If the world is to reduce its emissions of carbon dioxide by 90 percent, the U.S.—the biggest and most technologically advanced emitter—will gradually eliminate all activity fueled with coal, oil, and natural gas, unless those sources of energy could be engineered to emit virtually no carbon dioxide, or unless a great deal of carbon dioxide could be extracted from the air and stored to offset new emissions. Otherwise, the country would have only as much material production as can be managed with electricity generated in hydroelectric dams, nuclear plants, and alternative energy, such as wind generators and solar power.

Gore says this “really shouldn’t be seen as a partisan issue or even a political issue. It’s a moral issue.”

It should be seen as an economic issue. Achieving such goals will take an extraordinary redeployment of American energy production. In 2006, this was the distribution of the U.S. energy budget by source, according to the U.S. Department of Energy:

Fossil fuels, which are the primary sources of carbon-dioxide emissions, accounted for more than 84 percent of the energy consumed in the U.S. in 2006, which amounted to just under 100 quadrillion British Thermal Units (BTUs, a measure of heat that equalizes statistics about different forms of energy). Replacing that much combustion, or cleansing it of carbon dioxide, is a daunting enough task, but it’s worse than that: Mere replacement allows no room for economic growth without offsetting improvements in energy efficiency.

The United States has already improved its energy efficiency dramatically. In 1970, the country consumed 18,000 BTUs of energy to produce a dollar of GDP (adjusted for inflation, using year-2000 dollars), whereas in 2006 it consumed less than 9,000 BTUs for each dollar of GDP. Partly because energy use was managed well and became more efficient, economic output in those 36 years grew from $3.8 trillion of GDP to $11.4 trillion (also adjusted for inflation using year-2000 dollars.) Even though the energy cost of a dollar of economic output fell 50 percent, energy use rose from 67 quadrillion BTUs to 99 quadrillion BTUs because economic output nearly tripled.

In purely economic terms, this is a problem that other countries would like to have. China, for example, produces about one-tenth as much GDP as the United States and uses nearly as much energy as the United States in doing it. In environmental terms, however, it indicates that the carbon-dioxide emission challenge is insoluble with the technology we have. The more efficient we become, the more we can grow; the more we grow, the more we emit, despite increased efficiency.

With current technology, only deliberate reductions in economic growth can deliver the environmental benefits we would like to achieve from energy efficiency. Without a major change in technology, neither the United States nor any other country can expect to maintain its economic output after doing its fair share to cut fossil-fuel emissions by 90 percent. Much less can the world increase its output to satisfy the aspirations of billions of people.

Set aside any lingering questions about the data and about scientific uncertainty. Accept the worst-case scenarios of global warming, sea-level rising, and resulting problems. If, as Gore said, global warming is a moral issue, it is still necessary to compare the cost of the solutions with the benefits and to understand the costs and benefits of doing nothing.

Would it be more immoral to allow millions of people living on river deltas from Louisiana to Bangladesh to be flooded out or to hold back the industrial development of Asia and Africa and condemn billions of other people to lives of great poverty?

An environmentalist response to this is that Western economic prosperity is too expensive to extend to the rest of the world and is probably not sustainable even in the West over any long period of time. This may be true, but we should not accept it without a fight.

The United Nations says sustainable development is a pattern of development suitable “to meet the needs of the present without compromising the ability of future generations to meet their own needs.”

A good example is forest management: If you want lumber now and in the future, you shouldn’t cut trees faster than they can grow back. But such sensible advice can lead advocates of sustainable development to oppose the consumption of finite resources. That can turn into a mandate to reduce the living standard of the world or the number of people in the world.

Working on this task are international and national councils on sustainable development. The U.S. council was created in 1993, with a mission to advise the president on issues of sustainable development. Its official mission statement declares

“Our vision is of a life-sustaining Earth. We are committed to achievement of a dignified, peaceful, and equitable existence. A sustainable United States will have a growing economy that provides equitable opportunities for satisfying livelihoods and a safe, healthy, high quality of life for current and future generations. Our nation will protect its environment, its natural resource base, and the functions and viability of natural systems on which all life depends.”

The only thing missing is an indication of how this mission can be accomplished.

It’s a good thing for us living today that there was no Council on Sustainable Development in 1830. The council would have seen that America was using up its wood faster than nature could replace the trees. Everybody knew that coal was too difficult to mine by hand and transport by horse and wagon, and nobody wanted the stuff, anyway, because it would not burn well in fireplaces. Nobody knew anything about petroleum, oil burners, or internal-combustion engines. Sustainable development would have required the preservation of our precious forest fuels, reduction of immigration, and careful husbanding of capital to avoid wasteful investment, especially in dangerous ideas like new fireplace grates and steam engines.

Sustainable development must not require frozen development, frozen technology, and frozen brains. Our descendants, whether they live in suburbs or space habitats, will be amused by our pitiful efforts to save some semblance of our way of life for them to enjoy. To them, their way of life will seem superior to ours—just as today ours seems superior to that of the hardscrabble farmers and homespun town folk of 1830. We should be thankful that our ancestors did not presume to impose their way of life on us.

Ecologists have taught for a century and more that everything in the environment is connected to everything else. The Greek root “eco” means household. In ecology, the household is a metaphor for the planet Earth and for its subdivisions. The suffix “-logy” means “the study or knowledge of,” as it does in all the science-naming words—biology, zoology, and so on. Ecologists study the relationships among animals, plants, and microorganisms—connected through the network of predation. Everything eats, and everything is also food for something else, directly or indirectly. The whole relationship creates the conditions in which the entire ecosystem survives beyond the lifespan of its parts.

Economists also find that everything is connected to everything else—through money. In economics, the “eco-” prefix denoting a household is a metaphor for human relationships using money, and the suffix “-nomics” refers to rules, customs, or laws.

The laws of economics are not legislated; they have been formulated from observation—like the way ecologists study biosystems. Consider one of the most important economic laws—the law of supply and demand—and how much it is like certain observations of ecologists.

Because value and wealth arise from scarcity, markets and market prices have evolved to measure the scarcity of things. Prices go up when goods are scarce; they go down when goods are abundant. This is the law of supply and demand, but it really should be known as the law of constantly changing prices: People’s desires change constantly, and a market reflects their changing desires.

In an ecosystem, physical conditions constantly change, benefiting or harming members of the system. Take this oversimplified example: On the plains of Africa, dry conditions may reduce fodder for wildebeests, zebras, and other herbivores. If these animals are weakened, they may become easier prey, reducing the effort carnivores need to sustain themselves and reproduce. Dry weather thus foreshadows a larger population of predators. In the longer run, more predators will consume the excess food supply, which will leave the predators contending for scarce food and reduce their numbers.

Surpluses and deficits are the rule of nature, and so the law of supply and demand is a natural force. The markets humans use to respond to the surpluses and deficits of things with which they seek to sustain themselves are every bit as natural as humans themselves. Friedrich A. Hayek, a great free-market economist of the twentieth century, said that if the market were an invention suddenly brought into being next week, we should hail it as one of the greatest advances in human history. Unfortunately for the political cause of capitalism, markets have existed so long that many people despise them and regard prices set in markets as unnatural and unfair.

Where do market prices come from? Think of another natural process. Think of a cow path, a trail through the woods that leads from a pasture to a pond. Where did the trail come from? Cows tramped it down. Without the power of reason or the ability to communicate, cows agreed on the most desirable route from the pasture to the pond. When cows were first let into the pasture, we may imagine, each cow acted independently and took its own random path to the water. Accidentally, one larger cow, or a group of lucky cows, found a route that was slightly more advantageous. More cows herded together on that route and soon increased the advantage of that route by tramping down undergrowth, learning the places where a cow might stumble and protecting themselves from predators by sticking together in the herd.

People in a herd are more complex: They want more than a good pasture and a drink of water, but like cows, they find they can satisfy their needs and wants in a group.

A student of history might believe that the most common forms of human social organization are bonds imposed by force. From tribes following a strong chief to empires ancient and modern, history is a series of stories rarely relieved by voluntary cooperation. Everywhere in history books, armies collide and conquer. The individuals in the history stories are powerful leaders who forced thousands of anonymous, insignificant persons to accomplish feats worth writing about hundreds of years later. But the great deeds of great numbers of armed men were supported and fed by people who were making their way in life as best they could. Beneath the perception of the emperor, king, or duke were the villages and village markets, organized by necessity and happenstance, which made life a little easier by creating the opportunity for free exchanges enriching both parties.

The armies did not create wealth; they stole it. The specialization and division of labor made possible by markets created wealth.

Some may say that Adam Smith, the eighteenth-century moral philosopher from Glasgow, should not be the central character in a discussion of environmental economics. But society is the human environment and Smith contributed greatly to understanding society. Combining morality and reality made him the first great economist. Smith emphasized the importance of the division of labor as the root of economic progress. He rejected the idea that national wealth was expressed in piles of gold and silver. He stressed above all that national and personal wealth are the result of industriousness and creativity, rather than luck or false dealing.

His enormous book, An Inquiry into the Nature and Causes of the Wealth of Nations, begins in philosophy and psychology with the question: What motivates people? Smith’s answers include, importantly, “the desire of bettering our condition.” People are rarely if ever satisfied with their condition, he observes, and to improve themselves, they naturally trade among themselves, seeking from others what they desire and offering to others what they have but do not esteem.

This is the important difference between the ecological study of natural systems and the economic study of humans and markets. People, capable of reason and prediction, can trade. The closest equivalent to trade that has evolved in nature is the symbiotic relationship, such as the tiny clown fish that eats by cleaning the sea anemone and is in turn protected by the anemone’s tentacles. The difference is that animals don’t choose their ecological relationships. People do choose their economic relationships: They choose what betters their conditions.

Smith tells us that trade completely founded on self-interest can improve the condition of both sides of a trade. Charity and kindness, although morally praiseworthy, are neither as powerful nor as useful as self-interested trade. In a famous passage, he declared: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages. Nobody but a beggar chooses to depend chiefly upon the benevolence of their fellow-citizens.”

As with animals in nature, society is a war of all against all, and at the same time an accidentally cooperative venture in mutual satisfaction. Smith said an individual laboring for himself “neither intends to promote the public interest, nor knows how much he is promoting it.” Nor cares, nor should care, as Smith went on: “By directing his industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.”

Adam Smith considered the division of labor to be the most important principle contributing to the wealth of people and nations. In a famous passage, he talked of the pin industry. When he wrote in the eighteenth century, metal pins were just becoming available to a mass market, and he told the reader how:

“In the way which this business is now carried on, not only is the whole work a peculiar trade, but it is divided into a number of branches, of which the greater part are also peculiar trades. One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds at the top for receiving the head; to make the head requires two or three distinct operations; to put it on is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the paper.... I have seen a small manufactory of this kind where ten men only were employed, and where [each person averaged production of] 4,800 pins a day. But if they had all wrought separately and independently, and without any of them having been educated to this business, they certainly could not each of them make twenty, perhaps not one pin in a day.”

The capitalist pin-factory owner invested his money, energy, insight, and leadership to make ten people vastly more productive together than the ten could be each on their own. It was this extra productivity—and the wages that the productivity could sustain—that drew millions of yeomen and subsistence farmers off the land and into the mills of Europe and America during the next 200 years.

People focused on making a profit must attempt to increase revenues and reduce costs. Reducing costs, however, can take many forms; one common one is shifting a cost onto someone else without compensating them. The cost of generating electricity, for example, includes the cost of fuel, but it should include the cost of scrubbing exhaust gases to avoid harm to others who have no defense against breathing polluted air.

In the long run, our ecological books must balance. Inputs—energy from the sun and material from the dust of local space—eventually must equal outputs. Fossil fuels, for example, are the remnants of solar energy stored by plants hundreds of millions of years ago.

The long run is really long. Global warming and cooling is a process of trapping a little bit more or less solar energy under the atmospheric greenhouse of water vapor, carbon dioxide, and other gases. Over the last million years, the oceans have gone up and down by hundreds of feet dozens of times; glaciers have come and gone; deserts have been made and unmade. Over the last couple hundred million years, continents have been rearranged; mountains have risen higher than the Himalayas and eroded as flat as Kansas.

Species have come, changed, and gone. Climate changed in African jungles a few million years ago, offering a species of ape a chance to take its rudimentary use of tools onto broad plains. The apes prospered, grew smarter, and walked taller. Eventually we ape descendants spread over the entire earth and changed it.

Far more than 90 percent of species known to have existed on earth are extinct. We apes are not responsible for most of the disappearances. Dinosaurs vanished long before we apes tinkered with greenhouse-gas emissions; an asteroid, or a group of them, smashed into the earth and killed nearly everything. Some of the survivors evolved into birds. The dinosaurs vanished, indeed, but the eagle, chicken, and robin are their heirs.

Our technology is changing so quickly that we should not look beyond a century or so. What we cannot do today may well be cheap and easy in 2100.

Every Earth Day we hear calls for so-called sustainable development. This could mean little or no Western-style development for the people of underdeveloped countries because there won’t be the resources or wealth to bring them to Western levels of development. It could condemn hundreds of millions of subsistence farmers to that grim life—and their children, and their children’s children, unto the nth generation.

We apes have been around only a few million years, and we must take a shorter view. If we are going to survive, we must continue to design an environment that suits us. It is up to us to make development sustainable, not to choose only those lifestyles we imagine have naturally infinite possibilities. Nothing does.

It may not be worth investigating too seriously what the limits to growth really may be. If it’s really inescapable that the carrying capacity of Earth for human existence is considerably smaller than today’s population, and that the blessings of a polyester society cannot be extended for the foreseeable future to so many billions of people as are now living, then what?

Eat, drink, and be merry, for tomorrow the human race dies? Whether in a plague, a famine, or a Maoist fit of population control, if our passing is inevitable, the manner of our passing would hardly matter, any more than the exact size of the fatal asteroid mattered to the dinosaurs.

The real limits to growth are the limits of our technology and the limits imposed by our politics. Our investments in energy research and development should be aimed at the creation of new technologies and economic opportunities that people can use to improve their lives. In a primitive place, that could be commissioning the design of a more fuel-efficient wood stove, but only until it’s possible to install electric transmission lines that don’t waste so much power and thus bring the benefits of electricity to more customers at a lower cost.

Here we have to account for profit as well as policy. An honest government investing tax money might commission the stove design, the power lines, or both, based on politicians’ calculation of what will please the citizens. As likely, a crooked government will direct investment capital to officials’ foreign bank accounts, while blaming outside forces for the failure to show results.

Profit, however, is a sterner master. Capital must go where risk-adjusted returns are greatest.

At some times and some places, risk-adjusted returns on investment are illusory. Environmental economists frequently talk of “externalities,” by which they mean costs, such as pollution, that are dumped on the world at large without charge to the person or business doing the dumping. A railroad built across a pasture becomes a danger to the grazing cattle. Farmers may have tried to get the railroad to fence in their right-of-way; this did not always work. In the pre-industrial age, laws dealing with this issue were weak. Always and everywhere laws are weak when lawmakers attempt to impose costs on strong economic institutions. The long struggle to impose environmental regulations on polluters is well known.

Not as well known is another form of collision between private rights and public interests. Those who invest in the harvesting of wild resources may have a private right to do so, but the public interest may lie in limiting that harvest so that it does not go beyond the maximum sustainable yield. Problems arise with particular force when the maximum sustainable yield is not known.

In recent decades, it has begun to look as if overfishing is the natural result of the pursuit of fish. Salmon of the Oregon coast, cod of the Grand Banks, haddock of New England waters, and even lowly pollock, herring, and capelin of the open Atlantic and Pacific oceans are going the way of oysters, rockfish, bluefish, and so many other overfished near-shore species.

The overdevelopment of the North Atlantic fisheries was accomplished with factory trawler ships. The first of these vessels was launched in 1954, a triumph of new technology using nylon nets, net-retrieval ramps, skinning and filleting machines, and freezing machines. The big ship could travel from Europe to the Grand Banks off Newfoundland, fish for a longer period of time, and bring home frozen fish ready for market, of higher value than salt fish or iced fish of dubious freshness.

By 1974, hundreds of such ships existed. They ranged farther into the world’s oceans because the North Atlantic catch had already peaked in 1968. A couple years later, the maritime nations of the world agreed to establish 200-mile exclusion zones out from their coasts, in which only their own fishermen, and any foreigners they might license, could fish.

Facing no competition, fishermen of many countries, including the U.S. and Canada, invested heavily in new boats and equipment. Soon they were overfishing their waters even more thoroughly than foreigners had.

All this is an economic problem called the “tragedy of the commons,” referring to the village fields of the English feudal system. Each villager had an equal right to graze sheep and cows on the village’s common property. Result: Overgrazing. In a 1968 Science Magazine article of that name, Garrett Hardin laid the foundation for an important field in environmental economics.

He summed up the incentives: “Each man is locked into a system that compels him to increase his herd without limit—in a world that is limited. Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons. Freedom in a commons brings ruin to all.”

Compare the fishing vessels to cattle on a common pasture. Compare the fish to blades of grass. The owners of vessels rushed to build new efficient ships to capture the free wealth that swims in the ocean, as the owners of cattle had to increase their herds to capture the free nutrients locked in each blade of grass.

The ecologically economic problem of the commons lies in the private ownership of the means of production and the common ownership—no ownership at all—of the raw material. Ranchers are subject to the same incentive on the range; miners encounter it in a gold rush.

Hardin has asked some of the really hard questions posed by the tragedy of the commons: Would Americans have more or less to eat if we had not commonized the risk of farming through government subsidies? Would our residences be more secure against floods, not built on flood plains, if we had not commonized disaster relief? Will the people in very poor countries ever limit their numbers if rich countries commonize their survival through food aid?

So much sustainability depends on the organization of property. An unmanaged commons invites disaster. A managed commons begs the question of how to select a manager and how to control the manager’s power .

The practical solution to the conflict between private interest and public interest is more private interest. Private enclosure of the commons yields private benefits, private costs, and a profit-and-loss statement.

Many modern people have only a dim idea of the Industrial Revolution, filtered through poet William Blake’s line about “dark, Satanic mills,” and filtered through the misery and poverty portrayed in Charles Dickens’s novels. The story they know is that enclosure of the common pasture drove innocent peasants off the fields and into the mills, that the people of England suffered greatly from the destruction of the old rural way of life and suffered again from the oppression of urban factory bosses. The story implies that rural folk would have been better off if there had never been an Industrial Revolution. Some imagine child labor in factories to have been a greater evil than child labor in the fields. Some imagine poverty in the city to be more unnatural than poverty as a tenant farmer.

Some historians now see that enclosure promoted growth. The conversion of common pasture to wheat fields was one of many ways of increasing yield per acre, which in turn increased rents, which in turn made capitalists out of landlords, which in turn made factory investment possible, which in turn created new wealth and new jobs. Prosperity spread so widely that England’s population nearly doubled from 10.5 million in 1801 to 18.1 million in 1840. More efficient private farming fed the multitude. The tragedy of the English commons became the triumph of the English economy.

We must not imagine that the carrying capacity of the English soil, or the Earth, is like the carrying capacity of a wagon, not only finite but unchangeable. In reality, the Conestoga wagon becomes a Boeing 747, with a different range, speed, and carrying capacity.

Technology and property rights can solve the tragedy of the commons. Even on the ocean, the unlimited right to fish can be turned into the property right to farm. Creation of exclusive economic zones was a good first step and must be taken further. Each country that wants to fish should sell fishing rights. The higher that scarcity drives the price of fish and fish meal, the more that fishermen will bid for the right to catch fish. The funds raised can be used to establish saltwater hatcheries and to develop the technology of mariculture. While international corporations would probably do the job best, even American state governments manage to turn a profit on trout streams and fishing licenses.

The true tragedy of the commons was that feudalism offered no incentive to improve the land. It demanded impossible cooperation from people who could have prospered in competitive freedom.

An environmental policy ordered by profit would tackle current problems. To mention a problem of recent note in the United States, we should change land-use rules to foster development of new towns in areas safe from floods. Paying for new levees and rebuilding parts of New Orleans that are below sea level just engraves an invitation for new environmental disaster.

Against all reason, the federal government has issued new flood regulations that will let people in New Orleans rebuild homes that should never have been built in the first place and reinsure rebuilt homes through renewed federal flood insurance that should never have been issued in the first place.

Some homes that flooded up to their attics are considered eligible for flood insurance if the home sites are raised three feet. Even that inadequate defense will not be required unless the Katrina flood substantially damaged more than half the house. Some two-story homes won’t have to be raised at all.

Amazingly short-sighted city residents and officials greeted the new maps as important good news for New Orleans because so much more of the city can be rebuilt than would have been the case if the maps of flood-prone areas had been more realistic.

Rebuilding New Orleans this way means putting citizens in the middle of another disaster, and it means the next disaster will also be subsidized by the rest of the country. It’s a losing proposition, throwing good money after bad.

The same irresponsible process that built New Orleans and rebuilt it several times is at work in other places. In northern California, a danger point is the city of Sacramento and the river delta between the state capital and the San Francisco Bay. At least 400,000 people live or work in the shadow of levees that engineers say are much less secure than those that protected New Orleans. And the cities of northern California are closing in on each other, with new suburbs proposed for sites as much as 20 feet below water level.

Stopping irresponsible development, or at least refusing to subsidize the insurance that makes it possible, is the most important kind of flood-prevention investment. The distant flood prevention offered by the struggle against global warming is sheer speculation by comparison with the sound investment of preventing foolish development. There is no certainty of a payoff from reducing carbon-dioxide emissions—the planet was warming for 10,000 years before there were any industrial emissions. If industrial emissions were eliminated, the planet might keep warming. Floods, however, follow the law of gravity—they never inundate the high ground. It’s a lot cheaper to move people to high ground before the next flood.

The economy is an ecology, and vice versa. We cannot expect to solve environmental challenges without investing wisely.