your travel.
• 5. Whenever practical, walk, bicycle, or take public transportation.

Food

• 6. Eat less meat.
• 7. Buy certified organic produce.

Household Operations

• 8. Choose your home carefully.
• 9. Reduce the environmental costs of heating and hot water.
• 10. Install efficient lighting and appliances.
• 11. Choose an electricity supplier offering renewable energy.

From The Consumer's Guide to Effective Environmental Choices: Practical Advice from the Union of Concerned Scientists by Michael Brower and Warren Leon, (p85).