As the Environmental Audit Committee makes (EAC) a call for evidence on aligning the UK’s economic goals with environmental sustainability, including asking how effective its response has been to the Dasgupta Review to date, Alastair Chisholm argues that the Review’s core message has never been more relevant.
Detailed reviews of existential crises and how economics might address them are few and far between, particularly when they’re initiated not by the UN but by Her Majesty’s Treasury. 15 years on from the 2006 Stern Review of the Economics of Climate Change, the Dasgupta Review aims to make the case for no more delay in putting nature at the heart of economics.
The Stern Review made clear that serious, timely action on climate change would be considerably cheaper than putting it off ‘til we’re on the brink. A decade and a half on, we have a Climate Change Act and a legally binding net zero target – as well as a concrete to Net-Zero Stategy to help get us there – a new Heat and Buildings Strategy, burgeoning offshore wind industry and some nice sounding targets for electric cars.
But, we’re only just talking about resurrecting the canned zero carbon homes, utterly fluffing energy efficiency grants and as a result of a global fossil fuel pledge at COP26 have only now decided it’s probably best to speed up the end of fossil fuel subsidies and phase out the use of coal power. So, our report card probably reads ‘finally getting there but not before time’.
Our natural world is in a similarly perilous state to our climate. A couple of years ago, then Secretary of State for Environment Michael Gove’s advisers asked him to do something similar to Lord Stern’s review, only with the natural world the focus. Gove persuaded the Treasury to back it and the Dasgupta Review is the result.
While recent positive developments such as the passing of The Environment Act are cause for hope, we can’t ignore the the fact that the UK remains one of the most nature-depleted countries in Europe.
Decisive action on nature recovery
Almost two years into a global pandemic, which scientists say has been made more likely by habitat destruction and exploitation of nature, can we learn lessons and act more quickly and decisively on Dasgupta’s findings than we did with Stern? Can we build its findings into a green recovery?
Just as Stern identified that our prosperity will be undone by the climate crisis if we don’t act, so Dasgupta headlines our economies, livelihoods and wellbeing being reliant on our “most precious asset: nature”.
Dasgupta clearly describes nature as an asset, providing services that enhance our economies, but notes it has additional intrinsic, cultural and spiritual value beyond. The review describes a stark picture: we are ruthlessly exploiting nature to our own ends, building up human produced capital whilst decimating the stock of natural assets that provide us with such valuable services.
The review describes the irrecoverable destruction of many important ecosystems and the teetering on the edge of tipping points of many more. Deep rooted, institutional failure is described as a root cause of this.
To wit: nature sits outside our economic valuation systems and gets exploited as a result because economics treats much of it as free. Not only this but aspects of nature operate below our radar – invisible or silent in their functionality so it’s easy to ignore them, neglect them and not take responsibility. If they were valued in the same way that we value most other things this might be less likely to happen.
But then here’s the other harsh truth: governments have been chucking fuel on the fire by actively incentivising bad practice and paying more to exploit nature than conserve it.
This, the report concludes, has to change along with our valuation of nature – profoundly. Like the Stern review’s advice about timely and prudent action, Dasgupta notes that it is cheaper not to destroy nature that to have to restore it.
But restoring nature can be done as part of tackling climate change, through nature-based solutions. Multifunctionality is a strong theme. This mitigates the cost impacts of restoration by understanding that the benefits are many and wide, including in reducing poverty in those nations of the world where economies and prosperity are more immediately connected to nature.
This should all be the backdrop to ensuring that human demands on nature no longer exceed its supply.
Learn through doing
The next major finding of the review is that gross domestic product is a short-termist metric that ignores asset depreciation and drives exploitation without any consideration for future implications.
Recommending ‘inclusive wealth’ as a more complete measure, the Review acknowledges this will need the incorporation of natural capital valuation and accounting techniques which are not yet fully mature and refined but urges governments and businesses to embrace the approach and work out the wrinkles along the way. In other words, don’t delay, act.
Finally, Dasgupta recommends that in addressing the nature crisis we need to be better at managing international commons and cooperating through international mechanisms that pool financial flows into activities which restore nature rather than degrading them.
In an era when nationalist rhetoric and protectionism has been on the rise, the review is pointed in its recognition of need for global collaboration, transparency and support for measures which nurture nature and our relationship with it.
Nothing here comes particularly as a surprise, but as with such reviews, the evidence-base is extensive and the arguments considered such that they crystalise the points and sharpen the focus.
Yet it has its detractors. The concept of intertwining nature with economics is abhorrent to some. Prominent advocates against, such as George Monbiot, have described the Review as “morally wrong, intellectually vacuous and counter-productive…a catastrophic misstep in our relationship with nature".
The natural capital agenda is “the definitive expression of our disengagement from the living world” he says and argues that it kills the purity of mind that once recognised nature as wonder not commodity.
Doughnut Economics author Kate Rayworth proposes that rather than melding our outmoded, short-termist, exploitative current economic system into something perhaps a little more sustainable we should be changing models and metrics wholesale – collaborative not competitive.
Connected and embedded in nature, not a square peg in a round hole. No single metric of money but a dashboard of them, which better characterise the complex web of services and benefits nature provides us.
Rayworth recognises that getting to that place from where we are now will involve the need to talk a language – to speak to power in terms that engage it, but then to persuade it to move on somewhere better. She recognises we have to take steps now, to ultimately arrive somewhere more suited to the 21st century.
The argument that monetising nature risks commoditising it and fuelling its exploitation further can be quite compelling. But the thing that makes the nature crisis so utterly shocking is its pace. Dasgupta encourages lessons to be learned when the knowledge is imperfect, and iterative refinement.
Rayworth advocates pragmatism in motivating action through an approach she fundamentally doesn’t buy into long-term but with a vision of how things could evolve.
Looking to the future
There will always be risks in any approach and whichever is best, it will still be targeted by those who wish to exploit and undermine. But arguably the biggest risk is to delay timely action until we have certainty and consensus on the model for the future.
This is why the EAC's preliminary high-level investigation on revising the traditional measure of UK economic prosperity to take greater account of natural capital and environmental sustainability is so important.
Held over two hearings in early 2022, it will be informed by the aforementioned call for evidence, and put the Dasgupta Review, as well as Sir Charles Bean’s Independent Review of Economic Statistics (2016), back into the spotlight.
Let's hope its findings help shape high-level policy and events on biodiversity in 2022, not least of which is part II of COP15.
Alastair Chisholm is CIWEM's director of policy.