For example, Dasgupta suggests compensating countries that have tropical rainforests, paying them not to deforest, a concept that is already being explored through the Tropical Forest Finance Facility. He has also long argued that there is a need for an international institution in parallel to the World Bank and IMF to manage the oceans, as they are an open-access resource that are not accurately accounted for in pricing models.
The western world, he says, has got the idea of the environment and enlightenment wrong.
“Increasingly, western culture has moved in that direction of how successful we have been. It’s been essentially a celebration of science, culture, you name it – achievement in music and so forth. Meanwhile, of course, we’re trashing nature like crazy … [Nature is] what you demand of her, and if you demand too much of her, she’s going to start becoming less and less healthy.”
The role of regulators and disclosures in pricing Nature
Dasgupta doesn’t like to talk about climate change, especially with critics. That’s because people don’t understand or connect with such a vague and abstract idea, he says.
But people do relate to the idea of the natural world they are used to suddenly changing. It is more difficult to dismiss the benefits that forests provide when talking about deforestation than talking about weather patterns, he adds.
“[Talking about] biodiversity, the fact that you’re losing species, insects and so forth, that’s a lot more convincing,” he said.
While Dasgupta’s book spends a lot of time exploring financial markets, regulators and policymakers also play a role in pricing nature. He is strongly in favor of mandatory disclosures because it can provide information missing from market prices, he says. While consumers can typically infer the quality of a product from its price, since nature is not included in current pricing models the price is not a true reflection of its worth. In other words, there is no way for consumers to know the toll a particular product might be taking on the natural world.
He also encourages regulators to spend time with ecologists to have a better understanding of the disclosures and reporting that cross their desks.
“They need to have an understanding of why they’re inspecting what they’re inspecting, because it’s important … to be able to report back and advise those who are setting the standards. There should be a dialogue, as opposed to just carrying out instructions,” he added.
On Natural Capital by Partha Dasgupta is published in the UK by Witness Books.
Article reprinted with Permission as part of GreenMoney’s ongoing collaboration with Climate and Capital Media.
Article by Moriah Costa is an award-winning freelance journalist and editor who covers personal finance, investing, culture, and environmental issues. Her work has been published in Thomson Reuters, Money, The Guardian, and others. She previously worked as a banking reporter at S&P Global. Originally from Arizona, she’s lived in London, Madrid, and D.C. She currently calls Paris home.