Economics and joy

Happy International Biodiversity Day!

Last night, I spoke at the launch of Professor Dieter Helm’s new book, Natural Capital: Valuing the Planet.  It came a day after the launch (which I sadly missed) of another excellent book by Michael McCarthy, The Moth Snowstorm.  One is about the economics of nature the other about the joy of nature.  It seems entirely apt that these two contrasting books were launched in the same week.  Nature conservation is part joy part economic necessity.  What binds them is an imperative for urgent action.

I was asked to offer a challenge back to Dieter.  To be honest, knowing Dieter, being a supporter of the work he has been doing with the Natural Captial Committee and having read the book, I think my challenge broadened away from Dieter and became more of a critique of the societal and political response to the parlous state of nature.  And in that, I was partly inspired by Mike’s new book.

This is an expanded version what I said...

At about half-past four this morning, I had the pleasure of watching black grouse lekking at the RSPB Geltsdale reserve in the northern Pennines.  Watching these birds dance for their mate is a special experience.  It might not be for everyone but it is a reminder of the wonder of nature.

Memory of Thursday morning thanks to a smart phone and a scope

Black grouse conservation can feel a million miles away from economic concepts such as valuing natural capital.  Watching nature to me is about joy and that joy comes from my love of wildlife.  It is what informs my values and my belief that conservation is a moral imperative – for humans to act as stewards of the natural world. 

So, can economics help me and others have more joy?

Dieter’s book outlines a blueprint for how it can.  Its approach is not without challenges – which I shall highlight - but I also want to explain why Dieter’s analysis is so important and is worth taking seriously.

I am not an economist, so my comments should be seen through the lens of someone with 20 years of experience in and a passion of nature conservation.

So what does nature need? 

We want to keep common species common and prevent threatened species from becoming extinct.  To do that we need bigger, better and more connected protected areas, targeted action to recover threatened species and action to address the four horsemen of the ecological apocalypse – habitat destruction, invasive non-native species, pollution (especially that which results in climate change) and over-exploitation. 

In short, we (and I mean all of us as consumers, business leaders and decision-makers) need to learn to live in harmony with nature. 

This ambition is at the heart of the CBD global plan for nature expressed through the 2020 Aichi targets.

Yet, the state of nature statistics are so dire that some are beginning to argue that we have just one generation left to prevent half of the world’s species from being committed to extinction.  Given the relationship between biodiversity and the free but critical services that nature gives us that, of course, would spell disaster for humans.

So should we follow Dieter’s lead and embrace natural capital?  Does the natural capital approach, offer a practical means of mainstreaming and enhancing biodiversity considerations into public policy? 

Dieter, in his new book, addresses most of the key issues that need attention – ambition, the policy and regulatory framework, financial and institutional arrangements.

There is much to applaud within this package.  He deserves credit for proposing a 25 year plan to restore our nature which the current government embraced through its manifesto.  He rightly argues that the current millions (estimated as c£100b over next 6 years) spent on land and water management could work harder to enhance natural capital – a public good  He then goes further in offering some innovative financing options which together could create an aggregate natural capital fund.  He calls this ‘the prize’.

He is bullish about the need to embrace a regulated system for compensating loss of natural capital and makes a strong case for statutory underpinning of the Natural Capital Committee to complement the work of existing environmental agencies.

If government was to accept the entirety of this package, we should be delighted.  You could imagine a scenario at Geltsdale for example, where natural capital payments look after the carbon locked in the blanket bog and guarantee the water quality while agri-environment payments help provide the management for fussy bits of wildlife like black grouse.

But the hard-nosed economics needs something else to make it fly.

Because some societal considerations are beyond the bounds of economic calculus – we cannot reduce the importance of wildlife to a single monetised figure.  Now, I don’t think Dieter is saying this.  But some might.  Many believe there is an ethical imperative to care about the fate of the millions of other species with which we share this planet.  That ethical consideration is beyond any economic rationale.

So, for me and I think many involved in nature conservation, we see the natural capital agenda outlined by Dieter as essential to reframing the fundamental importance of the natural world to our wellbeing – it gives us legitimacy to engage in the big economic conversations about growth and prosperity. 

But we need more.  We need to understand what motivates people to act and inspire more to do so.  I see the Wildlife Trusts do this through their “My Wild Life” campaign, National Trust through their “50 things to do before you are 11 ¾” campaign and also through RSPB’s “Giving Nature a Home” and “Vote for Bob” campaigns.  From engagement, comes motivation to act.

The natural capital agenda is about making nature relevant to economics and therefore essential if we want the Treasury to evolve its thinking. 

Public pressure can create space for politicians to act.  The more people calling for change, may encourage civil servants and economists to think and act differently.  And this is when I think Dieter’s agenda will get real traction.

Let’s assume it does, here then are five challenges that we will inevitably have to address...

1. We need to integrate the longer term natural capital perspective with the short term imperatives for  jobs and growth.  What reform of HMT would be required to enhance its focus on longer term economic planning relative to its short-term budgetary function?
2. Natural capital assets do not align with administrative boundaries and businesses that affect them, like water companies, are not encouraged by policy or legislation to operate coherently with ecological systems.  What will need to change in order to make operational a natural capital approach?
3. As Dieter acknowledges, biodiversity is particularly difficult to value and not amenable to pricing yet biodiversity often acts as the glue that binds ecosystem services together.  Can natural capital accommodate this ecological value?
4. When it comes to valuation, Dieter often calls for valuation that it is better to be roughly right rather than precisely wrong.  But what if we get perverse unintended consequences for example if it makes economic sense to trade away a natural service (eg for flood defence) for an artificial one (eg  one made of concrete)?  Is there a danger that more weight is given to what we can measure compared to what we cannot?
5. And finally, Dieter seems a bit sceptical about the role that regulation can play, but to me, the laws that protect our nature (especially the EU Nature Directives), are the foundation for nature conservation in this country and across Europe – and help deliver huge value for humans.  I, for one, through experience have limited appetite for voluntary measures and market mechanisms seem a long way off.  What needs to be done to ensure the current deregulatory push in the UK and across EU doesn’t end up trading away essential legislative protection?

These challenges are real, but they should not be seen as a reason to depart from the agenda and direction that Dieter has outlined.  I commend his book to all of you.  Who knows, it may even lead to more black grouse and ultimately more joy.

Andy Hay's slightly more impressive photo of two lekking male black grouse