top of page

UK Report on the Economics of Biodiversity: Is Nature an Asset or Invaluable?

Economic policy with biodiversity in mind provides a compass for course correction.   ©Roshan Kumar Agarwal
Economic policy with biodiversity in mind provides a compass for course correction. ©Roshan Kumar Agarwal

The cycle has come full circle. From competing with increasingly efficient ways of exploiting natural capital and converting it into produced capital (goods and services), mankind is now faced with the challenge of rapidly reversing course or facing catastrophe. In 2019 the treasury department of the United Kingdom commissioned Professor Sir Partha Dasgupta of Cambridge University to carry out a comprehensive global review of the economics of biodiversity. Coming on the heels of the Intergovernmental Panel on Climate Change’s ‘Special Report: Global Warming of 1.5ºC’ and the onset of the global pandemic, the review couldn’t have been better timed.

With the delayed United Nations Biodiversity conference scheduled for later this year, the report assumes even greater significance. It was important that the scope of the review was global and the mandate was for an economic review commissioned by the treasury rather than the environment department. What ecologists and environmentalists have been saying since the 1970s finally had a willing ear among those in power worried about the future risks for global finance. Their time had finally come!

Today, we ourselves, together with the livestock we rear for food, constitute ninety-six percent of the mass of all mammals on the planet. Only four percent is everything else — from elephants to badgers, from moose to monkeys.” — Sir David Attenborough

The reaction to the 610-page report released in early February has been almost universally positive. Luminaries ranging from Sir David Attenborough to Prince Charles and the Prime Minister of the UK, not to speak of eminent academicians from diverse domains, have praised the report for its depth, vision, lucidity, and courage to prescribe some tough yet much-needed action.

The great naturalist Sir David Attenborough captured the crisis well in his foreword. “Today, we ourselves, together with the livestock we rear for food, constitute ninety-six percent of the mass of all mammals on the planet. Only four percent is everything else—from elephants to badgers, from moose to monkeys. We are destroying biodiversity, the very characteristic that until recently enabled the natural world to flourish so abundantly. If we continue this damage, whole ecosystems will collapse. That is now a real risk.” The Dasgupta review establishes the enormity of the crisis beyond doubt, with a mountain of evidence drawn from the best of recent research.

Does the report have any weaknesses? Judging by the overwhelmingly positive reaction full of hope and optimism that the report will finally lead to effective action, it would not seem it has. However, there are some voices of concern, particularly regarding the idea of treating nature as capital. ‘Natural capital’ is defined as the idea of natural resource production independent of human intervention. It has been the source for extraction as well as the sink for dumping all of our waste to create much of our ‘produced’ and ‘human’ capital. Yet, its depreciation has never been accounted for. This free ride has been hailed and indeed the efficiency with which humans could exploit natural capital was considered the hallmark of progress and civilization. Therefore, there is a fundamental concern that treating nature as ‘capital’ would not help address the crux of the existential crisis faced by humanity.

The Dasgupta review is broadly divided into two major parts. The first part of the review is about establishing in rigorous yet accessible terms the journey to the precipice, particularly in the period starting in 1970. The last fifty years have been epoch-making in human history in the way exponential change has taken place in a very short period. Global gross domestic product (GDP) per capita has increased about four times, average life expectancy from forty-nine to seventy-six years, absolute poverty has fallen from 60% to around 10%, and so on. The list of human achievements is endless in the period we have come to know as the ‘Anthropocene’—an age where the homo sapiens have come to dominate nature in a way unprecedented in the history of life on planet Earth.

Between 1992 and 2014, the stock of natural capital per person declined by nearly forty percent, while produced capital per person doubled.

Unfortunately, this rise in wealth and development has taken a serious toll on the earth’s natural resources. It is estimated that we currently need 1.6 earths to support the prevailing consumerist economy, notwithstanding the abject disparity that exists among regions. This relationship is elegantly captured in a simple formula N y / α > G (S) where N stands for population, y stands for per capita impact, α stands for efficiency of converting natural capital into produced and human capital, G is a regenerative capacity function representing the rate at which ecosystem services are regenerated by nature, and S stands for the total stock of natural capital. Between 1992 and 2014, in a little over two decades, the stock of natural capital per person declined by nearly forty percent, while produced capital per person doubled and human capital per person increased by about thirteen percent. Clearly, the equation is in imbalance to the detriment of our only home, the biosphere.

The Impact Inequality.  ©D.K. Mishra
The Impact Inequality. ©D.K. Mishra

Articulating ecosystem services as natural capital, whose depreciation is accounted for in the calculation of an alternative ‘green GDP’ measurement (or, as some have started terming it, ‘Gross Ecosystem Product’ or ‘GEP’), is certainly an important idea. However, this is by no means an original or first of its kind proposition. Quite recently China’s high tech city Shenzhen, after many months of experimentation, has formally declared moving to the alternative system of measurement of economic progress in line with the national policy of not pursuing GDP growth per se.

It is certainly a welcome move on the part of economics as a discipline to embrace wholeheartedly what had been proposed earlier for decades almost coinciding with the start of the Anthropocene, by the likes of Kenneth Boulding in his famous essay - "The Economics of the Coming Spaceship Earth". Walter Stahel and Genevieve Reday in their report for the European Commission in 1976 introduced the idea of a circular economy by proposing the replacement of the ‘take, use and throw’ model with the ‘take, use and recycle’ model. Even more recently Kate Raworth’s proposal of the doughnut economy has tried to integrate the measurement of economic progress with human well-being and to the extent to which the planetary boundaries are breached.

The second part of the report consists of wide-ranging recommendations to arrest the rapid slide in the stock of natural capital. From the inequality between the human impact on the demand side and ecosystem services on the supply side, it is clear that all steps must be taken to reduce demand and increase supply. As Sir David Attenborough rightly points out, by putting biodiversity at the core of economics and thereby bringing ecology and economics together, the review has provided the much-needed compass for urgent course correction.

Enforcing new standards for reuse, recycling, and disposal, imposing new taxes on unsustainable activity, and mandating global supply chains to adhere to environmental norms would be important to reduce demand. Demand can also be reduced by boosting investment in women’s education and empowerment, which has proven to reduce fertility rates and population growth pressures. Given that it is far less expensive to conserve rather than restore natural ecosystems, substantial financial incentives must be put in place for communities to preserve life-giving forests, watersheds, mangroves, and the like. Given that the poor are more directly dependent on nature, this will go a long way in addressing the economic disparity between the global north and south.

The world has a very poor record in meeting self-imposed targets.

Unfortunately, the world has a very poor record in meeting self-imposed targets. The twenty Aichi biodiversity targets agreed on in Japan in 2010 to protect coral reefs, remove government subsidies that damage nature, and tackle pollution come to mind. It was the second consecutive decade that governments failed to meet targets. The UN’s upcoming Kunming biodiversity summit may be humanity’s last chance to set ambitious goals. The COVID-19 pandemic has shown that unimaginable action, such as the complete shutdown of economies, is possible in the face of imminent calamity as humanity responded swiftly. Hopefully, the Dasgupta review may be a key driver for such a massive response as warranted to ward off the biodiversity loss disaster.

There are success stories from around the world cited in the review that show that it is possible to do many of the things recommended by it. Maybe the same ingenuity and innate capability that first led us to make such large and damaging demands on the biosphere can also be deployed to bring about transformative change. The biggest challenge would be to create a new global system of governance that would ensure foolproof mechanisms so that the goals agreed to are achieved in the designated time frame, so as not to jeopardize the future of our descendants.

The need of the hour today is to treat nature not as an asset or capital, but as invaluable and sacred. Our treatment of nature must transcend the asset-centric mindset to realize the true sanctity of nature as the source of all life, nourishment, and our very being.


*Dhanada K. Mishra is a PhD in Civil Engineering from University of Michigan, Ann Arbor, USA, academic and technologist with strong interest in sustainability of the built environment. He is currently serving as the Technical Director in RaSpect Intelligence Inspection Limited, a start-up based in Hong Kong.


Join Our Community

Sign up for our bi-monthly environmental publication and get notified when new issues of The Earth & I  are released!


bottom of page