“How much is an endangered species worth? is not only an impossible question but also an inappropriate one. Who can accurately determine a price tag for the giant panda?”
- Marilyn Waring, If women counted (1988)
My first job after university, in the late 1960s, was as an Assistant Research Officer in the UK Labour Government’s Department of Economic Affairs. One of my projects was to evaluate the regional planning implications of a cost benefit analysis that was being carried for an Inquiry into where to locate a proposed Third London Airport. As a recent Economics graduate, I was excited to explore how cost benefit analysis, with its promise of integrating social and private costs in decision making, would work in practice. Excitement soon led to disillusion.
The rise and fall of cost benefit analysis
The econocrats (Peter Self’s apt description of those who believed public policy should be determined by economic considerations alone) who undertook the analysis for the Roskill Commission Inquiry made a heroic effort to assign monetary values to some of the less tangible impacts of a new airport. But the more you dug into it, the more questionable their calculations appeared to be. Noise impacts, for example, were measured by estimating likely depreciation in property values, which implied that richer households suffered more from noise than poorer ones. Measures of the inconvenience of time spent travelling to the airport were based, for business travellers, on average hourly earnings, as if having to set the alarm clock half an hour earlier to catch a flight would mean the loss of half an hour’s productive labour.
Four possible sites were compared - one on mudflats in the Thames estuary, the other three inland. The estimated costs of time spent travelling to the airports far outweighed the other costs, and it was this that led to the estuarial site, Foulness, being rejected - its noise impacts were less than the inland sites, but the time passengers would take to get to the airport was greater. Quantification of impacts on wildlife proved difficult, which meant that little account was taken of the importance of the Foulness mudflats as an overwintering habitat for about 15% of the world population of dark-bellied Brent Geese.
Cublington in rural Buckinghamshire , one of the inland sites, was the recommended option. But voters in many parliamentary constituencies would have been affected by noise, and politicians took fright. They ignored the cost benefit analysis they had commissioned, and opted for Foulness, thinking it would have greater brand appeal if it was renamed Maplin.
Had the project gone ahead Brent Geese, having neither votes nor monetary value, would have lost out. They were saved, though, by the oil price shock of 1974, which led to the scrapping of the new airport project, and an expanded Stansted becoming London’s third airport instead. Cost benefit analysis survived the embarrassment of the Third London Airport decision, but the judgements of econocrats were never again accepted as uncritically as they had been during the Inquiry.
Wildlife protection and ‘natural capital’
The threat posed by the Maplin airport project stimulated intensive surveys of the wetland bird population of the Thames estuary. Economists may have been unable to quantify the monetary value of Brent Geese, but ecologists and ornithologists successfully quantified their ecological value. Their surveys provided reliable information on the critical importance of estuarial wetlands, and particularly the salt marsh grasses around Foulness Island, for wading birds - a significant development in creating a sound evidence base for site protection. Guided by this survey evidence, Foulness later became a Special Protection Area under the European Birds Directive, an EU initiative which recognised that most wild birds are migratory, so that effective protection requires co-ordination across national borders.
The econocrats didn’t accept defeat, though. Undeterred by the difficulty of integrating wildlife protection into a cost benefit analysis framework, they hijacked E.F. Schumacher’s concept of natural capital, and distorted it.
Schumacher had developed the concept of natural capital in his 1973 book Small is Beautiful (published in the short-lived period when the Foulness/Maplin airport was a live project). He criticised mainstream economics for valuing only what humans make for themselves, and taking for granted what is provided by nature. All economic activity in modern societies, he noted, makes use of physical capital to augment the productivity of labour. Some of this capital is human-made, but most is provided by nature. Understanding that what is provided by nature is capital, not income, would. he suggested, encourage us to maintain it, and not squander it.
“The modern industrial system, with all its intellectual sophistication, consumes the very base on which it has been erected. To use the language of the economist, it lives on irreplaceable capital which it cheerfully treats as income.”
(E.F. Schumacher, Small is Beautiful, 1973)
Schumacher used the language of economics to make an important point. He totally opposed, however, attempts to reduce the value of nature to a price, on both practical and moral grounds:
“To press non-economic values into the framework of the economic calculus, economists use the method of cost/benefit analysis. This is generally thought of as an enlightened and progressive development, as it is at least an attempt to take account of costs and benefits which might otherwise be disregarded altogether. In fact, however, it is a procedure by which the higher is reduced to the level of the lower and the priceless is given a price. It can therefore never serve to clarify the situation and lead to an enlightened decision. All it can do is lead to self-deception or the deception of others…what is worse, and destructive of civilisation, is the pretence that everything has a price, in other words, that money is the highest of all values.”
The commodification of nature
The Cameron coalition government set up a Natural Capital Committee (NCC) in 2012 to advise it on how to protect and improve natural assets. Their advice didn’t heed Schumacher’s disdain for an economics that reduces all value to price. Instead, much of the Committee’s work was devoted to establishing the ‘environmental services’ that nature provides for us, and attempting to assign monetary values to them.
Herman Daly, the founder of ecological economics, highlighted the fundamental difference between physical and monetary definitions of natural capital. A physical definition is useful, he suggested, in revealing that squandering natural capital as if it were income cannot be sustained. Monetary capital, in contrast, can sustain drawdown if liquidation takes place at a slower rate than the rate of interest:
“Exchanges of matter and energy among parts of the ecosystem have an objective ecological basis, They are not governed by prices based on subjective human preferences in the market.”
The NCC defined natural capital in 2014 as “The elements of nature that directly and indirectly produce value or benefits to people”. Not only did its definition ignore the sustainability considerations highlighted by Daly, it made clear that its focus was on how humans benefit from exploiting nature (in the short term) rather than on nature’s intrinsic value.
One of the NCC’s last acts, before it was disbanded in 2020, was to advise the Government on its 25 year Environment Plan. For its assessment of marine assets, the NCC was critical of what it called “the historical species-led approach” , and argued that “marine environments lend themselves more easily to a natural capital-ecosystem services approach”. The ecosystem services, it suggested,”include provisioning services such as food, biotechnology, genetic and medicinal resources; regulating services such as climate regulation, coastal and flood defence, waste treatment and assimilation, and cultural services such as leisure, recreation tourism and cultural heritage.” It admitted that “the value of benefits from marine ecosystem services in the UK, and the natural capital that underpins them, are not yet well quantified”. Yet the calculations it provided, of Gross Value Added in fisheries, tourism, CO2 sequestration, and coastal protection, suggest that it accepted the pretence criticised by Schumacher, that “money is the highest of values.”
It is hard to see how such an approach would benefit Brent Geese, particularly if adopting it would require removal of Special Protection Area status for Foulness.
The demise of the NCC in 2020 did not spell the end of natural capitalism. Early the following year, the UK Treasury published The Economics of Biodiversity (the Dasgupta Review). This recognised that “Biodiversity does not only have instrumental value, it also has existence value - even an intrinsic worth. These senses are enriched when we recognise we are embedded in Nature. To detach Nature from economics is to imply that we consider ourselves to be external to Her.” However, the main thrust of the Review’s chapter 12, on Valuing Biodiversity, was to emphasise the need to measure “people’s willingness to pay for an item of natural capital”, either directly (stated preference) or indirectly (revealed preference).
In a damning critique, Clive Spash and Frédéric Hache point out that “Dasgupta is proposing the optimal management of life on Earth in all its facets, an all encompassing approach, made possible by assuming the only thing that matters is maximising social value measured as monetary wealth invested in a capital stock. The aim of life is to maximise rates of return on investment.,,,,,Nature that does not pay enough is liquidated as a bad investment.”
Trussed
The short-lived Truss government in 2022 embarked on an intensified war against nature, and was determined to remove environmental protections (particularly those which originated as a result of EU membership). The then Environment Secretary, Ranil Jayawardena, arguing that the new government was still committed to environmental protection, made its position clear: “We propose to replace EU regulations written for a continent stretching from the Aegean to the Arctic, with better, bespoke, British protections.” (Sunday Express, 9 October 2022).
For migratory birds like Brent Geese it is, of course, essential that protection is Europe wide, whether or not the UK is in the EU. Birds, the Environment Secretary seemed not to have understood, do not respect national boundaries.
In situations like this, it is tempting for those who value nature to use arguments developed by the natural capitalists, that the economy depends on environmental services provided by nature, to defend nature against this attack. The downside, though, is that when we adopt the language of natural capital, we are being conditioned to accept a framing that values nature only to the extent that it directly benefits us, turning nature into a commodity. Perhaps the biggest danger is that by absorbing its language we further our disconnect from nature, amplifying the problem that natural capitalism claims to solve.
“The natural capital agenda is the definitive expression of our disengagement from the living world. First we lose our wildlife and natural wonders. Then we lose our connections with what remains of life on Earth. Then we lose the words that describe what we once knew. Then we call it capital and give it a price. This approach is morally wrong, intellectually vacuous, emotionally alienating and self-defeating. Those of us who are motivated by love for the living planet should not hesitate to say so. Never underestimate the power of intrinsic values. They inspire every struggle for a better world.”
(George Monbiot, The UK government wants to put a price on nature - but that will destroy it, Guardian, 15 May 2018)