The following blog was written by SVI’s Membership Coordinator, Lukia Nomikos.
Our economies, livelihoods and wellbeing all depend on our most precious asset: nature. We are part of nature, not separate from it.
(Prof Sir Partha Dasgupta)
Economic growth has been remarkable in the last few decades. The material standard of living of the average person in the world is far higher today than it has ever been before. Measured by gross domestic product (GDP), the global economy is 14 times bigger than it was in 1950. Arguably, in this very narrow economic sense, we have never had it better.
This increase in human prosperity has however come at a devastating cost – our unrelenting pursuit of endless economic growth and obsession with GDP is driving the climate crisis and destroying our planet on an unprecedented scale. So, although between 1992 and 2014, produced capital per person doubled, the stock of natural capital per person declined by nearly 40%. In fact, we would need an estimated 1.6 Earths to maintain humanity’s current way of life. In this broader sense then, perhaps we are living at both the best and worst of times.
One of the reasons for this incessant environmental destruction we are witnessing is the failure of economics “to take account of the rapid depletion of the natural world.” For too long, nature has been a “blind spot” in economics, but now, a landmark report published earlier this year is finally bringing economics and ecology face to face and calling for the “reconstruction of economics to include Nature as an ingredient.” The Dasgupta Review argues that we can no longer afford for the environment to be absent from accounting systems that dictate national finances or ignored by economic decision makers. Instead, we need to dethrone GDP as a measure of economic success and “start factoring natural capital into our economic accounting.”
According to Prof Sir Partha Dasgupta, the Cambridge University economist who conducted the review, “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.”
In other words, environmental impact belongs on the balance sheet, and this of course aligns with our mission here at SVI. We have long advocated for a world where organisations and businesses are held accountable for their social and environmental impacts and we believe that only if decisions are made by using a broader definition of value that goes beyond a limited economic concept of value and focuses instead on social and environmental effects, can we ensure the wellbeing of people and the planet.
This overhaul of the way the world accounts for value is more urgent than ever. 2020 was the joint hottest year on record, bringing with it numerous climate disasters across the world. Biodiversity is declining at a faster rate than ever before: since 1970, there has been almost a 70% drop in the populations of mammals, birds, fish, reptiles, and amphibians, and around one million animal and plant species – almost a quarter of the global total – are believed to be threatened with extinction.
Moreover, the world loses enough forest to cover a football pitch every three seconds and over the last century we have destroyed half of our wetlands. Half of our coral reefs are also gone and by 2050, the figure could be as high as 90%.
Of course, the Covid-19 pandemic is our most recent example of what humanity’s endless push for profit and disregard for the value of nature can result in. If we continue to encroach on natural habitats, we can expect our lives and livelihoods to be ravaged by many more viruses in the years to come.
Although terms such as ‘natural capital’ and ‘natural assets’ receive regular criticism from environmentalists who reasonably fear that it will lead to the “marketisation of things that should never be bought or sold,” perhaps talking about the value of nature also in economic terms and pointing out its financial benefits are necessary in a world where many are driven by a blind desire to generate as much profit as possible with no regard for its impact on people and the planet.
So, if the intrinsic and incalculable value of nature is not enough to convince one, there is a powerful economic case for its protection too. The Dasgupta Review provides a lucid example of how the absence of environmental considerations in accounting can damage our economies too:
“…the gaping holes in our accounting might see woodland destroyed to build a shopping centre. GDP records an increase in produced capital, but no depreciation of the ‘natural capital’ that absorbs carbon, prevents soil erosion, creates a habitat for much-needed pollinators, and provides direct benefits to us – from recreation to purified air – that reduce burdens on health services. Such losses carry economic costs.”
The Covid-19 pandemic is obviously another good example of the catastrophic economic consequences that environmental degradation and the failure to account for it can result in. It is therefore clear that the destruction of nature is not only a social and environmental issue but also an economic one.
The value of nature is therefore simply immeasurable to our lives, livelihoods and wellbeing – it underpins our very existence and is indeed our most precious asset. But because nature is ‘free’ and all around us, we tend to take it for granted and overexploit it. This in turn takes an enormous toll on ourselves and our planet, bringing with it huge social, environmental and economic costs. If we are to have a planet that can continue to sustain us all into the future, we need to recognise the value of the natural world and take better care of it. This can start by holding governments, organisations and businesses to account for their social and environmental impacts, and by ensuring that decision-making is based on longer-term benefits for people and the planet rather than short-term financial interests.
World Environment Day is the UN day for encouraging worldwide awareness and action to protect our environment. Since 1974, the Day has been celebrated every year on 5th June, engaging governments, businesses and citizens in an effort to address pressing environmental issues. This year the theme is Ecosystem Restoration, and the Day will kick off the UN Decade on Ecosystem Restoration, a global mission to revive billions of hectares, from forests to farmlands, from the top of mountains to the depth of the sea.