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The Actuary The magazine of the Institute & Faculty of Actuaries

Sustainable development

With regard to Lawrence Jackson’s article in the October issue, I have little doubt that actuaries can contribute to sensible environmental practices. However, it is first necessary to recognise two facts. First, actuaries have a professional duty to be impartial about important issues such as global warming; in particular they should not assume that official or government-mandated research is itself impartial. (A good start for actuaries would be to conduct a cost-benefit analysis of the WSSD ‘progress’ items mentioned by Mr Jackson at the end of his article).

Second, they should appreciate that environmental problems arise mainly as a result of what economists call externalities – largely because of the vast swathes of land, sea, and air which are not privately owned. The simplest remedy is privatisation which results in internalisation of costs and benefits. (Technical ways of privatising public resources such as sea and even air are arising all the time.) The lack of this is the main reason why there is no GDP allowance for the depletion of coal reserves or costs of fuel pollution, for example.

I would like to commend to the research group a new booklet published by the Institute of Economic Affairs, ‘Climate Alarmism Reconsidered’ by Robert L Bradley Jr; (www.iea.org.uk /record.jsp?type=publication&ID=218).

There are also several books on free market environmentalism. Indeed there is a research organisation, the Centre for Free Market Environmentalism based on the tenets of the superior stewardship and conservation of private property; the website is www.perc.org.