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Thanks Richard – that’s an excellent way of pulling together your various threads.
I have been struggling to articulate in a simple way the fundamental problems of the natural capital approach advocated by Dieter Helm and others – I think your diagram has just done it for me. The natural capital advocates are trying to use the market to solve the fundamental market failure that the market does not price all the values of nature that humans utilise.
Whereas what you appear to be saying (forgive me if I’ve misinterpreted, I’m not an economist or accountant), is that an appropriately designed taxation system would address this market failure by redistributing profit derived from nature-affecting market failures to public or other sector actions to remediate the damage and address the market failure (cure); and by creating such a mechanism, that will drive change to avoid causing the market failure in the first place (prevention).
In the environmental world we also face serious problems arising from the perverse conesequences of public subsidies – eg the Common Agricultural Policy farm subsidies. But I would include tax breaks as a form of subsidy. Using taxation isnt the best way to address perverse outcomes of subsidy payments (best to remove the subsidies) but is there a justification to use taxation where it is not possible to remove subsidies?
I think you have me right
Although there is more to it than that
The book may be worth reading
thanks Richard – it’s on my list of books to buy….