Just seven months ago we organized a large international conference on renewable energy at Tel Aviv University. Oil prices were peaking, and Al Gore’s opening presentation about the risks of global warming and the need to develop alternative and renewable sources of energy couldn’t have had a better and more receptive audience. Since then, we have been exposed to a serious world financial and economic crisis. This and the declining oil prices have drawn public attention away from the environmental issues and from the need to develop renewable energy sources.
The Financial Crisis and the Environment
The fact that the crisis started in the financial sector drew attention away from the very pressing and urgent environmental issue that would have led sooner or later to a global crisis of the real sector. The reason is a major flaw in the basic business and economic philosophy that is based on the spirit of consumerism, which means a continuous large-scale exploitation of diminishing resources. World resources are transformed, within a relatively short time, throughout the production, marketing and consumption processes, into waste and pollution. Many indicators are showing that accelerated development and the rapid population growth are causing significant and irreversible damage to our planet and to its sensitive and fragile ecosystem. The declining economies in the current recession will naturally reduce the consumption and the utilization of resources and will eventually lead to somewhat smaller emission of pollutants. But this is not what we are aspiring to. We need a way to maintain world economic development and growth, while drastically reducing our negative ecological footprint. This can be achieved by adhering to the popular three Rs slogan: Reduce, Reuse, Recycle.
The “invisible hand” is unable to control the process due to the use of wrong pricing mechanisms that do not properly price public goods such as air, water, land, public space, quietness, etc., and do not increase their prices, when these goods are becoming scarce. We don’t properly penalize those who misuse and try to privatize our common property, and we often ignore externalities in economic decision-making. We are now competing with the sharks for tuna fish, and with people on using crops for food or for bio-fuel for transportation. The use of ecological resources far exceeds the ability of nature to recover and renew the resources. A family that likes to live beyond its current means can do so by selling property or by borrowing money. This cannot be done on a global scale, since we have no neighboring planet that we can borrow from…