Free market economies driven by financial metrics are damaging the natural environment by failing to place a value on natural assets.
GDP has long been criticised as a measure of identifying the health of economies. To quote the late Bobby Kennedy, ‘GDP measures everything except that which is worthwhile.’
The Economics of Biodiversity: The Dasgupta Review by Sir Partha Sarathi Dasgupta examines the impact of capitalism on the natural environment. It was commissioned by HM Treasury and published last week.
With the Dasgupta report’s release, it’s never become more apparent that our measurement of what matters is utterly out of whack. The report has sharpened the impact the relentless pursuit of capital gains has had on the natural world.
Here’s one of the most profound findings from the report:
Collectively, however, we have failed to manage our global portfolio of assets sustainably. Estimates show that between 1992 and 2014, produced capital per person doubled, and human capital per person increased by about 13% globally; but the stock of natural capital per person declined by nearly 40%.
The report highlights that the cost on nature has no monetary attribution when looking at produced capital. In essence, we’re declaring that as we continue to breathlessly reach for GDP percentage points, we are drawing down on a loan that we refuse to recognise.
The absurdity of this is highlighted when natural or man-made disasters occur. The Exxon Valdez crisis led to US GDP going up, simply due to the amount of money invested in cleaning up the spill. The dreadful damage to Alaskan waters had no value attributed to it.
More callously, the Sichuan Province earthquake in 2008, which reduced cities to rubble and accounted for 80,000 deaths attributed to an improved economic growth forecast? Why? Because rebuild and clean up creates jobs and increases the flow of money.
This absurd measure of success has to stop. The great cover-up of natural cost in favour of economic gain must be revealed. We’re to spend the next decade actively tackling some of the most existential challenges we’ve ever faced. In that case, we have to stop kidding ourselves that everything we do economically has no natural cost.
As Dasgupta highlights, COP26 will be a crucial moment in deciding that our current measures are no longer fit for purpose.
A triple bottom line approach is as vital to the global economy as it is to businesses. We should all be pursuing a future where we’re able to fully understand the cost economic growth has on our natural resources, and dismiss any success story that fails to recognise this crucial trade transparently.