The Economics of Biodiversity: The Dasgupta Review

By Holly Niner

The Dasgupta review was commissioned by the UK government to provide a review on the economics of biodiversity. The review was published in early 2021 with a view to informing discussions at pivotal meetings for global biodiversity conservation and sustainable use – The 15th meeting of the Conference of Parties (COP15) to the Convention on Biological Diversity (CBD) and the 26th UN Climate Change Conference of the Parties (COP26), both planned to be held in late 2021. This blog post summarises the key messages and themes of the review relevant to the research of the One Ocean Hub, and considers how our work expands and furthers current thinking on natural capital approaches for ocean governance.  

A brief assessment of the Dasgupta Review

Natural capital

Building on extensive literature in the field of environmental decision-making and governance, the review starts by outlining how Nature (i.e. natural capital) is inseparable from society. The authors argue that natural capital is a foundational asset that should be robustly integrated into economic assessment alongside produced capital (e.g. roads, buildings, factories, ports) and human capital (e.g. health, education). Biodiversity enables and maintains our asset of natural capital, through imparting resilience, adaptive capability and productivity. Reductions in biodiversity reduce the quality and ‘amount’ of benefits society received from natural capital and thus the value of it as an asset. The authors outline how natural capital is our “our most precious asset” and how society is inextricably dependent on the benefits it provides, including but not limited to climate regulation, health and wellbeing, cultural and food provision. It has also been recognised that biodiversity is an essential precondition for the protection of basic human rights, such as the right to life, health, food and water, as well as for cultural, political and civil  rights (see reports by UN Special Rapporteur on Human Rights and the Environment in 2017 and 2020).

We are currently facing steep trends of biodiversity decline.  This decline is unprecedented and is thought to be pushing the boundaries of the “safe operating space” known to support human societies, a description taken from the work of Steffan et al (2015). The boundaries of the safe operating space represent the tipping points beyond which the Earth system may be unable to adapt to changes and maintain the stability that we know can support humanity. Human activity is known to be the major driver of biodiversity loss, through changes in the use of land and ocean and economic exploitation (e.g. fishing, mining). The extent of this loss and its relation to natural capital is illustrated by the author’s estimated 40% losses of natural capital stock value per capita over the 20 years spanning 1992-2014. Set against estimated increases in produced and human capital of 50% and 17% per capita respectively over the same time period, this contrast indicates how holistic management of our economy and society is failing.

Drivers of natural capital depletion

The trends in the various stocks of capital hint at some of the reasons the author provides for the mismanagement of our global economy and declining biodiversity. A major driver is identified as institutional failure, where Gross Domestic Product (GDP) has been adopted as the main measure of economic performance. The Review sets out how this misapplication of GDP measures a flow and not our stock of assets. Accordingly, it fails to account for depreciation of assets and thus excludes natural capital. The domination of GDP as the economic measure of overall domestic production and critical marker of a country’s economic health on the international stage has allowed the invisible depletion of our natural capital commonly in a bid to advance the more tangible benefits of produced and human capital.

The author describes a range of factors that contribute to the ongoing mismanagement of natural capital. These include those that complicate the quantification and incorporation of the myriad links between society and natural capital into accounts alongside produced and human capital. The factors challenging this incorporation relate to difficulties in measurement, a lack of pricing of common resources (e.g. nutrient cycling) and lifestyles that are increasingly distant from nature. The absence of a market value or ‘rent’ for common resources means that these benefits are often excluded in economic appraisal or market prices. These unpriced benefits are known as externalities and their exclusion leads to underinvestment in natural capital and ironically often investment in its depletion (e.g. via fishing subsidies).

Whilst touching on the inequities of current and historic trends influencing biodiversity decline, a key argument of the author is that population growth is a driving cause of natural capital decline. This concept, where the finite Earth system will be unable to meet the needs of an ever increasing global population is described as a major challenge. Despite the authors explicitly distancing themselves from Malthusian ideals (which are broadly contested and considered dated), the argument of overpopulation as a risk, is a clear and controversial thread throughout the review. This thread is much more prominent than a critique of modes of governance that have led to inequalities in the ways that natural capital has been accessed in the past and provides no clear perspective on equitable benefit sharing of finite resources for present and future development.

Transitions for ocean governance

The review is balanced in its consideration of the ocean as an important part of the Earth system and acknowledges that there is limited understanding of the ‘quantity and quality’ of marine natural capital. However, it is limited in its exploration of the challenges for ocean governance posed by the scale and the complexity of the ecological and societal links that give rise to natural capital assets and vary across time and space. In exploring the concept of equitable use of marine resources, the review restricts its analysis to that of financial benefits and solutions. Yet it does not unpick how these strategies may be unsuited to maintain and enhance intangible connections to the ocean.

The review suggests three transitions for change (i) ensure that the stock of natural capital is increasing, (ii) use economic measures that make our use of natural capital visible and (iii) transform institutions to support these changes. Central aims for institutional transformation relate to a shift toward polycentric governance models that support inclusive participation, and connected goals of growth of social capital and empowerment. However, beyond setting natural capital approaches at the heart of these transitions, the review falls short of exploring exactly what this might mean in practice for natural resources and space including those gifted by the ocean.

The One Ocean Hub

Natural capital and how it is managed and benefits accrued touches on much of the research being undertaken under the One Ocean Hub. This includes work focussed on access and distribution of marine and coastal resources and space, the many connections between society and the ocean, and how governance can effectively respond to this complexity to promote fair and inclusive decision-making for a healthy ocean. Specifically, we are working to develop a deeper understanding of ecosystem services of the deep sea and seek to address gaps in understanding of how natural capital approaches might be applied for the open ocean such as for Areas Beyond National Jurisdiction. To do this we are developing a framework for a natural capital approach for ABNJ that can capture and make visible concepts such as equity within accounting regimes for remote ocean areas. We also aim to demonstrate how ecosystem services arising from the deep sea (e.g. carbon sequestration and nutrient cycling) alongside intangible connections may be captured by natural capital accounts.

We will also build on this work to reflect on the legal implications, at the national and international level, of these understandings and approaches, with a view to feeding into policy and legal discussions on the protection of the marine environment and of the human rights that depend on a healthy ocean (see our previous blog posts here and here). We are also exploring through the social sciences and arts different conceptions of the value of the ocean, and how through a transdisciplinary approach we might integrate a variety of knowledge systems  (see here and here) for ocean governance and decision-making. In Algoa Bay, South Africa we are investigating participatory approaches for inclusive marine spatial planning, together with developing tools for sustainable management of ecosystem based marine spatial planning.

Looking ahead

The publication of the Dasgupta review sparked significant media interest in the UK and is evidence of the growing political relevance of natural capital for natural resource management. However, as has historically occurred and as is evidenced by the topics of focus in the review, the concept can further trends of inequity driven by a focus on neoliberal ideologies that reduce the complexity of ocean governance to a headline monetary value. Research under the One Ocean Hub can start to develop ways to embrace this complexity and support a more nuanced understanding of natural capital that includes aims of equity, ecosystem recovery and restoration rather than just a balanced account.