A good decision is based on knowledge and not on numbers.
Plato
This post presents a gentle meander around some of the issues and ideas generated by our modest proposal to explore an Initial Public Offering (IPO) for the Earth, an EPO.
The post represents a snap shot of our thinking – it does not raise or answer every question associated with the idea. I should also stress that it does not represent a wish for the private ownership of the Earth – merely a thought experiment on the nature and fitness of financial markets to value our home and our common futures.
While many may find this at best distasteful, we should have no illusions here, economies are currently getting on with doing what economies do while placing little or no value on natural capital and a positive future for a growing global population.
Conversations with financial experts
Over the last few years I have had the pleasure of being able to share some of my more leftfield thoughts on the adequacy of the financial system for valuing the things that are important to us all with a number of people working at the very heart of that system.
Through their generosity and patience I have been able to ask my deliberately naive, wide-eyed questions about why the world is as it is and not how it might be.
Some of these conversations have focussed upon the apparent absurdity of how the financial system is able to value private entities but not the common wealth and property that allows those private entities to exist in the first place – the Earth.
These conversations gave rise to our admittedly blackly comic plans to explore an Initial Public Offering (IPO) for the Earth, an EPO.
The EPO seeks to explore the following question:
“Is the earth a good investment opportunity?”
Why an IPO for the Earth?
Put simply, the EPO is a way of highlighting the strengths and weaknesses of the current economic and financial system to value the ability of the Earth to sustain life and, through that valuation, to prioritise investment in the Earth’s capacity to thrive and support us and other species over the long term.
Current economic and financial models struggle hugely with the challenge of prioritising behaviour which is innately and fundamentally sustainable. To a large extent this relates to the concept of environmental and social externalities.
Externalities occur when the market price for a good or service does not fully reflect the total costs (and benefits) which actually accrue.
In environmental and social terms, many externalities derive from the founding principles of modern economics, which tended to treat resources as “free goods” and effectively limitless.
Such costs are definitively “real” but are not priced in to the risks, operating costs or share price of companies. They often appear on “social or ecological balance sheets” but not on economic balance sheets and may indeed lie across the balance sheets of many actors and entities.
Solving the problem of externalities at one stroke?
The EPO is designed to wipe out the very concept of externalities by making it impossible for anything to take place off-balance sheet, as the balance sheet of the Earth would reflect all economic activity – simple!
Problems with an EPO
There are, of course, a number of (possibly fundamental) challenges with conducting an EPO.
An alternative Earth?
One of the experts with whom I initially discussed the concept of an EPO with responded that the process (to adequately value the planet as a going concern) could only be properly conducted if another Earth existed as an alternative assessment by which to conduct the primary valuation.
This is a key part of a normal IPO process, where the underwriters and coordinators of the proposed IPOs (investment banks) would present a valuation of the property in question through a comparison with multiples (relevant measures of value e.g. Price to Earnings, EBITDA etc) assigned to comparable traded companies.
This is clearly a problem for an IPO of the Earth, there are no comparable properties so how could we possibly start to price a share?
It would be rather absurd though, if we were unable to value our only home just because it is our only home. Surely there should be a difference between priceless and worthless.
Who is selling and who is buying?
These are issues we have some interesting thoughts on but no hard and fast answers as yet, the following questions do come mind though:
- What are our birthrights as human beings and shouldn’t we also have “Earthrights” – an inalienable right to a stake in our home planet?
- Are humans the only potential shareholders of the Earth?
- What rights should shareholder status bestow?
- What obligations should shareholder status bestow?
- Should it be impossible to trade Earth Shares?
A blatant corporatisation of the Earth?
The EPO could, of course, be interpreted as ushering in the idea that the Earth is simply a property to be commoditised and sold off to the highest bidders.
However, the problem is that this is pretty much exactly what is happening now. We have an almost unfettered market in the buying and selling of vital and strategic resources by both sovereign entities and private interests.
Rather than provide a pathway to global corporatisation, our purposes are as follows:
- to explore, examine and challenge the value of the Earth and why this is not reflected in the current economy and;
- to make a solid first principles and economic argument for significant maintenance and re-investment in the natural and human capital that allows the ship of capitalism to stay afloat.
Management objectives for the EPO
Like any good strategic objectives, those of the Earth should be simple to express and to evaluate. Ours are as follows, shared with our wider Towards 9 Billion concept:
“For the Earth, over the next 40 (ish) years to 2050, to deliver the following:
- Healthy and thriving ecosystems.
- A global human population of 9 billion capable citizens.”
Our plans for the EPO
We are committed to exploring how this concept may stimulate creative and innovative thinking in valuing and prioritising a sustainable future for our species and for the planet as a whole.
We believe that it makes overwhelming sense to connect the viability of our social, economic and industrial models to the viability of our home planet.
We are working to explore the idea with potential partners, funders and free thinkers and welcome all constructive support and help with those that find the idea of interest.
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