As The Guardian notes this morning:
The world is being put at “extreme risk” by the failure of economics to take account of the rapid depletion of the natural world and needs to find new measures of success to avoid a catastrophic breakdown, a landmark review has concluded.
The report on which this comment is based was written for HM Treasury by Professor Sir Partha Dasgupta of Cambridge University.
The Treasury says of the review:
Professor Sir Partha Dasgupta‘s review 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.
Grounded in a deep understanding of ecosystem processes and how they are affected by economic activity, the new framework presented by the Dasgupta Review — which was commissioned by HM Treasury - sets out the ways in which we should account for nature in economics and decision-making.
The Treasury notes Professor Dasgupta saying:
Truly sustainable economic growth and development means recognising that our long-term prosperity relies on rebalancing our demand of nature's goods and services with its capacity to supply them. It also means accounting fully for the impact of our interactions with Nature across all levels of society. COVID-19 has shown us what can happen when we don't do this.
I have to agree. My doing so is unsurprising. This theme was central to my 2011 book, The Courageous State.
I may return to that book, and its suggested approach to these issues over the next few days. At this moment, and without having had a chance to read more than the 10 page summary to the report, let me highlight two of its conclusions. The first is this, which underpins the report:
The solution starts with understanding and accepting a simple truth: our economies are embedded within Nature, not external to it.
While most models of economic growth and development recognise that Nature is capable only of producing a finite flow of goods and services, the focus has been to show that technological progress can, in principle, overcome that exhaustibility. This is to imagine that, ultimately, humanity is ‘external' to Nature.
The Review develops the economics of biodiversity on the understanding that we — and our economies — are ‘embedded' within Nature, not external to it. The Review's approach is based firmly in what we know from ecology about how ecosystems function, and how they are affected by economic activity, including the extraction of natural resources for our production and consumption, and the waste we produce through these activities, which ultimately damages ecosystems and undermines their ability to provide the services on which we rely. This approach helps us to understand that the human economy is bounded and reshapes our understanding of what constitutes truly sustainable economic growth and development: accounting fully for the impact of our interactions with Nature and rebalancing our demand with Nature's capacity to supply.
This is the logic is use in sustainable cost accounting. It is also the logic I outlined in a blog post last week .
The other extract is this:
Nature's worth to society — the true value of the various goods and services it provides — is not reflected in market prices because much of it is open to all at no monetary charge. These pricing distortions have led us to invest relatively more in other assets, such as produced capital, and underinvest in our natural assets.
Moreover, aspects of Nature are mobile; some are invisible, such as in the soils; and many are silent. These features mean that the effects of many of our actions on ourselves and others — including our descendants — are hard to trace and go unaccounted for, giving rise to widespread ‘externalities' and making it hard for markets to function well.
But this is not simply a market failure: it is a broader institutional failure too. Many of our institutions have proved unfit to manage the externalities. Governments almost everywhere exacerbate the problem by paying people more to exploit Nature than to protect it, and to prioritise unsustainable economic activities. A conservative estimate of the total cost globally of subsidies that damage Nature is around US$4 to 6 trillion per year. And we lack the institutional arrangements needed to protect global public goods, such as the ocean or the world's rainforests.
That we are in the mess we are in is the fault of failed economics that has been accepted as truth by governments. The failure is ongoing. The UK government is a part of that failure.
There is no sign this morning that the UK intends to change behaviour as a consequence if this report. If they, and almost all other governments do not change though then we as a race are at threat of extinction, as is much else life in earth. This need not happen. We might still have a choice. But will we take the option to survive?
That will require a courageous state.
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Nature is humanity’s creditor. Humanity is natures’s debtor. Nature will soon foreclose because the debt is now unsustainable. We need to start by a debt restructuring programme but to do that we must first understand how the debt has arisen and how we can start to repay. We have “maxed out our credit card”.
I completely agree Jim. Politicians constantly tell the public that we have to “live within our means” but how often do you hear them say this in relation to the natural world?
https://www.bbc.co.uk/news/uk-scotland-53861858
Fantastic report, not a moment too soon. Hands up who thinks Boris’ government is up to the challenge?
[…] Cross-posted from Tax Research UK […]
We do need a courageous state and it needs to be courageous enough to do two important things:
(1) assume the role of credit risk insurer of first resort, not last resort – this is the way to avoid financial chaos and the need for last ditch bail outs of financial institutions. Credit risk is currently treated as a legitimate commodity so we have a secondary market which is a gateway to tertiary markets and derivative layer on top of derivative layer. Close the gateway.
(2) close the secondary market for government securities. Again the secondary market is based on government securities being treated as a legitimate commodity. Close the gateway.
Market regulation has always included the prohibition of specified “goods” or “services” as commodities – classified drugs is a good example, child labour, even sex. State control of utilities such a water, etc is also a form of de-commodification. A courageous state can de-commodify credit risk and government securities and by doing that it will lead to a radically different banking and financial system that can be harnessed to repair the damage we have done to the eco-systems we rely on for our own well being.
PS – I should have said that the way to de-commodify government securities is to issue them as non-negotiable securities- issue them as one-to-one IOUs.
Required reading for every minister worldwide. Dasgupta had an excellent interview on BBC Radio 4 Today programme succinctly explaining how our economic system is working to destroy the planet and the need to reverse this. I think the interviewer was pretty gob smacked as Dasgupta was so clear and his argument so indisputable.
I will look it out. Do you recall the time?
Between 8.30 and 9am
Between 8.30 and 9.00am
Thanks
I have read the summary report. Firstly, it is a step in the right direction relatively speaking – but that is a qualified rating because we are in such a terrible place that even something like this looks like progress. But in my opinion it is flawed. It’s analysis of the problem is fine as far as it goes, just as Mark Carney’s analysis of what is wrong with the financial system is fine as far as it goes – but the solutions are just superficial.
The report rights says we have lost our connection with nature but goes on to propose solutions which just replicate the striving to subjugation of nature to our economy. It does this by proposing a quantification of nature as an “asset”. This is the completely wrong way to frame the debt we owe to nature. Our obligations to nature are beyond quantification. How do you quantify the debt you owe to your mother who brought you into the world? How do we quantify mother nature from whose womb all living things sprang?
The report is just more “left brain” thinking. What we need is “right brain” thinking. Left brain has been dominant for too long and still defines the framing of our narratives. We do need analytical methods but they need to be framed within an envelope of intuition, creativity, soulfulness. Our debt to nature is unredeemable.
As Felix Martin aptly quotes the Chinese proverb – “the fish is the last to know water”. We need to know and understand the “water” which we too swim in – it is the complex connected network that encompasses all of life – and non-life too.
This is not the typical terms of discourse found on this blog but it is vital and our left brain thinking should be harnessed to serve the right brain. As Stuart Kauffman, that brilliant, inspiring evolutionary biologist and complexity scientist says our task is to “Reinvent the Sacred”.
I will finish by providing a link to a poem/video I recently posted on my You Tube channel – I think it says it all really – its called “Metamorphosis” and runs for 1 minute 30 so it won’t take up much of your time…..unless you decide to explore the layers of meaning in it
https://www.youtube.com/playlist?list=PLfvWvz_jGJVx4gkT4XG9VylxSKerQ9shs
I am very unconvinced by the covert of natural capital
It looks like we agree on that
So does George Monbiot 🙂
Just started reading
A Small Farm Future by Chris Smaje.
It was recommended by one of the commenters on a previous thread on this blog site.
(Apologies, but I can’t remember who it was)
His analysis of the 10 crisis facing humanity, is a really insightful look at where we are and the challenges ahead.
They are:
Population.
Climate.
Energy.
Soil.
Stuff.
Water.
Land.
Health & Nutrition.
Political Economy.
Culture.
It’s sobering stuff, but we all need to read it. Can’t make the changes if we don’t fully understand the problems.
I’m only half way through, so haven’t read the solution, but I’m guessing his answer might be in the title! :).
https://smallfarmfuture.org.uk/my-book/
[…] I was opposed to this because the implication of this proposal is that sustainability standards can exist outside the mainstream of accounting, which is exactly the time institutional failing that was identified as a key reason for the failure of government to manage issues relating to climate change referred to in an HM Treasury report by Professor Sir Partha Dasgupta of Cambridge University to which I referred yesterday. […]