Still, you know, grifters gotta grift.
I suggest that this is a mistake. The assumption that underpins this logic is that of the microeconomic theory of the firm. This suggests that there are ‘free gifts of nature’ that a microeconomic entity is entitled to use without making compensation payment for the cost that is imposed upon society as a result. In accounting terms the assumption appears to be the costs of climate change does not need to be reflected in the financial statements that report profit or loss for a period, or upon a corporation’s balance sheet.
The “microeconomic theory of the firm” says nothing at all about free gifts of nature. It talks about why firms exist rather than networks of independents trading with each other. If only the P³ knew the economics he wished to critique.
What I then go on to explore is my version of climate change accounting, which I call sustainable cost accounting. There are more details here. This puts those costs in the accounts – which is where they belong. And only if they are included will we have efficient capital markets for the next thirty years.
If you actually wished to get climate change into accounts then you’d insist on getting climate change into prices. At which point all accounts would immediately reflect climate change costs – and, also, benefits.
For, of course, accounts are drawn from prices.
The answer to Ritchie’s mumblings is the carbon tax. Indeed, one of the reasons that Stern, Nordhaus, Quiggin, Tol, Uncle Tom Cobbleigh and all recommend a carbon tax is precisely so that it embeds climate change in prices and thus informs all decision making – including in corporate accounts.
But then agreeing with other people isn’t the way grifters grift, is it? Gotta invent something new that needs to be researched.