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.