On natural capital and poverty of thought

What’s nature worth? It’s a question many of might object to philosophically, but the British government has recently starting counting. It’s not something that many people are paying much attention to at the moment, but the second Natural Capital report was just presented this month.

Tree-TagIn a nutshell, the job of the Natural Capital Committee is to turn Britain’s nature into numbers. Trees and birds and rivers don’t count for anything, quite literally. They are invisible. For them to be accounted for, everything will need a price tag attached.

In my imagination, that involves Professor Dieter Helm and his colleagues running out into the woods to barcode sparrows. In reality, they plan to tot everything up and present their reports to George Osborne and his Economic Affairs Committee.

So far we know that certain things are in serious decline, including fish stocks and fresh water. Big opportunities exist in reforestation as a carbon sink, and tree planting and wetlands restoration to reduce flood risk. Improving air quality would also save us billions every year in healthcare costs.

Putting specific numbers to these things is a work in progress, but eventually they will all be listed on the ‘national natural capital accounts’ that are being developed as we speak.

The motive is admirable, to be “the first generation to leave the natural environment of England in a better state than it inherited”. But it is somewhat conflicted. On the one hand, it insists that “ambitious action is needed to put the economy on a sustainable footing within a generation.” On the other, all things are justified by their contribution to the economy. “A long-term plan is necessary to maintain and improve natural capital, thereby delivering wellbeing and economic growth.” Make no mistake – this is not about valuing nature for itself, but about measuring what it is worth to the economy, and those are two different things.

The report is up-front about the fact that this is all calculated on the basis of human utility, not the inherent worth of nature. It defines natural capital as “the elements of nature that directly or indirectly produce value to people”. The idea that things might have a right to exist in and of themselves is entirely absent.

Another problem is that once we’ve quantified and valued our rivers and forests, we are likely to start managing them on the basis of the numbers rather than the things themselves. But artificial monetary values don’t reflect the way the world actually functions.  Overlaying an economic understanding onto a world that doesn’t work that way leads to ecologically dubious policies like biodiversity offsetting. Deciding who to protect from flooding is another, with the government recently confronted with competing value claims to the Somerset Levels that their cost benefit analysis hadn’t revealed.

It’s hard to object to what the government is trying to do with the Natural Capital assessments. If economics is the language we understand, then pricing in nature makes complete sense and is even quite enlightened. But equally, you could argue that if our economists can’t see the natural world that sustains them, then their logic does not extend to the natural world and they should know the limits of their expertise. That doesn’t mean economics is useless, only that it cannot be the only perspective. We have become too dependent on a powerful but narrow way of looking at things.

It doesn’t have to be that way. Economics can be the servant of government and not the master. My post on Ecuador last week profiled a national approach to the environment that is much richer and more mature, with a sense of stewardship and partnership with the natural world.

That matters, because ultimately nature is relational. Ecosystems are the web of relationships between interdependent species. Wisdom in handling nature is about knowing our place, understanding our relationship to the land, air and water, and the other species we share them with. Like any relationship, you can’t break it down into numbers. To attempt to do so is to misunderstand it. The result is as unrepresentative as describing a painting or drawing a piece of music.

But then, George Osborne and his committees have failed to grasp the hierarchy from the start. They mistakenly believe that organising nature is part of their remit. “As the White Paper rightly emphasised,” says the report’s foreword, “the environment is part of the economy and needs to be properly integrated into it so that growth opportunities will not be missed.”

The arrogance of worrying if ‘growth opportunities’ might be missed if the environment is not integrated into the economy is rather striking. Going for growth is what the green world all around us does best – it’s just that it maximises life, not capital. It recognises no value but life itself, in all its glorious abundance and diversity.

In his recent book, Philip Roscoe wrote that “the greatest error of modern economics has been to forget that it is part of the world.” He is right. The environment is not part of the economy. Nature is bigger than we are, and it was here first. Left to its own devices it would happily integrate itself into the Treasury and the Bank of England, creating growth opportunities between its flagstones.

If the economy can’t see nature, is that nature’s problem or the economists? To put it another way, should we be wrestling nature into an economic paradigm, or shaping our economics to fit the world?

Let’s flip the question around. Instead of asking how the natural world can better serve our economic model, let’s ask how we learn from nature to create an economy that maximises life.

23 Comments on “On natural capital and poverty of thought”

  1. DevonChap March 19, 2014 at 9:02 pm #

    Economics needs values, it needs numbers. It is hard to think how economics could work without numbers.

    It is a criticism that the uneducated make that economics doesn’t care about nature. The fact is economics cares about nature a great deal, but since it is hard to value it is hard to include in economic policy. If you want economics to include the environment then putting a value to it it a necessary step.

    What is the alternative? You make s statement that the environment is ‘priceless.’ In which case how can you judge what is a sensible trade off between preserving part of the environment and human welfare? If saving a pristine piece of scrub land costs every one in the country £10 is that worth it, If is costs them £10,000 and means they go hungry is it still worth it? I can answer that if I have a value for that enviornment. Without valuing that piece of environment I can’t but if it is ‘priceless’ I’m at the mercy of zealots who want 90% of people dead.

    It is very romantic to attack economics but not really rooted in reality. This is just slogans.

    • Jeremy March 20, 2014 at 8:22 pm #

      I downloaded the Natural Capital Report because I thought it was a good idea and I was curious.

      It was the line that about the economy being part of the environment that made me pause. Perhaps you don’t see the hubris of the statement, but I find it quite extraordinary.

      It kept coming back to me. Why does it make me uncomfortable? Are they right? If not, why? I reflected on this for a few days, and then on monday I sat down and wrote the post on the train. I re-wrote it on the way home, and then I posted it yesterday after a third draft.

      In the course of re-drafting I softened the language and weeded out things that struck me as angry or cynical. I qualified my statements, and made sure that I was acknowledging the usefulness of economics, as well as wanting to point out its limits. I gave current political examples of how pricing nature could go wrong. I deliberately avoided the usual absolutist cliches like ‘nature is priceless’ – a phrase which does not appear in my piece.

      My point is this: it’s not a cheap shot.

      • DevonChap March 20, 2014 at 9:50 pm #

        The environment is part of the economy, the economy is part of the environment. The economy can not exist outside of the environment. But if you want humans to protect the environment you have to make it clear to them what they do and can get out of it.

  2. dichasium March 19, 2014 at 9:39 pm #

    DevonChap – How does ‘economics’ care about the environment?

    • DevonChap March 20, 2014 at 4:51 pm #

      Well, only people care about the environment. Perhaps I should have said economists care for the environment. Economics, is just a discipline like physics. Neither ‘care’ for the environment per se.What you get out of it depends on what you put into it. Both require data to create models.You want the environment included in the economic models, then it requires data, not platitudes

      • Tegan Tallullah March 20, 2014 at 6:11 pm #

        Interesting that you used physics as an example. It’s always struck me that many people think of economics as if it’s one of the natural sciences – like physics – that’s describes how the world works. That’s the kind of thinking that leads to the ridiculous quote in the article about the environment being part of the economy. The truth is the economy is a part of human society which is part of the environment. Duh.

      • dichasium March 20, 2014 at 7:03 pm #

        DevonChap thanks. I did leave the question open to your own interpretation so the reply wasn’t what I was looking for – my fault. But those who do not see it your way aren’t uneducated, romantic, just speaking in slogans and wanting 90% of people dead! I’m sure that some don’t want to see the environment in economic models because history has shown what overall long term damage that leads to, despite arguments for any of the undeniable benefits humans have received. There may not yet be a satisfactory answer to valuing the earth but many do don’t want it traded off in cold economic terms (And they only describe you and your type of thinking as misunderstanding!).

  3. m. 'A minor matter' March 19, 2014 at 9:40 pm #

    Thanks for touching upon some of the theorems postulated extensively in my draft of 2013, ‘A minor matter’ available below. Your article is pointing to the core of reality in all of it’s statements and questions. A few are left untouched, like the concept of jobs, the theorems of democracy and their meaning in the grand scheme of things.

    The mention of how to apply accountability, how to distinguish between human centric contexting and added value of humanity to larger reality are very to the point. This week NASA also drew upon quantitative analysis to report the pathway to disruption we humans are on.

    Read more: http://m.openairproperties.com

    • dichasium March 20, 2014 at 6:38 pm #

      m.’A minor matter’ – Please could you give the name of the NASA report and where to find it. Thanks. (I also could not open the pdf ‘A minor matter’!).

      (Jeremy – sorry I asked you first – not well, not thinking straight, and his link wouldn’t open for me!).

      • m. 'A minor matter' March 20, 2014 at 10:52 pm #

        NASA report was commented on at truth-out.com, there is a pointer to the primary source .

        The link is fine, maybe ask some help in how to pull it into a pdf reader, within the browser or stand-alone.

  4. jeffmowatt March 20, 2014 at 7:10 am #

    A point from our critique of traditional capitalism based on creating numbers:

    “Economics, and indeed human civilization, can only be measured and calibrated in terms of human beings. Everything in economics has to be adjusted for people, first, and abandoning the illusory numerical analyses that inevitably put numbers ahead of people, capitalism ahead of democracy, and degradation ahead of compassion.

    Each of us who have a choice can choose what we want to do to help or not. It is free-will, our choice, as human beings. ”

    http://www.slideshare.net/JeffMowatt/principles-of-people-centeredeconomics

    • DevonChap March 20, 2014 at 4:59 pm #

      What did Bill Clinton say when he was presented with this? Was it presented in person or the emailed to the White House public email account type of ‘presentation’?

      Separately I’d point out Descartes was only able to prove his existence, and perhaps that of God’s. Other people he could not prove existed so if you are basing this on Descartes you have started on an error.

      • Tegan Tallullah March 20, 2014 at 6:24 pm #

        When did Descartes possibly prove the existence of God?

        • DevonChap March 20, 2014 at 9:40 pm #

          Having proved that Descartes existed (he thought, therefore he was), he then felt someone had to have created him, and that was God.

          • Tegan Tallullah March 21, 2014 at 5:46 pm #

            I see… Having a feeling is a far cry from proof. Fair enough though – I just was surprised when I read that and thought I might have missed an important moment in history or something.

          • DevonChap March 21, 2014 at 5:56 pm #

            It doesn’t convince me either, but it is what Descartes believed. I just wish people would at least read Wikipedia before basing their philosophical outlook on something.

  5. dichasium March 20, 2014 at 4:21 pm #

    Jeremy, Sorry to bother, but do you know where I can view the NASA report mentioned above by m.’A minor matter’?

  6. Tegan Tallullah March 20, 2014 at 6:20 pm #

    Really interesting article, and I thought the ending was quite poignant. I can’t make my mind up about the economic valuation of nature. On the one hand it would be one of the most effective yet manageable ways of protecting nature without changing too much of our economic system. But on the other hand it seems wrong to attempt to put a price tag on parts of the natural world, on living things. It’s always going to be an undervaluation because as you say they can only count the utility value. It’s tricky because to be honest ‘the environment’ IS priceless – we literally couldn’t exist without it. I do think it’d be a good idea to price pollution – like calculate how much it’d cost to clean it up, tax the polluter that much and use the funds for clean-up. I just don’t think the habitat itself could be done justice with a number.

    • Jeremy March 20, 2014 at 8:28 pm #

      Exactly, you’ve nailed the tension here – this is a useful idea, and it should be a valuable exercise. But, it has to be done with a degree of humility, knowing that any numbers we come up with are highly artificial, one tool among many.

      What concerns me is not the idea of drawing up the natural capital accounts, but what we might do with them afterwards. Economic logic has a way of trumping all other perspectives.

      • Tegan Tallullah March 21, 2014 at 5:49 pm #

        Yes that’s very true. I think it can be considered a good thing that these authorities are starting to look at the value of nature, even if they’re going about it in a slightly narrow way. Let’s hope we can all remember the price-tags will be an arbitrary measure.

  7. Pooja LoPriore March 20, 2014 at 10:33 pm #

    Reblogged this on S U A R I * सुअरी and commented:
    Great Mind Opener

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