No, Deep Ecolomics is not a robust irrigation of the bowel, but a name I’ve coined in regard to the debate around the ecosystem services approach to valuing nature and natural capital.
In 2011, as part of its policy on environment, the UK Government established a group of economists to feed information to HMS Treasury on the state of UK’s ‘natural wealth’. This Natural Capital Committee is one of many emerging manifestations of the Ecosystem Service approach to valuing nature, and this post coincided with the publication of its first (interim) report. However, as recent twitter comments on bio-Diverse contributions highlight, there is also significant skepticism about this approach. Many environmentalists are wary of efforts to put a price on nature, despite the point made by economists that as a result many environmental services and the nature which supports them are as a consequence precisely valued at zero, and so are not considered when influential financial decisions take place.
Many people closely involved in understanding of the natural world have a deep-ecological perspective on the processes of nature and how humans fit within them. However, this is not case for the majority of the human population, yet alone for those in the world of high-finance. Instead their perspectives tend to be very human-centered, dealing primarily with financial and human capital. This is self evident; if there was a high-level of ecological awareness in these circles we would not live in a world where people are allowing the natural world to degrade the way it is. As much as we might wish otherwise it’s not difficult to see that without a sound ecological frame of reference Government Treasury ministers, investment bankers and private sector CFOs are unlikely to take proper account for environmental issues. I would argue that, while it would be very welcomed, it is equally evident that we cannot expect a deep-ecological revolution in these circles either. All the more important then that the issues of environmental change and biodiversity loss are translated and interpreted into a language which is understandable to people in such positions of influence; which means into the language of finance – economics. Imperfect though the approaches to ecosystem service economics maybe, I do place considerable store in translating natural value into a language that decision makers in the world’s financial and economic system can no longer ignore.
Deeper still, I look to Charles Darwin’s insight into his ‘economy of nature’ formed from his observations of the natural flows of materials and resources, of energy and nutrients through his ‘entangled bank’. Darwin, as with his many other significant insights understood the importance of the economics of ecosystem services, indeed in his famous monograph on ‘The formation of vegetable mound through the action of worms’ he emphasizes the point in regard to the role of earthworms in recycling leaf-litter and forming soil humus, writing ‘…WORMS have played a more important part in the history of the world than most persons would at first suppose…’
Darwin’s insight was influenced, indeed grew out of, his student exposure in Edinburgh, to the emerging economic ideas of the Scottish Enlightenment; from the work of Hume and of course Adam Smith’s Wealth of Nations. This led directly from Darwin to Haeckel and his coining of the modern science of ecology (hence the eco (0ikos) in both ecology and economics).
So while the development of an ecosystem service approach to the valuation of nature today might raise for some the question of, “Why apply ‘a failed banking model to nature’”(@Naturallest), I see precisely the reverse – of the possibility of applying the growing awareness of the economy of nature to reshape and redress some of the failings of the wider economic models governing human society. We might take some heart that the principal reason for the limitations of economic theory, identified by Adam Smith (among others) in his ‘diamond-water paradox’, was precisely that economists had no clear means for accounting for the value of natural resources. This led to nature being variously regarded as global commons, non-market goods, externalities and non-material to business – all resulting in the dramatic losses of natural capital that we see today. This is precisely why current ecosystem economic initiatives are so important and exciting – they have at least the potential to bring more awareness of environmental dependencies and therefore sense to financial decision making. Especially so if they also begin to bring more informed, deeper understanding of the sophistication of the economy of nature with its multiple services and benefits and its myriad of transactions of energy and resources which dwarf the transactions of global human markets.
It is also true that current policy and decision making remains largely human-centered rather than eco-centric. However, though the latter may be an ideal, a reasonable step forward might be that human-centered, economic decision-making is at least better informed on the environment and therefore able to take it better into account. Even better is that this leads to the realisation that investing in nature is a win-win scenario for helping ensure a profitable and healthy future. I anticipate, as the significance of the environment’s contribution to our wealth becomes more evident to those who have previously focused solely on human and financial capital, we will see increasingly significant changes to take account of the value of natural services, not the least because the risks of not doing so are increasing. I consider it likely that this process of translating natural value in economic understanding will lead to greater insight too. Learning from and mimicking the transactions of nature in economic understanding will reshape the way human economics, and the transformation of production systems will follow from this. Indeed we are already seeing this in the closed loop, reuse and recycling of materials seen in the notions of Industrial Ecology and of the Circular Economy; which are biomimetic (life-imitating) models translating natural cycles into the re-use of human-made products. This brings me make to my new word Ecolomics, which I define as the form of emergent economics (and which I predict will become the primary framework of economics in decades to come) that accounts for the movement of energy and resources through human engineered systems and values this within the wider value of the natural transactions, stocks, flows and services within the ecosystems of the planet; now that’s deep.