Third Ministerial Conference on Environment and Health

Keynote speech on economics by Gaudenz Silberschmidt
International Society of Doctors for the Environment ISDE

London 17th June 1999

From Health and Environment Economics to Healthy Economics

Thank you, Madame Chair, for giving me the opportunity to speak. I will try to go a little bit beyond common concepts on the link between economics, environment and health.

A few years ago, some economists told us that a rational and efficient response to climate change could be to implement the AOSIS target of 20% reduction in greenhouse gas emissions by 2005; however we even have difficulties in implementing the Kyoto protocol which asks for 5% reduction by 2012.

Some economists tell us that many of the most cost effective measures in the field of health are preventive actions; nevertheless all health budgets spend 95% or more on curative medicine.

Some economists tell us that the external health, environmental and social costs of road traffic are estimated to be 2-4 times more than what users actually pay. Economists are right to tell us, that the best policy would be to progressively internalise all of these costs.

Why is the political implementation of all this economic advice so difficult? Partly it is due to the excessive influence of those who profit from the current situation which is characterised by a lack of internalisation, high curative budgets and a heavy dependence on fossil fuels and cars. Another important reason for the difficulties might reside in the economic theories themselves.

Are we asking the right question? The three examples describe applications of economic theories to environment and health. This means that we take economic laws for granted and ask how environment and health can fit into this system. Shouldn't we ask the question the other way round? The ecosystem and our physiological system follow natural laws which are not man-made, while the economic system follows basically man-made laws, which can be changed by political decisions. Therefore we have to apply our knowledge on the environment and health to the economic theories.

Economics is the practice of efficiency. Free markets tend to be efficient in creating as many goods and services as possible, but they also destroy nature, create environmental health hazards and social injustice, which endangers the health of the poor. Neither nature nor human beings could survive a perfect competition which is the basic assumption behind many economic models. Such a system with a total market would lead to unbearable psychological stress for anybody living in it.

We have to stop trying to adapt the world to the economic models.

We must start to adapt the models to the world, in order to make them serve human health, wellbeing and the protection of the environment.

As long as we do not get back the primacy of politics over economics, nearly any political decisions will be in vain. They will be subordinated to the main criteria of economics: efficiency and maximisation of profits.

Some degree of efficiency is necessary to satisfy human needs, but competition needs its limits. These limitations of the market have to be decided politically and require international cooperation. They must serve human health, wellbeing and the conservation of the basis of life, nature. These three criteria are just another way of describing the concept of sustainable development. Environmental economics and health economics are necessary but not enough, we need also ecological economics and healthy economics, that means economic theories which serve us and do not rule us.

Thank you.

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