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03/02/2021

Approach to economics must change to reverse biodiversity loss, warns review

Words: Laura Edgar
Biodiversity offsetting: kicked into the long grass?

An independent review into the economics of biodiversity has concluded that there needs to be a fundamental change in the approach to economics if biodiversity loss is to be reversed and prosperity enhanced.

In The Economics of Biodiversity: The Dasgupta Review, Professor Sir Partha Dasgupta sets out the first comprehensive economic framework for biodiversity and calls for urgent change in how economic success is thought about and measured in order to protect and enhance the natural world.  

Dasgupta said: “Truly sustainable economic growth and development means recognising that our long-term prosperity relies on rebalancing our demand of nature’s goods and services with its capacity to supply them. It also means accounting fully for the impact of our interactions with nature across all levels of society. Covid-19 has shown us what can happen when we don’t do this.

“Nature is our home. Good economics demands we manage it better.”

Commissioned by HM Treasury, the review sets out how nature should be accounted for in economics and decision-making.

It makes the case for nature being the “most precious asset” but “significant declines” in biodiversity are undermining the productivity, resilience and adaptability of nature. This, in turn, puts economies, livelihoods and wellbeing at risk.

Humanity, the review contends, has “collectively mismanaged its global portfolio of assets”. Therefore, the demands on nature “far exceed its capacity to supply the goods and services we all rely on”. Transformative action is needed to address this, and taking that action now will be less costly than waiting.

Change is needed on three fronts, according to the report:

  • The demands by humanity on nature must not exceed its sustainable supply. Humanity must increase the global supply of natural assets relative to their current level. This could, for example, involve expanding and improving management of protected areas; increasing investment in nature-based solutions; and deploying policies that discourage damaging forms of consumption and production.
  • Different metrics for economic success should be adopted and there should be a move towards an inclusive measure of wealth that accounts for the benefits from investing in natural assets and helps to make clear the trade-offs between investments in different assets. Introducing natural capital into national accounting systems is a critical step.
  • Institutions and systems must be transformed – particularly finance and education – to enable these changes and sustain them for future generations. The review suggests increasing public and private financial flows that enhance natural assets and decrease those that degrade them. Citizens should be empowered to make informed choices and demand change, including by firmly establishing the natural world in education policy.

Prime Minister Boris Johnson said: “This year is critical in determining whether we can stop and reverse the concerning trend of fast-declining biodiversity.

“I welcome Professor Dasgupta’s review, which makes clear that protecting and enhancing nature needs more than good intentions – it requires concerted, coordinated action.

“As co-host of COP26 and president of this year’s G7, we are going to make sure the natural world stays right at the top of the global agenda. And we will be leading by example here at home as we build back greener from the pandemic through my 10-point plan.

Sir David Attenborough said: “The survival of the natural world depends on maintaining its complexity, its biodiversity. Putting things right requires a universal understanding of how these complex systems work. That applies to economics too.

“This comprehensive and immensely important report shows us how by bringing economics and ecology face to face, we can help to save the natural world and in doing so save ourselves.”

Tony Juniper, chair of Natural England, also welcomed the review. “For too long it has been widely assumed that the degradation of the environment was a necessary price of progress. This review reveals, however, that the opposite is in fact the case, and how a healthy natural world is essential for sustaining the health of our economy and society.

“The clear upshot is that we now need to ensure collective and sustained action to ensure the natural world on which we depend is not only protected, but also restored at transformational scale. This will require a step change in investment, both public and private, in the recovery of nature.

“The restoration of the natural world will bring a range of valuable dividends, making this one of the wisest investments we can make, with rich returns seen in, for example, improved public health and wellbeing, catching carbon from the air, helping us adapt to the changing climate, ensuring supplies of clean water, boosting tourism and protecting our future food security."

The government commissioned Dasgupta to lead an independent global review of nature in spring 2019.

The Economics of Biodiversity: The Dasgupta Review can be found here on the UK Government website.

Image credit | Shutterstock

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