Why a single whale could be worth $2m

Natural resources: Economists argue that it’s time to pay the environmental bill.

Should everything have an eco-value as well as a financial one? A new report into the economics of biodiversity argues we should include impacts on nature in the costs of doing business.

Is it time we included the bees work in our accounting?

A new report argues for precisely this approach. The Dasgupta review, authored by economist, Sir Partha Dasgupta, encourages us to think of nature as “assets”.

He argues that we can place a monetary value on these assets, which he calls “natural capital”.

Just as a house is an asset, so is a habitat, such as a mangrove swamp.

It is worth more to the world to have the swamp than it is to replace it with farmland – even though a farm might create short-term profit.

If we calculate this benefit, then we might be less likely to destroy natural assets.

This new approach reveals the costs of our current approach: Dasgupta estimates we are losing around $4 to $6tn every year.

Recent years have seen efforts to put a price tag on nature, and to evaluate “ecosystem services”.

The review claims that biodiversity itself already shares logic with the market economy, comparing biodiversity to a diverse “portfolio” of investments.

To some, such language reduces nature to a commodity. For others, the strongest argument that biodiversity matters is its connection to your wallet.

Should everything have an eco-value and a financial one?

Grows on trees

Yes. We are currently living through a crisis caused by our failure to understand the value of nature. Knowing the true value of an elephant’s ecosystem services will make it worthwhile to pay those who might become poachers. It will also reveal the debt the rich world owes to poorer countries.

No. For some economists, paying more for a hamburger now penalises the present to benefit the future. For some, thinking of nature as part of our economy is exactly what caused the crisis of biodiversity in the first place. Knowing the price of nature is not the same thing as understanding its value.

You Decide

  1. If we can place a price on nature, should we do the same thing to reward good behaviour?

Activities

  1. Pick an animal you like and do some research into how it interacts with its ecosystem. Draw it surrounded by a list of the “services” it provides.

Some People Say...

“I care not, Fortune, what you me deny; You cannot rob me of free Nature's grace, You cannot shut the windows of the sky…”

James Thomson (1700 - 48), Scottish Poet

What do you think?

Q & A

What do we know?
It is widely agreed that the biggest impact on biodiversity is human food production. It is estimated that 96% of the biomass of mammals on earth are now humans and their livestock. Human activity has shrunk the biomass of wild marine and terrestrial mammals by six times over the course of our species’ history. The biomass of plant matter has likewise declined by half. Seventy per cent of all birds are now farmed poultry.
What do we not know?
One main area of debate is over what it means to “value” nature financially. An attempt to put a price tag on the biosphere came in at $33tn in 1992. However, others have argued that, as life cannot exist without nature, its value is infinite. In standard economics, something’s value is determined by our willingness to pay for it; but by translating something that we are currently unwilling to pay for – nature – into financial terms, we are also redefining what financial value is.

Word Watch

Capital
A term used to describe things other than labour that go into the production of goods. Machinery and tools are capital, as is a factory. Some people classify knowledge or skills as another kind of capital, human capital, and the idea of natural capital extends the term further.
Mangrove swamp.
A habitat on the coast where mangrove trees grow in salt water. They house many species and help protect against tsunamis.
Profit
Profit is the amount of money that the seller of a good makes after the value of labour and other costs such as capital have been deducted.
Commodity
A good that one can exchange in the market.
Penalises
To punish something or make it punishable.

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