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"I am sorry for your loss.  If we had full cost accounting for the energy we use, he probably would have lived at least another ten years."

Even though this is undeniably true, thousands of times per year, we'll never hear it.  Death by accounting error hides behind other proximate causes such as stroke, heart attack, and lung cancer.

A fully informed market really can bring the miracle of the invisible hand,  organizing itself to help people find the best buyer, seller, product, or market.

A market that is designed to hide the most grevious of costs can, and does, kill.  Every day.  

The main thing that stands in the way of full cost accounting, especially for energy, is the fact that it's difficult or impossible to identify the victims.

Ha!  I know what you're thinking.  The real obstacle is those powerful corporations finding ways to skive out of their responsibilities.  Right?

That's definitely a huge part of the picture, but it's important to see what circumstances allow that evasion.  A look at historical examples shows that, when it is possible to identify named victims, the chance of corporations having to pay for health impacts that they create are much greater.  And with that "risk" comes a hugely increased chance that corporations then change their practices so that they injure less.

When the victims are anonymous, even if the effect is known with certainty and is known to be considerable, it is open season.

This underscores the incredible importance of rigorous science in understanding how pollution harms health, and also in the ability of that science to be used when setting policies.  The war on science is not just about building stupid ark replicas at tax payer expense - most of all, it is an effort to keep the victims as anonymous as possible.

So let's do the lemma: Named victims get all the attention, anonymous victims just die quietly.

Let's be clear that there are to a many exceptions, especially where the named victims are poor or belong to a group that is far from the levers of power.  We're talking about a trend.  And we can illustrate that by two polar opposite examples:

Tylenol: 7 people dead, all named victims.  Result: Hundreds of millions of dollars spent by J&J in compensation and in changes to assure that it never happens again.  Excellent info here from Kossak dsteffen.

This is the perfect storm of conditions forcing a corporation to take full responsibility.  It's ironic because the poisonings were not even J&J's direct fault (a criminal opened the containers, put cyanide poison in, and replaced them on store shelves).

The conditions that created this result, defining one end of the spectrum:

- The (known) victims were all identified by name
- The effect was more or less immediate
- Direct consumption of the product caused the deaths

The perfect alignment of these conditions caused a vigorous response, not just to compensate the victims (as settlement of high dollar lawsuits, of course), but also to make sure that it did not happen again.

At the opposite end of the spectrum we have: Air Pollution from Fuel Combustion.

Over-regulated?  I beg to differ.
The disconnect is stunning.  We have, with clear certainty, tens of thousands of deaths per year from this pollution.  Yet, there is basically no voluntary action to reduce pollution emissions from combustion, and each regulatory step is bitterly contested politically and in court.  Get this: The legally mandated regulations from a law passed over twenty years ago have still not gone into complete effect.

It would be easy to chalk this one up to powerful fossil fuel lobbyists.  But let's look at the underlying factors that allow decision makers to ignore the connections between the activity and the consequences.

- The victims cannot be identified by name
- The effect is delayed, in many cases by years*
- The deaths occurred whether or not the person was consuming the product

* This may be less true than once thought.  Acute pollution conditions may cause stresses that represent the final straw for someone already vulnerable.

The bottom line is that science is the link between the pollution and the deaths.  While you might think that it's self-evident that breathing in noxious crap is bad for you, it's not quite directly, viscerally observable, so science must fill that gap.  Yep - we need the statistically significant, peer reviewed documents that prove that breathing in noxious crap is bad for you, and by exactly how much.

The next layer of cost is of course climate costs and ocean impacts of Carbon Dioxide emissions.    These costs can be quantified, and should be.  There is just no excuse for excluding them from any large capital decision made anywhere in the world from now forward.

Now we get to use the fun word of the day: “Externality”.  In business terms, Externality means

“Something external to what I care about, which thus is your problem, so stop yammering on about it.”
Coal Externalized Costs (c/kWh)
When an activity is known to cause serious health and/or environmental effects, and considering our shrinking world compared to the impacts upon her, we can't dismiss "externalities" any more.

Why do shadowy think-tanks spend millions of dollars each year funding various versions of the war on science?  It's because of this: Science is a direct threat to the ability of the powerful to evade responsibility for the harm they cause.

With strong science, and with a strong understanding of the value delivered by science, we can create the first fully cost loaded market economy.  That's an economy where the real costs of a product, especially energy, are taken into account when financial decisions are made.

What's amazing is that with full cost loading, we instantly get to see the market work help people make decisions that work well for themselves without injuring others.  Want to build and operate a new coal-fired power plant?  That's fine, as long as you are prepared to pay for all of the costs, including all of the public health costs.

Is that kind of study expensive?  Well, you need to define "expensive".  Such study costs are nothing compared to the scale of big carbon capital projects, and even smaller compared to the actual health and environmental effects that are the concerns.  In many cases the research already exists, and it's just a matter of gathering it.

The concept of fully loaded cost accounting is of course not limited, at all, to carbon fuels.  It's just the most striking example of where we need it, right now.

I can just hear it.  Cost!  Doom!  Financial Reality won't allow this to occur!

Here's the thing.  Those costs really occur - someone is paying, often with their health or life.  When we change how we account for costs to reflect that reality, we are not creating costs, just recognizing them.  Let's not forget this incredibly basic concept:

The entire purpose of financial reality is to advise and educate actual reality.
Our Future - Worth Saving
A great going-forward answer for America is a real market economy that, for the first time ever, takes into account the entire value that we get from our existing environmental and health resources, and accounts fairly for the same type of costs where they occur.

Let's make our decisions based on actual reality.


Kossack A Siegel specializes in this topic.  Check out this link among many, describing how pollution control will help reduce losses in mental function due to Mercury poisoning.  Somehow, he manages to avoid the potentially irresitable topic of how that lowered mental function might improve the electoral prospects of certain people.

Here's a recent example of abject failure to consider the reality of public health: EPRI reports about the billions (billions, I say!) needed to comply with new air regulations.  [Energy Wire, subscription required]  Then we see this:

The report did not estimate economic benefits of the public's health improvements due to tighter pollution controls ...
Classic, eh?  So, why not consider all the costs?  Because it might, say, lead to the exact opposite conclusion that you wanted to get?  You might find out, for instance, that full cost accounting shows that the cost of coal is double the cost that gets recognized on the books right now.

See this good article on the paper Full Cost Accounting for the Life Cycle of Coal by Epstein at al, 2011.

And in our own back yard, we have the Cherry Point coal export terminal proposal being railroaded forward, with a big question brewing about to what extent the process will even consider the very significant health impacts of the terminal, as have been meticulously documented here.

This is a rewrite of a previous diary.

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Comment Preferences

  •  Superb analysis. (12+ / 0-)

    I will forward this widely.

    Freedom isn't "on the march." Freedom dances.

    by WarrenS on Sat Jun 02, 2012 at 07:13:59 PM PDT

  •  Stalinesque. (13+ / 0-)
    When one man dies it is a tragedy. When thousands die it's statistics.

    --Josef Stalin

    "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

    by HeyMikey on Sat Jun 02, 2012 at 07:17:37 PM PDT

  •  If we accounted for lives lost in wars for oil (14+ / 0-)

    the story gets even uglier. Oil production has recovered in Iraq and will increase as more production comes on line. How many people died in the wars for that oil?

    There's a reason we accounted so poorly for the Iraqi lives lost. Our government kept them as anonymous as possible to protect big oil and the politicians owned by big oil.

    look for my eSci diary series Thursday evening.

    by FishOutofWater on Sat Jun 02, 2012 at 07:25:51 PM PDT

  •  Excellent, excellent, excellent!!! (11+ / 0-)

    Reality based analysis and accounting is important in so many areas. Energy, health care, transportation... Special interests cook the books, but more and more, the 99% have access to solid information that can inform policy towards the greatest good for the greatest number.

    My particular area of interest in this topic goes to issues of land use and valuation, infrastructure and regional planning.

    Thanks for the great Diary, I will follow up on the references you provide!

    The important and difficult job is never to find the right answers, it is to find the right question. For there are few things as useless–if not dangerous–as the right answer to the wrong question. -- P. Drucker

    by The Angry Architect on Sat Jun 02, 2012 at 08:52:30 PM PDT

    •  Effective land use (5+ / 0-)

      is something I would really like to better learn as it relates to this.

      •  I am just beginning to scratch the surface... (4+ / 0-)

        But the kind of things I am thinking abut are, for example:

        In residential neighborhoods, it is common to put a value on a piece of land based upon how much house you can put on it (e.g. 2-story, 1,800 square feet, 3 bedrooms, 2 baths...) The value of such construction can be compared to recent sales of similar homes and is commonly modeled. The housing crisis has shown that these common models can and do fail, especially when bubbles burst, and prices fall.

        What I am trying to wrap my head around is how to model the same residential lot, or possibly clusters of contiguous lots where houses are NOT built, but land is left open for: permeable area to recharge groundwater, community food gardening and composting, distributed energy production (eg - solar or fuel cells), neighborhood pocket parks.

        I live in Los Angeles, and my observations are focused here, but I would assume similar conditions in many locations: Green yard waste is trucked out to god knows where to process to mulch, food is trucked in. Rainwater is conducted through a labyrinth of channels and pipes to the sea, bypassing the natural cycle of aquifer regeneration.

        I want to research productive ($$) capacity per acre of urban farms, including saved embodied energy of food transport from remote locations  + savings of embodied energy for export of green waste from "X" number of adjacent homes + (as you point out savings on negarive health impacts) + groundwater recharge + public space + energy production + possible benefit of locan jobs in service of these "Neighborhood Commons" = $????? value per month or year to NOT build or to demolish existing construction.

        My thinking on this topic has really been stimulated by the fact that banks that WE bailed out are sitting on residential properties all over the country that they have refused to VALUE accurately on their balance sheets. Some of these homes may never return to bubble values, but if these pieces of land were considered for different uses, they could provide community value beyond the notion of traditional private ownership.... THE PUBLIC COMMONS - (We bailed these fuckers out. As far as I'm concerned, WE own these properties, and we ought to benefit from them!!!)

        Anyway, this is a notion in progress, but I found your Diary quite inspirational in regard to continuing my thinking on this matter especially in re. "HONEST COST/VALUE ACCOUNTING".

        The important and difficult job is never to find the right answers, it is to find the right question. For there are few things as useless–if not dangerous–as the right answer to the wrong question. -- P. Drucker

        by The Angry Architect on Sun Jun 03, 2012 at 08:09:20 AM PDT

        [ Parent ]

        •  Definitely diary material (3+ / 0-)

          I think you're really on to something.

          Implicit in the conventional model of land and home valuation is an assumption that carbon fuel will be able to continue to provide all kinds of lifelines, at a nominal cost that does not reflect the true fully loaded cost of that fuel.

          When that assumption is reconsidered, the underlying true economics may be revealed.

          It's an excellent line of inquiry.

        •  Your ideas exemplify the (3+ / 0-)

          absolute truth in the sig quote. Long overdue line of inquiry. Have you checked Google to see if anyone else is out there to collaborate with? LTE to architectural and other professional journals? Futurists?  

          And as JW suggests, a diary. I think it is getting critical that homeowners and communities start thinking of smaller, more numerous ways to collect and store rainwater. Rain barrels on gutter drainage. Small cisterns at community gardens and other open areas. (Safety issues shouldn't be prohibitive.) Aside from developing a system to offset what is becoming an erratic and unreliable delivery system, it could help keep the PTB from getting America into water wars.

          JW, very worthwhile rewrite. Brings to mind a story from the Valdez spill. Several years later, Exxon commercials were bragging about how the fleet was completely double hulled.

          My ex yelling at the TV: You FAILED to meet the regulations which required that FIVE YEARS before Bligh Reef.

          It is going to take a revolution in thought to get corporations to accept and build into their business plans that protecting and promoting the environment and ecosystems is a cost of doing business.  The mining of the Wisconsin sandhills to use for fracking, and resulting destruction of that area, is about as off the responsibility chart as I can imagine. Which means there is probably something even worse going on.

          On the issue of what do we do with our science tax dollars. One of the under examined lessons of the Gulf spill was how much we hadn't spent exploring the oceans. While I think the NASA budgets were very worthwhile, there should have been equivalent amounts spent on that. Somewhere we have a useless military expense instead.

          In the Pacific Ocean, toxic waste from the Japanese earthquake and tsunami is over halfway to North Americas west coast.

          "People, even more than things, have to be restored, renewed, revived, reclaimed and redeemed; never throw out anyone. " Audrey Hepburn "A Beautiful Woman"

          by Ginny in CO on Sun Jun 03, 2012 at 12:24:27 PM PDT

          [ Parent ]

  •  Excellent piece ... (9+ / 0-)

    I like the frame "death by accounting" even though, I think, accounts won't.

    Blogging regularly at Get Energy Smart NOW! for a sustainable energy future.

    by A Siegel on Sat Jun 02, 2012 at 08:52:31 PM PDT

  •  The problem stems from an assumption (5+ / 0-)

    and the designation of an artificial body (corporation) as a natural person.

    The assumption is that individual behavior by a natural person is good, unless and until proven otherwise. That is, "innocent until proven guilty" is a constant, not just a prelude to a trial. This makes sense, because looking at everyone with suspicion is anti-social and a waste of time.

    The problem is extending this assumption to groups of people organized to evade individual accountability. It promotes irresponsible behavior that's potentially more powerful than any individual can carry out.  So, damage is automatically amplified.

    The solution is to strictly limit the behaviors of corporations in their charters and specify what has to be done with their waste.

    People to Wall Street: "LET OUR MONEY GO"

    by hannah on Sun Jun 03, 2012 at 12:50:25 AM PDT

  •  They poison me, and I don't even get a T-shirt. (2+ / 0-)
    Recommended by:
    James Wells, John Crapper

    Excellent stuff. I can refuse to smoke cigarettes;but I cannot refuse to breath the air polluted by the scores of coal-burning power plants that lie within 500 miles upwind of my otherwise pristine rural location.

    They're poisoning me, and I didn't even get a T-shirt. What's up with that?

  •  Excellent diary. The idea of factoring in the (2+ / 0-)
    Recommended by:
    James Wells, Ginny in CO

    full costs associated with production of all kinds has been around for years.  Intellectually it makes sense.  Science has been measuring it and making the case for years.  Psychologically we each, in our own way and to different individual extremes, violate the dictates of this knowledge.  Take for example the romantic couple.  They  know intellectually that burning that firewood in the fireplace for their romantic evening is not the best for the external environment but they are most concerned with their intimate internal environment.  They ignore their knowledge of the "greater good" for their personal desire to create that romantic setting.
    How about the use of the power leaf blower instead of the old-fashioned rake. There are some externalities harmful to both the environment and an individual's physical fittness.
    How about using a power tool instead of the manual one.
    Spray painting instead of brushing.  How about the RV camper traveling down the freeway with 2 dirt bikes and a car in tow.  I could go on and on.

     When we truly come to terms with our own individual actions and examine them with this diary's message and knowledge in mind  we will find "We are participating in our own destruction".  

    If we really want to straighten out all this crap we need to really think about shit!

    by John Crapper on Sun Jun 03, 2012 at 10:45:58 AM PDT

    •  Beware the trap of the (1+ / 0-)
      Recommended by:
      John Crapper

      Purity Test.

      We all have impacts.  What matters is making good choices that create the most life value per amount of impact.

      The Purity Test is especially insidious when it is used to  cause people to doubt their standing to advocate for environmentally effective choices.  Basically "If you have any environmental impacts at all, you have no standing to comment on any impacts, no matter how egregious."  It's a classic mis-logic that is used over and over and over again to derail positive dialog.

      •  I read the diary and agree totally. (1+ / 0-)
        Recommended by:
        James Wells

        Conversely we must guard against the power of cognitive dissonance  Consumption in inescapable and almost by definition it is destructive of our environment.  With the power of this cognitive process we can fool ourselves into refusing to accept our personal responsibility for the "system" we unknowingly suport.  Changing our internal psychology to place us in the proper place regading the larger natural world so we can accurately make good choices is my point.  I call it ass-forward thinking or putting waste-end considerations to the forefront of our thinking when it comes to assessing our needs and wants and making decisions about consumption.  Accordingly my tag line.  Mankind cannot "Save the Planet".  We can only save ourselves.  Nature doesn't care about us. Nature will win.  You can bet on it!    

        If we really want to straighten out all this crap we need to really think about shit!

        by John Crapper on Sun Jun 03, 2012 at 01:03:20 PM PDT

        [ Parent ]

    •  Or the one that really fries me (2+ / 0-)
      Recommended by:
      John Crapper, James Wells

      High powered water sprayers to clean walks, driveways, cars...

      "People, even more than things, have to be restored, renewed, revived, reclaimed and redeemed; never throw out anyone. " Audrey Hepburn "A Beautiful Woman"

      by Ginny in CO on Sun Jun 03, 2012 at 12:28:12 PM PDT

      [ Parent ]

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