Paying for the environmental damage they do would render global industries unprofitable overnight

The externalities are massive.

Grist's David Roberts reports on a paper produced by environmental consultancy Trucost, which assess the value of the externalities used by the world's industries, and comes to an astonishing conclusion:

Of the top 20 region-sectors ranked by environmental impacts, none would be profitable if environmental costs were fully integrated. Ponder that for a moment. None of the world’s top industrial sectors would be profitable if they were paying their full freight. None!

Backtracking a bit. An externality is a cost or benefit of production which is not internalised into the cost of production. If I use electricity to make widgets, I have to pay for it; but if I "use" the atmosphere to make widgets, by releasing pollution into it, then I don't have to pay a dime.

What that means is that the standard logic of the free market – that voluntary transactions will always make everyone better off – breaks down. If I make £1 profit from each widget I produce, but cause £2 of damage to the environment, then my incentive is to keep pumping out widgets, even though there's a net loss of £1 to the world for every one I make.

The standard economic response to this problem is to call for externalities to be "priced in". If I have to pay the £2 damage that my pollution causes, I won't make widgets until I clean up the production process.

That is the logic behind calls for a carbon tax, but it actually applies to a lot of environmental problems. The Trucost paper looks at water use, land use, air pollution, land and water pollution, and waste as well as just greenhouse gas emissions, and puts a cost on each of them. And when it does, it finds that a lot of industries might not be profitable if they had to pay the full cost of what they do:

(Click to embiggen)

Coal power generation in Eastern Asia, which generates revenues of $443.1bn, has a natural capital cost of $452.8bn (that's unpriced natural capital – the report already takes into account the various ways in which industries are forced to price in their externalities), largely due to greenhouse gases. Cattle ranching in South America, with revenues of $16.6bn, has capital cost of $353.8bn, due to the unpriced cost of land use. And so on.

You can quibble the figures – and doubtless many will – but what is clear is they are large. Really, really large. Many of the biggest industries in the world can only exist because they don't have to pay the true environmental cost of what they do. The word "unsustainable" is thrown around too much these days, but it seems to fit here.

Argentine Cattle. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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I'm a Remain voter who feels optimistic about Brexit - here's why

Take back control is more than just a slogan. 

Most politics geeks have found themselves deliciously sucked into a soap opera over the last few days. It’s fast-paced, personality-based and ripe for speculation. But underneath it all, the deeper, harder questions remain – what does Brexit look like, and how can we make it work?

When news of Leave’s victory broke in the early hours of Friday morning (is it possible that was just a week ago?) I felt like the only Remain voter who had some kind of optimism. Fellow Remainers still reeling from the result berate me for it, but I continue to find two reasons for hope.

First, leaving gives us a chance to build a different type of economy. I don’t wish to belittle the recent economic fallout, but with the right leadership and negotiations, we could use this moment to push for an increase in trade with the Commonwealth and beyond. A fall in the pound will disappoint many, but it could help with a much needed rebalancing of our economy, moving from one predominantly based on financial services in London to manufacturing across the regions. 

Second – and perhaps more importantly – leaving is a chance to rebuild our politics. For too long, millions of people in this country have felt ignored or exploited by those who call themselves democratic leaders. In protest, they have left mainstream parties to join UKIP or the hordes of non-voters. In winning this referendum, they have finally been listened to. Perhaps the pressure cooker of discontent can finally be taken off the boil. Perhaps parties can use this result as a chance to rebuild trust and shake up some of our other institutions that are badly in need of reform. 

This point was really brought home to me by a student in the school where I teach. The morning of the referendum she told me that she didn’t think we’d leave the EU, even if the people voted for it. Her friends agreed, saying it was “weird you have to vote in pencil”. They were scared the people’s voice could so easily be rubbed out. When I saw her the next day, a small part of me was relieved that these students had seen that people can genuinely trump the establishment. 

If you’re not convinced, just imagine the backlash if Remain had won by a point or two. We almost certainly would then have voted in an extremely right-wing government, much the same way that the SNP saw a boost after they lost the independence referendum last year. 

Of course, a positive path for Brexit is far from guaranteed. Any leader that goes back on the vote, or tries to fudge it by saying that open borders are a price worth paying, is going to do worse than plummet in the polls - they are going to undermine our entire democracy. And a whole generation’s trust in politicians is already dangerously low.

But this doesn’t have to be a moment for the right. Good leaders understand that Leave’s “take back control” message was about a genuine concern with our borders. Great leaders will acknowledge that it also reflected a deeper concern about the need for agency. They understand the vote was a rejection of a neoliberal approach to the economy that fails to make space for well-paid work, family and community.

The public voted for decreased pressure on public services and a Britain that would negotiate as hard in India as it would in Germany for trade deals. They voted to end a perceived overcentralisation of power by elites, and create a more democratic Britain that gives more dignity to its people. I might not have believed that leaving the EU was the best way to achieve these things, but I’m on the left because I believe we are best placed to make these desires real.  

The vote to Leave or Remain was a binary decision. But Brexit is not. What type of path we take now depends entirely on the direction we choose, and the perseverance we show along the way.

Rowenna Davis is Labour PPC for Southampton Itchen and a councillor for Peckham