We highly recommend enabling JavaScript for the best experience. You can find detailed instructions for your browser at enable-javascript.com.

Sustainable? You bet your life

April 12, 2011

I participated in a sustainability symposium that was international in flavor a few weeks ago, and one of the things that became clear was that there are myriad cultural variations on what it means to be sustainable.  The questions spiraled around the room: What does sustainability mean in Latin America?  And even within that geography, South America?  And within that, Andean  or Amazonian South America?  People go on and on about indigenous knowledge–how important is it really?  Why are there all these megadollar development projects going in in Amazonia far from any population centers?  Does law really count for anything when more than US$1B is involved? How are frontiers tamed and brought under the rule of law?  What is the ontogeny?

Relatedly, we always talk about sustainability and social justice, etc., but it is mostly imprecise and feelings based.  Not at this symposium.  In the first symposium session two Hungarians were presenting on the red mud disaster that happened in 2010. Where pH 13 tailings from aluminum processing spilled from a dam–it killed ten or so and ruined the lives of thousands.  In the question and answer period, I asked, “In the US it would cost about $70M to kill 10 people.  How much does it cost in Hungary?”  The guys lit up, and so did an Indian economist working on the 2004 tsunami effects.  Because lives are valued in terms of GDP, the Hungarians said a Hungarian life was worth about a third of a US life.  The Indian guy said that in terms of purchasing power parity they should be the same, but lives aren’t valued that way.

My dark side thought, there is a huge opportunity for arbitrage in human lives for high-risk industries.  I suspect this is already done implicitly. It would be an interesting exercise to do explicitly–a few more factors included and it could be an interesting analysis for a class.  If lives in developing countries are worth a fraction of what they are in developed countries and money is your concern, you’d be foolish to locate a high-risk industry in a developed, or well regulated developing country.

One of the Hungarians finished and said, “Actually, I do know how much a life is worth.  My uncle was put in prison during the uprising and tortured to death.  The government gave my grandfather $2000, and I remember him saying, ‘So this is what a man’s life is worth.’ ”  Willingness to pay reveals all.