Monday, 1 February 2016

The price of everything and the value of nothing.

Back in November 2015 the Scottish Wildlife Trust hosted probably the most important event you’ve never heard of - The World Forum on Natural Capital.  Around 600 people from 45 countries attended, and they were there to discuss the benefits that nature provides to people. 

Our economy is fundamentally flawed.  We know the price of everything but the value of nothing.  We attribute value to useless things (like diamonds and plastic robots) and attribute no value at all to things on which we totally depend (like oxygen, wildlife and an equitable climate).  The idea of natural capital is to recognize that nature – natural capital – does have value even if this value cannot be quantified or expressed in monetary terms.

If we do not value nature then it has a very low priority in any economic decision making.  Listen to the language that is normally used: putting money into anything to do with the economy is called “investment”; putting money into anything to do with the environment is call “grants” or “subsidies”.   Normal measures add up everything to do with the economy (whether positive or negative, it’s all counted positive) and call it GDP (Gross Domestic Product).  Activity to look after the environment is called “a burden”.  The implication is clear – the economy makes money but the environment costs money.

A few simple examples expose the nonsense of this situation.  If you over-fish the sea for economic gain in one year then you’ll have no fish, so no money, long term.  If you neglect soil conservation in order to gain maximum crop productivity on a farm in one year then soil will be degraded and you won’t farm, or make money, long term.  Fossil fuels short term – climate change long term.  Degrade wetlands short term – flooding long term.  Throughout many of these examples wildlife gives you a pretty good clue as to whether you are getting it right or not.  Landscapes rich in wildlife are probably the ones that are going to provide the most public benefit in the long term (perhaps indefinitely).

So – natural capital is our stock of nature.  Like any capital, if you erode the stock then you reduce your revenue.  As Dieter Helm (Chair of the Natural Capital Committee) put it “successive natural capital deficits have built up a large natural capital debt and this is proving costly to our well-being and economy”.

Reduce the stock of nature and you reduce the benefits we get.  If this is not reflected in decision making then either you need to recognize the economic value of nature or recognize that nature lies outside quantification and correct the market failure – probably both.  At present we do neither, so nature has no value and it is consistently degraded in the name of economic growth.

Some have reasonable concerns that a natural capital approach might result in the “monetisation” of nature, where we try to put a £ sign against every aspect of nature.  But what price an orchid, a molecule of oxygen or a sunset?  However, by ignoring nature as an “externality”, our economy can all too easily be used to undermine the very natural systems on which everything else depends.  We therefore need to question whether our current economy is fit for purpose.  Is our current obsession with economic growth really delivering human prosperity, now and in the future?  If not then why are we driven by it?  

Instead of “monetising nature” what we need should be viewed more as the “naturalization of the economy.”