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Why a single whale could be worth $2m

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. Nobody pays the bees for their labours. Despite this, every year, they pollinate flowers and crops worldwide. Without them, harvests would fail. So is it time we included their work in our accounting? A new report, commissioned by the UK government argues for precisely this approach. The Dasgupta review, authored by eminent economist, Sir Partha Dasgupta, encourages us to think of nature and its biodiversity as “assets” – things we benefit from owning. He argues that we can place a monetary value on these assets, which he calls “natural capital”. The review calls for a reunion between economics and ecology. Prime Minister Boris Johnson echoed this at its launch, calling them “two atoms in the same molecule.” Just as a house is an asset, Dasgupta argues, so is a habitat, such as a mangrove swamp. You would not knock down a house to sell it brick by brick because a house is more valuable than the individual bricks. The same is true of the swamp. As a whole, it supports biodiversity and protects an area from flooding. In the long term, 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 more short-term profit. If we can calculate this benefit, Dasgupta suggests, then we might be less likely to destroy our natural assets in order to sell them off piece by piece. This new approach reveals the costs of our current approach to the environment: Dasgupta estimates we are losing around $4 to $6tn every year. Recent years have seen a flurry of efforts to put a price tag on nature, and to evaluate what are known as “ecosystem services”. In the case of the mangrove swamp, the “services” it provides – such as habitats and protection from flooding – have been valued at around $4,000 per hectare per year. The same calculations have been used to put a value on elephants, whales, rainforests and any number of species and habitats. Estimates suggest that the labour of the bees is worth about $190bn to the US economy every year. Some hope that this bill will encourage governments and businesses to take action on biodiversity, including paying poorer countries to save ecosystems. That way, the products we buy could have an eco-value – one that reflects the impact on biodiversity or costs of pollution. This is a way of dealing with what economists call externalities. When something is seen as being outside the market because nobody pays for it, it is harder to regulate. Nature, the argument goes, needs to be brought inside the market. The review claims that biodiversity itself already shares a logic with the market economy, comparing biodiversity to a diverse “portfolio” of investments. To some environmentalists, such language reduces nature to a commodity. For others, the strongest argument that biodiversity matters is its connection to your wallet. So, should everything have an eco-value as well as a financial one? Grows on trees Some say yes. We are currently living through a crisis caused by our failure to understand the value of nature. It is partly a matter of incentives. Knowing the true value of an elephant’s ecosystem services will make it worthwhile to pay people who might otherwise become poachers. It will also reveal the extent of debt the rich world owes to poorer countries, whose wealth is often extracted through damage to their ecosystems. Others say no. For some economists, paying more for a hamburger now penalises the present to benefit the future, when people will be richer because of economic growth. For some critics, thinking of nature as part of our economy is exactly what caused the current crisis of biodiversity in the first place. Knowing the price of nature is not the same thing as understanding its value. 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. Reunion: Ecology and economy both have their origins in the Greek word Oikos, which means the house or family unit. 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. Hectare: One hundredth of a square kilometre. Externalities: This term was actually invented by economists to discuss air pollution. Commodity: A good that one can exchange in the market. Penalises: To punish something or make it punishable.KeywordsCapital - The assets a person, organisation or group owns.

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