The Economics of Biodiversity and the World’s environmental crisis

The response of the UK government to the Dasgupta Review is positive and comprehensive. The question is whether the environmental movement will see this as an opportunity to slow the demise of the natural environment.

The Dasgupta Review “The Economics of Biodiversity” says we can no longer afford for biodiversity to be absent from accounting systems and ignored by economic decision makers. Accordingly the Review details the need for environmental accounting which would allow natural capital to be included in national accounts and therefore GDP

The Review gives an example of the woodland destroyed to build a shopping centre or housing estate. GDP records an increase from produced capital but no depreciation of “natural capital” from lost services such as tree carbon, purified air, habitat for pollinators, and amenity.

The Review of 500 pages details the many ways economic considerations could bring biodiversity into current economics and governance and indeed would allow whole of government response to address the environmental crisis.

The Review was discussed at the G7 meeting in London in June 2021 and

it is likely to be considered alongside climate policy at COP26 in Glasgow as evident from President Biden’s communiqué after the G7.

This article details responses to the Dasgupta Review.

Norges Bank, one of, if not the biggest institutional investor in the world, has issued a “New expectation document on biodiversity and ecosystems”,  setting out how the companies they invest in should take biodiversity and ecosystems into account in their activities, governance structure, strategy, risk management, measurement and reporting.

The findings of the Dasgupta Review have been discussed and promoted by the UK Green Finance Institute and by the World Business Council for Sustainable Development (WBCSD).

To date, the response to Dasgupta by environmental organisations has been limited but it has been welcomed by the WWF.

In Australia there was a transient response in some media including the ABC. There does not seem to have been an official response from the Government and the important 2021 Intergenerational Report which guides Australia over the next 40 years has only one sentence on Dasgupta in its 198 pages.

The UK Governments Response 

The Response of the UK Government is comprehensive and positive.

The crucial question is whether the environmental movement will see this as an opportunity to slow the demise of the natural environment.

The UK government recognises that the biodiversity crisis is closely linked to the climate crisis and requires a whole of government integrated response and how all countries can “take decisions in ways which account for the natural environment; and in doing so have a more complete view when balancing social, economic, and environmental considerations in decision-making.”

It succeeds, in that it is difficult to summarise the Response for to do so would revert to current ministerial working within silos! Indeed it leads us to reflect on Australian management of the environment with biodiversity entrusted to an ineffective EPBC Act when the most destructive decisions are made in the more powerful silos. The response has many lessons for Australia and is a must read for all those concerned about the climate and biodiversity crises.

The UK government aims to ensure economic and financial decision-making and supports a “nature positive future” by reversing biodiversity loss globally by 2030. This recognises that biodiversity ultimately sustains our economies, livelihoods and well-being. This commits to environmental accounting supported by the UN System of Environmental-Economic Accounting (SEEA) which is progressing in the UK and some other countries but which is largely absent in Australia.

The UK Government recognises that GDP has its limitations and should not be seen as an all-encompassing welfare measure.  A nature positive future requires natural capital and the goods and services which it delivers to be integrated into our economic and financial decision-making, and into the institutions and systems that underpin and drive those decisions. Nations consuming their natural capital may well have a negative GDP.

This implies recognition that biodiversity loss is caused by fundamental flaws in the way we live that is by growth and development - in a finite planet. One gets the impression that the UK government has suddenly recognised at five minutes to midnight that the planet is finite.

Many in the environment movement believe that only a new economic system can save us; this may be so but a first step is to educate on the value of ecological systems which is rarely in the thoughts of finance ministers. The inclusion of natural capital in accounting systems will do this.

The UK Treasury’s Green Book will be used to appraise policies, programmes and projects to include environmental assessment on natural capital. All developments will be appraised against their contribution to the Government’s strategic objectives to assess how a specific project interacts with other policies – such as the Government’s 25 Year Environment Plan – and how it is limited by constraints including legal commitments.

A Biodiversity Metric will provide developers, planners, land managers and others with a tool to calculate the baseline biodiversity of a site and how this can be increased by increasing the size of habitats or improving their quality.

The whole of government response embraces Extension of Protected Areas with measures to enhance their biodiversity; increase in National Park funding; a Nature Recovery Network for connecting natural habitats; an increase in Natural Nature Reserves; action on trees, woodlands and forests; restoration of peat lands; a commitment to sustainably managed soils by 2030 to underpin a range of environmental, economic and societal benefits including food production, biodiversity, carbon storage and flood mitigation; a green jobs taskforce with funding.

It might seem that the government failed to recognise overpopulation as a major driver of biodiversity loss. However the Response commits the UK to invest in voluntary family planning programmes to empower women in their reproductive choices, and so support the health, prosperity and resilience of their communities and country.

Global measures to control of illegal logging and the wildlife trade have a commitment as does the inclusion of environmental safeguards in trade agreements.

Here we already see the major danger to the UK environmental program and plans to mitigate climate change, the politicians themselves who meddle with crucial decisions for personal or party gain.

The recent UK-Australian trade deal transgresses the Paris climate agreement and allows the import of large quantities of cheap beef and other agricultural goods produced to lower environmental standards than are permitted in the UK. Hopefully it will not be ratified.

We await a response to the February 2021 Dasgupta Review from the Australian Government as well as the financial sector and the environmental movement