Putting an economic value on environmental costs, viable?

In the previous post, we talked about how development could be natural. However, not everything that occurs naturally are good. Things seem to go wrong when economic values are attached to the resources. For instance, rubber trees used to be of little economic value before people knew how to collect latex. Thereafter, capitalists start destroying natural forested areas to make way for rubber tree plantations. Introducing and using biofuels as a major energy source will only increase value of certain crops (first and second generation mainly), exacerbating artificial selection. In the past, humans may not have realised the possible environmental nor social consequences of human activities thus values of a product only comprise of commercial marketable value. Today, externalities such as social and environmental costs can be calculated and included in official financial accounts via costs of ecosystem services as people increasingly see the importance of sustainable development. Including socio-environmental costs into the capitalist system is a great idea since it has always been missing in the capitalist equation. Hence, the increasing attention given to biofuels can be attributed to this new holistic accounting method. However, there are a few problems associated with it. How do we know if the environmental values are ‘correct’? Are we able to accurately to translate socio-environmental values such as ‘lesser carbon footprint’ into economic values that can be included in the calculation of traditional economic accounts? Putting aside the technical problems, let us take a look at the practical problems. Is it actually viable to capitalise on the social and environmental aspect of anything? In the capitalist world, there has to be revenue, costs and self-interested capitalists who strive to maximise profits. Social and environmental costs can be calculated but private firms are not interested as the benefits (revenue) are non-excludable. In other words, firms will be incurring higher costs which benefit the society as a whole and not oneself. There is no incentive for a capitalist, whose primary aim is to maximise profits, to include such costs. In other words, traditional economic and capitalist ideas are still deeply ingrained in the international market. Then why are biofuels gaining so much attention from the LDCs such as Malaysia and Indonesia who wants to become major biofuels powers?Even though biofuels are often marketed as environmentally friendly fuels, capitalists are intrigued by other characteristics of biofuels – renewability and low costs of production. Being renewable means that it will never run out unlike coal or fossil fuels, so producers worry less about volatile prices of biofuels. On top of that, unlike other renewable resources, biofuels can be assimilated into the current energy supply chain with minimal technical adjustment hence have much lower costs comparted to renewable energy such as hydroelectric, wind or nuclear energy where power plants and infrastructure has to be built from scratch. In other words, socio-environmental accounting has little significance in affecting the biofuels market, which essentially still is driven by traditional economic factors.