It’s time to properly value the environment

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A personal perspective from Ian Stewart, Chief Economist at Deloitte in the UK. To subscribe and / or consult previous editions, simply google “Deloitte Monday Briefing”.

For the vast majority of human existence, homo sapiens held little power over nature. The efforts of our ancestors to “tame” nature were modest and had little lasting effect. In perhaps 200,000 years of human existence, it is only about 250 years since the Industrial Revolution that human activity has encroached on nature. Industrialization, economic activity and population growth have taken their toll.

A recent report by Cambridge economist Professor Sir Partha Dasgupta exposes the extent of the damage. Natural capital, the stock of natural assets including soil, air, water and all living things, has been reduced by human activity. Most striking of the report’s many extraordinary facts is the speed of this process.

As the world got richer, more educated, healthier and more populous, we were depleting the environment. The report estimates that the natural capital stock per capita of the world’s population has fallen by 40% in less than 30 years. It is a new era in the relationship of humans with the planet. In 2000, atmospheric scientist and Nobel Prize winner Paul Crutzen coined the term “anthropocene” to describe this new era when the impact of humans on the plant rivaled natures.

The humans and the cattle we raise for food now make up 96% of the mass of all animals on the planet. 70% of all birds are poultry that we must eat. Extinction rates are believed to be 100 to 1,000 times higher than the average rate over the past ten million years. Climate change is the most obvious form of self-inflicted harm caused by human activity, but it comes in many other forms.

The loss of plant species reduces the natural stock from which new foods, medicines and biofuels can be obtained. A report from the Royal Botanic Gardens in Kew last year found that two in five plant species in the world are threatened with extinction due to the destruction of the natural world. Urbanization and population growth increase the risk of zoonotic disease transmission from animals to humans, as appears to have happened with COVID-19. Deforestation, climate change and overuse have led to land degradation and desertification. C02 emissions have increased the acid content of the oceans, disrupting marine life and threatening aquatic food chains.

Professor Dasgupta observes that we are extracting natural capital at a faster rate than it is regenerating itself. In this regard, the world is on an unsustainable path. The report looks at a proven solution. Governments have a long history of assessing harms in areas such as air pollution, workplace safety and water quality. Regulations, or penalties for infractions, are then calibrated to bring about changes in behavior. In economic jargon, policy makers internalize or charge for the externality or damage.

But Professor Dasgupta wants to take these instruments and apply them globally, with governments valuing the stock of natural assets on the earth and taking into account the effect of human activity on it.

It is extremely ambitious and the practical problems are legion. The same could have been said of climate change at the turn of this century. Since 2015, 190 countries have officially joined the Paris Agreement to reduce greenhouse gas emissions and limit the increase in global temperature to two degrees Celsius during this century. Among the main issuers, only Turkey, Iran and Iraq have not yet joined. The world has gone from the beginning, to the target and now to the action.

Biodiversity is a relatively modern term, but the concern about the depletion of natural resources is as old as industrialization itself. In the 18th century, Thomas Malthus argued that a bountiful harvest would generate rapid population growth which, in turn, would deplete agricultural capacity, triggering disease and famine. The basic environmental problem, of individuals depleting a common resource, such as grazing land or fish stocks, to the detriment of all – the so-called tragedy of the commons – was first described by British economist William Firster Lloyd in 1832. The preservation of open spaces, the construction of modern sewerage systems, and the regulation of air and water pollution in the 19th century marked the beginning of the modern environmental movement. In the 1970s, the Club of Rome, a group of academics, policy makers and industrialists, played a very important role in shaping environmental opinion. Its first report, “The Limits to Growth,” foreshadowed the Dasgupta report by asserting that resource depletion was a growing threat to economic growth. It has sold 30 million copies.

For rich countries, there have been many improvements. In London, the concentrations of airborne particles, mainly soot, smoke and dust, which are easily particularly harmful to human health, have risen from a peak of over 600 micrograms per cubic meter in 1891 to 17 today ‘ hui. (It is now estimated that the great smog of 1952, which lasted only five days, killed between 10,000 and 12,000 people.) The Thames, which the Natural History Museum has declared “biologically dead” In 1957, now houses fish and sometimes seal.

Yet, as the Dasgupta report clearly shows, the overall environmental score is negative. (Even in London, fine particle pollution levels are too high in some areas and plastics are rampant in the Thames.)

Proper accounting for natural capital is the first step in preserving it, just as understanding climate change leads to reductions in C02 emissions. Such assessments are inevitably flawed. Many aspects of nature are invisible or mobile, and the effect of human activity can be distant and difficult to trace. The report describes how the soot emitted from South Asian cuisines affects the circulation patterns of North Sea monsoons and fish consuming microplastics native to the Bahamas.

Maintaining biodiversity requires action on many other fronts. The near doubling of the world’s population over the past 40 years has been a factor in the depletion of natural resources, and the Dasgupta report recommends investing in community family planning to give women greater reproductive autonomy.

Science and innovation are likely to offer many solutions. Genetic modification offers the prospect of more resilient and abundant crop varieties (which has been more controversial in Europe than in the United States or in emerging markets). Cultured meat substitutes could play a role, as could the creation of more industrial food products.

Vertical farming – growing crops indoors, under special LED lighting, often in water, with minimal use of pesticides and human intervention – is growing rapidly, sometimes in unlikely places. Going Underground grows salads and herbs in a disused air raid shelter 33 meters underground in south London for restaurants and consumers in the capital. Consumption models will have to change. Switching from animal and dairy consumption to a more plant-based diet would help.

Yet the Dasgupta report cautions against the idea that there is a comprehensive solution to the challenges we face. He argues that our economic possibilities are circumscribed by the workings of nature: “No technological advancement can make economic growth as conventionally measured an indefinite possibility. Our economy is inevitably a finite economy, just like the biosphere of which we are a part ”.

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