UNIVERSITY OF CAMBRIDGE
Our fixation with Gross Domestic Product for over half a century as the primary indicator of economic health has rendered nature “invisible” from national finances, intensifying the biosphere’s destruction by omitting its value from the systems that govern us.
This is according to leading economists from Cambridge University and the United Nations, who meet on Tuesday 15 December to help launch a “statistical standard” that allows governments and banks to calculate the worth of natural “dividends”: from fish stocks and carbon ‘sinks’ to reduced health burdens from purified air.
Almost a decade in the making, the new statistical approach, called “Ecosystem Accounting”, had its final consultation on the first of this month, and will go before the UN General Assembly next year with hopes of ratification as the global standard for measuring how the natural world underpins national economies.
“A focus on GDP without proper regard for environmental degradation or inequality has been a disaster for global ecosystems and undermined social cohesion,” said Prof Diane Coyle, who leads ‘Beyond GDP’ research at Cambridge’s Bennett Institute for Public Policy and is a key speaker at Tuesday’s public event.
“Statistics are the lens through which we see the world, but they have made nature invisible to policymakers. Twenty-first century progress cannot be measured using twentieth century statistics,” she said.
While many talk of the need to ‘build back better’ from the ravages of Covid-19, we cannot recover better without better information to guide us, says United Nations Chief Economist Elliot Harris, who will also speak at the Cambridge-hosted event.
“It is high time we moved beyond GDP and measured our wealth and success with tools that recognize the value of nature and people. The developments to our System of Environmental Economic Accounting are a giant leap in the right direction,” Harris said.
As part of a global team, economists from Cambridge’s Bennett Institute for Public Policy such as Dr Matthew Agarwala have been working with the UN to develop aspects of the new accounting methods. With his colleague Dimitri Zenghelis, Agarwala has written a guide for treasuries and central banks that the UN will roll out as a training programme.
“Some of the ways we currently value nature, what we term ‘natural capital’, are just absurd,” said Agarwala. “Most parks in the UK, including huge parks in major cities, have an asset value of £1, because they can’t be sold.
“Local Authorities have a balance sheet with a £1 asset that costs many thousands in annual upkeep. But this ignores revenues from higher property values in the vicinity. Even worse, it ignores the value of outdoor recreation, cleaner air, and the greatly reduced impact on local health services this creates.
“We now have the framework for putting that information into everyday economic decisions and scaling it up to the national level,” he said.
The Bennett Institute also works closely with the UK’s Office for National Statistics, early adopters of Ecosystems Accounting during its previous “experimental” phase. ONS work published last year used these methods to reveal the startling value of nature.
“Shading and cooling services” provided by greenery and waterways were valued at almost a quarter of a billion pounds a year in the UK through improved worker productivity and air-conditioning energy savings alone.
Just the green spaces and rivers in urban areas saved almost £163m annually in healthcare costs, and urban woodland was estimated to be worth £89m a year through carbon removal. Recreation spent in nature just in urban areas was valued at some £2.5 billion a year in the UK.
“We need statistics that can guide us through the new challenges we’re facing – biodiversity loss, inequality, climate change, and automation,” said Agarwala. “We are only just scratching the surface of what these accounting methods can reveal.”
Two Cambridge graduates at the Central Statistical Office – the precursor to the ONS – James Meade (later a University professor) and Richard Stone, laid the foundations for GDP as we know it: essentially, the value of things and services produced by a given country.
But Cambridge is also home to Prof Sir Partha Dasgupta, considered the father of the modern movement to knock GDP from its pedestal and infuse economics with the worth of life on Earth: from nature to the value of human connection.
Prof Dasgupta will also be speaking at the Ecosystem Accounting event, discussing his landmark commission from the UK Treasury to investigate the economic benefits of global biodiversity – and the costs of its rapid loss.
“Ecosystem services are simply absent from most national statistics,” he said. “Vast intellectual energy is given to estimating GDP, but there is little data on the biosphere’s capacity to meet human demand for natural goods and services.”
Dasgupta describes natural capital as a necessary step towards the creation of “inclusive wealth”, in which economics accounts for everything from health and skills to the value of communities – all fundamental to productivity, and all currently gaping holes in national balance sheets.
At the event, Prof Coyle will discuss the major Bennett Institute report she produced with Agarwala called ‘Building Forward: Investing in a resilient recovery‘. Published last month, it outlines how inclusive wealth could be developed in response to the pandemic and the UK’s longstanding “productivity puzzle”.
“Gaps in economic measurement have contributed to chronic underinvestment in natural and social capital,” said Coyle. “Assets such as public green space or personal networks do not have a market price and so are not counted in economic statistics.”
This omission of life’s fundamentals in national economic calculations is not just a missed opportunity for governments, but a massive risk. “The halls of power have yet to grasp how vital it is to include natural capital in the economy,” added Agarwala. “Look at the precipitous falls in fossil fuel value, and that’s just one small part.
“The extreme human and economic cost of the pandemic arise from a failure to manage natural capital. It has proved far more costly than it would have been to protect wild habitats and biodiversity in the first place to avoid such zoonotic spillover.”
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The ultimate goal of the progressives is to make sure that nothing can be judged by impartial numbers that can be measured and compared.
Instead we must be judged by ephemeral standards that only elites can determine.
Ecosystem accounting? It’s about time. Here in Massachusetts where solar “farms” are popping up like mushrooms after a heavy rain- I often bitch about the fact that nobody seems to account for the loss of the forests- where most of these “farms” are being installed. Forests sequester carbon, produce oxygen, are wildlife habitat and last but not least- produce wood products we all like and jobs to make those wood products. The irony is that this state has a large number of climate hysterics who say we must lock up all the forests to “save the planet and biodiversity”- yet they seem to love these solar “farms” which have destroyed several thousand acres of forest in just the past 5 years. So far, solar is only producing a few percent of the state’s electric power but the state now has a goal of net zero by 2050- so there will have to be a boom in solar “farms”. I ask the state politicians how many more acres of forest will be destroyed and they don’t reply. So, in addition to the countless billions to make the state net zero by 2050- it’s imperative to put a dollar sign on the lost ecosystem values by the destruction of the forests.
This is how many productive assets will soon be valued if they can’t be used to earn money and can’t be sold, or are a huge liability against current income because a wealth tax has been imposed.
While human interaction is priceless, to claim that it can be measured, racked and stacked is pure BS. I bet that Jeff Bezos loves to knock back a few and shoot the s–t while enjoying his yacht. Does the yacht contribute to human interaction? The car you took friends to the game in? The gas you burned to get to the concert? This appears to be nothing more than a dishonest tool to promote the projects that the authors support.
Ha ha ha ha ha ha ha ha ha ha ! First chuckle of my day.
Guess he didn’t exactly want to say “Great Leap Forward”
There was a death toll associated with China’s Great Leap
Forward, I suppose this “Giant Leap in the Right Direction”
will at least leave a string of bankruptcies.
Even if the IPCC was close to correct about the effect of CO2 emissions, this fool and his UN comrades make no sense unless the goal is to revert civilization back to the stone age. Back then, rather than a GDP to indicate progress, progress was measured by how much of your competition for resources you can eliminate with tribal warfare and/or turn into slaves.
What a load of cod’s wallop that airy fairy unquantifiable economic accounting idea that is.
To then conflate Covid with human failure to value nature, put the clincher on just what this “New accounting system” actually is.
It is no more than publicly funded virtue signalling designed to discredit and block real wealth creation.
The western world has gone completely mad.
We are seeing the academics building their own funeral pyre but they have no concept of what they are constructing!
Another narrative with a willing media to spread it designed to corral wealth while claiming to fairly redistribute it.
The GDP was and is since 1990 pure fiction anyway.
The Great Reset will replace this fiction with an even more insane “measure”.
The Green Domestic Product – there, I trademarked it before the Davos geniuses.
“This is according to leading
ecwhackonomists”There, fixed.
The underdeveloped countries of the world have refused, certainly, since Paris 2015, to even attempt to fashion a waste management plan for their countries, {despite being offered proven methodologies by my own Company}often because they will not place the burden of ‘Waste Producer Pays Policy’ (PPP, otherwise known as the Tipping Fee) where it belongs, hence waste is discarded at will, by virtually all producers, to any available hole in the ground, or suitable place at the time. Interestingly, the cost of household disposal in say South Asia can be calculated (to include CAPEX and OPEX of 3R’s) to be less than $0.5/week/household. Thus a circular waste management scheme funded based on revenue from (a)PPP and revenue from (b)energy sales into ‘the grid’ at a fraction of the cost of a ‘packet of cigarettes’ (a major polluter in themselves), which never appear to ‘cost too much’ to so many who deposit their garbage ‘ab-lib’. People are left to scavenge landfill sites, even live on top of them, in order to simply survive, while their politicians promise them ” We will build Bridges……even when there’s no River to Cross” (HS2 perhaps), Ports, where there are very few {cargo} ships arriving, and airports where there are no ‘Arrivals and Depature Lounges.’
It’s all about the money, is it not?
Sovereign Debt Agreements, to guarantee Foreign Investment to fund Waste Management systems, don’t work in such places, due to bad credit ratings or unplayable debt interest. Banks can’t work under such conditions, and the ‘humanitarian aid’ that is supplied is sparodic and prone to either damage or loss before its work can be done.
GDP is not a global system that tells the truth about why the number is what it is, and does nothing to assist the underdeveloped regions to erect for themselves the essential ‘ladders of progress’ to climb out of abject poverty.
I have an invention to change this, but try getting anyone to listen to the message and it back to “The Money” and everything else, especially poverty, is not on the global menu, well not for real anyway.
Charities are not equipped to deal with lazy or corrupted Governments and throwing odd coins into the fountain of waste won’t make any appreciable difference anywhere
Time has come to make big decisions that affect global humanitarian problems, stating with all aspects of ‘control’, how many, how much, how to match demand with real sustainability, everywhere.
I am reluctant to make a remark but here goes. One of our state representatives explained a problem to me that I hadn’t grasped prior. If land is sequestered as open space, or conservation easements, there is a cascade of lost revenue and increased competition(demand) for remaining land space. First, once it is “publicly owned” that potential for tax base is lost. Also, the loss of potentially developable land for additional uses that may offer more local support in tax base for infrastructure, i.e. roads, bridges, court houses, and services such as police capability, hospital services, emergency planning etc. etc. prevents adequate social services and quality of life. Some open space type programs are anything but. Large swaths of land that no longer produce a commodity or product and can only be accessed for walking or biking do nothing to produce but they do cause increases in the cost of living on the land that should provide housing and jobs or useable products. Those on the short end of the stick who cannot pay the higher price for the remaining opportunities are disenfranchised in a very real way, no amount of reframing by the UN is going to change that.
The WEF’s Great Reset would put the entire planet under a world government run by the UN. This is new accounting system would muddy any comparisons between whatever entities survive the Great Reset. Unusable natural resources will now be used to convince people that the are successful in spite of the facts that much of the population is freezing in the winter, sweltering in the summer and starving most of the time.
They do raise some good points & GDP is a poor way of measuring our wealth, health & success, why does ours have to be bigger than yours, Isn’t that just a mindless pi$$ing contest ??
(If can get mine higher up the wall… but then it splashes all over me…what have I gained ??? )
Also we need to move away from the constant demand for yr on yr % growth & crackpot ‘targets’ just to produce more stuff of little value to make bigger landfill dumps.
Suppose there were no fossil fuels. Wouldn’t people simply have used up all available resources such as whales and trees already? Is that the idea? But, of course, if there were no fossil fuels in the first place, there would never have been any people anyway. The creation of fossil fuels was a necessary precursor to the evolution of man.
Lysenkoism ++ (and Steroids)
This is very bad news for windfarms given the gigantic amount of damage they are causing to the natural world.
For example, 14 million trees have been felled in Scotland to make room for these bird mincing monstrosities.
“knock GDP from its pedestal and infuse economics with the worth of life on Earth: from nature to the value of human connection.”
This is a harbinger of the froddy election of Joe Biden, a guy in advanced stages of cognitive breakdown, as president of the USA and ‘head’ of the ‘free world’. It is the perfect symbol for what has been planned for us all without a dominant economically powerful US. With Trump at the helm this nonsense would probably not have been rolled out. The US has had the say in matters of the World Bank since its inception. Now we have Joe, unaware of his surroundings with a rubber stamp in his hand.
The whole UN, EU preoccupation has been to bring down the United States. Student friends and I saw and discussed the former as an anti-American institution as far back as the late 1950s. Socialism was the preferred path of the world and the colossal success of the free enterprise system of the United States economically and in all major fields (US has won ~380 Nobel Prizes ~40% of the world total) has bern a constant festering thorn in the side of socialists whose puny productivity by comparison was a constant advertisement for the US politico-economic system.
The EU was put together as a competitor but it ended up diluting the economic strength of the UK and Germany and its unravelling was predictable from the outset.
They gave up competition and resorted to dark methods that hsve brought to today’s sorry mess.
James: “GDP is not a global system that tells the truth about why the number is what it is, and does nothing to assist the underdeveloped regions to erect for themselves the essential ‘ladders of progress’”
GDP is only a basket of goods indicator that works very well for functioning economies. Regarding the underdeveloped economies it also is a stark measure even with its inaccuracies that tells countries in no uncertain terms that they have to pull up their socks”. God help them if they had a really accurate measure. They have to change how they are governed. That is the only course.
Just a minor point and correction:
Quote:
“”The extreme human and economic cost of the pandemic arise from a failure to manage natural capital.””
Complete b*ll*x
Not least as you *have* to understand something/anything PROPERLY first before you attempt any kind of ‘management’
No matter that now….
It *should* read:
“”The extreme human and economic cost of the pandemic arise from a failure to eat a Proper Diet.””
All the ‘co-morbidities’ of Covid are directly or indirectly attributable to a shit, plant based, diet chock full of irritants, allergens and poisons while lacking in essential nutrition i.e & e.g. Vitamins B & D, Zinc and Magnesium.
‘Tis the Modern Way innit?
Pass the Buck and No Matter What, don’t let a good** crisis go to waste.
(**) As far as Covid is concerned, I use the word ‘good’ advisedly
“ Twenty-first century progress cannot be measured using twentieth century statistics,” she said.”
However, she failed to note that 21st century energy needs can be supplied using 15th century technology.
“Bull-oney”.
The “Health of the Ecosystem” is a completely different (and very subjective) measure that when appropriate should be considered and balanced against the actual and measurable financial status of an entity.
Combining those measures is “oil and water”.
If I may paraphrase Churchill, “Gross Domestic Product is the worst indicator of economic health, except for all the others.”
😉
The Institute for International Finance says global debt will be $277 trillion by the end of the year. This would represent a debt-to-GDP ratio of 365% of the world economy.
Think for a second. The world population is 7.8 billion. What this really means is that world politicians have already spent $277 trillion that does not exist in the world economy, or $35,513 per person. It has to come from somewhere to avoid default. Guess where.
So Zimbabwe is really a wealthy country because now it has little agriculture, the previously poverty-stricken fields having reverted to nature.