A cynic, writes Oscar Wilde, is someone who “knows the price of everything and the value of nothing.” On this basis, our dominant economic system – corporate capitalism – is beyond cynicism.
A cynic, writes Oscar Wilde, is someone who “knows the price of everything and the value of nothing.” On this basis, our dominant economic system – corporate capitalism – is beyond cynicism. It takes Wilde’s aphorism one step further because he doesn’t even know or factor in the cost of everything, let alone recognize and explain what is priceless.
This is, if not quite in those terms, the conclusion of a surprising review of the economics of biodiversity by eminent Cambridge economics professor Sir Partha Dasgupta. Surprising not only because of what he says, but because of the person who commissioned his report: the Chancellor of the Exchequer (read âMinister of Financeâ) of the British government of Boris Johnson. So this week I take a detour down the road from Donut Economics to review their important report. Next week I’ll see how we need to change.
What Professor Dasgupta has to say is both simple and profoundly important: We have not properly included neither the price nor the value of nature in our economic models and practices, nor in the price of our goods and services. Instead, we treat them as “exteriority”, by which he means “the unexplained consequences for others, including future people, of actions taken by one or more people”. In other words, we are winning at the expense of people elsewhere, future generations and, he might have added, other species.
The result of ignoring the damage to nature (and, he would also have added, the damage to the health of people and to the social well-being of communities) caused by our economic system and our way of life, writes- it is that “while mankind has prospered immensely in the past few decades, the manner in which we have achieved such prosperity means that it has come at a devastating cost to nature. “
Indeed, he reports, âbetween 1992 and 2014, the capital produced per person doubled, and human capital [health, education, Âaptitude and skills] per person increased by around 13% globally. However, he adds, “the stock of natural capital per person has declined by almost 40 percent.” In addition, it should be noted that this is only over 22 years; the decline since the âgreat accelerationâ of human impact began in the 1950s is much more significant.
The result is that “many ecosystems, from tropical forests to coral reefs, have already been degraded beyond repair, or are at imminent risk of ‘tipping points.’ These tipping points could have catastrophic consequences for our economies and our well-being. Sadly, as he notes, “this is what economic growth and development means to many people.”
But even if we could include the cost of ecological damage in the price of our goods and services, that would not be enough. Professor Dasgupta notes: âNature is more than an economic good: many value its very existence and also recognize its intrinsic value.
This view is evident in a 2018 report by the International Institute for Sustainable Development on measuring ‘aggregate wealth’, by which they mean the combination of five forms of capital: product (infrastructure, buildings and machinery), natural, human, financial (stocks, bonds and cash) and social capital.
While some forms of natural capital – so-called marketable natural assets (such as minerals, fossil fuels, timber, water resources, and the fish we extract) – can be expressed in monetary terms, d ‘other forms of natural capital – a stable and warm climate and key ecosystems such as forests, wetlands, grasslands, lakes / rivers and oceans – âare indeed invaluableâ.
Indeed, the latter âare essential to well-being. Any degradation of these imposes direct and irreplaceable costs on welfare, and their monetary value is therefore irrelevant. So while we can measure and explain some forms of natural capital, those ecosystem “goods and services” that are essential to our well-being “cannot (and should not) be included in aggregate measures of aggregate wealth” .
In other words, it is not enough to understand the price of nature; we must recognize that it is to a large extent priceless, of inestimable value.
As a society, we need to know not only the price but also the value of nature, and we need an economic system that recognizes and integrates this.
Dr Trevor Hancock is a retired professor and senior researcher in the School of Public Health and Social Policy at the University of Victoria.