Other studies only serve to clarify this state of affairs. One, begun in 2008 by the United Nations and called the Economics of Ecosystems and Biodiversity Study, or TEEB, which continues to do its work, sought to highlight the growing cost in financial terms of the annual loss of biodiversity and the destruction of ecosystems around the world. They began by working out the value of the natural systems wiped out every year, be it wetlands or rainforest and so on. If you imagine this area as a factory, they estimated that this factory would be worth around $50 billion. But that is not the total loss. The figures are worse than that. Calculating the annual output lost from this $50 billion economic concern over a period of the next forty years and applying a low rate of interest to that output, their estimate was that, in financial terms, the world’s economy is incurring a loss of between $2 and $4.5 trillion every year because of our destruction – every single year. To put that figure into perspective, when the world’s banking system suffered its crash recently – described by the Media frenzy as ‘the worst financial crisis the world has seen since the 1930s’ – the estimated one-off loss of that crisis was put at just $2 trillion. We all witnessed the scale of that news story, but it is curious that the far bigger one has never yet received the same sort of panicked Media attention.
This leads me to suggest that the increasingly unbalanced relationships we forge with the world around us are of far more importance than is widely understood. Harmony between people and the rest of Nature is not simply a philosophical or ethical matter – it is a fundamental practical and economic priority. But it is not seen this way because of the way we have come to measure and consider economic progress.
During the twentieth century, and particularly in the period after the Second World War, countries began to measure something called Gross Domestic Product, or GDP. This is basically a proxy for how much economic activity is taking place in a country and is a measure of the output of goods and services. Once it became possible to measure GDP with some accuracy (and also Gross National Product, or GNP, the measure of income rather than output), it was a natural and short step to measuring ‘growth’ – the increase year on year of GDP or GNP. This proved a very convenient tool for assessing a country’s success, not least because it gave the impression of being a good benchmark for social welfare and national progress.
I grew up in this era and have seen the vast changes that have occurred in society as a result of what has become our obsession with endless economic expansion. I can see that measuring growth in this way is the logical outcome of two and a half centuries of industrial development in the West. It is, after all, a means of computing our continued and accelerating ability to improve human progress by harnessing technology and pushing the boundaries of science. What is perhaps less well known is that those who came up with the idea of measuring GDP growth cautioned against using it in this way, simply because this is not what it was designed for. Economists such as Simon Kuznets, who helped to establish ways of measuring GDP, warned that there was a lot more that it didn’t measure, compared to what it did. He wrote that “the welfare of a nation can scarcely be inferred from a measure of national income". GDP nevertheless offered to begin with a broadly successful means of helping to create relatively orderly ways of expanding wealth and helping people gain access to more goods and services. One other outcome was that, as people got richer, so the flow of taxes to governments got bigger. As time has gone by, though, it has become increasingly worrying that the limitations of GDP growth are not being reflected in how economic development is pursued in many countries, although at least now the limitations are becoming much clearer.
One problem with GDP growth as a central measure of progress is that it only measures certain things. Others are left out of the equation. For example, much of the welfare enjoyed by societies derives from the quality of people’s relationships andthe pleasantness and security of their neighbourhoods. GDP does not measure change in these. Neither can it accommodate the financially unmeasured but very real benefits that derive from good parenting, or the care received by an elderly or infirm person from their families. It does not measure how happy we are, nor whether our lives are fulfilling.
Neither does GDP reflect the huge costs that come with clearing ancient forests, depleting fisheries, or loading carbon dioxide into the Earth’s atmosphere. Worse still, all these are the result of activities that at the moment increase economic growth. The clear-up of a major pollution incident contributes to growth; so does the sale of the complex drugs needed to treat our twenty–first–century health problems like cancer, heart disease and widespread allergies. While all of these things count positively towards GDP growth, they are at the same time either signs of diminished natural capacity or reduced human welfare. This is why I think there is now a very strong case to conclude that we are measuring the wrong things. The picture is incomplete.
We have inadvertently created economic signals and measures that regard many natural forms of capital as valueless, not least the stability of the climate. This seems to me to be a fundamental and pretty remarkable oversight, considering how the connections between the continuing degradation of Nature and its economic impact now stare us in the face. For example, some 75 per cent of the electricity produced in Brazil comes from large hydro-power dams. They are clearly totally reliant upon rain which, in the main, is produced by the rainforests of the Amazon basin. Yet as the forests have been cleared in pursuit of economic growth, and the ‘benefits’ of deforestation increasingly judged from this perspective, the cost of clearance, for example, has not been factored into the future price of producing electricity. In other words, the shortterm value of deforestation is not set against the slightly longer-term rises in the price of power that it will cause, never mind the myriad other benefits that are being lost.
Unfortunately, the blunt truth of the situation at the moment is that in order for people to contribute most to national success – that is, success measured by the growth in GDP – they might drive everywhere in a huge, energy-wasting car and then buy a new one every year. They might also buy vast quantities of unnecessary consumer goods, waste much of their food rather than eat it, and, after retirement, die a lingering death preceded by years of dependence on expensive, life-extending drugs; all of which would contribute positively to GDP growth. It may sound a pretty miserable approach, but these are the kinds of things that maximize our principal measure of economic success. With this as the dominant mindset it is perhaps little wonder that such grave imbalances occur.
The largest power station on Earth — Itaipu hydroelectric facility, on the River Parana between Brazil and Paraguay. Each one of the massive pipes seen in this picture is 30 feet wide. Much of the rain that flows in the river which powers this huge dam is generated by the Amazonian rainforest
More recent studies confirm that this economic contradiction not only continues but deepens. For example, the 2006 UN Millennium Ecosystem Assessment demonstrated how it will be impossible to meet our long-term aim of reducing poverty if we continue to deplete and destroy the Earth’s natural ecosystem services. Later that year the Stern Review on climate change was published. It set out how, if we do not act very soon, the ongoing pollution of the atmosphere can be expected to cause damage to the economy in the coming few decades that would be equivalent to the cost of both world wars and the Great Depression combined. To compound the urgency of the situation, since the publication of his report in 2006 the author has suggested that his original projections were based on an underestimate of the speed and severity of climate change and its likely costs.
When GDP was first adopted as the main measure of economic success the assumption was that growth would make us happier because it would provide the resources needed to make us more comfortable and that would offer us more options and greater freedom. Up to a point this has been the case. But even this logic is now under attack. It seems that beyond a certain stage the relationship between increased growth and happiness starts to break down – and that point now appears to have been reached in many parts of the world, especially the richer ones. Academic research has found that consumerism with its emphasis on the acquisition of more and more material goods does