Question: In your opinion, what are the main drawbacks of current research in the economics and management of pollution control?
Fouad El Ouardighi. The economics and management of pollution control, as two distinct fields of research, incur drawbacks of different natures. In the economics of pollution control, we observe i) a persistent lack of interdisciplinarity within the literaturein that environmental sciences are not included in the modeling of the pollution accumulation process, and ii) a long-standing lack of a global perspective concerning the most important interactions between environmental issues and renewable natural resources harvesting and their consequences on the modeling of pollution accumulation. In the management of pollution control, we observe i) a lack of farsightedness, where the future impact of current emissions is not considered in the modeling of pollution issues, and ii) excess optimism stemming from ignorance of the environmental facts and/or from underlying ideological influences.
Question: What new approach does your new book suggest for addressing environmental issues?
Fouad El Ouardighi. On the one hand, the book suggests an economic model that accounts for the mostly well-established results from the environmental sciences literature on the economic modeling of the pollution accumulation process. These results imply that natural pollution sinks can switch to pollution sources when the pollution stock is large enough. Our economic model accounts for this fact and therefore puts into perspective the emphasis placed on a drastic reduction of emissions. A drastic reduction of emissions is not possible in the short run because the decoupling between economic growth and annual emissions occurs at a relatively sluggish pace in most countries. The main reasons for this slowness include both the exorbitant cost of technological transition to more environmentally friendly economic processes and the difficulty of imposing socially fair carbon sobriety on the populations concerned. Nor is the drastic reduction sufficient in the long run because of the vulnerable state of the natural pollutions sinks and the need for rapid actions to enhance their resilience. As a result, we observe that the reduction of emissions in many countries nevertheless results in increased pollution accumulation. Why? Because the natural pollution sinks are deteriorating more rapidly than the emissions decrease. It has been shown that if anthropic emissions were to stop now, the biosphere would return to its preindustrial state only after a time interval ranging between 1 and 10 centuries. This means that restoring the natural pollution sinks is at least as important as reducing emissions. The restoration of pollution sinks, which should not be confused with geo-engineering, is a main priority because it can improve global carbon absorption capacity by approximately 25%. There is obviously no serious restoration without protecting existing natural pollution sinks, yet action on this issue has been relatively slow. The case of peatlands is illustrative: they cover only around 3% of the Earth's land (forests cover about 31%) but store an estimated 500 to 600 gigatons of carbon, about twice as much as all the world’s forests combined. Once degraded, the 12 to 15% of drained peatlands under human use release 5 to 6% of global anthropic emissions per year, more than aviation and shipping together. To address this, the EU finally adopted the Nature Restoration Law in 2024, requiring member states to restore 30% of drained agricultural peatlands by 2030, rising to 50% by 2050, with national restoration plans to be submitted only by 2026.
These facts led us to establish a simple and widely acceptable definition of sustainability: sustainability refers to a stable state of the biosphere in which pollution sinks cannot turn into pollution sources. This definition is valid at both local (firms) and global (nations) decision-making levels. Frankly, the switch of pollution sinks into pollution sources has probably already started, at least locally. This is not good news, nor is it new: environmental scientists predicted this transition several decades ago.
Today, the challenge is no longer simply to prevent the switch, but to delay it and mitigate its harmful effects. Restoration of pollution sinks is an essential lever in this regard, alongside emission reductions wherever possible. Interestingly, mainstream environmental science has independently emphasized the importance of restoring carbon sinks. Our perspective, grounded in system dynamics, goes further: restoring carbon sinks is not merely a way to accommodate residual emissions; it is the only way to prevent existing sinks from turning into sources.
I am surprised to read that some economists are still reluctant to accept this option: are they unaware that once natural pollution sinks are exhausted or damaged by the accumulated pollution stock, efforts to reduce emissions become far less effective, since the pollution stock (i.e., global warming) continues to grow with residual emissions? Worse, in the likely scenario of an irreversible shift from natural pollution sinks to pollution sources, the remaining carbon budget to limit warming to 1.5°C (around 250 to 300 GtCO₂) could be exceeded by two to five times by emissions of natural origin. In that case, even if future anthropogenic emissions were reduced to zero, policies that omit the restoration of carbon sinks would be doomed to fail—like a real-life version of Richard Fleischer’s Soylent Green.
Additionally, there is a need for models that adopt a broader perspective than existing pollution accumulation models, incorporating the key interactions between environmental issues and other areas of primary concern. Our work aligns precisely with this approach, analyzing pollution accumulation alongside deforestation, renewable resource harvesting, and other critical environmental processes to provide accurate and actionable policy prescriptions.
In addition, the book considers the problem of management of pollution control through a dynamic perspective. The literature mainstream still uses static models in most areas of management. This is absurd because it results in myopic management of pollution control. A minimum requirement for responsible research on pollution control management is to consider pollution not as a flow but as a stock variable. The book considers the pollution control problem from a supply chain management viewpoint. This is also necessary first because pollution is considered as the collective outcome emanating from a sequence of interdependent vertical processes, involving suppliers, manufacturers and retailers, that is, the so-called scope 3 emissions. As for the economics of pollution control, controlling pollution accumulation is very different depending on whether it involves one or more agents. Most supply chains are decentralized, which means that they do not involve a coordination scheme to manage pollution control. In other words, the supply chain members usually behave in a non-cooperative way. This is why the decentralized nature of the decision-making process should not be ignored. In the context of a decentralized supply chain, the vertical nature of strategic interactions among the supply chain members has a specific influence on the pollution accumulation process. For instance, we know that there is a fundamental opposition between the sum of the supply chain members’ profits and the consumers' welfare and the level of pollution engendered. Then, the issue is to find robust coordination schemes that allow for an agreeable tradeoff among firms, customers and the environment. These issues should be considered in a scientific way where neither optimism nor ideology should prevail. The problem of pollution control management is vast, and recycling management is another important problem. To date, in operations management, this problem has been investigated using misleading approaches.
Question: How are economics, management and pollution control correlated?
Fouad El Ouardighi. They are complementary. By tradition, economics of pollution control generally accounts for the social welfare of future generations. This is a responsible approach indeed. The decision-makers are frequently nations. In this setup, most important issues are related to free-riding behaviors, on the one hand, and time-inconsistent behaviors, on the other hand. Free-riding behaviors refer to the fact that if one country makes greater efforts to reduce its emissions, other countries might well take advantage of this by considering that the first country is doing the job for them and thus increase their emissions. Time-inconsistent behaviors refer to the case where, at some point, one country revises its commitment to reduce its emissions because of electoral cycles. Illustrations of such behaviors can be easily found. Management of pollution control is a more recent area. By definition, the time horizon adopted is much shorter than in economics, and the decision-makers are usually firms involved in a polluting economic activity. However, a finite time horizon should not lead one to disregard the dynamic nature of pollution accumulation, especially for firms that claim to practice environmental corporate responsibility. Both in economics and management of pollution, the problem of disregarding dynamics stems at least partly from the inability to detect history-dependency. History-dependency in pollution control issues means that an environmental policy may be dramatically sensitive to the initial state of the environment. More clearly, there exist discontinuity thresholds in the initial state of the biosphere: Depending on whether a policy is initiated below or above one of these thresholds, the outcome should be quite different. These thresholds generally reflect the existence of an irreversible narrowing of the field of possible actions. In general, the issue here is to find means to neutralize history-dependency. The mainstream research on the management of pollution control is still far from taking this kind of issue into account.
Question: Who is this new book for?
Fouad El Ouardighi. The book is mainly intended for the research community, professors, PhD students, etc. In fact, the book can also be useful for a wider readership interested in a scientific approach toward pollution control in economics and management. In the context of academic education, it paves the way for both environmentally responsible and socially acceptable options for managing the environment. For business schools, it is important to educate students not only on how they can promote the restoration of pollution sinks, but also on the merits of recycling, as a business venture.
Questions by Audrey Abaca.