A Common Sense Economic and Market Structure Model for Developing Countries


For more than thirty years developing countries’ economic problems have created major financial crises in the international community. Developing countries have remained so due to their low-income economies. African and Middle East countries live in ethnic diverse communities and are subject to political instability and corruption than Asia and Latin American countries that live in more homogeneous communities. There is more cost involved in a population of workers and who belong to different ethnic groups because of diversity, cultural differences, religion and language. The purpose of this economic development model is to address economic stability, the problems (value inhibitors), solutions (value drivers), the strategies and implementations of the economic enhancement in order to help the developing countries be less dependent on developed countries. So many studies have been conducted on developing countries, but none of the studies have focused on how the developing countries could apply or use the economic models with less participation of the industrialized countries. World Bank and United Nations ought to examine minutely any potential foreign aid application while focusing on this model for developing countries. This model will enhance in devising a strategic means of monitoring the developing countries before distributing fund to those that may not use the model or practice noncompliance. The practical sense of the use of this model is to elevate the developing countries to economic success and stability, and reduce their dependency on developed countries.

Role of leadership

In developing countries, most leaders behave and think differently. Although, these may not be tolerated by developed countries, they are the norm and are based on their ethnicity, beliefs, religion, culture, social classes, and assumption of supremacy. Negotiating and managing conflicts in developing countries is a matter of understanding the genetic makeup of that country. Diversity may create needs but these needs do not have to be neglected in order to create balance among the ethnic or sectarian groups. A Western countries’ style of negotiating and resolving conflicts may not be applicable in the developing countries where religion and ethnicity have continuously impacted the leadership in those countries. Hence, the inefficient and ineffective leadership have led to social development and economic neglect that have caused the worse economy and poverty in those areas. If politics are set aside and economic benefits are put in the forefront by these developed countries, the chances of conflict resolution will be increased.

Leaders who have vision for change may think about what the impact the economic and market development will have in the long-run, and in the locations and in the life of its citizens. The social problems in Malaysia exist because of the ethnic Chinese who are not Muslim in a country where over 90 percent of the population is Muslim.

In developed countries, situations create focus on civilization and leadership, where civilization shapes leaders and leaders shape civilization. Power is treated as a shared resource, but in most developing countries coercion is the system used by leaders. Leaders use physical, economic, and social threats and punishments to induce change in followers for the sake of the leaders. The leaders therefore have become power wielders. These leadership problems have impacted the economic and market structure of the countries. Hence, a new model may mean a step to a new and better way of life for all the developing countries. The Western part of the Asia continent is predominantly Muslims and still have untapped resources that have not been explored because of dictatorship, politics, religion, culture, beliefs, and diversity. Exploring these countries and helping them stabilize will transcend to trading with other developing countries, which will in turn pull them out of poverty, instability, and create peace among the sectarian and ethnic groups.


Before the coming of the tsunami in December 26 2005, the South Asian countries were poor and developing. Both the South and East Asia have untapped economic sources. These potential raw materials need to be explored in order to help develop the economic and market structure of the region. The tsunami destroyed the infrastructure, economy, and the lives of the people of the South Asian countries. The 6.3 in magnitude earthquake that hit the central java of Indonesia on May 27, 2006 destroyed what was left of the tsunami. These countries will benefit from cash crop, livestock, and poultry production because of their adequate weather and availability of natural water, which will not require a high technology in order to irrigate the farmland. Mechanized farming will need to be introduced and implemented to aid in maximizing production of agricultural products. The Eastern part of South Korea has a comparative advantage over industrial, commercial, and manufacturing production. Producing and trading on building, automobile, motorcycle, and other petty materials in the form of buying and selling will enhance in the development of the market setting and economy. This will help in the stabilization of the East and South Asian countries. A stable economy will help resolve and manage conflict in these countries that have different ethnic groups and history of diversity. The economic and market structure may also aid in the stability of the leadership, political and social system. The environmental problems may need to be addressed in order to guard against pollution or any unhealthy by products or waste materials that may cause harm to people or have short or long term health problems or may be fatal to people. If these countries are stable, they will attract foreign investments rather than needing foreign aid. The military disturbances in East Timor are not helping the economic and the market structure of the young independent country.

The four factors that determine the economic growth are labor, capital, land, and Entrepreneurship. Developing countries have more labor force with lower wages than developed countries and yet their economic growth is still lower than that of the developed countries. Capital is another problem facing developing countries. They need resources such as equipments, machines, factories, and money to work with. Labor without capital is synonymous to guns without bullets. Capital will also represent an investment that will pay off in the future. Most developing countries have untapped resources such as oil, gold, diamond, minerals, forests, and water that represent land which by themselves cannot stimulate economic growth unless they are explored and converted to goods and services. Technology enhances economic growth. A group of agricultural researchers from Texas A&M University and University of California-Davis acquired a four-year grand of $4.4 million from U.S Agency for International Development’s Mission to Afghanistan eGrazing. This discovery will aid the livestock herders to successfully tend to cattle, sheep, horses and goats. If this system had been in place, it may have made an impact during the tsunami in Indonesia. Political and social factors that inhibit Economic Growth are corruption, instability, lack of leadership and administrative skills, population growth, and lack of business enterprises.


African countries are very poor and in dare need of economic and market structure development. Before these countries go global, they may to have sufficient needs of life by taking comparative advantage of their sources of raw material. Some have cash crops that need to be irrigated, some have livestock and poultry that need to be technologically upgraded, and market structure that needs to be redesigned, developed and implemented. The improvement of the agriculture will help the poor farmers send their children to school, build infrastructure, develop the quality of institutions, and make a smooth run of transportation.

Middle East

Middle East region is a turbulence area because of instability associated with religion, oil, dictatorship, and developed countries’ influence. The Iraq war has devastated the whole region, and couple with the Israel, Palestinian, and Lebanese conflict, which has created further economic drawbacks that amount in billions of dollars. The destruction of the infrastructures, and the lost of lives have sent the economy of Lebanese country decades backwards.

Latin America

Development in Latin Americans countries could stem from agriculture, forestry and fishing, to mining, and manufacturing. These Latinos can help in building their countries rather than trying to immigrate to United States of America. If guided, they will improve their countries’ economy and help in the marketing of agricultural, manufacturing and other natural resources. Immigrants spend much time in the state of California farms, Illinois factories, North Carolina, and areas in the north east of United States of America working mostly in food industries. These efforts can be redirected to Latin America in order to develop the entire area.

Political struggles, lack of administrative skills, and power supremacy have strangled the economic and market structure of most countries in Latin America. For decades the Latinos have traveled north of the border to United States of America in search of better lives. This economic situation has resulted in the deaths and mutilations of people trying to enter United States of America. The smugglers who are known as the “coyotes” have made huge profits for attempting to transport these illegal Latinos across the border. It is very dangerous ventures because of the hot temperature, train transportation, unhygienic felt, bad weather, lack of food, water, and other unknown dangers along the road to the border. Immigrants spend months traveling to the border and most times do not make it to United States because they are caught and send back south of the border. Most gang groups have resorted to kidnapping wealthy Latin Americans living in the United States side of the border for huge ransoms, demand thousands of dollars in exchange to the kidnapped victims and most of the times these victims are killed. Families are separated due to fractured economy when men live their families for years in search of money for food in the north of the border. Income is not redistributed to the population, the rich gets richer while the poor gets poorer. The people of Latin Americas deserve more from their leaders and their natural resources, which has not happened because of corruptions and drug kingpins who have operated by intimidation, coercion, and fear.

The Four “Pies” facing developing countries

Poverty stems from lack of education, opportunities, and low literacy level. These countries do not put too much emphasis in education as they resort to marrying more than one wife and having too many children. Farming and herding have been their main source of food production and livelihood. Ethnicity is attributed to too many tribes, languages, and dialects. It has also contributed to lack of trust amongst different ethnic groups due to lack of understanding each other’s culture and tradition. They have become one country but different people. Instability is created by lack of a stable government by corrupted leaders, who always come to power for the purpose of stealing funds. That ultimately leads to no mandate to build infrastructure, and develop the economy and market for the country. When people’s needs are not met, most of the times in developing countries, rebellion begins when the government neglects a certain group of people. When people are deprived of the necessities of life while the other group has it all because of their ethnicity and religious sect, it creates tensions that lead to a “time-bomb” ready to explode. These most times cause conflicts that are attributed to hatred, sabotage, riots, revolution, and deaths. This is common in the developing countries where corruption and venality have played a role due to self-centeredness on the part of the leaders. Leaders therefore resort to intimidation of their citizens and thereby control these countries by coercion.

17 Strategies for implementing economic and market structure in developing countries

(1)A comprehensive education across the country needs to be instituted. This may be in the local dialect and language in order to make it easy for the citizens of that area. Assessment test of individuals’ talent and abilities need to be explored, recognized and documented to be sure where these individuals’ maximum potentials lie. A program needs to be instituted in order to teach the citizens methods of family planning and birth control. Individuals also need to understand the social and economic benefit of the birth control.

(2)Some individuals may have ability in agricultural work (Crops/livestock/Poultry). Locations with fertile lands need to be located and utilized for crops and livestock, and those areas without fertile land may need to be used based on its comparative advantage, such as poultry, storage of byproducts, and market areas.

(3)Supermarkets are to be constructed in all densely populated locations or urban cities to enable the young men and women find and keep jobs. The stores will consist of three shifts so that students can work and at the same time go to school and do their schoolwork. These markets will be located in the areas where people can afford to shop. A Wal-mart (USA) approach will be most appropriate in these locations. The four utilities of market will have to be considered and instituted as the main reason for the location of the supermarkets.

(4)Consideration of the product that people will want, the price to set for the product, the place that will be appropriate for the supermarkets and their nearness to the people, and how the promotion of the product will be conducted in order to reach the consumers and customers.

(5)The nomadic approach of rearing, transporting, and selling livestock will be changed to using trucks to transport them if it involves long distance in order to avoid spreading of any diseases such as mad cow disease and other diseases that come from livestock feces as they are transported though out the country. Trading locations where buyers and sellers meet, and the days to meet are to be established in both rural and urban areas.

(6)Areas where people still live in poverty, a trade by barter may be established so as to allow the farmers who want to exchange items from their farms to bargain for exchange. This short-run method will continue until the economic development is in place and running.

(7)Foreign investment and property rights need to be considered as part of encouraging investments and savings in order to stimulate the economic growth. This method may help the developing countries to invest less money on capital goods, create more competitive markets, and in turns reduce or eliminate corruption.

(8)Establish local leaders by ethnicity, who will act as representatives or middlemen between the government and their ethnic group. These local leaders may be selected by group they represent and approved by the government to ensure they are working on behalf of the people they represent and not for their own self-interest. In addition, the African experts may be contracted to help establish the boundaries of no corruption.

(9)Individuals have certain religious beliefs and different ways of thinking, and as such need to be segregated according to their sect for the benefit of market structure and economic development. Individuals who understand that certain groups have designated times in which they pray will have no problem doing business with such groups. This may reduce tensions for those who understand the culture of those religious group, and for those, who do not there will be tensions and uneasiness, which is the reason for grouping citizens according to their religious sect.

(10)Government need to institute “watch dog groups” in order to police the programs and to make certain that the programs are in place and running. A 3-year trial needs to be established for any program of economic and market structure that is implemented for these countries. This is enough time to evaluate the program in place in order to ensure its workability. Experts in Africa need to be involved in all phases of implementation in order to combat corruption and promote stability.

(11)Poverty may be reduced if adequate and stable structure for economy and market is established, and the government leaders via the local leaders address all citizen’s problems. The essential necessities — housing, clothing and food – may be the top priorities for these countries in order to reduce the poverty.

(12)Professionals and skilled workers are to be encouraged through issuance of incentives in order to motivate them to stay and reside in these developing countries and help in the development of these countries rather than leaving for developed countries. Mass exodus from these developing countries only harms and delays the development of these countries.

(13)Construction of infrastructure such as roads, buildings, and bridges are important for the economic and market structure of developing countries. Food products and other necessities of life can be transported to their respective destinations as quickly as they are needed when good infrastructure is in place. It may also encourage in foreign investments. Investors will prefer to invest in stable countries to unstable countries.

(14)Construction and installation of adequate running water in developing countries and to all parts of the countries also will help in building stable economic and market structure. It will help in curtailing diseases such as typhoid’s and malaria that usually come from unclean water. It will also help the children to focus in education and literacy programs rather than traveling miles upon miles to fetch water from the streams and wells. Some of these children die in taking these water-fetching adventures.

(15)Installation of electrical system may help in the growth of communities. Businesses cannot operate adequately where electricity is lacking. As such, these countries will require electricity in all areas of the countries as a form of economic development and market structure in order to help businesses function and grow, help in the food storage, and eradicate waste of food products that would otherwise be stored safely in cold rooms and refrigeration.

(16)Social Organizations need to be introduced to help the poor get out of poverty, and give them the opportunity to operate their own small businesses. This type of organizations are set up by the government as not-for-profit organizations, and the purpose is to develop the people’s business skills and issue them interest free start-ups loans to enable them manage their own businesses, which in turn lead them to poverty free. They will guided them to the type of businesses to open, how to open them, where to open them, and why they should open those kinds of businesses.

(17)The potential goals may be achieved by enforcing the use of this model as a condition of receiving funding or foreign aid. As a way to check and ensure that monies do go to what they are intended for, developing countries pledge to use and implement this model. This model will check and police the development of the projects. The intention of this requirement is not to discriminate against developing countries, but to help the citizens of those countries as they have no way of benefiting from these funding and foreign aid that usually end up abused, misdirected, and misused for other personal and private purposes by the leaders due to corruption and venality.

Who Are the Developing Countries

World Bank defined developing countries as those with low-income economies with per capita incomes of $755 or less. World Bank is an International Organization that categorizes such countries as developing countries and also issues loans to them.

Economical and Ecological Solutions by Insulation

A frigid cold winter can do a lot more than just choke up your driveway. If your home is not geared up with good insulation systems to keep it warm, you will end up spending an enormous amount of money in paying your heating bills. Thus, one way to arm your house to face the winter in full health is by covering your house with the right gear using the help of good insulation suppliers whose supplies will ensure you keep affordably warm.

To make your house right, there is nothing more important than to get the right insulation suppliers. Good suppliers are ones that provide their products to installers, builders and home developers and also have a good network to be able to supply their insulation products to your doorstep. An essential quality that every consumer will look for from insulation suppliers are that the product is of high quality and should be made from formaldehyde free eco friendly material at competitive prices that will give the product an easy buy appeal.

Though many insulation manufacturers prefer formaldehyde based products, this chemical can cause various health hazards like nausea, difficulty in breathing and asthma in high concentrations. It is also known to cause severe allergic reactions and is also suspected to be an agent that can cause cancer. But certain insulation manufacturers now provide fiber glass that has reduced or does not emit volatile organic products like formaldehyde. Thus now the eco friendly and hazard free solution is to utilize glass wool based insulation products that is made by a coat of glass fibers and a highly specialized resin that gives it its moldable quality.

There are a range of advantages in using glass wool based insulation like good dimensional stability and greater strength. It also delivers a high thermal performance and is also heat resistant and doesn’t catch fire easily. Moreover, a number of insulation importers also prefer to use it as it has light weight and is incredibly flexible and its low ability to absorb moisture avoids microbial growth that finds a lot of takers as it will stay in a great working condition for a long time.

It is a great resource for energy preservation too as these glass wool based insulation systems will provide low energy bills and also control moisture to provide a better indoor air quality. The formaldehyde free feature is famous among most insulation suppliers and so they promote these insulators that deliver environmental satisfaction as it is prepared from materials that can be recycled after use. The recycled glass that is used in making these insulation products saves millions of cubic feet of landfill space thus ensuring a really ecological and economical solution. The only non recyclable product used in this fiber glass is sand that can be found everywhere and is also a rapidly renewable source.

While your neighbors will complain of either really high energy bills or about their children suffering constantly from allergies and health problems, you will know why your family is safe in rough winters. So go ahead and sit on your warm couch to think about the support that you have got from your insulation suppliers in ensuring that your house is protected from nature’s fury and blessed with its bounty.

Some Economic and Environmental Benefits of Plastic Recycling

Recycled plastic can be reused and employed by a wide variety of industries Nike has recently used recycled plastic materials in their world cup range. Most other leading sports retailers are following suit. The plastics recycled make stronger and more durable replacements in many cases for example the life of outdoor plastic furniture compared with more traditional wooden products is much longer.

Other spillover effects are the production of new jobs as some of these are technical in nature they may benefit the local economies as transportation costs are likely to undermine any benefits of lower labour in less developed countries. The Asian recycling industry will boom regardless of importing waste from abroad due to the massive manufacturing capacity of the Asian powerhouse. Local supply chains will be fed by new plastic products developed locally as the production wages will filter back into the local marketplaces stimulating regional growth.

This is certainly the case in the UK at present where there is a thriving recycled plastics industry which is competitive and takes advantage of the cheaper costs per tonne of transportation of recycled plastic compared with wooden or concrete alternatives in the building trades.

A growing awareness of the potential for renewable energy sources and materials in Europe and the US which has been highlighted recently by the BP oil spill which has made alternatives to oil and more carbon intensive energy sources much more attractive certainly in the eyes of a more environmentally aware group of consumers. Recycled plastics will help win over the ethically minded consumer recycled plastic does not require constant weather treatment so will reduce the strain on the environment further with no need for chemical weather treatment.

The majority of plastics are themselves now recyclable and constant technology innovation and consumer awareness will continue to push the loop closer to closure with supermarkets continuing to push for the removal of plastic carrier bags and some major high street names in the UK like Tesco offering drop off points for exhausted plastic that has been reused again and again. Similar innovations exist in the agricultural sector where farm waste plastic is used to produce agricultural plastic products and many other industries are starting to follow suit.

The consumer is becoming more aware and with more information available than ever before it is probably time you business started to look at the use of recycled plastic or any other reusable materials in a more productive manner.

How to Transform Our Financial and Monetary World

Indeed money is a huge topic in today’s time. Having been in the business of money and finances throughout my ‘worldly’ career’, I can sing a few tunes concerning this topic. Long before the 2000 crash I had realized that the systems and structures we created individually as well as globally were not viable and sustainable and would have to be replaced with new ones. I left Germany and the financial world and moved to New York, the global hub of finances, in order to assist in this process of economic and financial transformation.

Immediately behind personal transformation, money and finances is actually my favorite topic. Because the collapse of our present financial, socio-economic and environmental structures and systems is no longer just about markets correcting themselves or catching a few ‘thieves’. Instead, it is about human transformation and evolution! It presents us with the great opportunity to transform ourselves and our environment. And this, has very little to do with money or finances but a lot with our perceptions, beliefs and the way we view and treat each other and our environment. Who we are affects every aspect of our daily life from relationships and career to monetary and financial matters.

Therefore, I recommend a program called “Self-Transformation through Self-Realization” based on the teachings of a group of (American) Indian Spirit Guides which helps us to discover WHO we are in Truth, WHAT our inherent core (survival) fears are (based on our pre-birth arrangement) and what defense mechanisms we have developed in our early childhood to cope with these fears. The teachings are very self-transformative and powerful.

The time for change and transformation is now! We are all inhabiting this very same planet at the same time, however, we do live in different realities. Depending what reality one lives in, one conducts oneself, one’s career, relationships as well as financial and money matters either in the old or the new paradigm.

Sustainable Development – What Does it Mean and Who Wants To Tell You?

Today’s journals of trade and popular culture are all but awash in the buzzwords ‘sustainable’ and ‘sustainability’. Here, we are obliged to raise the red flag and warn of lurking danger. These diverse and many advocates do a great disservice in more ways than they know.

For in this great sea of ‘sustainability’, which spans business strategies and regimens of weight loss, one all too easily loses sight of the real battle. We know that over-use of a term can have an unintended blunting effect. But the word is so much in vogue, and its employment so overzealous, that it has in many instances become obscured entirely. So, you ask, what is sustainable development? Who are its proponents and antagonists? And, oh yes, why exactly is it to be so desired after all?

Ours is an age in which we have come under the twin pressures of burgeoning population growth and an accompanying intensification of economic development. This development is necessary for the provision of the surging population’s needs and wants. Though rates of population growth show signs of slowing, the number of earth’s inhabitants will continue to expand massively in the foreseeable future. With the added variable of impending climate change, there is a sudden and new awareness of the potentially destructive nature of the human project.

These realities have given immense weight to calls for an oversight which explicitly takes account of the fate of future generations. Many nuanced definitions have been devised, but the most commonly evoked is that sustainable development “meets the needs of the present generation without compromising the ability of future generations to meet their own needs.” General consensus holds that the sustainability project spans three interactive domains; these are (1) environmental sustainability, (2) economic sustainability, and (3) social-political sustainability.

Environmental sustainability is concerned with the preservation of resources and our earth’s natural environment. In the strictest sense, any process which allows natural capital (the net sum of all natural resources and other bounties of the earth) to be depleted faster than it can be replenished threatens its ability to function and to serve us properly and indefinitely. Advocates of environmental protection actively seek solutions which will minimize the present and future burden to our natural environment of industrial and other pursuits. The best solutions are those which find ways to incorporate renewable methods of resource exploitation.

The notion of environmental sustainability is thus inextricably bound to the premise of economic sustainability. Rapid advances in new technologies and production techniques are constantly altering and expanding the boundary of production possibilities. But ultimately, economics is the science of the allocation of a finite resource pool. Promotion of economic sustainability thus seeks to allow for future generations to reach their own optimal allocations free from constraints imposed by our own patterns of exploitation in the here and now.

The sphere of social-political sustainability is interesting in that it expands beyond the simple necessity of economic growth and its effect on the natural environment to more directly include the human element in the equation. Social-political sustainability promotes social harmony and continuity of healthy political institutions so that a mechanism is in place for the enactment of the collective will (presumably a will which is favorable to sustainability).

The project of sustainable development has inevitably encountered resistance. Some are eager to point out that any economic pursuit which entails resource depletion is by that very fact unsustainable. But to make this charge is to reduce the debate to semantics; to contend that the impossibility of an absolute application invalidates the endeavor wholesale is to court the ridiculous.

Another more prominent criticism is slightly more troublesome to counter. Available evidence seems to confirm the wisdom that as nations emerge from poverty and amass wealth they are more willing to dedicate a portion of their incomes to combat pollution and other unpleasantries. The wealthy industrialized nations of the world at one time advanced through dirtier stages analogous to the present progress of developing economies. However at that time there were no monitors or whistle-blowers. This school of critics cries hypocrisy. They uphold “dirty” mediums of economic growth that wealthier nations can now afford to bypass as the only hope to elevate massive populations from abject misery. In so doing, they seek to force arbiters of sustainable development into the unenviable position of choosing between the welfare of the earth’s poor and that of the earth itself.

In the face of these criticisms, proponents of sustainable development strive for the national and international coordination of environmental, economic and sometimes social policies in the advancement of responsible progress. They are mindful that the world more than ever is a system of actors, none of whose actions bear no consequence for others. Their goal is the day-to-day management of policy decisions such that humanity might enjoy the bounty of our natural environment without exhausting it, and without selfishly revoking the privilege of coming generations to do the same.

Without sounding the bells of certain alarmists, sustainability of this color is to be venerated and upheld. Dilution of the term’s strength by those who would seek to hijack its nobility is, on the other hand, to be regretted and indeed resisted.

Business Sustainability and Company Social Responsibility

Company social responsibility is one of the most debated topics around the world in recent years and many business leaders have expressed their support for it. Accepting the concept of company social responsibility and implementing measures to achieve it is a conscious decision taken by most businesses around the world. Businesses don’t do it because it makes them looks good, but because it is beneficial for their business. Let’s look at what company social responsibility actually means.

Company social responsibility means all actions taken by a company to not only comply with existing laws, but to achieve the long terms goals that are beneficial to the community it operates in. It involves the following things:

  • Conducting the business of the company in an ethical manner such that it meets the interest of the community it operates in
  • Being cognizant of societal priorities and expectations
  • Protecting the interests of both, shareholders and the community as a whole
  • Acting in the interest of the community even when there is no regulatory obligation to do so
  • Being a good corporate citizen

A company that feels obliged to address the concerns of not just shareholders, but all stakeholders can be considered as a CSR compliant company.

Business Sustainability

A business that can withstand severe shocks because of its close connection to social, economic, and environmental systems is said to have achieved business sustainability or corporate sustainability. Such businesses help build strong local communities, boost healthy ecosystems, and create economic value.

Company social responsibility is one of the most debated topics around the world in recent years and many business leaders have expressed their support for it. Accepting the concept of company social responsibility and implementing measures to achieve it is a conscious decision taken by most businesses around the world. Businesses don’t do it because it makes them looks good, but because it is beneficial for their business. Let’s look at what company social responsibility actually means.

Adherence to the principles of sustainable development is the key to achieve corporate sustainability. For an organization to become sustainable it has to address issues at the micro as well as macro level such as:

  • Social equity which includes poverty, health of community, and human rights
  • Economic efficiency by way of innovation, increased productivity, and sound financial management
  • Environmental issues including efficient land use, preservation of the biodiversity, and climate change

These issues are best addressed by engaging all stakeholders, finding common ground, and joint decision making. Environmental issues can be addressed by putting in place systems and processes that foster environmental efficiency in the organization’s culture.

Business sustainability or corporate sustainability does not go unrewarded. Employee retention rates go up, financial risks are reduced, enhanced business reputation, and innovative employees are some of the benefits organizations derive.

The Economic and Climatic Importance of Trees and Forests

Trees are seen as a valuable economic asset but only once they have been cut down for their timber. Our economic system in fact values dead trees as being assets, not live ones. In its way, the plight of the world’s forests and the attempts to manage and preserve them is indicative of the whole reappraisal of the “meta economics” that is demanded by the need to fight climate change and reclaim a safe climate.

Trees cover about 30% of the Earth’s total land area, but the forests are unevenly distributed around the world, with just 10 countries possessing two thirds of the total, whilst 64 countries have less than 10% of their land area as forest cover. Just over a third of the world’s forests are truly wild places with no clearly visible indications of human activity. Only 4% are forest plantations, growing trees to order mostly for the paper industry. The remainder of the world’s forests are a somewhat haphazard alliance between people and plants, supporting the livelihood of an estimated 1.6 billion people. Some of them mange to do this sustainably, but an awful lot do not.

Generally speaking, the richest biodiversity, measured in terms of the variety of plants, birds and other species in any given place, is to be found in the wild forests that are remote from humans.

Broadly speaking, the world’s forests grow in two great lateral bands, one stretching across northern latitudes and incorporating the forests of North America, Scandinavia and Russia. This band is of the type of forest known as ‘temperate and boreal’. These contain the type of trees that are most familiar to people in Britain, with a mix of broadleaf trees such as oak, ash, sycamore and chestnut along with evergreen and needle leaf varieties such as pine, spruce and larch. The other major band runs across latitudes in the southern hemisphere and incorporates the forests of South America, Central Africa and Asia. These are tropical forests and are not all rainforests, as some of them are at higher altitudes or by the coast where they form mangrove forests. Mangroves are particularly important. They are tidal forests and have important functions as natural sea defences, breeding grounds for fish, and habitats for lots of other species.

The probability of sea-level rises and extreme weather events caused by climate change raises the importance of mangroves as a buffer protecting coastlines in the tropics and subtropics. Despite this, mangroves worldwide have been subjected to an appalling rate of destruction resulting from over-harvesting for timber and fuel wood, clearing for shrimp farms, agriculture, coastal development and tourism. Mangroves have been destroyed much faster than any other forest type.

Forest exploitation, just like fossil fuel exploitation, occurs in line with the same economic system that pays no price for the cost of environmental destruction. Indeed, destroying forests for timber is big business, with the global value of wood imports worth $160 billion in 2006 and the rate of cutting them down outstrips the rate of replanting by about 7m hectares a year (which is the space occupied by around 85 billion trees).

Although forests have lots of different possible uses, policymakers, particularly in the developing world, often do not consider forest to have a value other than timber, and defend their exploitation on the basis that the developed world destroyed their forests years ago as part of the development process. Besides timber, forests can also produce other direct use products such as latex, cork, fruit, nuts, spices, natural oils and resins, and medicines. Many of the medicines we use today have come from forest products and nobody knows what else may be discovered.

Forests can also be used for recreation and even spiritual respite. As these uses are related to the existence of a range of tree, plant, animal and other species, forests have an important role in providing habitat for the preservation of these species, particularly in tropical areas. In fact, tropical rainforests contain a phenomenal range of species, more than twice as many as any other forest type and many more of them are unique to their own forest. Forests also have important benefits for the countries in which they are located in terms of recycling nutrients in the soil and providing watershed protection. Forested watersheds act like a sponge that slowly lets out the water so providing a more constant water flow into the rivers and so reducing floods. Cutting down the forests also leads to the soil being washed away, taking its nutrients with it and leading to build ups of mud in water reservoirs and rivers. What’s more, forests have a big impact on climate both locally and on a wider scale. Local rainfall can be reduced once a forest has been cut down because the sponge dries out and the trees are no longer giving out water vapour.

Lastly, of course, once you have cut down a tree and turned it into timber, it is no longer breathing and removing carbon dioxide from the atmosphere. And that is a big contributor to the global greenhouse gas problem. Not only have we been putting pressure on the atmospheric system by pumping out extraneous gases from industrial, transport and farming activities, we have been cutting down the lungs of the planet at an alarming rate. So much so that around a fifth of the GHG problem is due to deforestation.

International discussions about deforestation and the GHG emissions it creates have been going on for more than a decade under the auspices of the United Nations Framework Convention but it concluded that as emissions from forest loss were impossible to accurately measure or control, they could not be included in the Kyoto Protocol’s carbon accounting and trading scheme. As a result, the Kyoto Protocol provided few incentives for reforestation and none to maintain existing forests. This was always recognised as a major missed opportunity although the delicate political issues between developing and developed nations about how to value trees and who pays for them made for slow progress in negotiations. The entire principal of paying to retain forests is also extremely controversial among civic society groups in the with many arguing that the ownership rights lies with the indigenous people so are not the governments to “sell” the rights to.

The first proposals for how an agreement might look were made by Costa Rica and Papua New Guinea and these were eventually worked up into a proposal called REDD, which stood for Reduced Emissions from Deforestation and Degradation. At the 2010 Cancun meeting of United Nations Conference of Parties there was, finally initial agreement on a scheme called REDD+. This agreement clearly states that REDD+ is not only about reducing emissions but halting and reversing forest loss. This is important as it emphasizes that REDD+ actions must result in maintaining existing forests and carbon stocks. It also encourages all countries to find effective ways to reduce the human pressures on forests that result in greenhouse gas emissions. This element is important as it, correctly, puts part of the responsibility of slowing, stopping and reversing forest cover loss and associated emissions on those countries and actors (e.g., companies and consumers) that create the demands that drive deforestation (e.g. demands for timber, oil palm, soy, and cattle).

The agreement in Cancun, however is only a step forward and leaves important questions left unanswered that makes practical implementation impossible. This is because while the agreement recognizes various activities – i.e., reducing emissions from deforestation and forest degradation, conservation and enhancement of forest carbon stocks, and sustainable management of forests – most of these activities have not been defined. Without definitions it is not possible to measure progress or pay for performance, unless there is a true market for these goods when the buyer want to “consume” the offer and makes her own judgment as to whether the offer being made is providing “value” in return. There is also the “grubby politics” of setting the base level of emissions levels from which the “reduced emissions” will come from. Allied to that is the question of how countries will develop an information system to track how safeguards are addressed and respected for the agreement. Then, lastly there is finance. Once again the world is struggling to try and manage a planned economy in the midst of a notionally free market world when actually it should be looking at the underlying functioning of the economic system.

Economics is supposed to answer the question of how best humans can maximise scarce resource but the way we account for our economic activity makes the ludicrous assumption that the planet’s resources and services are not only unlimited but that there is no cost attached to their use.

Business has long been use to the idea that it is necessary to have a depreciation charge to put aside cash so that when a capital item needs replacing there is money to do it. It is time that business was also made to pay for the depreciation of natural capital. If they were obliged to spend that charge on restoration projects of their choice (e.g. restocking oceans, protecting biodiversity, taking carbon out of the atmosphere through reforestation or protecting existing ones) it would by-pass government administration (but not verification) and so couldn’t be accused of being a tax. Projects could, of course be either in the country of origin of the depreciation charge or overseas. This in keeping with the competitive nature of the way the existing system works. It would also put us onto a rapid course of making thing better and stimulate the needed creativity that has, so far, ensured our species has thrived.

Climate change is a fundamental challenge to the way humans social and economic systems operate. Finding lasting solutions to climate change require that we find a way to make our economic system work with the ecosystem. At present the ecosystem literally “fuels” the economic system with the current generation giving no value to the needs of the next. One of Britain’s most famous Prime Minsters, Margaret Thatcher once said “No generation has a freehold on this Earth, all we have is a life tenancy with a full repairing lease”. REDD+ is a decent attempt to start to get the repairs done but a full blown depreciation charge would a faster route to finding one of the solutions to climate change.