Capitalism and Environment

Capitalist economies have inherent charecteristics to destroy the environment. At least, that's how capitalism performed in the 20th century.

Automation leads to higher productivity, but increases energy consumption
Adam smith said that human beings are more productive when there is division of labor and when they work in a factory style environment. That naturally leads to factory owners automating the human tasks for higher productivity. Automation, at least the way it's done in 20th century, leads to higher consumption of energy. Automation of daily mundane tasks like dish_washing and laundry_service leads to an increase in energy consumption. For example, when people switch from postal mail to e-mail, it leads to creation of massive computer server farms. Computer server farms need energy to operate. The new century should define earth-friendly ways of automation (or) clean ways of producing energy.

Consumption increases as incomes raise
Free markets have proven to create richer societies and richer people. Richer people means more consumption. Consumption includes consumption of natural resources. Goods become cheaper to produce, which causes cyclic effect and increases consumption. Higher consumption correlates to higher production of trash and garbage. Evidently, average amount of trash each individual produces per day in U.S. is way more compared to other countries. Recycling is definitely the solution. However, recycling processes only recycle around 50-75% of what's consumed. Governments should aggressively discount waste management companies and promote excessive recycling. Governments could go further and use tax-dollars to achieve the golden dream of 100% recycling.

International trade imbalances force some countries to exploit more natural resources
A country with trade deficit has incentive to increase exploitation of natural resources to fill the gap. Greedier countries might cut down it's forests to create more short-term profits. Brazil is cutting down Amazon forest at a very fast pace. Brazil can survive in this competitive world market without selling ethanol. However, it wants to create more money. If Brazil never traded with any other country, then it might have the incentive to keep it's forests intact.

Bigger markets and fewer trade barriers increase the potential of free markets and make the civilizations better. However, creating bigger markets by opening up of international borders has huge environmental implications. The situation is exaggerated by the fact some of the environmental problems are global in nature and can't be solved at a national level.

Difficult to objectively measure benefits of environment friendly products
It's not trivial for Governments to come up with good incentives for corporations to create environment friendly products. Let's take the example of "Postal mail" Vs "Email". Automation of mail led to lesser consumption of paper and higher consumption of energy. How can the impact of paper on environment be objectively measured? How can the impact of computer server farms which provide email service be measured? Should we reward the product which helped reduce the deforestation? OR should we reward the product that consumes fewer energy?

Another example is maid Vs dishwasher. A maid can wash dishes just as clean as a dishwasher. Automation led to a situation where dishwasher is cheaper than hiring a maid. Capitalism led to increase in value of human capital, which in turn made hiring a maid more expensive.

Kyoto protocol is good but implausible
Kyoto protocol proposes a cap on carbon emissions for every country. Kyoto protocol puts onus of measuring carbon footprint on individual countries. This is like asking a student to grade himself. Trade imbalances and poverty drive countries to exploit natural resources at their will. Kyoto protocol works only if countries are also forced not to have trade imbalances. If there's no trade deficit, countries have incentive to provide their citizens cleaner air and water. It's economics which at the end of the day. So, make environmental rules which can play with economics.

Conclusion
Coming up with a formula for objectively measuring pollution footprint is key to the success of reversing pollution and global warming. Benefits of free markets should not be at the cost of screwing our planet. I hope, some day, market forces themseleves would provide a solution for this problem!