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A CARBON TAX?

I've been focused on "cap-and-trade" as a way to address greenhouse gas emissions and filter funds to preserving forests and restoring soils with biochar but Tom Friedman is beginning to convince me that a carbon tax integrated with a true energy-and-environment policy may be the better way.

The problem is that while this may be a GREAT domestic policy, it does not channel funds from the developed industrial world to the developing world where the heaviest new environmental damage is taking place. In the final analysis it's gonna be a nation's politics -- one-by-one -- that determines whether to sustain or deplete its natural resources.

Here's how Costa Rica addressed the issue and became one of the world's most inspiring examples.

April 12, 2009

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By THOMAS L. FRIEDMAN

Liberia, Costa Rica

Sailing down Costa Rica’s Tempisque River on an eco-tour, I watched a crocodile devour a brown bass with one gulp. It took only a few seconds. The croc’s head emerged from the muddy waters near the bank with the footlong fish writhing in its jaws. He crunched it a couple of times with razor-sharp teeth and then, with just the slightest flip of his snout, swallowed the fish whole. Never saw that before.

These days, visitors can still see amazing biodiversity all over Costa Rica — more than 25 percent of the country is protected area — thanks to a unique system it set up to preserve its cornucopia of plants and animals. Many countries could learn a lot from this system.

More than any nation I’ve ever visited, Costa Rica is insisting that economic growth and environmentalism work together. It has created a holistic strategy to think about growth, one that demands that everything gets counted. So if a chemical factory sells tons of fertilizer but pollutes a river — or a farm sells bananas but destroys a carbon-absorbing and species-preserving forest — this is not honest growth. You have to pay for using nature. It is called “payment for environmental services” — nobody gets to treat climate, water, coral, fish and forests as free anymore.

The process began in the 1990s when Costa Rica, which sits at the intersection of two continents and two oceans, came to fully appreciate its incredible bounty of biodiversity — and that its economic future lay in protecting it. So it did something no country has ever done: It put energy, environment, mines and water all under one minister.

“In Costa Rica, the minister of environment sets the policy for energy, mines, water and natural resources,” explained Carlos M. Rodríguez, who served in that post from 2002 to 2006. In most countries, he noted, “ministers of environment are marginalized.” They are viewed as people who try to lock things away, not as people who create value. Their job is to fight energy ministers who just want to drill for cheap oil.

But when Costa Rica put one minister in charge of energy and environment, “it created a very different way of thinking about how to solve problems,” said Rodríguez, now a regional vice president for Conservation International. “The environment sector was able to influence the energy choices by saying: ‘Look, if you want cheap energy, the cheapest energy in the long-run is renewable energy. So let’s not think just about the next six months; let’s think out 25 years.’ ”

As a result, Costa Rica hugely invested in hydro-electric power, wind and geo-thermal, and today it gets more than 95 percent of its energy from these renewables. In 1985, it was 50 percent hydro, 50 percent oil. More interesting, Costa Rica discovered its own oil five years ago but decided to ban drilling — so as not to pollute its politics or environment! What country bans oil drilling?

Rodríguez also helped to pioneer the idea that in a country like Costa Rica, dependent on tourism and agriculture, the services provided by ecosystems were important drivers of growth and had to be paid for. Right now, most countries fail to account for the “externalities” of various economic activities. So when a factory, farmer or power plant pollutes the air or the river, destroys a wetland, depletes a fish stock or silts a river — making the water no longer usable — that cost is never added to your electric bill or to the price of your shoes.

Costa Rica took the view that landowners who keep their forests intact and their rivers clean should be paid, because the forests maintained the watersheds and kept the rivers free of silt — and that benefited dam owners, fishermen, farmers and eco-tour companies downstream. The forests also absorbed carbon.

To pay for these environmental services, in 1997 Costa Rica imposed a tax on carbon emissions — 3.5 percent of the market value of fossil fuels — which goes into a national forest fund to pay indigenous communities for protecting the forests around them. And the country imposed a water tax whereby major water users — hydro-electric dams, farmers and drinking water providers — had to pay villagers upstream to keep their rivers pristine. “We now have 7,000 beneficiaries of water and carbon taxes,” said Rodríguez. “It has become a major source of income for poor people. It has also enabled Costa Rica to actually reverse deforestation. We now have twice the amount of forest as 20 years ago.”

As we debate a new energy future, we need to remember that nature provides this incredible range of economic services — from carbon-fixation to water filtration to natural beauty for tourism. If government policies don’t recognize those services and pay the people who sustain nature’s ability to provide them, things go haywire. We end up impoverishing both nature and people. Worse, we start racking up a bill in the form of climate-changing greenhouse gases, petro-dictatorships and bio-diversity loss that gets charged on our kids’ Visa cards to be paid by them later. Well, later is over. Later is when it will be too late.