Sunday, 17 October 2010

Fixing the economy - nature is the missing link

A very important series of UN meetings is taking place this week in Nagoya when representatives from around the world meet to discuss how to value the natural environment. The hope is that the meeting will be able to set a target to halt biodiversity loss by 2020, though that will require, as always, money and a willingness to support the developing world. The last point is especially important given the level of environmental destruction in the developing world.

By placing no value on 'nature' at the moment we have created a massive market distortion that fuels unsustainable economic growth and prevents innovators from commercialising great ideas. If we as consumers and the businesses that we buy from do not need to pay the true cost of the resources and economic destruction we cause then how can the market be efficient and how can we make reasonable economic decisions? This is an example of the type of distortion that allows outdated business and industries to stay in business. Far from supporting the creative destruction on which capitalism thrives it is destructive and stupid.

Since we now understand that there is an economic and social cost to losses in the natural environment it is a worthy exercise to value these resources so that communities, companies and governments can better manage their use. It will also help us, as communities and individuals, to understand the true cost/benefit ratio of a business and industry to our region and the world.

It also seems logical to update the 'economic rules' by which capitalism is governed from time to time. We are doing exactly this in the wake of the recent banking crisis and here's hoping we do the same thing now we understand and accept how critical the natural world is to humanity.

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