World Cities Summit Issue, Jun 2008

The Environment as Capital
Dodo J. Thampapillai

ENVIRONMENTAL ECONOMICS AND GOVERNANCE
Governments must choose an appropriate mix of actions so that environmental sinks that have been damaged by years of neglect, false premises and complacency can be restored. While a zero emission regime may prove difficult in the short run, it may be feasible in the long run. The lower end of the time scale given in the Stern report for environmental repatriation is only 50 years. Although this estimate is probabilistic, it is prudent to be aggressive in the search for appropriate measures such as those mentioned in this essay. Some approaches, such as globalising the PUB model of sewerage treatment, could be put in place, perhaps much sooner than global carbon trading markets.

Equally important is the role of environmental economics in guiding the governance regime. When KN is explicitly recognised in the production function, business decisions can be altered to such an extent that voluntary environmental stewardship by firms could be feasible.

Lastly, the theory of production involving KN must be incorporated within the economics curriculum of training institutions in order to cultivate environmental values and awareness in policymakers.

Dodo J. Thampapillai is an economist at the Lee Kuan Yew School of Public Policy, National University of Singapore. He also holds a Personal Chair in Environmental Economics at Macquarie University and an Adjunct Professorship in the same field at the Swedish University of Agricultural Sciences at Uppsala. Professor Thampapillai has written over 100 publications, including seven books and nine refereed monographs. His current research focus is on Macroeconomics and the Environment.

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