A personal view from Ian Stewart, Deloitte’s Chief Economist in the UK. To subscribe and/or view previous editions just google ‘Deloitte Monday Briefing’.
Through the vast majority of human existence, homo sapiens held little power over nature. Efforts by our ancestors to “tame” nature were modest and had little lasting effect. In perhaps 200,000 years of human existence it has been only in the last 250 or so years, since the industrial revolution, that human activity has impinged on nature. Industrialisation, economic activity and a rising population have taken a toll.
A recent report by Cambridge economist, Professor Sir Partha Dasgupta, lays bare the scale of the damage. Natural capital, the stock of natural assets including soil, air, water and all living things, has been drawn down by human activity. The most arresting of many extraordinary facts in the report is about the speed of that process.
While the world was becoming richer, more educated, healthier and more populous, we were depleting the environment. The report estimates that the stock of natural capital per head of the global population has fallen by 40% in less than 30 years. This is a new era in humans’ relationship with the planet. In 2000 the atmospheric scientist and Nobel Laureate, Paul Crutzen, coined the term the ‘anthropocene’ to describe this new epoch in which humans’ impact on the plant rivalled natures.
Humans, and the livestock we rear for food, now constitute 96% of the mass of all animals on the planet. 70% of all birds are poultry for us to eat. Extinction rates are judged to be 100 to 1,000 times higher than the average rate over the past tens of millions of years. Climate change is the most obvious form of self-inflicted harm caused by human activity, but it comes in many other guises.
The loss of plant species reduces the natural stock from which new foods, medicines and biofuels can be drawn. A report by the Royal Botanic Gardens at Kew last year found that two in five of the world’s plant species are at risk of extinction as a result of the destruction of the natural world. Urbanisation and population growth increase the risks of zoonotic transmission of diseases, from animals to humans, as appears to have happened with COVID-19. Deforestation, climate change and overuse have led to the degradation of land and desertification. C02 emissions have increased the acid content of the oceans, disrupting sea life and threatening aquatic food chains.
Professor Dasgupta observes that we are extracting natural capital at a faster rate than it is regenerating. In this respect the world is on an unsustainable path. The report looks to a tried and tested solution. Governments have long priced harms in areas such as atmospheric pollution, workplace safety and water quality. Regulation, or penalties for infractions, are then calibrated to drive changes in behaviour. In the economic jargon policymakers internalise, or charge for, the externality, or damage.
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But Professor Dasgupta wants to take these instruments and apply them comprehensively, with governments putting a value on the earth’s stock of natural assets and accounting for the effect of human activity upon it.
This is hugely ambitious, and the practical problems are legion. The same could have been said about climate change at the turn of this century. Since 2015, 190 countries have formally joined the Paris Agreement to reduce greenhouse gas emissions and to limit the increase in global temperature to two degrees Celsius in this century. Among major emitters only Turkey, Iran and Iraq have yet to join. The world has moved from principle, to target and now action.
Biodiversity is a relatively modern term, but concern about the depletion of natural resources is as old as industrialisation itself. In the 18th century Thomas Malthus argued that abundant harvest would generate rapid population growth that would, in turn, exhaust agricultural capacity, triggering disease and famine. The basic environmental problem, of individuals depleting a common resource, such as grazing land or fishing stocks, to the detriment of all – the so-called tragedy of the commons – was first described by the British economist William Firster Lloyd in 1832. The preservation of open spaces, the building of modern sewerage systems and the regulation of atmospheric and water pollution in the 19th century marked the start of the modern environmental movement. In the 1970s the Club of Rome, a group of academics, policymakers and industrialists, was highly influential in shaping opinion on the environment. Its first report, “The Limits to Growth”, prefigured the Dasgupta report in arguing that resource depletion posed a growing threat to economic growth. It sold 30m copies.
For rich countries there have been many improvements. In London, concentrations of suspended particulate matter, mainly soot, smoke and dust, which are easily especially injurious to human health, have fallen from a peak of over 600 micrograms per cubic metre in 1891 to 17 today. (The Great Smog of 1952, which lasted just five days, is now estimated to have led to 10,000-12,000 deaths.) The Thames, which the Natural History Museum declared was, “biologically dead” in 1957, now hosts fish and the occasional seal.
Yet as the Dasgupta report makes clear, the overall environmental score card is negative. (Even in London levels of fine particulate pollution are too high in some areas and plastics are endemic in the Thames.)
Properly accounting for natural capital is the first step to preserving it, much as the understanding of climate change is driving reductions in C02 emissions. Such valuations are unavoidably imperfect. Many aspects of nature are invisible or mobile and the effect of human activity can be distant and hard to trace. The report describes how soot emitted from South Asian kitchens affects the circulation patterns of the monsoons and of fish in the North Sea consuming microplastic originating in the Bahamas.
Sustaining biodiversity requires action on many other fronts. The near doubling of the world’s population in the last 40 years has been one factor in the depletion of natural resources and the Dasgupta report recommends investing in community-based family planning to give women greater reproductive autonomy.
Science and innovation are likely to offer many of the solutions. Genetic modification offers the prospect of more resilient and abundant crop varieties (something that has been more controversial in Europe than in the US or emerging markets). Cultured meat substitutes could play a role as could the creation of more factory-based food products.
Vertical farming – growing crops indoors, under special LED lighting, often in water, with minimal pesticide use and human intervention – is growing rapidly, sometimes in improbable places. Going underground grows salads and herbs in a disused air-raid shelter 33 metres below ground in south London for the capital’s restaurants and consumers. Patterns of consumption will need to change. Shifting from animal and dairy consumption to a more plant-based diet would help.
Yet the Dasgupta report warns against the idea that there is a complete fix to the challenges we face. It argues that our economic possibilities are circumscribed by nature’s workings: “no amount of technological progress can make economic growth as conventionally measured an indefinite possibility. Ours is inevitably a finite economy, as is the biosphere of which we are part”.
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