Accounting for Environmental Remediation Costs

Abstract

lion years, less than one-tenth of one percent of the earth's estimated existence. The post-industrial era spans only the last seventy years or so. In this relatively minute portion of the earth's history we have depleted and destroyed much of this planet's natural resources. We risk making it uninhabitable for ourselves and the other species with whom we share it. As a society, we look to the owners of capital as the institutions with sufficient power, control and resources to provide leadership in improving our stewardship of the environment. While each individual consumer is a link in the chain of environmental degradation, the actions of producing entities have the most immediate and direct effect on our natural resources. It is not a cynical but a realistic view of human nature which suggests that we cannot rely on ethical imperatives alone to achieve this more responsible stewardship of the earth's limited resources. We must devise the means and mechanisms to put the right economic incentives in place at the micro-economic level to achieve our desired ends. The social cost of pollution must be converted to a private cost. The costs of environmental degradation must enter into the stream of factors relevant to the decisions about what to produce and how to produce it. Philosopher and theologian William Temple, Archbishop of Canterbury, wrote Governing is the art of ordering life so that self interest prompts what justice demands.1 Accounting standards play an