Putting a price on nature: the limitations of economic ‘fixes’

There’s a new nature conservation strategy in town. And it means business. From the 1970s to 1990s, the main tactic to protect wildlife was highlighting the plight of charismatic ‘flagship’ species. You may remember the WWF Save the Panda campaign, for example. In the last few decades, however, a new strategy has emerged and been backed by several major conservation organisations such as The Nature Conservancy, which is to give a monetary value to the benefits that nature provides.

The commodification of nature

Not all conservationists agree, as borne out by fierce debates in a recent major international initiative to assess global biodiversity¹ but the idea is now mainstream conservation policy in many countries. In the UK, a high profile review ‘Economics of Biodiversity: Dasgupta Review’ was commissioned, and natural capital assessments have been adopted into policy making across government. Supporters argue it’s pragmatic, because if we don’t give nature a price, we essentially treat it as having zero value.

The downsides of commodification

1. It’s not practically possible to quantify all the benefits that different species provide – the extent to which they pollinate our crops, their effectiveness at controlling pests and diseases, how they purify water, decompose waste, store carbon, and so on. The majority of species worldwide are not even discovered yet (86% of species on land and 91% in the ocean remain undescribed)².
2. Many of the benefits humans receive from species are not easily quantifiable. This includes things like the aesthetic value of landscapes and the educational and spiritual benefits that nature provides. As the sociologist William Bruce Cameron once stated, “Not everything that can be counted counts, and not everything that counts can be counted.” Major global initiatives that have pioneered the monetisation of nature (such as TEEB – The Economics of Ecosystems and Biodiversity) were initially at pains to highlight the fact that not all the benefits of nature can be easily measured or converted into a dollar value. Yet, even after making these caveats, they went ahead and produced monetary assessments. For example, a TEEB assessment estimated the value of a biodiversity hotspot that would be destroyed if a major trade port was built in Durban, South Africa. The economic case for the port was deemed to be stronger and the construction went ahead with very little mitigation of its negative impacts³, despite the fact that many of the biodiversity benefits remained unquantified.
3. One big risk is that if we treat nature as an asset, we obscure other reasons to care for it based on our sense of care and moral responsibility. One major conservation project, called NaturETrade, produced computer algorithms to quantify the benefits from nature. Landowners were then helped to draw up a contract so they could be paid for these in an auction the researchers behind the project described as an ‘eBay for ecosystem services’. Yet research shows many landowners protect nature simply because it’s the right thing to do, and paying them risks crowding out these social norms⁴.

The language of commodification weakens our sense of connection to nature and the responsibility to care for it. The things we own (our phone, watch, etc.) are assets and we look after them as such. The care I provide to my cat, however, is not based on its utility to me, but on the responsibility I owe to another living creature, to another entity that is infused with the same organising life force that flows through me. As Sigmund Freud realised in 1930, when we identify strongly with – or, to use the non-scientific term, ‘love’ – something, then the subject-object relationship disappears. This love extends to wild nature. It is antithetical to many people to refer to a dancing swift, an elegant swan or friendly-looking robin as an ‘asset’.

Do economic fixes have a role to play?

Achieving multiple goals for society (a stable climate, clean air and water, thriving nature, etc.) needs transformation of our economy, technology and culture. A narrow focus on just one of these strands – economic fixes in this article – is unlikely to be effective and it may even make things worse.

Economic tools have their place in protecting nature but they’re not a silver bullet. Their limitations must be recognised and factored into the decision-making. ‘B Corps’ (companies that act upon their values of responsibility for nature and society) are an important example of using economic tools within a wider decision-making context. These companies structure their operating procedures to actively restore nature even if it doesn’t turn a profit and without necessarily monetising its value.

The key is to avoid seeing nature only as a set of ‘assets’, which doesn’t tackle the deeper aspects of our cultures that drive environmental degradation⁵.

References

1. The battle for the soul of biodiversity Masood, E. Nature, 22 Aug 2018
2. How Many Species Are There on Earth and in the Ocean? Mora C, et al., PLOS Biology 9(8) 2011.
3. DTPC State of the Environment Report 2015-16, 5th Sept 2016.
4. Motivation crowding by economic incentives in conservation policy: A review of the empirical evidence. Rode, J., Gómez-Baggethun, E. & Krause, T. Ecol. Econ., 117, 270-282, 2015.
5. Meeting Environmental Challenges: The Role of Human Identity. Compton, T. & Kasser, T. WWF-UK, 2009.