A new comprehensive review shows that nature has a fundamental economic value – and our account is severely outdated.
Why does it matter: The natural capital created by clean water and air, biodiversity and basic resources has been the foundation of human prosperity, but because it has no clear economic value, we treat it too often as infinite. Ensuring a sustainable future may require treating nature less as lottery winnings and more as a retirement account.
News management: On Tuesday, Cambridge University economist Partha Dasgupta released a major report commissioned by the British government on the underestimated economy of biodiversity.
- From an economic point of view, Dasgupta notes that although the capital produced – assets such as factories and roads – doubled between 1992 and 2014, and human capital increased by about 13%, the stock of natural capital per person decreased by almost 40%.
- The report cites estimates that current extinction rates are 100-1,000 times higher than the base rate of the planet and that 20% of species could become extinct in the next few decades.
- These trends are largely a consequence of how much Earth has become a support system for a single species: human beings.
- 70% of all birds alive today are poultry – mostly the 23 billion chickens raised for food at one time – while humans themselves and the domesticated species used for animals now make up 96% of all mammals on the planet.
The impact: “Estimates of our total impact on nature suggest that we would need 1.6 lands to maintain the world’s current living standards,” Dasgupta writes.
- Last time we checked, we only had one.
The whole picture: The degradation of nature has coincided with revolutionary improvements in the human condition, with the world’s final production of goods and services increasing 13 times in the last 70 years, to a value of over 120 trillion dollars.
- The report considers these two facts to be connected. From the richest billionaire to a person who has just emerged from absolute poverty, human prosperity depends on the ability to extract from the resources that nature offers – at least in market terms – for free.
- A 1997 study estimated the global flow at the time of biosphere services – everything from water to air to pollination – worth $ 33 billion, more than the value of world GDP at the time.
The problem is that while nature The bank account can have a lot of zeros, it is not infinite and, as we draw it, we escape the future of humanity, like a rich family that loses the inheritance of its descendants.
- Dasgupta argues that we must look at natural capital as we would other forms of capital, investing it wisely to ensure that future generations enjoy not only the natural splendor but also the raw materials on which an economy depends.
- To do this, we need to find ways to equitably share the planet’s natural capital, instituting payments to protect the ecosystems controlled by individual nations and imposing rents for common global resources, such as the oceans and the atmosphere.
Capture: Any such system would require a degree of international governance and cooperation – not to mention individual discipline – that goes far beyond what we are currently able to manage.
- And even if Dasgupta speaks 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, which some critics have quickly pointed out:
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Our thought bubble: One of my fundamental assumptions about the Future is that technological progress is particularly valuable insofar as it can allow us to circumvent our political and even psychological limitations.
- I doubt that nearly 200 countries will ever come together to share enough of the world’s natural capital, just as I doubt that human beings can be persuaded to significantly reduce 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 natural capital stock – 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.
Bottom line: As Dasgupta writes, when it comes to nature, “we are all asset managers.”