GDP and beyond: why treating nature as capital cannot save the planet

Humanity’s inability to manage natural resources is increasing global strain. Economists propose pricing nature to encourage conservation and reduced use, but economic tools alone cannot solve the planet’s most severe problems. An expert group convened by the United Nations recommended 31 indicators to complement GDP, covering foundational principles, well-being, equity, and sustainability. The proposed dashboard treats sustainable development as multidimensional and avoids forcing all well-being into a single index. The approach relies on comprehensive wealth accounting using produced, human, social, and natural capitals as national balance-sheet stocks. This can value certain resources, but it does not adequately protect against existential risks tied to global commons like the atmosphere, oceans, biosphere, and Earth system. Planet-wide risks require decisions about environmental capacity limits and about who can use that capacity across countries and generations before scarcity and market prices become meaningful.

"However, the report is not an unsinkable vessel. The approach it endorses is comprehensive wealth accounting, which considers produced, human, social and natural capitals as stocks on a national balance sheet. This is fine for evaluating the financial value of timber in a forest or domestic work, say - neither of which is included in GDP. But it is not enough to protect the planet from existential risks. The worst risks involve the deterioration of global commons - shared natural resources such as the atmosphere, oceans, biosphere and Earth system - that are not owned or controlled by any government or subject to any market."

"On 7 May, an expert group convened by the United Nations delivered its recommendations for metrics of national development to complement gross domestic product (GDP). It proposed 31 indicators, covering foundational principles, well-being, equity and sustainability. The report, Counting What Counts, deserves recognition. Its dashboard of measures acknowledges that sustainable development is multidimensional. Its refusal to cram all the facets of human well-being into one index is a theoretically sound and intellectually courageous choice."

"Addressing planet-wide risks such as climate change or biodiversity loss requires consideration of who is affecting them and how. Two questions must be answered. The first concerns scale: what is the maximum level of pressure that the environment can sustain? The second, distribution: who has the right to use how much of that capacity, and across which countries and generations? Only once these inherently political decisions have been made can scarcity be defined and markets produce meaningful prices."

"To end this free-for-all, some economists want to put a price on nature, to motivate people to conserve more and use less. But a purely economic approach will not address the worst problems that the planet faces. Humanity's inability to manage natural resources is putting the world under strain."

Read at Nature