Combustion, 10 March 2017, South Sydney, Australia. © Ray Collins
A thought experiment for investors and policy makers: what if we redesigned our economic model to take into account the cost of using nature" Markus Müller explains why this idea is no longer blue-sky thinking
We are currently facing a market failure, based on the fact that we do not take into account the value of the natural capital we all depend on. As we do not measure its systemic value, we also do not ask the question of whether, by over-using the planet?s ecosystem services, we are irreparably damaging its quality and vitality.
Markus Müller
The health of the world?s natural capital is something we now have to articulate and factor into all our financial decisions. We need to understand the true impact of our activities on our overall stockpile of natural capital, and on nature?s ability to replenish this stockpile for itself. In economic terms, there are negative externalities that we need to internalise, via accounting methods. Follow LUX on Instagram: luxthemagazine
To do this, we do not need to reinvent economics, just enhance it. We have forgotten to give room to the non-financial dimension of economics. Until now, we have thought, ?what nature delivers is free?. But this was an illusion, based on chronic undervaluation. How we have acted could be seen as a failure of governance and a misuse of economics.
Elinor Oström (1933?2012), the political economist and Nobel laureate, showed...