The Dasgupta Review on the Economics of Biodiversity

A quiet revolution started at the Treasury this week. Launched at the Royal Society, with an introduction from the Prime Minister and the Environment Secretary, Professor Sir Partha Dasgupta presented his review of the economics of biodiversity.

Running to some 600 pages, the review into the economics of biodiversity sets out the way that nature has been consistently undervalued or altogether ignored as an externality to the economy. The review identifies that our economies, livelihoods and well-being all depend on the health of nature and that we have failed to engage sustainably with nature, thereby exceeding its capacity to provide for us and endangering the prosperity of future generations. This failure of the markets to properly evaluate nature’s worth to society has distorted our economies and led to more investment in manufactured capital and underinvestment in natural assets. The result is broader institutional failure; governments around the world pay subsidies to people to exploit nature and prioritise unsustainable economic activities over the restoration of nature.

Economics of biodiversity: Where’s the new news?

To someone working in my field, there is perhaps nothing entirely new in the review. Over the years, there have been many reports produced by international NGOs setting out the state of nature and calling for society to live within its environmental means. The importance of this review, though, is in the writer, one of the world’s most respected economists, and the commissioning body, HM Treasury. This is not a fringe interest decrying the mainstream; this is the establishment recognising the need for transformative change. It is not the first time the Treasury has ‘dabbled’ in natural capital accounting, having incorporated guidance on how to take this into account in developing public policy in its ‘Green Book’ back in 2018. But merely providing a useful methodology is not the same as declaring that we need transformational change in how we think, act and measure success. The Dasgupta review, if implemented, entirely refocuses economic policy and triggers urgent action.

Quoted in Environment Analyst, Green MP Caroline Lucas said that the review “should send shockwaves through the Treasury”. She added, “Its conclusion is crystal clear. Ministers need to replace GDP growth with environmental protection and human wellbeing as the country’s overarching economic goals and apply this to all economic policy making, starting with next month’s budget.”

There are several examples of society making these types of significant shifts. The iconic photograph of construction workers having their lunch break atop a New York skyscraper shows working practices unthinkable a few decades later.

More recently, the Stern report on the economics of climate change, published in 2006, triggered a shift in thinking about the global response to climate change. Within ten years we had the legally binding targets of the Paris agreement. In the case of our impacts on nature, we do not have ten years to agree targets; by 2030, we need to have reversed the loss of biodiversity globally if we are to avoid the catastrophic effects of ecosystem collapse. The CoP15 meeting in Kunming this year, where governments will sign up to new targets on protecting biodiversity, will be the start of transformative change, and governments, businesses and civil society will all play a part in redefining our relationship with nature.

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