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The world needs to overhaul how society measures economic success

White bird flying over a lake during daytime by Coralie Meurice

Why?

Our demands on nature far exceed its capacity to supply them, putting biodiversity under huge pressure and society at “extreme risk” of its rapid decline. It is rare to see it presented quite so clearly in a government-commissioned report – The Dasgupta Review for the UK Government.

Estimates suggest we require 1.6 Earths to maintain current living standards!

Reducing human demands on nature in line with supply requires a far more fundamental restructuring of human consumption and production patterns. Policies that challenge existing patterns of consumption by – changing prices and behavioural norms including enforced new standards for reuse, recycling and sharing – introducing new taxes on unsustainable activity.

Global management of legally protected areas must be improved and increased investment in nature-based solutions that address biodiversity loss is also necessary. It is far less expensive to conserve nature than to restore damaged or degraded resources and has the net effect of alleviating poverty in low-income countries where those on low incomes rely more directly on nature.

For more than 70 years Gross Domestic Product (GDP) and its growth, has been the primary measure of economic success. GDP fails to take stock of natural capital. It props up an economic system that incentivises activity that depletes ecosystems and habitats crucial to human survival. The review calls for a new measure “inclusive wealth,” which combines the accounting value of produced, human and natural capital. Most governments pay out more to activities that harm nature than protect it.

We need a set of global standards, underpinned by credible data, that allow businesses and financial institutions to fully integrate nature-related considerations into their decision-making and their financial disclosures.

Simply accounting for nature and putting a price on natural capital will not, on its own, prove sufficient in protecting natural habitats. It needs improved regulation and protection of high value areas. There is a strong economic rationale for quantity restrictions over pricing mechanisms.

Education also can play a major role in fixing society’s unhealthy relationship with nature and crafting fresh education policy can remedy humans’ increasing detachment from the nature. Efforts to help people understand and connect with nature will empower citizens to make informed choices and demand higher standards from business, finance, and government.

The implications of the review for businesses and investors are obvious and considerable – it’s a game-changer!

However, the Dasgupta Review does make one thing clear that nearly everyone can agree on: Mainstream economic thinking is badly flawed and needs to be reformed if environmental disaster is to be avoided!

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