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Brief # 109 Environmental Policy 

The Importance of Preserving the Biodiversity of Our Planet

By Jacob Morton

February 19, 2021

Review

The biodiversity of our planet is declining at an accelerated rate. Populations of plant and animal species around the world are dwindling to the point of near extinction, more rapidly than at any other time in our planet’s history. Sir Partha Dasgupta, an economist at Cambridge University, says this rampant and unheeded degradation of our planet “could have catastrophic consequences for our economies and wellbeing,” pointing to Covid-19 as “just the tip of the iceberg.” Earlier this month, Dasgupta and the UK Treasury released an independent report on the economics of biodiversity. The main takeaway? We are draining the bank of our most valuable asset, natural capital. And the consequences are not going to be pretty.

Dasgupta explains it like this, “Just as diversity within a portfolio of financial assets reduces risk and uncertainty, diversity within a portfolio of natural assets increases nature’s resilience in withstanding shocks.” The widespread impacts of climate change and a coronavirus run rampant across the globe are just a couple examples of nature’s loss of resilience. As the report points out in its opening remarks, “Our economies, livelihoods and wellbeing all depend on our most precious asset: nature. We are part of nature, not separate from it.”

The report points out that the demands we have placed on nature far exceed nature’s capacity to supply us with all the resources we ask of it. For too long we have enjoyed the spoils, at no cost to us, of our fruitful soils, waters, and forests. Now, the costs to our global ecosystems have piled too high to be ignored. Dasgupta says, at this rate “We would require 1.6 Earths to maintain the world’s current living standards.” To frame these demands as costs, Dasgupta notes that “most governments pay people more to exploit nature than to protect it and that destructive farming subsidies cause … $4 trillion – $6 trillion [worth of damage] per year.”

The report presents humanity with “an urgent choice,” neither of which will be easy: continue business as usual or ensure that humanity’s demands do not exceed nature’s capacity to supply. According to the report, “Continuing down our current path presents extreme risks and uncertainty for our economies.” However, the alternative “will require transformative change, underpinned by levels of ambition, coordination and political will akin to, or even greater than, those of the Marshall Plan (under which Europe was rebuilt after the second world war).”

The report suggests six areas in which our global community must seek reform, ranging from food production to education. First, our food production systems must be redesigned to employ progressive practices such as “precision agriculture and genetic breeding.” For example, developing perennial wheat varieties that do not require annual tillage, using geospatial technologies to improve crop yields and reduce inputs, and transitioning from gillnetting to reef-netting practices in our oceans to reduce harm to unwanted by-catch, to name a few. Though these practices will help immensely, the most profound changes to our food systems must start with the consumer. Dasgupta says that overconsumption of food products known to cause the most ecological damage, such as beef, “must be cut.”

Second, the growing human population must be addressed. Dasgupta’s report argues that “Addressing the shortfall [in women’s access to education and family planning] is essential, even if the effects may not be apparent in the short-term.” The report suggests that “There has been significant underinvestment in such programs,” and that “improving women’s access to finance [and increasing] support for community-based family planning programs can shift preferences and behavior and accelerate the demographic transition.”

Third, conservation efforts must be greatly expanded. As the report notes, “It is less costly to conserve nature than to restore it once damaged or degraded.” The report suggests that we ought to be “expanding and improving the management of [already] protected areas,” and that “large-scale and widespread investment in nature-based solutions would help us to address biodiversity loss and significantly contribute to climate change mitigation and adaptation, not to mention wider economic benefits, including creating jobs.” Dasgupta also notes that most low-income countries acquire much of their wealth from “natural capital,” as well as “tend to rely more directly on nature.” Thus, “conserving and restoring our natural assets also contributes to alleviating poverty.”

Fourth, Dasgupta implores us to change the way we measure economic success, steering our focus away from GDP. He argues that as a measure of economic activity, GDP “is needed for short-run macroeconomic analysis and management. However, GDP does not account for the depreciation of assets, including the natural environment. As our primary measure of economic success, it therefore encourages us to pursue unsustainable economic growth and development.” Instead of simply focusing on GDP, Dasgupta recommends we develop a more “inclusive measure of wealth” as a means of judging the sustainability of economic development. The report demonstrates that, “By measuring our wealth in terms of all assets, including natural assets, ‘inclusive wealth’ provides a clear and coherent measure that corresponds directly with the well-being of current and future generations.” To do this, Dasgupta suggests, “Introducing natural capital into national accounting systems would be a critical step towards making inclusive wealth our measure of progress.”

Fifth, the report proclaims that we must unite ourselves around the protection of those biomes considered “global public goods,” such as tropical rainforests, whose impacts transcend national borders. The report suggests we ought to explore a system in which payments are made to the nations in which these biomes exist, to protect and conserve those vital ecosystems. Similarly, for the ecosystems that lie beyond national borders, such as the high seas, the global community should consider “imposing charges, or rents, for their use (for example, ocean traffic and ocean fisheries) and prohibiting their use in ecologically sensitive areas should be instituted.” Dasgupta proposes that perhaps the revenue from such charges and rents could serve as the funds for the payments to the nations charged with protecting those biomes considered global public goods.

Sixth, Dasgupta’s report highlights the critical need to begin incorporating the study of nature as a key component of our education systems. Dasgupta says that “The discipline to draw on nature sustainably must, ultimately, be provided by us as individuals;” arguing that the increased urbanization of our societies has created a disconnect between humans and nature. Dasgupta proposes that, “Interventions to enable people to understand and connect with nature would not only improve our health and well-being, but also help empower citizens to make informed choices and demand the change that is needed.” The report firmly states that, “Establishing the natural world in education policy is therefore essential,” and explains that “the development and design of environmental education programs can help to achieve tangible impact” through collaboration with scientists and community organizations to address local environmental issues. Additionally, the report argues, “Our education systems should introduce nature studies from the earliest stages of our lives and revisit them in secondary and tertiary education. … We [must] create an environment in which, from an early age, we are able to connect with nature.”

Analysis

Environmentalists and economists alike have praised the report for its ability to highlight the services we take for granted from our natural environments, and the impacts on our global economy from our failure to protect them. The report has received acclaim for its reinterpretation of economic health as a measure of our natural assets, and its proposal of a new economic model that factors in the sustainability of our natural capital. Peter Blom, Chief Executive at Triodos Bank N.V., says, “The decisions that the financial sector continue to make do not reflect today’s reality, let alone the future we face. … If we do not act on the recommendations of the Dasgupta Review, we risk bankrupting our greatest asset.”

Nina Seega, from the University of Cambridge’s Institute for Sustainability Leadership, says, “The review’s focus on completely rewiring mainstream economic and financial models is key to moving the nature debate on to the agenda of governments, financial regulators and individual financial firms.” Seega and Mauricio Claver-Carone, President of the Inter-American Development Bank, both point to the timely nature of the report as nations work to recover from a debilitating pandemic. Claver-Carone writes, “As we look to a post-COVID-19 economic recovery, the Review highlights evidence that all of us in development can agree with, that greater investment in biodiversity could help boost employment and support a green and inclusive recovery.”

Jennifer Morris, CEO of the Nature Conservancy, acknowledges the urgent need to act now on the recommendations of the report. Morris says, “The upcoming UN summits on climate and biodiversity in 2021 provide an unparalleled opportunity to redefine the relationship between people and nature. Our shared planet is counting on all of us to step up and protect our natural world for generations to come.” Professor Justin Yifu Lin, Dean of the Institute of New Structural Economics, and Honorary Dean of the National School of Development at Peking University shares Morris’s sense of urgency. In reaction to Dasgupta’s report, he says, “Decisive biodiversity actions at the community, national and global levels should be followed immediately for preventing devastating impacts on our health, well-being and economy from pandemics, similar to COVID-19, and other risks fueled by the accelerating loss of biodiversity.”

Dasgupta concludes his report with a sage and optimistic revelation, “To detach nature from economic reasoning is to imply that we consider ourselves to be external to nature. The fault is not in economics; it lies in the way we have chosen to practice it. Transformative change is possible – we and our descendants deserve nothing less.”

Engagement Resources

The Nature Capital Project

  • Pioneering science, technology, and partnerships that enable people and nature to thrive. The Natural Capital Project aims to improve the well-being of people and our planet by motivating targeted investments in nature. Natural Capital Project | (stanford.edu)

Network for Greening the Financial System

  • At the Paris “One Planet Summit” in December 2017, eight central banks and supervisors established the Network of Central Banks and Supervisors for Greening the Financial System (NGFS). The Network’s purpose is to help strengthen the global response required to meet the goals of the Paris agreement and to enhance the role of the financial system to manage risks and to mobilize capital for green and low-carbon investments. The Network defines and promotes best practices to be implemented within and outside of the Membership of the NGFS and conducts or commissions analytical work on green finance. NGFS

The Nature Conservancy

References

Carrington, D. (2021, February 02). Economics of biodiversity review: What are the recommendations? Retrieved February 14, 2021, from https://www.theguardian.com/environment/2021/feb/02/economics-of-biodiversity-review-what-are-the-recommendations

Dasgupta, P. (2021), The Economics of Biodiversity: The Dasgupta Review. (London: HM Treasury). Retrieved February 14, 2021, from Final Report – The Economics of Biodiversity: The Dasgupta Review – GOV.UK (www.gov.uk)

Einhorn, C. (2021, February 2). Study Recasts Biodiversity as a Vital Economic Asset and Warns of Depreciation. Retrieved February 14, 2021, from https://blendle.com/i/the-new-york-times/study-recasts-biodiversity-as-a-vital-economic-asset-and-warns-of-depreciation/

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