Today, the Financial Times (subscription required) ran a commentary about how economists are trying to put a price on environmental damage caused by global climate change. "Most economics theory," wrote the authors, "is designed to cope with issues that are relatively short term or national. Even international economics is ill-equipped to deal with trans-boundary issues."
They go on to describe a United Nations program that takes into consideration "natural capital," so clean water, air, and a stable climate can be factored into economic equations. One metric the UN is currently using (but that is not mentioned in the FT) is called emergy. An emergy analysis breaks down everything from natural resources (like coal or sunshine) to finished products (like sneakers or an office building) into the same unit of measure, providing an apples-to-apples comparison that makes economists happy.
At least, it may make them happy now. Apparently, when the emergy metric was first introduced in the 1980s, economists ran screaming from the room because it challenged basic market principles. But today they seem more willing to stay seated and hear what emergy proponents have to say. The climate has changed, in more ways than one.
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