Nations will need to rethink economic growth as a measure of success if they are to deliver on their promises to stop the destruction of the natural world, according to a UK government-backed report released on Tuesday.
As countries meet in China in May for a UN-led summit to agree on a new global biodiversity deal, studies have sought to highlight the financial benefits of preserving forests, oceans and other habitats rich in species.
The authors of the latest review, commissioned by former British Chancellor of the Exchequer Philip Hammond in March 2019, hope its official status will give added weight to their calls to put ecosystems at the center of economic decision-making.
“Nature is our home,” said Partha Dasgupta, an economist at the University of Cambridge who led the study. “A good economy requires us to manage it better.”
British Prime Minister Boris Johnson, whose government is hosting a climate change summit in November, hailed the results.
“This year is crucial in determining whether we can stop and reverse the worrying trend of rapidly declining biodiversity,” Johnson said. The review showed that “protecting and enhancing nature requires more than good intentions – it requires concerted and coordinated action,” he added.
In a broad critique of mainstream economics, the 602-page report urges policymakers to accept that all business activity is “built-in” into nature and to begin valuing ecosystems accordingly.
But Dasgupta said that assigning absolute monetary values to nature would make no sense because life would simply cease to exist if destroyed. The Indo-British economist has called on governments to find an alternative to gross domestic product (GDP) as a means of measuring wealth, warning that it is “totally inadequate” for ensuring sustainable development. Instead, he said, governments should use a more inclusive measure of wealth that considers nature as an asset.
“Truly sustainable economic growth and development means recognizing that our long-term prosperity hinges on rebalancing our demand for natural goods and services with its ability to deliver them,” he said. “It also means taking full account of the impact of our interactions with nature at all levels of society. COVID-19 has shown us what can happen when we don’t do this. “
The report’s recommendations reflect a wider debate on whether GDP is an appropriate measure of success or whether alternative measures could be used to reflect environmental degradation.
“GDP does not take into account depreciation of assets, including the natural environment,” the report says. “As a primary measure of our economic success, it therefore encourages us to pursue unsustainable economic growth and development.”
Instead, the authors propose a concept of “inclusive wealth” that would reflect the health of a country’s assets – including its natural assets.
They also call for new ways to assess the value of the many benefits nature offers, from clean air and fertile soils to pollination, which would allow policymakers to better assess the trade-offs.
Academics have spent decades trying to put a price on nature. A widely cited study in 1997 estimated that the global flow of the Earth’s biosphere was valued at an average of $ 33 trillion per year – far more than the global gross domestic product of that time.
“We know in our hearts that we are abusing the Earth’s resources,” Roger Gifford, president of the London-based Green Finance Institute, told Reuters news agency. “The Dasgupta report is really essential in helping us start the measurement process.”
The researchers welcomed the findings, saying it could help clarify the often “intangible” benefits of nature conservation.
“The Dasgupta journal will be essential in raising the importance of biodiversity… in making this intangible something tangible,” said Nicola Beaumont, an ecosystem services expert at the Plymouth Marine Laboratory.
Green fund managers
The rapid destruction of the planet’s biodiversity is now starting to grab the attention of fund managers.
Where collapsing fish stocks, degraded forests and declining bee populations once seemed to be distant concerns to financiers, many have realized they pose a huge economic threat. More than half of the world’s total GDP is moderately or heavily dependent on nature, with humans relying on the planet’s natural resources for everything from food to medicine.
After several years of trying to calculate their contribution to climate change and the portfolio implications of global warming, a number of fund managers, banks and insurers have pledged in 2020 to undertake similar efforts for the biodiversity. In total, 37 companies, including the AXA Group and NN Investment Partners, have now signed the Finance for Biodiversity Pledge, committing to contribute to the protection and restoration of biodiversity through their financing activities and investments.
Their biggest challenge will be to measure the effect of a given business on nature. Where climate impact calculations typically focus on carbon emissions, biodiversity is orders of magnitude more complex since it covers all natural life and ecosystems.
Dasgupta’s report stresses the importance of understanding the problem.