But these solutions may be missing something fundamental, according to Partha Dasgupta, an economist at the University of Cambridge. In a 2021 report commissioned by the British government, Dasgupta made the case for shifting how natural resources are valued, and the idea has since gained momentum: Last month, the White House released a draft proposal on what should be considered in a cost-benefit analysis when it comes to ecosystem services in government, practices that draw on his work.
DealBook spoke with Dasgupta about updating economics to account for nature.
Traditional economics does not account for the value Earth provides, Dasgupta said, but instead assumes that ecosystems are self-regenerating and able to offer services indefinitely and that there will be an infinite supply of materials. His report included what he calls an “important new set of calculations” for treating natural resources like the ocean and functions, like pollination, as assets, which, theoretically, increase the chances that we invest in and manage our ecosystems to allow for the production of more goods. “Asset management is a very well understood phenomenon,” Dasgupta said. “But for a variety of reasons, Mother Nature’s assets don’t carry the signals we need to manage them adequately.”
How this idea is applied will vary from place to place, Dasgupta said, but now there is a vocabulary and method for addressing the underlying issues. The Biden proposal, for example, cites “failing to fully account for nature’s bounty” as having led to an “erosion of our nation’s natural assets.” Dasgupta called the proposal “a fine piece of work,” but he said that he wasn’t confident it would be put into effect, or that his ideas more broadly would be understood fast enough to prevent disaster. “We’re in a firefighting situation,” he said. “Extreme weather events are happening even as we speak.”
Dasgupta worries that an important nuance within his work gets lost, even as it becomes more well known. The services of nature are interconnected, and “they can be brought down like a house of cards,” he said. “You remove one card from the house and the whole house collapses.” So climate change solutions that focus on goods and tech, like replacing oil with solar power, fail to account for the full picture — the interconnectedness of everything.
Policymakers often assume that a few tweaks and some human ingenuity will allow for infinite goods and growth; Dasgupta does not.