Montreal, April 22, 2005 - The best way to promote sustainable development is to remove barriers to free-market forces, according to an Economic Note published today by the Montreal Economic Institute (MEI). Price-distorting subsidies that favour the use of raw materials and environmental regulations that prevent the development of by-products from waste are discouraging innovations in recycling, author Pierre Desrochers concludes.
The view that increased profitability is incompatible with environmental protection is "historically inaccurate … not only are higher profits and a cleaner environment compatible, but much historical evidence suggests that industrial recycling is a long-practised, productive and, indeed, essential element of the market system," writes Desrochers, who is an assistant professor in the Department of Geography at the University of Toronto and Research Associate at the Montreal Economic Institute.
A historical precedent
As the Note reveals, industrial waste recovery has been a developing market since the dawn of the Industrial Revolution. The article cites statements from industrial waste studies dating back to 1862, showing that the private sector was already a dynamic force in industrial recycling long before it was regulated by government.
The pursuit of efficiency is a natural force that drives companies to develop markets for by-products that were once considered waste. Desrochers uses the Oregon pulp and paper industry as an example to illustrate environmentally sound behaviour driven by free-market forces.
"As a society becomes more technologically and commercially advanced, the increased diversity of the technical, managerial and trading capacities of its members will provide for many different ways of turning residuals into resources. Meanwhile, many new and different potential markets for these resources will be created," writes Desrochers.
Titled Reconciling Profits and Sustainable Development: Industrial Waste Recycling in Market Economies, this Economic Note is available on MEI's Website.
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