Bennett Institute economists work with the White House and United Nations to find economic frameworks that include the environment.
The White House has announced a new national strategy to reflect natural assets on America’s balance sheets. It notes the main economic measures that the United States (US) government uses to make decisions don’t capture the environment, health or justice, which are all elements of our world that allow economies to exist—now and in the future.
The US government will go beyond using GDP (Gross Domestic Product) to calculate the wealth of the nation; it will measure the economic value that natural resources provide to society and illustrate how a robust economy depends on a healthy natural environment.
This follows years of work by organisations and advocates including Cambridge economists Sir Partha Dasgupta and Prof Diane Coyle, and the Bennett Institute’s Wealth Economy team led by Dr Matthew Agarwala, who have worked for years with others to find economic frameworks that:
- measure how sustainable economic activity is in the long term
- include the environment
- reflect how fairly wealth is spread
- are easy to communicate
In February 2021, HM Treasury published the “Economics of Biodiversity: Dasgupta Review” written by Partha Dasgupta, Professor of Economics, which found: “Our unsustainable engagement with Nature is endangering the prosperity of current and future generations.”
In March 2021, the United Nations (UN) adopted a new framework to go beyond GDP to make sure that natural capital—forests, wetlands & other ecosystems—are recognised in economic decision-making & reporting. The SEEA Ecosystem Accounting is the result of a global effort including University of Cambridge Economists.
In April 2022, the White House Office of Science and Technology Policy invited Diane Coyle, Bennett Professor of Public Policy, to participate in a roundtable discussion on new Biden-Harris Administration initiatives for assessing, accounting for, and finding solutions in nature. As the only representative of the UK, she discussed her work on the wealth economy and why government should include the environment and natural capital in economic statistics and national accounting.
Says Coyle: “Natural capital assets have a direct impact on the economy and peoples’ livelihoods. For example, biodiversity, soil and water quality affect the productivity of farming and commercial fisheries and if we don’t sustain that productivity that’s going to hit food prices.
“Natural capital accounting is already used in the UK by government and the finance sector. What is now important is to have the ability to gather the data to create these kinds of accounts in a much more timely and comprehensive way. There are new data sources and techniques but I would add that local knowledge is also important for a more granular understanding of where are the bottlenecks and tipping points and how government at every level, as well as local community, use these measures to improve people’s livelihoods, both now and in the long-term to make them more sustainable.”
Read more about the work of the Wealth Economy project’s research, reports, and recommendations to stakeholders.
Says Agarwala: “Education – teaching about the bigger picture of different assets making up the wealth of a nation is also important to better understand how fully integrated are nature, the economy and peoples’ livelihoods.”
The views and opinions expressed in this post are those of the author(s) and not necessarily those of the Bennett Institute for Public Policy.