Posts tagged ‘economics’

Why Universities Soon Will Be Teaching Eco Economics

Did you know that Green economics is hardly an established concept academically? That is because economists have difficulties believing that anything other than the input in their models reflects reality. But the numbers they so diligently belabor are only valid because everyone else in the game plays by the same rules.

Standard economist models account for the earth’s resources as if they were free and infinite, but the realisation is growing that this is an untenable position. Economics is traditionally highly empirical and the uptake of a new logic will take time. It took us until the 1700s to produce an Adam Smith who had the presence of mind to adopt a systemic approach to the mishmash of Mercantile partying. It’s ironic that now that business practices are once again beginning to resemble Mercantile characteristics, it is taking us time again to reconcile it into the Capitalist system, even though the case for it is strong.

eco eco´s offer of eco professorsMercantilism is a great concept, even though the term might not be fashionable right now because it has such a bitter taste to it in a macro economic context. But then again, consumer driven pressures for sustainable production might just outpace the initial distaste. What’s more, the mixture of demand for green, ecological production processes and mercantilist trading is bound to result in new textbook material in a few years. Professors who train young economists might soon see that it’s time to talk a different game.

Watch this video of an alternative proposition on accounting for the earth’s natural resources. A reaction to the movie reads: “You obviously do not understand free markets. Who is making green technology buddy? Its not the government. Its businesses in the ECONOMY that are creating green technology because it is PROFITABLE to do so.” But it seems to me that the tipping point for has moved forward. Various trends show that profitability as a focal point is being replaced by probability.

The mercantilist based economy is already soaring, even if we don’t recognise it as such. Take any crowdsource platform and what you witness happening is essentially mercantilist trading. We simply don’t use the word but, in true mercantilist fashion we’ve come up with individual labels as the replacement generic term.

Recently, Business Week dedicated an article to the virtual untraceability of millions and millions of small businesses. This is evidence that language wise there’s a gap. But it doesn’t mean that organizations of small traders don’t exist. In a subsequent article, they featured which is an example of a company that fills the niche of grouping the individual businesses together. MerchantCircle is a kind of interactive Yellow Pages that exploits local to the max.

Small business owners (from around the globe) can register, claim SEO optimized listings for their business and what’s the best part; have their customers write referral reviews of their services. The company is very young, under one year, but already it’s thriving. Part of its success is due to MerchantCircle’s own brilliant use of word of mouth.

cream aidFor instance, it is getting bloggers like myself to write about them via the equally ingenious platform This is another example of a mercantile miracle. Via CreamAid, you can kickstart writing for dollars without being mediated by a reviews brokerage. You pick a topic you were already thinking to blog about and join a conversation by submitting your blog post. The party you review pays you plus you receive traffic from a widget that publicises the conversation in which you’ve participated. One of my next posts will deal with paid blogging in the green sector.

February 21, 2008 at 2:00 pm Leave a comment

Airlines That Refuse To Offset Carbon Footprint Face Tough Financing Terms

Negative public perception of airlines’ environmental policies is bad. Customers are known to switch airlines on environmental grounds. But the worst is yet to come for polluting airlines; they put their funding at risk if they don’t go green. That’s what financial analysts predict.

Airlines are forced to go green because their financiers will no longer provide financing if they fail to live up to the standard their competitor set. In what appears to be evidence that some genuine change is beginning to take place across the board, financial decision makers are demanding green credentials in return for cash. That’s what Global Flight, a trade magazine for the airline industry, reports in its February 2008 issue.

A risk expert quoted says that the thinking more or less originates in Europe. The mix of regulations, new European guidelines and financial considerations is no mean feat. The rules can determine the bottom line for an airline, says the analyst. But despite the toughness, the model is set to become a blueprint for companies in other industries.

“A risk manager will […] as a matter of course take account of a business’s holistic impact on the environment and will subject that to the same level of audit scrutiny as he would traditionally give to a business’s balance sheet”, according to Flight Global. One risk management expert says “We don’t have to prove we’re right about the risk. We just have to prove we may be right.”

Moody’s analyst George Godlin says “If there is successful adherence by European airlines through a formalised structure that could well improve access to capital. These airlines could well show the way, be the harbingers of a trend and could ultimately become the model. But they will first have to demonstrate that they are managing these programmes effectively.”

Godlin believes that a new US administration could be positive for the creation of a [global] emissions trading program. If the Open Skies transatlantic air travel liberalisation is going to step up competition in the airline industry, it will also lead to a further internationalision, which in turm might mean that the European initiative could be adopted in the US as well.

More proof of the upcoming trend? Consider the fact that Moody’s has started to work on standardised methods to rate airlines’ pollution in as fair a way as possible as rather conclusive evidence. Its methodology will include financial metrics and qualitative considerations such as fleet age, fuel hedging strategies and geographic spread of risk. It looks like the rating agency acts as a bridge between the rather inflexible world of industry to the more flexible world of finance and consumers at large.

January 1, 2008 at 10:08 pm Leave a comment



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