Economics of Nature

It seems fairly obvious to me that, like it or not, capitalism rules the world. Anarchism never got off the ground because it was impossible to “imagine no possessions” as John Lennon suggested. Communism failed because people did not want to imagine no possessions that did not belong to the state. So capitalism reigns supreme because it appeals to our need to strive and succeed and, of course, to our greed. And, as Gordon Gekko once said, “Greed is good.” Maybe not so good just at the moment but I am sure it will come into fashion again.

The trouble is that the proponents of capitalism, like the proponents of all the other financial systems, cheat to further their own ends. There is a belief in the free market when it suits. There is a belief in subsidies when they suit. And there appears to be an almost universal belief that the air, water, earth, timber, etc are all free. Even resources that are not free are provided to large corporations at markedly reduced rates, such as Alcoa and its subsidised electricity. Perhaps if the solar industry was similarly subsidised it too would suddenly become as affordable as oil. But we can’t have that.

If nothing else the Deep Water Horizon oil spill taught us that large corporations can be held accountable for affecting other people’s lives and livelihoods. If their actions are detrimental then those affected deserve to be compensated. Unfortunately the legislation in the US has a few more teeth than in Nigeria, where oil companies are free to pollute and damage livelihoods with no fear of repercussions. (Having said that I heard recently that a group of Nigerians are bringing a class action suit against Shell for causing two massive oil spills, so there is hope for all of us.)

It seems reasonable to me that if I am a rubber tapper and someone cuts down the forest, which belongs to no one (or everyone), then I should be compensated for loss of livelihood. If I am a prawn fisherman I should be compensated when the mangroves, which belong to no one (or everyone), are drained, as this is taking away prawn nurseries. If my farm is downhill from a forest that has been logged I should be compensated if my farm then floods because there are no trees to contain the runoff. If a genetically engineered plant excretes a toxin which kills bees as well as noxious pests (,1518,473166,00.html), apiarists should be compensated. In fact all of us should be compensated because, according to Indian banker Pavan Sukdhev, the global value of pollination for food-bearing trees and various forms of agriculture is in the order of $190 billion per annum.

For more on Pavan Sukhdev see “Putting a Price on the Real Value of Nature” ( ). He is a founding member of The Economics of Ecosystems and Biodiversity (TEEB) which is a major international initiative aimed at drawing attention to the global economic benefits of biodiversity and attempting to highlight the growing costs of biodiversity loss and ecosystem degradation. Like war environmental destruction is bad for business. It’s hard to make a profit if you keep smashing your equipment. For more information check out

Another example focusses on the toilets of Kampala, Uganda. The Kampala sewage system consists of a large 40 square kilometre swamp. At one point the local administration decided to dam up the swamp, which no one owned, and convert it to agricultural land, until an economist pointed out that the value of this horrible mosquito-infested swamp, as a way of eating up the human sewage from the city of Kampala, was something like $2 million. The economist also pointed out that to build an alternative physical sewage-treatment plant would cost a huge amount of money and cost another one-and-a-half-million dollars to run. All this was being provided free by the swamp.

It’s time to calculate the true cost of doing business. No more freebies from the planet. I suspect that taking ALL costs into consideration would drive us considerably faster into a sustainable future.

Dr. F. Bunny

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