The Economics of Biodiversity

 

One problem with the Anthropocene is that our economic systems undervalue forms of “natural capital” for which there are no markets, or poorly developed markets. I’m talking about things like clean air, forests, wetlands, oceans… and biodiversity. For many of these things the price is zero or even negative, due to government subsidies.

So, we’ll burn through these things recklessly until the ensuing disasters wake us up. We’re like a family trying to earn more cash by selling off the windows and doors of our house. It may work for a while. But winter is coming.

Partha Dasgupta, an economist at the the University of Cambridge, has been studying this. In 2019, the UK government commissioned him to lead an independent, global review of the economics of biodiversity. It came out this month at an event hosted by the Royal Society and attended by the Prince of Wales, Boris Johnson and David Attenborough. Here it is:

The Economics of Biodiversity: The Dasgupta Review.

The full report is 610 pages long. It’s very clear; I’m reading it and will say more about it here. There’s also a 103-page version and a 10-page ‘headline’ version, but the headlines leave out the really fun stuff: the economic analyses, the differential equations, and so on.

This came out at a good time for me, because I’ve recently been asked to give a talk about the economics of the Anthropocene. I seem to have reached the age where people ask me to give talks about practically anything I’ve ever blogged about. I need a lot of help on the economics, since I have intuitions but no framework to organize them. The Dasgupta Review provides a framework, and since I don’t have a lot of time before my talk, I plan to lean on it rather heavily.

Here’s the introduction, by David Attenborough. It’s easy to read. But it does not get into any of the economics, so please don’t judge the cake by its frosting.

We are facing a global crisis. We are totally dependent upon the natural world. It supplies us with every oxygen-laden breath we take and every mouthful of food we eat. But we are currently damaging it so profoundly that many of its natural systems are now on the verge of breakdown.

Every other animal living on this planet, of course, is similarly dependent. But in one crucial way, we are different. We can change not just the numbers, but the very anatomy of the animals and plants that live around us. We acquired that ability, doubtless almost unconsciously, some ten thousand years ago, when we had ceased wandering and built settlements for ourselves. It was then that we started to modify other animals and plants.

At first, doubtless, we did so unintentionally. We collected the kinds of seeds that we wanted to eat and took them back to our houses. Some doubtless fell to the ground and sprouted the following season. So over generations, we became farmers. We domesticated animals in a similar way. We brought back the young of those we had hunted, reared them in our settlements and ultimately bred them there. Over many generations, this changed both the bodies and ultimately the characters of the animals on which we depend.

We are now so mechanically ingenious that we are able to destroy a rainforest, the most species-rich ecosystem that has ever existed, and replace it with plantations of a single species in order to feed burgeoning human populations on the other side of the world. No single species in the whole history of life has ever been so successful or so dominant.

Now we are plundering every corner of the world, apparently neither knowing or caring what the consequences might be. Each nation is doing so within its own territories. Those with lands bordering the sea fish not only in their offshore waters but in parts of the ocean so far from land that no single nation can claim them. So now we are stripping every part of both the land and the sea in order to feed our ever-increasing numbers.

How has the natural world managed to survive this unrelenting ever-increasing onslaught by a single species? The answer of course, is that many animals have not been able to do so. When Europeans first arrived in southern Africa they found immense herds of antelope and zebra. These are now gone and vast cities stand in their stead. In North America, the passenger pigeon once flourished in such vast flocks that when they migrated, they darkened the skies from horizon to horizon and took days to pass. So they were hunted without restraint. Today, that species is extinct. Many others that lived in less dramatic and visible ways simply disappeared without the knowledge of most people worldwide and were mourned only by a few naturalists.

Nonetheless, in spite of these assaults, the biodiversity of the world is still immense. And therein lies the strength that has enabled much of its wildlife to survive until now. Economists understand the wisdom of spreading their investments across a wide range of activities. It enables them to withstand disasters that may strike any one particular asset. The same is true in the natural world. If conditions change, either climatically or as a consequence of a new development in the never-ending competition between species, the ecosystem as a whole is able to maintain its vigour.

But consider the following facts. Today, we ourselves, together with the livestock we rear for food, constitute 96% of the mass of all mammals on the planet. Only 4% is everything else – from elephants to badgers, from moose to monkeys. And 70% of all birds alive at this moment are poultry – mostly chickens for us to eat. We are destroying biodiversity, the very characteristic that until recently enabled the natural world to flourish so abundantly. If we continue this damage, whole ecosystems will collapse. That is now a real risk.

Putting things right will take collaborative action by every nation on earth. It will require international agreements to change our ways. Each ecosystem has its own vulnerabilities and requires its own solutions. There has to be a universally shared understanding of how these systems work, and how those that have been damaged can be brought back to health.

This comprehensive, detailed and immensely important report is grounded in that understanding. It explains how we have come to create these problems and the actions we must take to solve them. It then provides a map for navigating a path towards the restoration of our planet’s biodiversity.
Economics is a discipline that shapes decisions of the utmost consequence, and so matters to us all. The Dasgupta Review at last puts biodiversity at its core and provides the compass that we urgently need. In doing so, it shows us how, by bringing economics and ecology together, we can help save the natural world at what may be the last minute – and in doing so, save ourselves.

7 Responses to The Economics of Biodiversity

  1. rubennelson says:

    The best part of this report is that it was done at all. It is a glimmer of hope that serious folks in the financial world are noodling the thought that an economics that has no useful information about the living systems which we depend on, at best is useless, at worst is dangerous. Sadly, much of it runs downhill from there. The report still assumes the enduring validity of our Modern Techno-industrial frames of reference which economics reflects. The report shows no sophistication in the work of seeing, understanding, and responding to the realities of complex living biological systems as complex living systems. Oh my.. i hope they do not think they are finished with this work because in their own minds they have done such a fine job. Rather, this is just a beginning effort. as with many 1st year efforts it gets a C for effort.

    • John Baez says:

      As one ventures farther and farther from our “modern techno-industrial frames of reference”, fewer and fewer people with economic power will pay attention… because the conclusions will tend to undermine their power and even their sense of self-worth. So, it’s important to have people thinking about these issues in a whole continuum of ways.

      From my reading so far, it looks like Dasgupta is taking an approach based on “asset management”, which is quite traditional in many ways, but he’s expanding the scope of what counts as “assets”. If people really acted on this, their behavior would change quite dramatically.

      He talks about how education can help people make this shift. Education is probably necessary. And yet, this shift doesn’t require a complete change of worldview. So, it might catch on fairly soon. Other more dramatic changes in attitude may only catch on after a crisis forces a more serious rethink.

  2. this report certainly will provide some more light into the need of adopting Nature-Based-Solutions to limit Global Warming to 1.5°C and the benefits society, businesses and governments attain in doing so.

  3. cgopaul says:

    If I may ask a naive question, do you think this perspective of economics can be better modelled with the tools of category theory or petri nets? You have over the last decade described both as having use in understanding systems and processes made of parts. It seems natural assets and their interrelationships are quite complex things with lots of different kinds of overlaps and feedback and this may benefit from a more precise mathematical approach, one a bit different to his impact equation, though similar in spirit. Does any of that make any sense to you, given your knowledge in those areas?

    • John Baez says:

      I would like to use math to shed some new light on biology, ecosystems, biodiversity… and yes, the economics of biodiversity. It’s been going rather slowly so far. One reason is that I need to learn a lot of stuff. Another is that I’m doing too many different things. Another reason might be that this task is intrinsically difficult. But I’m pretty optimistic that if people keep pushing in this direction, some nice things will emerge.

      Right now I’m working with Evan Patterson, James Fairbanks, Owen Lynch and Christian Williams on applications of Petri nets and statistics to biochemistry. I have a half-finished paper with Jonathan Lorand about open Petri nets and chemical reaction networks. With luck I’ll spend July at the brand-new Topos Institute talking to people about related ideas.

      I never finished my series of posts on Fisher’s fundamental theorem, but this is another thing I want to keep working on. This another side of the same set of ideas, since like chemistry, evolutionary game theory can to some extent be formalized using Petri nets and concepts such as entropy and free energy. At least, there’s enough overlap that there’s some real math to do in the intersection! And, one nice thing is that evolutionary game theory moves in the direction of economics.

      Actual economics is a lot harder for me. I think it’s crucial to change how we think about economics to do well in the Anthropocene. But it’s not an easy subject and I’m far from an expert! I’ve been asked to give a talk about economics at the still-nascent DeMoS Institute, and I hope that forces me to crystallize some of my thoughts. But it will take a while.

      (You can’t read about the DeMoS Institute anywhere, and I won’t say anything about it until the organizer gives me the go-ahead. But it’s interesting that a number of young mathematicians are trying to set up institutes aimed at helping solve big real-word problems.)

  4. Keith Harbaugh says:

    As to the relation between economics and saving/preserving/improving the environment,
    the following brings up one aspect of that relation:

    “These companies need your garbage”
    https://www.politico.com/newsletters/the-long-game/2021/02/23/these-companies-need-your-garbage-491859

  5. Ishi Crew says:

    The feb 29 2016 Azimuth blog post ‘price of everything’ overlaps with this; a july 2020 article in Sustainability by N Ashford (MIT business school) on inequality, sustainability and COVID has a list of well known ‘solutions’ to these problems.

    Dasgupta’s article has been discussed on ‘degrowth’ blogs (a sort of French term (‘decroisssance’) for achieving a ‘stready state economy’–though ;’degrowethers’ and ‘steady staters’ spend alot of time debtaing which terms is better; many mainstream envoironemtalists and ecologists stay out iof these debates. .

    The Dasgupta article is good,but way too detailed for most people I think. The basic logic (summarized in a few simple equations) is buried in the text . –they are simple accounting identities.

    An older book by Dasgupta (and an overlapping one by Amartya Sen) sort of went through the biodiversity –or diversity in general arguments.

    Dasgupta pointed out for the case of India people’s productivity decreases if they don’t have enough to eat. This is one reason despite havig large populations, rural areas of India often don’t get alot done. (I’ve been to India once, and remember seeing very slender people who would sit and break rocks with hammers to build a road).

    The biodiviersity argument is sort iof like saying a wilderderness area with rare species which may only be of economic value for for tourism, ecological research, and possibly ‘ecosystem services’ (flood and fire prevention, fisheries, maybe clean air, and reserves of genetic diversity that maybe useful to have around) has a divfferent value than if the area was converted to a corn farm and cattle feed lot—the corn is used for cattle feed, and to make corn oil/syrup/fructose used in sodas and canned food (wjhioch sometimes lead to healthb problems–they say health care is 18% of US GDP and alot of that is for preventible diseases and due to other social problems. )

    (This topic is one i’ve been studying a long time –how do you place a vlaue on something not composed of one thing. Its like a ‘recipe’ –you want the optimal combination of ingrediants. Also people prefer different recipes–so you need an optimal combination of optimal combinations. I haven’t been able to find any academic environment where i could study this kind of problem applied to socio-economic-ecological problems *though conceptuaklly similar ones exist through science, especially machine learning / data science but those approaches are ones which basically major elements of the ‘recipes’ i like. .

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