Earlier this month, the Dasgupta Review was published. “The Economics of Biodiversity” is an independent review representing “a landmark contribution to our understanding of the relationship between nature and our economy”, according to Andrew Bailey, governor of the Bank of England.
The full report runs to some 606 pages. The abridged version is a mere 103 pages ; so you might want to start with the 10 pages of “headline messages”. The author is Sir Partha Sarathi Dasgupta, one of the most distinguished economists in the world (Cambridge, LSE, Cornell etc) , with a deep and long-lasting interest in development economics, climate change and related issues.
The first headline from the review is that we all depend on nature, and we are part of it, not separate from it. It is an asset; not just economically, but intrinsically in terms of our health, wellbeing and very existence. But humans “have collectively failed to engage with Nature sustainably, to the extent that our demands far exceed its capacity to supply us with the goods and services we all rely on”.
This is a report that is pitched at a certain academic, business and finance audience, I would assume, so its approach is hard headed, as you can see from the focus on nature as “assets” and the use of financial terms throughout. So the “stock of natural capital per person declined by 40%” between 1992 and 2014”. Biodiversity is declining and ecosystems have been degraded or are at a critical tipping point.
And this is because there is deep-rooted “institutional failure”. We don’t value nature properly and the value of what it provides “is not reflected in market prices because much of it is open to all at no monetary charge. These pricing distortions have led us to invest relatively more in other assets, such as produced capital, and underinvest in our natural assets”.
So do we need to privatise and monetise our coral reefs, elephants and rain forests, if we need to look at them and treat them as “assets”? That concept has upset some, such as George Monbiot, who says we cannot “defend nature through the mindset that’s destroying it”. It is a fair point, but the Review does want us to understand the economics of biodiversity and that we “are ‘embedded’ within Nature, not external to it”. Equally, some right-wing, free-market folk have scoffed at the very idea of putting a monetary value on an elephant ($1.75million, by the way).
Whatever your view, the Review suggests that the change required needs three broad transitions.
1. Ensure that our demands on Nature do not exceed its supply, and that we increase Nature’s supply relative to its current level.
2. Change our measures of economic success to guide us on a more sustainable path.
3. Transform our institutions and systems – in particular our finance and education systems – to enable these changes and sustain them for future generations.
The Review looks at many different aspects of the economics of nature – I am working my way through the “abridged version” and some of it is somewhat heavy going if you are not an economist or financier. But there are fascinating discussions on a host of topics within those pages and powerful data that will be useful in thousands of PowerPoint presentations for years to come (including in the procurement with purpose community).
Whilst this concept of nature as an “asset” might not resonate with some of the more spiritual views of the universe, looking at the topic in this manner could be very powerful. If these issues of bio-diversity, species loss and ecosystems become of interest to the most powerful investors, politicians, regulators and executives in the world, then there is a better chance of humankind at least starting to move in the right direction.
But one final observation. I have not found any mention in the Review of procurement – the business interactions between organisations, which sit firmly within that economic view of life, I would suggest. And most readers will understand how powerful a tool procurement can be for driving changes in economic behaviour.
Whether it is firms promising to buy raw materials only from sustainable growers, or coming up with innovation to reduce water use through their supply chains, buyers pushing sellers to change behaviour is a powerful lever. That is particularly so as those sellers are almost always “buyers” themselves, so we see the multiplicative “network effect” as purposeful procurement becomes more established.
In any case, for anyone interested in these topics, this is essential reading. The Dasgupta Review will be remembered as an important contribution to the intersecting worlds of business, finance, government and sustainability.