[Graeme]

Over the past few days and weeks, I have been exposed by some members of this forum to ecological economics. I haven't shown much interest in this topic until now mainly because these posters have tried to impress on me how serious our situation is in this regard. I do acknowledge this. In an attempt to clarify this extremely important issue, I just happen to find this excellent article recently published in Nature, which I hope will initiate further discussion of this topic.

Economics: Account for depreciation of natural capital

For the past year, academics and policy-makers have been discussing Thomas Piketty's 2013 economics best-seller, Capital in the Twenty-First Century1. It documents the considerable rise over the past 40 years in national wealth relative to national income in eight of the richest economies — the United States, Japan, Germany, France, the United Kingdom, Italy, Canada and Australia. The national wealth of each of these countries increased from 2–3 times national income in 1970 to 4–6 times income in 2010.

Piketty relies on standard income conventions as prescribed in the United Nations national accounts. He includes natural resources such as fossil fuels, minerals and forests in his estimate of a country's capital. But his measures of national income and savings adjust only for depreciation of 'fixed capital' — buildings, equipment and so on.

We must also account for the depreciation of natural capital in appraising wealth. This is the value of net losses to natural resources, such as minerals, fossil fuels, forests and similar sources of material and energy inputs into our economy. If we use up more natural capital to produce economic output today, then we have less for production tomorrow.

At the same time, we are also squandering valuable ecological capital — ecosystems provide important goods and services to the economy, such as recreation, flood protection, nutrient uptake, erosion control, water purification and carbon sequestration. By converting and degrading ecosystems, we are depreciating this important ecological capital endowment.

Economic indicators change dramatically when the depletion and degradation of natural resources and ecosystems are accounted for. Here, I show by how much, through a worked example of mangroves in Thailand. Depreciation of natural capital is particularly high in developing economies, which are often rich in resources and ecosystems. We must retool our measures of income and wealth accordingly, starting with net domestic product.

Creative accounting
Since 1970, the World Bank's World Development Indicators have provided estimates for most countries of the adjustments to national income, income growth and savings that arise from net depletion of forests, energy resources and minerals. This rate of natural-capital depreciation as a percentage of adjusted net national income over the past four decades is alarming (see 'Natural capital').

Two global trends are noticeable. First, the decline in natural capital has been five times greater on average in developing economies than in the eight richest countries. Second, natural capital depreciation in all countries has risen significantly since the 1990s. There was a dip during the global recession of 2008–09, but as the world economy has recovered, so has the rate of resource use.

Ecological capital, too, is clearly endangered by current patterns of economic development. Over the past 50 years, ecosystems have been modified more rapidly and extensively than in any comparable period in human history, largely to meet burgeoning demands for food, fresh water, timber, fibre and fuel. According to the worldwide Millennium Ecosystem Assessment, approximately 60% of major global ecosystem services have been degraded or used unsustainably, including fresh water, wild fisheries, air and water purification, and the regulation of regional and local climate, natural hazards and pests.

Unfortunately, ecological capital, being unique, poorly understood and difficult to measure, tends to be undervalued. Consider the example of mangroves in Thailand from 1970 to 20092. Average annual mangrove loss in Thailand has fallen steadily in every decade since the 1970s. Yet cumulatively, Thailand is estimated to have lost around one-third of its mangroves since the 1970s, mainly to the expansion of shrimp farming and other coastal development.

Natural Capital

[Graeme]

I already knew that our ecosystms are being degraded but I didn't realize to what extent they are in different parts of the world (for instance, the developing countries). The first point that strikes me is that ecological capital is difficult to measure as pointed out in the last paragraph of the OP. This seems to me to be the key to proper management of our life-supporting ecosystems in future.

This figure identifies the countries in ecological deficit:

[Newfie]

China and India are both low income/bio capacity deficient. Both have huge populations with India's growing rapidly.

I wonder how this is gonna play out.

Nice graphics for explaining the coming die-off.

[Graeme]

I had a brief look around the web last night to look for resources on natural capital accounting. I found these:

Towards a global map of Natural Capital

In a controversial study on the value of the world’s ecosystem services (National Research Council, 2004), Costanza et al. (1997) used localized, context-specific valuation studies to estimate this value to be approximately $33 trillion per year, nearly double the global gross national product of $18 trillion. An updated study (Costanza et al. 2014) increased this estimate to US$125 trillion/year in 2011 (with the estimated loss of ecosystem services from 1997 to 2011 due to land use change being valued at $20.2 trillion/yr, using the updated values).

Accounting for Natural Capital

‘The new model for business seeks to integrate the real value of nature into its thinking ... These companies are not just taking notice of the market price of natural resources: they also assign value to the services provided by nature and are finding ways to make what was once the invisible value of nature’s resources and services apparent in their business models. As a result such businesses are making their companies more resilient, managing risk more effectively, concentrating on the right relationships with customers, and suppliers and strengthening their reputations. For the economy as a whole this shift in understanding will drive innovation, improve resilience and enhance competitiveness.’

Ernst Young state as examples that Puma, Coke Cola and Dow are accounting for natural capital.

See also Natural Capital Protocol.

Natural Capital Accounting

GDP looks at only one part of economic performance – income – but says nothing about wealth and assets that underlie this income. For example, when a country exploits its minerals, it is actually depleting wealth. The same holds true for over‐exploiting fisheries or degrading water resources. These declining assets are invisible in GDP and so, are not measured.

Wealth accounting, including natural capital accounting, is needed to sustain growth. Long‐term development is a process of accumulation and sound management of a portfolio of assets – manufactured capital, natural capital, and human and social capital. As Nobel Laureate Joseph Stiglitz has noted, a private company is judged by both its income and balance sheet, but most countries only compile an income statement (GDP) and know very little about the national balance sheet.

The other major limitation of GDP is the poor representation of natural capital. The full contribution of natural capital like forests, wetlands, and agricultural land does not show up. Forestry is an example – timber resources are counted in national accounts but the other services of forests, like carbon sequestration and air filtration are ignored. So, GDP can give misleading signals about the economic performance and well‐being of a country.

As a result, ecosystems are deteriorating worldwide, and with them, the capacity to support human wellbeing and sustainable economic growth. Natural capital is a critical asset, especially for developing countries where it makes up a significant share (36%) of total wealth.

The concept of accounting for natural capital has been around for more than 30 years. To date, however, progress in moving beyond conceptual thinking towards practical implementation of natural capital valuation has been slow. Barriers to implementation include (i) the lack of internationally‐agreed methodologies for ecosystem valuation, (ii) a lack of uptake of natural capital accounting by policy makers, especially finance ministers (iii) capacity limitations in many developing countries and (iv) lack of leadership in moving “beyond GDP”.

Is natural capital a 'neoliberal road to ruin'?- experts discuss

George Monbiot does not like natural capital. At the recent SPERI lecture at the University of Sheffield, he attacked the idea of placing a monetary value on nature as "complete and utter gobbledygook".

We asked four experts from different sides of the debate to respond to the key question raised by Monbiot's piece: Is natural capital a "neoliberal road to ruin"? Please leave your thoughts in the comments section below.

Robert Costanza - chair in public policy at the Crawford School of Public Policy, Australian National University.

Ecosystem services, as a concept, highlights the interconnected, dynamic interdependence between humans and the rest of nature. If anything, it is the conventional environmental and economic views that perpetuate the myth that humans are separate from the rest of nature.

Environmentalists want to protect nature from people, economists tend to ignore nature as irrelevant. Both separate nature from people. Ecosystem services makes human's interdependence with the rest of nature more obvious and tangible.

The valuation of ecosystems is not something we can choose to do or not do. Far from being impossible, it is happening every day, all the time, every time we make a decision that involves tradeoffs that affect ecosystems. The problem is that this valuation is implicit in the decision, not explicit and transparent, and generally ignores the benefits from ecosystems. We are better off trying to pull back the curtain, messy and imperfect as that process might be.

Valuation is not the same as monitisation, commodification, privatisation, etc. Valuation is about communicating tradeoffs and the units chosen to express those tradeoffs are arbitrary and depend on how well they communicate. We could use money, energy, time, land area or oranges. as the common denominator. Money communicates tradeoffs well because most people use money for this purpose (and they don't use energy, land, or oranges). A key distinction that many miss is that ecosystem services valuation is about tradeoffs with sustainable well-being, more broadly defined, and not just marketed production.

However, expressing values in monetary units DOES NOT imply that these values came from market (or even pseudo-market) exchanges. The whole point is that most ecosystem services are outside the market - and should remain there. They contribute to human well being just by existing and functioning, not necessarily by being exchanged in markets.

[Graeme]

How the world's economic growth is actually un-economic

By Robert Costanza, Australian National University

Yet there has been no real growth in the global economy for decades. The policies the G20 advocates will only exacerbate this unfortunate trend.

Many people will question this claim and ask, hasn’t gross domestic product been growing consistently since the second world war with only the occasional downturn? We have had growth of GDP, but since around 1980 this growth has been “un-economic”. This is in the sense that human welfare per capita, adjusted for the costs of inequality, environmental damage and other factors that affect welfare, has not improved.

The real economy – including all things that support human well-being – is much larger than the market economy estimated by GDP. GDP was never designed as a measure of overall societal well-being and its continued misuse for that purpose needs to stop.

Why GDP is not an accurate measure of economic growth

The real economy includes our natural capital assets – all of the gifts from nature that we do not have to produce - and the immensely valuable, but non-marketed, ecosystem services those assets provide. These services include climate control, water supply, storm protection, pollination and recreation.

These natural assets have been estimated to contribute significantly more to human well-being than all the world’s GDP combined. But our cavalier overlooking of these contributions has led to massive depletion of these assets.



A new indicator that includes social and natural costs

One indicator that accounts for changes in social and natural capital is the Genuine Progress Indicator (GPI). GPI adjusts personal consumption by income distribution, adds non-marketed services like volunteer and household work, and subtracts the costs of natural capital depletion like air and water pollution. Globally, GPI per capita has not improved since 1978, even though GDP per capita has more than doubled.

What this means is the world has been experiencing “un-economic growth” since 1978.

Two states in the US, Maryland and Vermont, have adopted the GPI to help guide policy. Several others are considering the same. It is time for the rest of the world to realise the reality of our un-economic growth policies and practices and move to build a real economy that provides sustainable and equitable prosperity for all. The UN Sustainable Development Goals process is an important move in this direction.

Perhaps at the next G20 summit, world leaders can discuss how to improve real economic performance – genuine progress - rather than merely increases in environmentally disruptive, inequitably distributed marketed goods and services.

skepticalscience

[Graeme]

The First Ecological Land Units Map of the World

The US Geological Survey (USGS) and Esri are pleased to announce the publication of the most detailed global ecological land units map in the world. This exciting new global data set provides a science platform for better understanding and accounting of the world’s resources. Scientists, land managers, conservationists, developers, and the public will use this map to improve regional, national, and global resource management, planning, and decision making.

This map as well as the data layers used to create it can be explored in a new story map that introduces ecological land units. The data is available in the form of services and can enrich any GIS effort.

The collaborative partnership between Esri and USGS resulted in a dynamic online map representing the world’s ecological diversity at unprecedented detail and authority. This work leveraged quantitative methods, geographic science, and big data produced by government agencies and the scientific community. To create this map the data were processed in Esri’s ArcGIS cloud computing environment. This map provides new knowledge and understanding of geographic patterns and relationships by distinguishing the geography of the planets’ ecosystems.

To better understand the significance of the new Global Ecological Land Units (ELUs) map and the data behind it, I recently met with project leads, Roger Sayre, Ph.D., Senior Scientist for Ecosystems, USGS, and Randy Vaughan, Manager of Content Engineering, Esri.

esri

[Graeme]

Open Working Group proposal for Sustainable Development Goals

Sustainable Development Goals:

Goal 1 End poverty in all its forms everywhere
Goal 2 End hunger, achieve food security and improved nutrition and promote sustainable agriculture
Goal 3 Ensure healthy lives and promote well-being for all at all ages
Goal 4 Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
Goal 5 Achieve gender equality and empower all women and girls
Goal 6 Ensure availability and sustainable management of water and sanitation for all
Goal 7 Ensure access to affordable, reliable, sustainable and modern energy for all
Goal 8 Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
Goal 9 Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation
Goal 10 Reduce inequality within and among countries
Goal 11 Make cities and human settlements inclusive, safe, resilient and sustainable
Goal 12 Ensure sustainable consumption and production patterns
Goal 13 Take urgent action to combat climate change and its impacts*
Goal 14 Conserve and sustainably use the oceans, seas and marine resources for sustainable development
Goal 15 Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss
Goal 16 Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
Goal 17 Strengthen the means of implementation and revitalize the global partnership for sustainable development

A lot more details here

[Graeme]

Academics can't get it right. They are bickering over why not how.

Bridging the Conservation Divide

Early last month, two prominent biologists wrote a comment in the journal Nature in which they addressed one of their field’s central questions: Should we conserve nature for nature’s sake, or for our own? Recent debate over that question, they wrote, had become so vitriolic that it was “stifling productive discourse, inhibiting funding and halting progress.” Noting that many of the loudest voices belonged to men, the authors of the article—Heather Tallis, the lead scientist at the Nature Conservancy, and Jane Lubchenco, a professor of marine biology at Oregon State University and a former administrator of the National Oceanic and Atmospheric Administration—called for the development of a “unified and diverse conservation ethic,” one that would welcome a wide range of philosophies and do away with “gender and cultural bias.” The same week, Emma Marris, the author of the book “Rambunctious Garden,” and Greg Aplet, the senior science director for the Wilderness Society, made a similar appeal in an opinion piece in the Times. “No matter which reason motivates you most, working together and using a diversity of approaches is far better than inaction or squabbling,” they wrote.


Abbey, who was more provocative than Kareiva and at least as passionately a preservationist as Soulé—his novel “The Monkey Wrench Gang,” about a group of eco-saboteurs, inspired many of today’s radical environmentalists—suggested that the solution was for conservationists to stop bickering and get back to protecting vulnerable places. “I am weary of the old and tiresome and banal question ‘Why save the wilderness?’ ” Abbey wrote in 1979. “The important and difficult question is ‘How? How save the wilderness?’ ”

newyorker

[Graeme]

But not the US government!

Congress Protects New National Parks And Wilderness Areas For The First Time In 5 Years

In the face of growing pressure from President Obama and frustration from local communities for its failure to pass meaningful land conservation legislation in the past five years, Congress sent a package of dozens of land conservation bills to the President’s desk for signature on Friday.

All together, the bills — which were added to a defense spending bill that was approved on Friday — protect more than 1 million acres of national parks, wilderness areas, and wild and scenic rivers. It is the most significant piece of land conservation legislation that Congress has passed since 2009.
“In addition to setting aside nearly a quarter million acres of wilderness in the American West, it also expands more than a dozen of our national parks to protect more of this country’s natural splendor for future generations,” said House Minority Whip Steny Hoyer (D-MD).

The bills passed today include protections for 244,970 acres of new wilderness, including an addition to the Bob Marshall Wilderness in Montana, the creation of the Columbine-Hondo Wilderness in New Mexico, the Pine Forest Range and Wovoka Wildernesses in Nevada, and the Hermosa Creek Wilderness in Colorado.

thinkprogress

[ennui2]

Graeme, keep studying this topic. It will be an eye-opener for you.

Once you see where all our gadgets really come from and how it's ultimately an unsustainable house of cards stacked on top of practices we started 10,000 years ago with the neolithic revolution you'll realize that you can't just "innovate" your way out of dependence on the natural world the way Elon Musk or fantasies like Interstellar would postulate.

[Graeme]

Would you like to write a better list?

[Graeme]

Well done. I know that is new policy in the Philippines but it conflicts with the interests of the Catholic church. Not sure how effective it will be then. Impressed with the suggestion though.

[careinke]

Open Working Group proposal for Sustainable Development Goals

The rest of the list fails, having never defined 'sustainable. And the damn thing ignores population control. Who wrote this thing? It's junk.

They certainly missed population control. An essential element.

[Graeme]

I think that one of the more important publications to appear this year was the one I posted in the World on the Brink of Sixth Great Extinction Thread about biodiversity.

The International Union for Conservation of Nature (IUCN) highlighted the uncertainty in the latest version of its Red List of Threatened Species, which was released in November. The report evaluated more than 76,000 species, a big increase over earlier editions. But that is just 4% of the more than 1.7 million species that have been described by scientists, making it impossible to offer any reliable threat level for groups that have not been adequately assessed, such as fish, reptiles and insects.

Recognizing these caveats, Nature pulled together the most reliable available data to provide a graphic status report of life on Earth (see ‘Life under threat’). Among the groups that can be assessed, amphibians stand out as the most imperilled: 41% face the threat of extinction, in part because of devastating epidemics caused by chytrid fungi. Large fractions of mammals and birds face significant threats because of habitat loss and degradation, as well as activities such as hunting.

Further down, we see that there are attempts to model our ecosystems:

Despite all the uncertainty, researchers agree that they need to devote more attention to evaluating current and future risks to biodiversity. One approach is to develop comprehensive computer models that can forecast how human activities will alter ecosystems. These general ecosystem models, or GEMs, are in their infancy: earlier this year, Tittensor and his colleagues published initial results from the first global model that seeks to mimic all the major ecological interactions on Earth in much the same way as climate models simulate the atmosphere and oceans (M. B. J. Harfoot et al. PLoS Biol.12,e1001841; 2014).

Building the GEM took 3 years, in part because the model tries to represent all organisms with body masses ranging from 10 micrograms (about the weight of small plankton) to 150,000 kilograms (roughly the size of a blue whale). “It needs a lot more development and testing, and ideally there will be a lot more variety of these models,” says Tittensor. But if they do a decent job of capturing the breadth of life in a computer, he says, “they have real potential to alert us to potential problems we wouldn’t otherwise detect”.

nature