26 June 2019 — New Economics Foundation
To create the change we really need, the time is now for bold action
The UK’s 25 year environment plan — to lead the world in the ‘natural capital approach’ — contains many bold statements about the capacity of this approach to produce positive change for nature. One aim is for an ‘overall improvement’ in the health of the environment and to improve environmental decisions by ‘emphasising the value of the benefits the environment provides to people.’
But will this really be effective in reducing our impact on nature? Will it bring about transformation quickly enough? Does it put key questions of power and equity at the forefront of the approach? While the natural capital approach provides important information on the health of the environment, there needs to be a reality check: by failing to account for who has power in society, the natural capital approach contains a critical flaw.
The recent UN report confirms what Extinction Rebellion and the climate strikers have been telling the world: biodiversity and natural habitats are being lost at a rate never seen before in human history. This has been clear for decades and is now unequivocal. Today the Climate Coalition leads a mass lobby for climate and the environment, the key message being ‘The Time is Now’ for bold action. Does the ‘natural capital approach’ really meet these urgent calls from the public to act now? Is there time to focus on accounting first, rather than strong legislation or regulatory changes to end nature’s decline?
Current economic accounting classifies nature as a free input to economic activity, while our impacts on nature are off the ledger. Natural capital as a concept was first developed to correct for these omissions in economic accounting. If we make nature visible in our decision-making, the theory goes; we will value it and improve the state of our ecosystems. Nature is accounted for as stocks of resources (e.g. a forest or fisheries) which provide flows of benefits (e.g. lumber or food) to people.
natural habitats are being lost at a rate never seen before in human history
From a seemingly innocuous starting point of trying to account for our impacts on nature economically, a passionate debate in the environmental movement has emerged. This tension is most apparent where monetary units are sometimes assigned in the natural capital approach. Adversaries claim the approach risks commodifying and privatising nature by incorporating economic or market logic into conservation, whereas proponents argue that it provides the environment a hearing on equal terms.
Putting a price on something doesn’t necessarily capture its whole worth. By way of example, the economic value of pollination services was estimated at £690 million per year in the UK but that does not mean that £690 million can account for the total value of all the UK’s bees for a year. You cannot really capture the value of a bee in economic terms in any satisfactory way and valuation alone is not what is going to determine the fate of the species. To create the change we really need, the priority should be to take action by banning harmful pesticides and creating more suitable habitat.
Any approach claiming to transform decision-making needs to be able to explain how this better world comes about – the ‘theory of change’. The implicit assumption in the natural capital approach is that the problem with protecting the environment is about information. Certainly having more information is no bad thing. Measuring the population of a species or the extent of a habitat is the basis of conservation science and is necessary for sustainable management. But turning what we already do in science into economics isn’t going to change the rules of how our economic system treats nature just because we have a value.
Consider where we have had conservation successes. What motivated change is what motivated people. Blue Planet didn’t need to cost the impacts of turtles and whales suffocating on plastic bags to have an impact which is leading to changes. The 25-year environment plan itself focusses on the 5p plastic bag tax as the headline success story in the foreword, rather than the impact of any valuation study. It’s the political will and people power via campaigning that is leading to change in this space, rather than the fear of paying 5p. The natural capital concept is 30 years old and has to be able to point to successes if we are going to pin our hopes on it and so far, according to an EU level review, there were hardly any examples of ecosystem service valuation feeding directly into policy-making.
Putting a price on something doesn’t necessarily capture its whole worth
We do have examples, however, where better information did not equal better decision-making. The distribution of power within society and the market economy determines outcomes – just look at the Heathrow 3rd runway expansion decision: climate change, noise and air pollution, while costed in excruciating detail, is not the decisive factor. Paradoxically, neither does classical economics as even the core government cost-benefit appraisal of Heathrow produces results that are at best anemic and at worst are more costly than beneficial. But Heathrow has been given the go-ahead on a ‘strategic’ case which, in essence, is more of an illustration of the powerful forces behind the airport’s expansion and baked-in assumptions about what’s good for the economy.
But in the age of climate emergency, it is impossible to ignore the urgency and to pursue business as usual. Future generations will not be impressed with our time-consuming, well-documented and monetised account of environmental breakdown. Instead we need to account for power in how decisions are made and have a solid legal basis to judge those decisions against.
We need countervailing forces in policy and legislation. In finding an effective alternative that meets the urgency we could learn from the Welsh Well-being of future generations act. Just last week the Welsh Government stated they will not build the £1.6bn M4 relief road because of its cost and impact on the environment, meaning it is not in the interest of future generations. What made the difference was the legal basis for sustainable decision-making and the inability to justify that negative impact, ensuring the right decision for people and planet.
Even with perfect accounting, the natural capital approach is not a tool that will alone deliver the change required in the time available. For that, we need to change the rules; it’s people, not markets, that will save the planet.
People must organise to take on power imbalances, push to shift tax and subsidy incentives, set legal requirements to protect and restore nature and the wellbeing of future generations and follow the precautionary principle. We need to do all this while speaking to people’s experiences and values in the green transition to a net-zero world, and the time is now.