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83 The Economics of Information in a Green Economy JOSHUA FARLEY AND SKYLER PERKINS Building a green economy confronts two critical and conflicting scale issues. To avoid environmental catastrophes, we must dramatically reduce throughput— carbon emissions alone must fall by over 80 percent. However, modern economies are so dependent on fossil fuels and other forms of throughput that far more modest reductions could result in economic catastrophe. New technologies can help bridge the gap between these two conflicting thresholds, but must be developed and disseminated as rapidly as possible. Current efforts to speed up technological innovation rely on strengthening intellectual property rights. However, scientists competing for property rights are unlikely to share information, slowing the advance of knowledge. Environmental catastrophes threaten public goods and are likely to have the worst impacts on the poor, providing little incentive for market investments in technologies that protect them. Patents on new technologies raise their prices for twenty years, slowing dissemination and preventing other scientists from freely improving the technology. Knowledge is expensive to produce, but its value is maximized at a price of zero and as a result is best produced through cooperation, not competition. Building a green economy requires public investment in open source knowledge, ideally funded by fees on throughput. INTRODUCTION There is a growing acceptance that we must “green” our economy but little consensus about what that entails. The Organisation for Economic Co-operation and Development (OECD) calls for green growth (OECD, 2011), while others believe that a steady-state economy or even degrowth is a prerequisite for sustainability (Daly, 1973; Flipo and Schneider, 2008; Victor, 2008; Jackson, 2009; Rijnhout and Schauer, 2009; Martinez Alier, 2011; Daly, 1977). The basic criteria for a green economy, however, are quite clear. A green economy cannot use renewable resources any faster than they can regenerate. In fact, we must reduce the rate of use of renewable resources to below their regeneration rate in order to rebuild our seriously depleted stocks. We cannot emit waste products into ecosystems faster than they can be absorbed, and we must be particularly careful when we extract and concentrate toxic elements from the earth’s crust and release novel chemicals into the environment, because ecosystems have not evolved the capacity to absorb them. In fact, we must reduce emissions 84| Farley and Perkins rates well below current absorption rates in order to reduce the harmful accumulated stocks of greenhouse gases (GHGs) and other dangerous pollutants. We must also ensure that neither resource extraction nor waste emissions threaten the supply of life-sustaining ecosystem services, again requiring a reduction in both. Finally, we cannot use nonrenewable resources upon which we depend faster than we develop renewable substitutes. Failure to develop a green economy must ultimately have catastrophic results. Unfortunately, the path toward a green economy is rocky indeed. Take the relatively straightforward case of achieving climate stability. We know from the report of the Intergovernmental Panel on Climate Change (IPCC) that failure to reduce greenhouse gas emissions by greater than 80 percent will lead to continuing accumulation of GHGs in our atmosphere, likely resulting in runaway climate change (IPCC, 2007). From an economic perspective, the marginal costs of GHG emissions are immeasurably high. However, our economy currently depends on fossil fuels for everything from food supply to communication. Conventional modern food systems, for example, consume over seven calories of fossil hydrocarbons for every calorie of food that winds up on a plate (Heller and Keoleian, 2000; Pimentel and Pimentel, 2008). Reducing fossil fuel consumption by as little as 50 percent would leave us unable to feed 7 billion people with current technologies and likely lead to global economic collapse. The marginal benefits of GHG emissions are also immeasurably high with current technologies. The loss of ecosystem services in general presents a similar dilemma. Failure to restore global ecosystems and biodiversity threatens a catastrophic loss in ecosystem services, including many essential to agricultural production.There is often a significant time lag between human activities and ecological degradation, and again between degradation and biodiversity loss (Brooks et al., 1999; Metzger et al., 2009). This time lag offers a window of opportunity to restore ecosystem resilience. However, the greatest threats to ecosystem function include nitrogen, phosphorous, greenhouse gas emissions, land conversion, biodiversity loss, freshwater use, and chemical pollution (Rockström et al., 2009). Agriculture is a leading cause of all of these threats (Millennium Ecosystem Assessment, 2005). Measured in terms of ecosystem services lost, the marginal costs of agriculture are immeasurably high...

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