Financial Crisis Can Lead To Modest Lifestyles

PlanetArk 25 Mar 09;

LONDON - The financial crisis is a timely warning of much greater risks the planet faces from excessive focus on profit and growth, veteran British environmental campaigner Jonathon Porritt said on Saturday.

Environmentalists have linked the present recession with wider threats such as climate change, blaming credit-fueled economic growth for the reckless consumption of natural resources including fossil fuels.

Governments, companies and regulators must reduce the rewards for growth and profits to avoid a far worse crisis and the collapse of the life support systems such as fisheries, soil and rain on which the world depends, Porritt told Reuters.

"It was a harsh and unsustainable form of capitalism for the last 25 years," said the chairman of the independent British government watchdog, the Sustainable Development Commission.

"It's appropriate people are talking about more modest lifestyles."

For example, bank lending at high repayment rates had driven demand for more credit, creating a cycle of consumption which had also run down natural resources, he said, and policymakers could curb the role of banks to avoid a repeat.

"Banks have forfeited the right to operate on their terms. We've just got used to this idea it's banks' right to create credit and charge interest on it. Governments can create credit ... on much less onerous terms."

Policymakers worldwide have responded to the recession with about $2 trillion of stimulus spending, and about one tenth of that they will direct into green causes such as clean energy technologies, efficiency, public transport and conserving water.

Such green spending may not only fight climate change and cut dependence on imported fossil fuels, but also create jobs in a growing sector of the world economy.

British Prime Minister Gordon Brown says he wants a meeting in London on April 2 of the G20 leading developed and emerging economies to coordinate spending into a global "green new deal."

Some analysts, U.N. agencies and environmental groups say green spending should be a much bigger part of the total stimulus, to improve infrastructure including homes, transport and electric grids and cut carbon emissions.

"We've degraded our natural capital, we have to build this back like we're re-capitalizing the balance sheets of banks. The way to do this is to put huge amounts of money into energy efficiency, low-carbon technologies, renewables," said Porritt.

A report Porritt has written for the charity Forum for the Future, of which he is a co-founder, called "Living within our means: avoiding the ultimate recession," is published on Saturday.