A new thorough review suggests that nature has a fundamental economic value, and that our account is greatly oversized.
Why it’s important: Natural capital created by water and clean air, biodiversity and basic resources has been the basis of human prosperity, but as it has no clear economic value, we too often treat it as infinite. Ensuring a sustainable future may require treating nature less as a lottery winnings and more as a retirement account.
Leading the news: On Tuesday, Cambridge University economist Partha Dasgupta released a major report commissioned by the UK government on the undervalued economy of biodiversity.
- In economic terms, Dasgupta notes that although the capital produced (assets such as factories and roads) doubled between 1992 and 2014, and human capital has increased by about 13%, the stock of natural capital per person has decreased. 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 become extinct in the next few 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 poultry (most of the 23 billion chickens raised for food at any given time), while humans and domesticated species used for livestock represent now 96% of the mass of all mammals on the planet.
The impact: “Estimates of our total impact on nature suggest that we would require 1.6 lands to maintain the world’s current living standards,” Dasgupta writes.
- The last time I checked it, we only have one.
The general picture: The degradation of nature has coincided with revolutionary improvements in the human condition, with the final production of goods and services in the world more than 13 times in the last 70 years, to exceed $ 120 trillion in value.
- 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 being able to extract for free the resources that nature provides, at least in market terms.
- A 1997 study estimated the overall flow at that time of biosphere services – 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 even though it is natural the bank account can have a lot of zeros, it’s not infinite, and as we shrink it, we’re undermining the future of humanity, like a rich family wasting their inheritance on their descendants.
- Dasgupta argues that we should look at natural capital as we would with other forms of capital, investing it prudently to ensure that future generations enjoy not only natural splendor, but the raw materials on which the economy depends.
- To do this, we need to figure out ways to equitably share the planet’s natural capital, establishing payments to protect ecosystems controlled by individual nations, and imposing rents on common global resources such as the oceans and atmosphere.
The catch: Any such system would require a degree of international governance and cooperation, not to mention individual discipline, which seems far beyond what we are currently able to manage.
- And while Dasgupta speaks the language of 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 were quick to point out. to point:
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Our thought bubble: One of my assumptions underlying Future is that technological progress is especially valuable insofar as it can allow us to dodge our political and even psychological limitations.
- I doubt that nearly 200 countries will come together to fairly divide the natural capital of the world, just as I doubt that humans can be persuaded to significantly curb their consumption patterns.
- What is most likely to save us is the development of technologies that can allow us to take more advantage of our natural capital stock – an approach that Dasgupta praises. We only have one Earth, but the final economic value of the planet depends largely on what human ingenuity does.
The summary: As Dasgupta writes, when it comes to nature, “we are all asset managers.”