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Muñoz, Lucio, 2023. Sustainability thought 162: Can we transition from the
environmentally dirty economy to the environmental clean economy with the use of dwarf
green markets? If no, why not?, In: CEBEM-REDESMA Boletin, Año 17, Nº 2, La Paz,
Bolivia.
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Sustainability thought 162: Can we transition from the environmentally dirty economy to
the environmental clean economy with the use of dwarf green markets? If no, why not?
By
Lucio Muñoz*
* Independent Qualitative Comparative Researcher / Consultant, Vancouver, BC, Canada Email: munoz@interchange.ubc.ca
Abstract
There is an environmental pollution problem separating the environmentally dirty
economy from the environmentally clean economy; and this is because the environmentally dirty
economy operates through the use of environmental pollution production markets. Since 2012
Rio +20, the world has been using dwarf green markets to manage pollution generation; and this
is because the dwarf green economy works through the use of environmental pollution
management markets, markets that are apparently delinked from the idea of the need to transition
as soon as possible from the environmentally dirty economy to the environmentally clean
economy, a permanent climate change friendly move. And this raises the question: Can we
transition from the environmentally dirty economy to the environmental clean economy with the
use of dwarf green markets? If no, why not?. What are the implications of this? Among the
goals of this paper is to provide answers to all those questions.
Key concepts
Traditional market, Green market, dwarf green market, dirty markets, clean markets,
environmental pollution problem, pollution production market, pollution reduction market,
pollution management market, environmentally dirty economy, environmentally clean economy,
paradigm transition, paradigm shift
Introduction
a) The problem separating environmentally dirty markets from environmentally clean
markets
i) The environmental pollution problem(EPO) in simple terms
The ideal of environmental pollution problem(EPO) separating the environmentally dirty
economy(EDM) from the environmentally clean economy(ECLM) has been pointed out recently
in simple terms(Muñoz 2022) as indicated in Figure 1 below:
Figure 1 above tells us that there is an environmental pollution problem(EPO) separating
the environmentally dirty economy(EDM) from the environmentally clean economy(ECLM);
and therefore, to live under an environmentally clean market(ECLM) we need to get rid of the
pollution production markets(PPM) like the environmentally dirty market(EDM). In other
words, Figure 1 above indicates that we need to eliminate the environmental pollution
problem(EPO) generated by the environmentally dirty market(EDM) fully to transform it into the
environmentally clean market(ECLM), which means that the most climate change friendly action
humanity can take is to transition to an environmental pollution free world under
environmentally clean markets(ECLM).
ii) The environmental pollution problem(EPO) graphically
We can transform the information in Figure 1 into graphical information in terms of
supply and demand of the environmentally dirty market(EDM) as summarized in Figure 2
below:
Figure 2 above tells us the following: i) that there is a environmentally dirty
market(EDM) at point 1 where the environmentally dirty supply(EDMS) meets the
environmentally dirty demand D determining the environmentally dirty market quantity(EDMQ)
to be produced and consumed at the environmentally dirty market price EDMP; ii) that this
market generates environmental pollution EPO going from point 1 to point 4; and iii) that as long
as this pollution generation problem(EPO) exist there will be no environmentally clean
markets(ECLM). Hence, the best climate change friendly policy based on Figure 2 above is to
eliminate the environmental pollution problem(EPO) generated by the environmentally dirty
market(EDM) at point 1 to transition it towards the environmentally clean economy(ECLM).
iii) The expansion of the environmental pollution(EPO) generation problem
If the environmentally dirty market expands from EDM to EDM1 because there is a
decrease in the environmentally dirty market price from EDMP to EDMP1, then the
environmentally dirty market supply will shift from EDMS to EDMS1 expanding pollution
levels as indicated in Figure 3 below:
We can see in Figure 3 above that when the environmentally dirty market expands from
point 1 to point 2 the pollution problem(EPO) expands from point 4 to point 1 to point 4 to point
2 as the new environmental pollution problem(NEPO) is greater than the original environmental
pollution problem(EPO) so that NEPO > EPO by the distance from point 1 to point 2 represented
by the blue arrow. In other words, as the environmentally dirty market(EDM) expands more
environmental pollution(EPO) is generated.
b) Ways of dealing with the environmental pollution(EPO) problem
There are two possible ways of addressing the environmental pollution problem(EPO),
one is through setting up environmental pollution management markets(EPOMM) if we just
want to patch the pollution generation problem and live permanently under them; and the other
one is setting up environmental pollution reduction markets(EPORM) if we want to fully fix the
pollution problem and transitioning it to the environmentally clean economy(ECLM), which are
summarized in Figure 4 below:
We can see in Figure 4 above that environmental pollution management
markets(EPOMM) deal with a portion of the pollution generation problem(EPO) created by the
environmentally dirty market(EDM) while environmental pollution reduction markets(EPORM)
deal with the whole of the environmental pollution problem(EPO) through problem
internalization. In other words, environmental pollution management markets(EPOMM)
addresses the environmental pollution generation problem(EPO) through pollution management
theory where, once markets are in place, pollution reduction is not a profitable business
incentive as pollution management costs are set externally while environmental pollution
reduction markets(EPORM) deal with the environmentally pollution problem through perfect
pollution reduction market theory where, once markets are in place, pollution reduction is an
excellent business opportunity as it leads to producing at the lowest pollution reduction market
price possible.
c) Dealing with the environmental pollution problem though dwarf green markets
Since the 2012 Rio + 20 conference(UNCSD 2012a; UNCSD 2012b) a process of green
market paradigm shift avoidance has been taken place as dwarf green markets(DGM) are being
used as environmental pollution management markets(EPOMM), where the environmental
pollution problem(EPO) generated by the environmentally dirty market(EDM) is being patched
with the use of dwarf green markets as indicated in Figure 5 below:
Figure 5 above indicates that dwarf green markets(DGM) are being used to manage the
environmental problem(EPO) generated by the environmentally dirty market(EDM) as pollution
generation takes place. Notice that the structure of the environmentally dirty market(EDM) in
Figure 5 above is similar to the market structure of the environmentally dirty traditional
market(ETM) of Adam Smith(Smith 1776) when under social externality neutrality assumptions
so that EDM = ETM, which means that there is an environmental pollution problem(EPO)
separating the environmentally dirty traditional market(ETM) from the environmentally clean
market(ECLM), and this means too that the environmentally dirty traditional market(ETM) can
also be patched with the use of dwarf green markets(DGM).
d) The need to understand whether or not we can transition to the environmentally clean
economy through the use of dwarf green markets
In summary, based on the discussion above there is an environmental pollution problem
separating the environmentally dirty economy from the environmentally clean economy; and this
is because the environmentally dirty economy operates through the use of environmental
pollution production markets. Since 2012 Rio +20(UNCSD 2012a: UNCSD 2012b), the world
has been using dwarf green markets to manage the environmental pollution generation problem
highlighted in 1987 by the Brundtland Commission(WCED 1987); and this is because the dwarf
green economy works through the use of environmental pollution management markets, markets
that are apparently delinked from the idea of the need to transition as soon as possible from the
environmentally dirty economy to the environmentally clean economy and which work in
opposite ways as perfect green markets do(Muñoz 2016; Muñoz 2019). And this raises the
question: Can we transition from the environmentally dirty economy to the environmental clean
economy with the use of dwarf green markets? If no, why not?. What are the implications of
this? Among the goals of this paper is to provide answers to all those questions.
Goals of this paper
a) To highlight how dwarf green markets works in framework form and graphically; b)
To point out how the expansion of dwarf green markets work analytically and graphically; c) To
stress the structure of the problem of that comes along when leading humanity to living inside
the environmentally dirty economy under environmental pollution management and climate
change permanently with no way to transition to the environmentally clean economy; and d) To
share the structure of the future of humanity under permanent bearable climate change in the
eyes of those keeping the environmentally dirty economy alive.
Methodology
First the terminology used in this paper is shared. Second, the working of the dwarf
green market is shared in Figure and its nature described. Third, the working of the dwarf green
market is pointed out graphically and its implications stressed. Fourth, the working of dwarf
green markets under environmental pollution management expansion is indicated in detail as
well as its main implications. Fifth, the structure of the world under permanent dwarf green
market based climate change dynamics with no way to transition to environmentally clean
markets is presented and its implications discussed. Sixth, the structure of a world under
permanent bearable climate change as apparently envisioned by those keeping the
environmentally dirty economy alive is indicated as well as its implications. And finally, some
food for thoughts and relevant conclusions are listed.
Terminology
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TM = The traditional market GM = The green market
EDM = The environmentally dirty market PO = Pollution problem
EPO = Environmental pollution problem E[C] = Environmental cost externalization
I[c] = Environmental cost internalization CLM = The clean market
EPORM = Environmental pollution reduction market DM = The dirty market
ECLM = Environmentally clean market DGM = Dwarf green market
POPM = Pollution production markets EPOPM = Environmental pollution production market
PORM = Pollution reduction markets EPORM = Environmental pollution reduction markets
RPO = Remaining pollution problem REPO = Remaining environmental pollution problem
NEPO = New environmental problem DGMP = Dwarf green market price
GMP = Green market price EM = Environmental margin
TMP = Traditional market price EDMP = Environmentally dirty market price
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Operational concepts, relevant market structures and externalization and internalization
rules
A) Operational concepts
1) Science, the world based on the scientific truth, this world falls if invalidated.
2) Ideology, the world based on the non-scientific truth, this world will tend to persist even if
invalidated.
3) The theory-practice general consistency principle, the world where the theory of the model
must match the practice.
4) The different model general inconsistency principle, the world where the theory and
practice of different models are inconsistent with each other.
5) Academic facts, the science based truth.
6) Alternative academic facts, the non-science based truth.
7) Academic blindness, the inability to see academic facts due to the existence of knowledge
gaps, paradigm shift based or otherwise.
8) Willful academic blindness, the willingness to ignore academic facts and consensus.
9) Sustainability, the world where the interplay of sustainability theory and sustainability
practice is aimed at fixing or correcting embedded externality problems.
10) Sustainable development, the world where the interplay of sustainable development theory
and sustainable development practice is aimed at patching or managing embedded externality
problems.
11) Academic integrity, the duty to respect and defend academic facts and consensus.
12) Golden paradigm, one that does not creates abnormalities.
13) Flawed paradigm, one that creates abnormalities.
14) Kuhn’s loop, the science based mechanism that leads to paradigm shift through abnormality
correction.
15) Dirty economy, a pollution based economy.
16) Clean economy, a pollution less based economy.
17) Red Marxism, capitalism need to be replaced as it is destroying societies.
18) Green Marxism, dwarf green capitalism must be replaced as it is destroying nature.
19) The red socialism market, the social justice and equality based market.
20) The green socialism market, the environmental justice and equality based market.
21) Green capitalism, capitalism supported by green markets.
22) Dwarf green capitalism, capitalism supported by dwarf green markets.
23) Traditional market, the market cleared by the traditional market price.
24) Green market, the market cleared by the green market price.
25) Red market, the market cleared by the red market price.
26) Pollution production market, a market operating under distorted market pricing.
27) Environmental pollution production market, a market operating under environmentally
distorted market pricing
26) Pollution reduction market, a market operating under a corrected distorted market price.
27) Environmental pollution reduction market, a market operating under an environmentally
corrected distorted market price.
28) Pollution management market, a market operating at a pollution management cost led
market price.
29) Environmental pollution management market, a market operating at an environmental
pollution cost led market price.
30) Sustainability market, the one cleared by the sustainability market price.
31) Dwarf green market, the market cleared by the dwarf green market price.
B) Relevant market structures
If we have the following: a = social abnormality, c = environmental abnormality, A =
dominant society, C = dominant environment, and B = the dominant economy, then the structure
of relevant markets can be stated as indicated below:
1) The traditional market as a golden model
i) TM = B
Under externality neutrality assumptions the traditional market TM in section i) above is
a golden paradigm, it produces no abnormalities.
2) The traditional market under social abnormalities(a)
ii) TM = aB
Under no social externality neutrality assumptions, the traditional market TM in section
ii) above produces social abnormalities “a”. It is a flawed paradigm as it has social abnormalities
to correct.
3) The traditional market under environmental abnormalities(c)
iii) TM = Bc
Under no environmental externality neutrality assumptions, the traditional market TM in
section iii) above produces environmental abnormalities “c”. It is a flawed paradigm as it has
environmental externalities to correct.
4) The traditional market under socio-environmental abnormalities(ac)
iv) TM = aBc
Under no socio-environmental externality neutrality assumptions, the traditional market
TM in section iv) above produces socio-environmental abnormalities “ac”. It is a flawed
paradigm as it has social and environmental externalities to correct.
5) The red market under environmental abnormalities(c)
v) RM = ABc
Under no environmental externality assumptions, the red market RM in section v) above
produces environmental abnormalities. It is a flawed paradigm as it has environmental
externalities to correct. Notice that in the red market RM, both society(A) and economy(B) are in
dominant form.
6) The green market under social abnormalities(a)
vi) GM = aBC
Under no social externality assumptions, the green market GM in section vi) above
produces social abnormalities. It is a flawed paradigm as it has social externalities to correct.
Notice that in the green market GM, both the economy(B) and the environment(C) are in
dominant form.
7) The sustainability market has no abnormalities
vii) SM = ABC
The sustainability market SM in section vii) above produces no abnormalities as all
components are in dominant form since all components are now endogenous to the model. It is a
golden paradigm as it has no abnormalities to correct.
C) Abnormality externalization and internalization rules
If y, x, z are three abnormalities and Y, X, Z are the corrected variables and if E[ ] =
externalization and I[ ] = internalization, then the following holds true:
a) E[Y] = y b) E[X] = x c) E[Z] = z
d) I[y] = Y e) I[x] = X f) I[z] = Z
g) I[E[Y]] = Y h) E[I[y]] = y i) E[YX] = yx
The working of the dwarf green market in simple terms
If we insert the dwarf green market solutions(DGM) in Figure 5 above between the
environmentally dirty market(EDM) and the environmental pollution problem(EPO) it generates
we can see how the environmental pollution management framework works in simple terms, as
shown in Figure 6 below:
Figure 6 above helps us to see the following: i) the dwarf green market(DGM) manages a
portion of the total environmental pollution EPOM as indicated by the green arrow from EDM to
DGM while still externalizing the remaining portion of pollution generated REPO as indicated
by the green arrow from DGM to REPO; ii) this means that there is still a remaining
environmental pollution problem(REPO) separating the environmentally dirty market(EDM)
under pollution management from the environmentally clean economy(ECLM); and iii) this
therefore indicates that the dwarf green market(DGM) breaks the environmental pollution
problem(EPO) into pollution under management(EPOM) and remaining environmental
pollution(REPO), where EPO = EPOM + REPO and where EPOM < REPO. In other words,
Figure 6 above highlights that there is still a remaining environmental pollution problem(REPO)
affecting the sustainability of dwarf green markets and of climate change objectives as costs that
are externalized are costs that are not accounted for.
The working of the dwarf green markets graphically
We can transform the information in Figure 6 above into graphical information as shown
in Figure 7 below:
We can extract the following relevant information from Figure 7 above: i) At point 1 we
have environmentally dirty market(EDM) where the environmentally dirty supply EDMS meets
the demand D at the environmentally dirty market price EDMP; ii) At point 1 we have the
environmental problem(EPO) generated by the environmentally dirty market(EDM) as indicated
by the black arrow that goes from point 1 to point 4; iii) At point 3 we have the dwarf green
market(DGM) where the dwarf green market supply DGMS meets the demand D at the dwarf
green market price DGMP; iv) At point 3 a portion of the environmental pollution(EPOM) is
being managed while the remaining environmental pollution(REPO) is still being externalized;
iv) If the environmentally dirty market(EDM) is placed under dwarf green markets(DGM) to
manage a portion of the pollution generated(EPOM) then it shifts from point 1 to point 3 as
indicated by the blue arrow; and v) hence when setting up dwarf green markets(DGM) we still
leave active the remaining environmental pollution problem(REPO) preventing the dwarf green
markets(DGM) or the environmentally dirty market under environmental pollution management
to tend towards environmentally clean markets(ECLM).
The working of dwarf green markets under pollution management expansions
If we expand environmental pollution management consistent with the situation in Figure
7 above, then the environmental pollution cost associated with the dwarf green market or dwarf
green market cost margin(DEM) increases leading to a higher dwarf green market price and to
decreases in production and consumption and therefore, decreases in environmental pollution as
indicated in Figure 8 below:
We can appreciate in Figure 8 above the following: i) that when we expand the dwarf
green market(DGM) from point 3 to point 5 as a result of an increased in the pollution
management cost leading to a dwarf green market price increase from DGMP to DGMP1 we are
then reducing environmental pollution from point 3 to point 5 as indicated by the red arrow while
still leaving a remaining environmental pollution problem(REPO1) as indicated by the red arrow
from point 5 to point 4; ii) that the dwarf market price increase due to the increase in the
pollution management cost leads to a reduction in production and consumption from DGMQ to
DGMQ1, which corresponds to the decrease in environmental pollution from point 3 to point 5;
and iii) that as there will be a remaining environmental problem(REPO1) at the dwarf green
market(DGM1) located at point 5 and this problem will continue to affect its sustainability. We
can also see in Figure 8 above that the environmental pollution problem(EPO) generated by the
environmentally dirty market(EDM) at point 1 is greater than the remaining environmental
problem of the first dwarf green market(DGM) at point 3, which is greater in turn than the
remaining environmental problem of the second dwarf green market(DGM1) at point 5 so that
EPO > REPO > REPO1 as environmental pollution management expands.
Implication:
There will always be a remaining environmental pollution problem preventing dwarf
green markets or the environmental dirty markets under environmental pollution management
from ever becoming environmentally clean markets.
The nature of the problem of leading humanity to living inside the environmentally dirty
economy under environmental pollution management or dwarf green markets
When the decision that was made in 2012 Rio + 20(UNCSD 2012a: UNCSD 2012b) led
not to green markets, but to dwarf green markets, then that decision meant a future for humanity
under climate change with minimal emissions in ways unconnected with the remaining
environmental pollution problem(REPO) created in the process and delinked from the need to
one day transition to the environmentally clean economy as indicated in Figure 9 below:
We can clearly see in Figure 9 above that keeping the environmentally dirty
economy(EDM) alive through the use of dwarf green markets(DGM) to manage some of the
pollution problem(EPOM) created moves the world towards climate change in a way which has
no transition path to environmentally clean economies(ECLM) as remaining environmental
pollution(REPO) is still being externalized as indicated by the green arrow from DGM to REPO,
which keeps the dwarf green market delinked from the environmentally clean economy(ECLM)
as shown by broken green arrow from REPO to ECLM. Hence, the remaining environmental
problem(REPO) affects the sustainability of the dwarf green market(DGM) or of the
environmentally dirty market(EDM) under environmental pollution management and of climate
change plans in ways that can never lead to a world under environmentally clean
economies(ECLM) as indicated by the broken arrow from REPO to ECLM in Figure 9 above.
The future of humanity in the eyes of those keeping the dirty economy alive
As climate change events and impacts became more severe and common since
environmental pollution has still been increasing under dwarf green market management since
2012, a fact consistent with the expectation of the remaining environmental pollution
problem(REPO) created when setting up dwarf green markets now actions and policies have
been directed at climate change mitigation, adaptation, and resiliance, including during COP27
when a climate change fund to help less developed countries to bear the consequences of climate
change has now been established(UNFCCC 2022), which means that attention has been given to
create a world under permanent bearable climate change, a world summarized in Figure 10
below:
We can clearly appreciate in Figure 10 above the following: i) that those who decided to
keep the environmentally dirty economy(EDM) alive through the use of dwarf green
markets(DGM) to manage some of the pollution problem(EPOM) created are attempting to bring
the world towards permanent bearable climate change in a way that has no transition path to
environmentally clean economies(ECLM) as remaining environmental pollution(REPO) is still
being externalized and it will continue to be externalized; and ii) this means that environmentally
clean economies(ECLM) will never see the day in a world where a portion of the environmental
pollution associated with business activity is being managed while the rest is being externalized
as an ongoing remaining environmental pollution problem(REPO). A disconnect indicated by the
broken green arrow from REPO to ECLM. Hence, a transition from the environmentally dirty
market(EDM) to the environmentally clean market(ECLM) through the use of dwarf green
markets(DGM) is not possible as indicated in Figure 10 above as there will always be a
remaining environmental pollution problem blocking that transition.
Food for thoughts
a) In the world of perfect green markets, are green producers and green consumers
leaders in development? I think Yes, what do you think?; b) In the world of dwarf green markets,
are dwarf producers and dwarf consumers followers in development? I think Yes, what do you
think?; and c) In the world of perfect traditional markets, are traditional producers and traditional
consumers leaders in development? I think Yes, what do you think?
Conclusions
First, it was shown by mean of Figure and graphs that when we set up dwarf green
markets there still remains a remaining environmental pollution problem keeping it unconnected
to the transition path towards environmentally clean markets. Second, it was pointed out that as
dwarf green markets expand due to an increase in the pollution management cost dwarf
production and dwarf consumption, and therefore environmental pollution fall, but there still
remains an environmental pollution problem preventing it from ever taking the form of an
environmentally clean economy on its own. Third, it was indicated that when the decision was
made in 2012 to go dwarf green market to address the environmental pollution problem as it is
being generated that meant bringing humanity through a permanent pollution generation-climate
change process disconnected from the path towards an environmentally clean economy. And
finally, it was stressed that as environmental pollution has continued to increase under pollution
management decisions makers apparently are leading humanity towards a world of permanent
but bearable climate change as they have been enacting and implementing policies for
adaptation, mitigation, resilience, and monetary help, an approach disconnected from perfect
green market theory and with the need to transition to the environmentally clean economy. In
general, it was shown that we cannot transition the environmentally dirty economy to the
environmentally clean economy using dwarf green markets because the use of dwarf green
markets stills leaves active a remaining environmental pollution problem affecting its
sustainability and affecting climate change plans.
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Citation:
Muñoz, Lucio, 2023. Sustainability thought 162: Can we transition from the
environmentally dirty economy to the environmental clean economy with the use of dwarf
green markets? If no, why not?, In: CEBEM-REDESMA Boletin, Año 17, Nº 2, La Paz,
Bolivia.