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Nature Should Be An Economic Asset

by | 11 March 2021

A fundamental change in how we think about and approach economics is needed if we are to reverse biodiversity loss and protect and enhance our prosperity, an independent, global review on the economics of biodiversity has found.

Professor Sir Partha Dasgupta’s review, released in February 2021, presents the first comprehensive economic framework of its kind for biodiversity. It calls for urgent and transformative change in how we think, act and measure economic success to protect and enhance our prosperity and the natural world. One of its conclusions is that our current unsustainable engagement with nature is endangering the prosperity of current and future generations.

Our economies, livelihoods and well-being all depend on nature, Dasgupta argues. He makes the point that we “rely on nature to provide us with food, water and shelter; regulate our climate and disease; maintain nutrient cycles and oxygen production; and provide us with spiritual fulfilment and opportunities for recreation and recuperation, which can enhance our health and well-being. We also use the planet as a sink for our waste products, such as carbon dioxide, plastics and other forms of waste, including pollution.”

He asserts that nature is therefore an asset, in the same way as ‘produced capital’ like roads, buildings and factories, and ‘human capital’ (health, knowledge and skills) are assets. He contends that, like education and health, nature is more than an economic good: many value its very existence and recognise its intrinsic worth too.

Full video of online event from the Royal Society featuring Professor Gasgupta, The Prince of Wales and Sir David Attenborough among others. 1hr 14mins.

To underline the point, Dasgupta provides some headline figures to explain the extent of the issue. Estimates of our total impact on nature, set out in the review, suggest that we would require 1.6 Earths to maintain the world’s current living standards. He also points out that biodiversity is declining faster than at any time in human history, with current extinction rates around 100 to 1,000 times higher than the baseline rate.

UK Prime Minister Boris Johnson commented on the findings: “This year is critical in determining whether we can stop and reverse the concerning trend of fast-declining biodiversity. I welcome Professor Dasgupta’s Review, which makes clear that protecting and enhancing nature needs more than good intentions – it requires concerted, co-ordinated action. As co-host of COP26 and president of this year’s G7, we are going to make sure the natural world stays right at the top of the global agenda. And we will be leading by example here at home as we build back greener from the pandemic through my 10 point plan.”

The UK government is at pains to say it is investing more than £600 million in nature-based climate solutions, such as tree planting and peatland restoration with a total of £3 billion earmarked for climate change solutions that restore nature globally and a new due diligence law to clean up supply chains and help tackle illegal deforestation. But is it enough? Campaigners say this is just a drop in the ocean. Green New Deal UK, a nonprofit campaign group, said they had to go further. Fatima Ibrahim, the group’s co-executive director, said the government’s commitment “could mark a step in the right direction, but to deliver on its promises, we need to see a lot more commitment and ambition.”

In the recent Budget, it was noted by some opposition leaders that the government was already ignoring the guidance with Green Party leader Caroline Lucas tweeting that there was “Not a single mention of word nature in #Budget2021 speech yesterday & no new money for nature recovery.”

The Dasgupta Review makes clear that urgent and transformative action taken now would be significantly less costly than delay and will require change on three broad fronts:

  • Humanity must ensure its demands on nature do not exceed its sustainable supply and must increase the global supply of natural assets relative to their current level. For example, expanding and improving management of Protected Areas; increasing investment in Nature-based Solutions; and deploying policies that discourage damaging forms of consumption and production.
  • We should adopt different metrics for economic success and move towards an inclusive measure of wealth that accounts for the benefits from investing in natural assets and helps to make clear the trade-offs between investments in different assets. Introducing natural capital into national accounting systems is a critical step.
  • We must transform our institutions and systems – particularly finance and education – to enable these changes and sustain them for future generations. For example, by increasing public and private financial flows that enhance our natural assets and decrease those that degrade them; and by empowering citizens to make informed choices and demand change, including by firmly establishing the natural world in education policy.

Commenting on the Review, Sir David Attenborough said: “The survival of the natural world depends on maintaining its complexity, its biodiversity. Putting things right requires a universal understanding of how these complex systems work. That applies to economics too. This comprehensive and immensely important report shows us how by bringing economics and ecology face to face, we can help to save the natural world and in doing so save ourselves.”

There has also been widespread reaction from across the world from policy makers, business leaders, academics and NGOs. Among these, Dr Akinwumi Adesina, President, African Development Bank Group puts it succinctly: ‘How we measure wealth determines how we seek it and what we reward. The conventional approach of using GDP to measure wealth has spurred significant growth, but at the expense of the environment and the quality of life. Nobody breathes or eats GDP. We must change our wealth construct to take nature into account.”

Kristalina Georgieva, Managing Director, International Monetary Fund also commented: “Professor Dasgupta makes a most compelling case for economists and policymakers to place our biosphere and biodiversity on an equal footing with human and physical capital.”

The Review provides a watershed moment in thinking about how to evaluate the value of nature. Jane Lubchenco, Distinguished University Professor, Oregon State University and former inaugural U.S. Science Envoy for the Ocean even goes so far as to say: “‘The Dasgupta Review is the most profound and important document published in the last 100 years. The Review proposes a quantum leap in the utility of mainstream economic models by internalizing the reality that humanity is dependent upon Nature. It makes clear that simply grafting new features such as climate change onto existing models fails to address fundamental flaws in the underlying models themselves. Rather, the economy must be understood to be embedded in the biosphere, not independent of it.”

All that’s needed now is comprehensive action to match the effusive praise.

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