It’s official: biodiversity is at the heart of economics. Failure to acknowledge this up to now has led to uncountable loss of species. A landmark report commissioned by the British government finally acknowledges this. But will it make any difference?

“Today, we ourselves, together with the livestock we rear for food, constitute 96 per cent of the mass of all mammals on the planet. Only 4 per cent 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.”

These are the words of the renowned naturalist and broadcaster David Attenborough taken from the foreword to The Economics of Biodiversity: The Dasgupta Review, by Professor Partha Dasgupta of St John’s College, Cambridge. 

Dasgupta has been called “perhaps Earth’s leading economist” by Professor Paul R. Ehrlich.

The report’s publication represents a landmark in the same way as Nicholas Stern’s review of the economics of climate change, commissioned by Gordon Brown when he was Chancellor in the British Labour government of 2006. It became one of the most influential reports on climate change ever produced. Both are published by the UK Treasury. 

The Dasgupta Review will do the same for the natural world. Over 600 pages Professor Dasgupta argues that it is essential that economic modelling now includes the value of natural capital as well as of the accumulation of produced capital (intellectual property, roads, machines, buildings, factories, and ports) and human capital (health and education).

It defines humanity’s ecological footprint and its relation to planetary boundaries. Dasgupta puts it in the form of an algorithm in which he tries to quantify the relationship between population (N), our wants and desires (y), the biosphere’s supply of its goods and services (G(S)), and the efficiency with which we use these to supply these wants and desires (?X, ?Z).

The most important algorithm in the world?

There is probably no more important algorithm in the world, because upon it depends our survival. And not just our survival but that of thousands of other species and ecosystems.

Its aim is to bring aggregate demand (Ny/?X + Ny/?Z) in line with aggregate supply (G(S)).

Of course, we are in deficit at the moment. The Global Footprint Network’s calculations show that this has been the case since 1972. If our bank accounts are in too great a deficit, the bailiffs come and take our property away. This is exactly what has been happening at a global scale; we have lost 60 per cent of nature since that year, and climate change has become an existential threat.

The genius of Dasgupta’s review is that it provides not just a reason for the failure of economics so far but models and languages for various actors in an economy that would allow them to rectify this so as to protect and sustain our place in the biosphere. 

Perhaps the most important sentence is: “It is a fundamental misconception of economists that we can continue to rely on models of growth and development in which our impact on the biosphere is of second-order importance” (page 130).

Climate change and biodiversity loss are intimately related. If we tackle one then we tackle the other, he says: “An integrated response to climate change and biodiversity loss is needed.”

How to achieve positive outcomes for the biosphere

The report asks and answers more fundamental questions such as: “How can positive outcomes be achieved for people and ecosystems in different contexts as the climate changes?”

To give one small answer to this question, he says, in reference to the great barrier reef: “Coral reefs only occupy 0.1 per cent of Earth’s surface, but they provide habitat for 25 per cent of known marine organisms. After reef bleaching, recovery is a race between recolonising corals and the algae that grow on the dead reef. Parrotfish are among the most effective consumers of algae, and they are also negatively affected by climate change. Helping protect parrotfish will help the reef recover, and maintain reef fishery output and communities’ livelihoods.”

It’s clear that indefinite growth as measured by global Gross Domestic Product (GDP) is impossible. So the review offers a new way of measuring economic progress by tracking the factors underlying the human impact on the biosphere including the waste products that follow all production and consumption.

I = (Ny/?X +Ny/?Z) ? Ny/? = the global ecological footprint

To put it in English, the global impact of humanity’s consumption is the income of the total population divided by the extent to which the biosphere is transformed by pollution and waste.

It follows that if we are careful to remove all pollution, and treat our waste, preferably by reusing it in a circular economy, the impacts on the biosphere will be reduced.

The review starts at the global level and then burrows down to study the distribution of ecological footprints across households, villages, regions, or other groups of institutions, replacing the word ‘biosphere’ with the term ‘ecosystem’. He also discusses the impact of trade at this level.

Regenerating nature is an investment in our children’s futures

Just as, over time, invested capital can accrue interest, so nature can regenerate. The review proposes an algorithm to describe this as well: the supply side of the equation. But it also warns about the unintended negative effects of human technological interventions– ‘ecosystem engineering’ – that were intended to fix ecological problems we had caused.

The review also acknowledges overshoot and offers a route to getting our footprint deficit back into the black while meeting the Sustainable Development Goals.

We can do this by finding “ways in which [the “stock” of the biosphere] can be stabilised. To sustain that stabilised value of S requires that the global ecological footprint equals the biosphere’s regenerative rate, that is: Ny/?X + Ny/?Z ? Ny/? = G(S)”

[See the key in the figure above.]

Dasgupta also discusses the management of the commons (chapter 8) and ensuring well-being for future generations (chapter 9).

Not everyone likes it

The review has been welcomed by a wide variety of people. 

There have been objections two have a concept of putting a value upon nature I’m bringing it into the capitalist hegemony. How can you say how much a water vole or a dragonfly is worth? Surely a 300 year old oak is priceless?

Philosophically and practically this is true. Moreover George Monbiot, complaining about the uncritical response that the review has received, tweeted: “Destruction is driven, above all, by the power of the rich. Regardless of how others value nature, those with power will destroy it, until their power is curtailed. Dasgupta’s natural capital agenda extends and enhances it. It is naive on many levels, but above all it is naive about power. Putting a social price on something does nothing to stop anti-social interests from exploiting it.”

Yet just because this is also true does not mean that Dasgupta’s approach is untenable. It is undeniable that because nature has been left off the balance sheet since the beginning of the age of empires and through the industrial revolution, its destruction has been inevitable.

Putting a value on nature helps us see that restoring it increases value. Passing laws protecting nature and their enforcement will help prevent other forms of destruction. But only rooting out corruption as such will stop ruthless industrialists bribing politicians to let them destroy mangroves. This is a separate issue.

Dasgupta acknowledges that nature has an intrinsic and sacred value, drawing upon his Indian heritage for examples: “Biodiversity does not only have instrumental value, it also has existence value – even an intrinsic worth. These senses are enriched when we recognise that we are embedded in Nature. To detach Nature from economics is to imply that we consider ourselves to be external to Her.”

And end to the old economics

It is time for economists to be taught a new type of economics. Traditional economics is morally and ecologically bankrupt. 

Someone from the future looking back at the way we have treated our environment would find it just as horrific as we do when recollecting our pre-19th century ancestors throwing their slops through their windows into the public streets.

As Henry Dimbleby, project lead on the UK’s National Food Strategy, says, “Not all of this is hard, but it will take huge courage and political skill. Dasgupta has thrown down the gauntlet, it is now the turn of the policy makers to accept it.”

David Thorpe is the author of ‘One Planet’ Cities: Sustaining Humanity within Planetary Limits and Director of the One Planet Centre Community Interest Company in the UK.