'Poisoning the well from which we drink'

Wednesday, December 27, 2017

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New research from a team of Oxford economists has rung ominous bells, showing that the decline of nature poses severe threats to continued national and global prosperity.

Launched at the World Forum on Natural Capital in Edinburgh November 27 & 28, the research shows that ministries of finance and treasuries are often blind to how dependent economies are on nature, which is declining at a dangerous rate. As a result, businesses and politicians are failing to register the systemic risk building up as the natural world fails.

“We are poisoning the well from which we drink,” says Oliver Greenfield, convenor of the Green Economy Coalition, which commissioned the research. “The dire state of nature and the implications for our future barely register in economic decision-making. To put this another way, we are building up a big systemic risk to our economies and societies, and just like the financial crisis, most economists currently don't see it.”

Professor Cameron Hepburn, who led the research at University of Oxford's Institute for New Economic Thinking at Oxford Martin School, says that flawed economic and political institutions are to blame.

“Much of the value that economies create is built upon a natural foundation – the air, water, food, energy and raw materials that the planet provides. Without nature, no other value is possible,” he said.

It's called natural capital, and it's the basis for all human prosperity. But, he reasoned, because most economies fail to account for this dependency, “business as usual” is driving a dangerous trend of environmental decline.

Extreme weather, mass extinctions, falling agricultural yields, and toxic air and water are already damaging the global economy, with pollution alone costing US$4.6 trillion every year. And we're in danger of losing other indispensable natural capitals, like topsoil for food production or a stable climate, without which organised economies cannot function.

Climate resilience has gained prominence in the reconstruction agenda for Caribbean islands devastated by hurricanes Irma and Maria, and in the economic decision-making of other islands across the Caribbean. The recent announcement by Prime Minister Andrew Holness to ban mining in the Cockpit Country Protected Area in Jamaica is one such example. According to Holness, the Jamaican Government could not put a price tag on the loss of the country's water resources and biodiversity.

“The area is too valuable in terms of its ecological and hydrological importance and uniqueness to allow mining, which may result in permanent and irreversible harm, and deprive future generations of the benefit of the national asset,” he noted.

The Oxford research points to three central reasons. Firstly, there is currently a lack of tools to adequately measure and understand the value of nature, meaning it is largely invisible to policymakers. Secondly, many economic models assume that environmental value can be easily and indefinitely replaced by man-made value; for example, the loss in natural capital from logging a forest is offset by the creation of valuable jobs and timber — ignoring the question of what happens when the last tree is cut down. Finally, there are no laws or institutions required to protect critical stocks of natural capital from unsustainable exploitation.

However, the research finds encouraging signs that the economy can be rapidly rewired to protect the planet. Getting there, it said, requires that:

• Governments and businesses start measuring their stocks of natural capital in comprehensive natural wealth accounts, and ensure that those assets are protected and improved.

• Better data be put on the value of the natural wealth that underpins economic activity, so that value can be accounted for by treasuries and financial centres.

• Critical natural assets – without which society cannot survive – be given special status so that they cannot be squandered.

“The opportunity to properly value nature is not just a task for economists but for all of us,” Greenfield added. “The societies and economies that understand their dependency on nature are healthier and more connected, with a brighter future.”

The Caribbean Natural Resources Institute (CANARI), which is a member of the Green Economy Coalition, calls the research “an urgent wake-up call to governments and businesses around the world”.

“Our economies are flying blind, and new models and methodologies are urgently required,” it said.

CANARI is expected to take the work forward in the Caribbean region by engaging Caribbean stakeholders in exploring pathways for transformation of economic development models towards a green, fair and resilient economy under its #GE4U: Transformation towards an Inclusive Green Economy in the Caribbean. Recognising the value of natural capital for economic development is a central principle in the European Union-funded project.




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