A new comprehensive review argues that nature has a fundamental economic value – and our account is very much drawn.
Why it matters: Natural capital created by clean water and air, biodiversity and basic resources has been the basis of human prosperity, but as it has no clear economic value, we often treat it as infinite. Ensuring a sustainable future may require treating nature less like lottery prizes and more like a retirement account.
Driving the news: On Tuesday, Cambridge University economist Partha Dasgupta published an important report commissioned by the UK government on the underestimated economy of biodiversity.
- In economic terms, Dasgupta notes that while the capital produced – assets such as factories and roads – doubled between 1992 and 2014, and human capital increased by about 13%, the natural capital stock per person decreased by almost 40%.
- The report cites estimates that current extinction rates are 100-1,000 times higher than the planet’s reference rate and that 20% of species could be extinct in the coming decades.
- These trends are largely a consequence of how much the Earth has become a support system for a single species: humans.
- 70% of all live birds today are birds – mainly the 23 billion chickens raised for food at any one time – while humans themselves and the domesticated species used for livestock now represent 96% of the mass of all mammals on the planet.
The impact: “Estimates of our total impact on nature suggest that we would need 1.6 Earths to maintain the world’s current living standards,” writes Dasgupta.
- Last time I checked, we only have one.
The big picture: The degradation of nature has coincided with revolutionary improvements in the human condition, with the world’s final production of goods and services growing more than 13 times in the past 70 years, to more than $ 120 trillion in value.
- The report sees these two facts as connected. From the richest billionaire to a person who has just emerged from absolute poverty, human prosperity depends on being able to draw on the resources that nature offers – at least in terms of the market – for free.
- A 1997 study estimated the global flow at the time of biosphere services – everything from water to air to pollination – it was worth $ 33 trillion, more than the value of world GDP at the time.
The problem is that although nature The bank account can have many zeros, it is not infinite and, as we pull it out, we undermine the future of humanity, like a wealthy family wasting the inheritance of their descendants.
- Dasgupta argues that we need to look at natural capital as we would with other forms of capital, investing it wisely to ensure that future generations enjoy not only the natural splendor, but the raw materials on which an economy depends.
- To do this, we need to find ways to share the planet’s natural capital equitably, instituting payments to protect ecosystems controlled by individual nations and imposing rents on common global resources like the oceans and the atmosphere.
The footprint: Any such system would require a degree of international governance and cooperation – not to mention individual discipline – that seems far beyond what we are currently capable of managing.
- And even though Dasgupta is speaking the language of the markets, his recommendations call for a review of an economic system that has long been built on the short-term exploitation of natural capital, a fact that some critics have been quick to point out:
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Our thought bubble: One of my basic assumptions at Future is that technological progress is especially valuable in that it can allow us to get around our political and even psychological limitations.
- I have doubts that about 200 countries would come together to reasonably divide the world’s natural capital, just as I have doubts that human beings can be convinced to significantly restrict their consumption patterns.
- What is most likely to save us is the development of technologies that can allow us to get more out of our stock of natural capital – an approach that Dasgupta praises. We have only one Earth, but the final economic value of the planet depends largely on what human ingenuity can do with it.
The end result: As Dasgupta writes, with regard to nature, “we are all asset managers”.