Molly Scott Cato Professor of Strategy and Sustainability Roehampton Business School There is no wealth but life Putting Natural Capital Ahead of Financial.

Molly Scott CatoProfessor of Strategy and

SustainabilityRoehampton Business School

There is no wealth but life

Putting Natural Capital Ahead of Financial Profit

My Backyard

Why Markets Won’t Save Habitats

Problems with theory•Substitution of capitals•Discounting and cost-benefit analysisProblems in practice•The Clean Development Mechanism•The EU Emissions Trading System

And what types of policies might

Substitution and the Five Capitals

Robert Solow—theorist of growth

•what little evidence there is suggests that there is quite a lot of substitutability between exhaustible resources and renewable or reproducible resources’

• ‘If it is very easy to substitute other factors for natural resources, then there is, in principle ‘no problem’. The world can, in effect, get along without natural resources. Exhaustion is an event not a catastrophe’. . .

The value of nature is different. . .

• In different countries: ‘'I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.'

And in different times

• Discounting to turn all values into Net Present Values

Recipe to create a ‘missing’ market

Creating a product:

supply of resources, e.g. drugs from the Amazonassimilation of wastes, e.g. forestsdirect source of ‘utility’ in terms of enjoying the view or feeling spiritually uplifted, e.g. an unspoilt view

• A preference for something and a willingness to pay to secure it

‘Ecosystem services’ and the Clean Development Mechanism

• First we value ecosystems, then people sell ecosystems. But who decides who owns them?

• What does ownership mean?• What is the product? Who controls the ‘shadow

market’?• Lohman found that local ‘entrepreneurs’ have

profited whereas self-provisioning communities have lost out

Selling the global commons

ProblemsIf markets protect environments better than people do, why are intact ecosystems are in less developed areas?

Poorly developed legal systems appear to have preserved ecosystems

Subsistence farmers in the world’s poorer nations are are displace and lose livelihoods as their land is traded to provide carbon sinks

• ‘the origins of the cataclysm lay in the utopian endeavor of economic liberalism to set up a self-regulating market system’

• ‘previously to our time no economy has ever existed that, even in principle, was controlled by markets’

Challenging our preconceptions

Welfare and community

• Side by side with family housekeeping, there have been three principles of production and distribution:

ReciprocityRedistributionMarket

• Prior to the market revolution, humanity’s economic relations were subordinate to the social. Now economic relations are now generally superior to social ones.

Four aspects of the solution• Getting the politics right—and at the right

level• Reducing the role of trade and replacing it

with local provisioning• The Bioregional Economy• Relearning our place in the natural world

Market or Politics?

Binding global treaties launched by EU and imposed on imports e.g. Cites

EU Forest Law Enforcement Governance and Trade (FLEGT) legislation to be compulsory rather than voluntary

Need to demonstrate compliance before import is permitted

Lengthy supply chains undermine accountability. Need local economies provisioning locally

GAST: a proposal from Colin Hines for ‘progressive

protectionism’Current rule Effect Amended GAST ruleMost-Favoured Nation

Choice between producers is prohibited

Favoured treatment to states that respect human and animal rights

National Treatment

Imported and locally produced goods to be treated equally

Favourable treatment to domestic products that further decent wages and environmental standards

General Exceptions to WTO Rules

Provides scope for enforcement measures on environmental or health and safety grounds, but narrowly interpreted

Scope of exemptions should be extended and reinforced

New TEEB levies

•Payment for ecosystem services (PES) to make sure that the ecosystem benefits from those that exploiting it.•‘Conservation banking‘ to mitigate the destruction of unique habits as a result of economic development by offsetting the damage with benefits elsewhere in the region.•Suffers the problems of costing, relative value and generally accepting that this is problem best solved by the market rather than people

Why ownership matters

• Stewardship not property rights• Commons not markets e.g. National

Trust• Participatory economic planning e.g. EU

fisheries policy• Who will gain the profit?• Cornish minerals mining: which system

of ownership would best protect the environment?

Back to the future

• McKinsey’s Resource Revolution as a global enclosure project

• Corporate technical and managerial expertise will solve the ‘challenge’ of ‘inefficiency’ posed by traditional economies in the areas of the world where resources are still plentiful.

• Role of government is limited to establishing a price for carbon and ensuring property rights are respected

• Justification for land grabbing

•Living closer to the land ensures our identification with other species

•The importance of re-embedding

The Importance of Relationship

What is a bioregion?• ‘a unique region definable by natural (rather

than political) boundaries’

• A bioregion is literally and etymologically a ‘life-place’—with a geographic, climatic, hydrological and ecological character capable of supporting unique human and non-human living communities. Bioregions can be variously defined by the geography of watersheds, similar plant and animal ecosystems, and related identifiable landforms and by the unique human cultures that grow from natural limits and potentials of the region

An economic bioregion

• A bioregional economy would be embedded within its bioregion and would acknowledge ecological limits.

• Bioregions as natural social units determined by ecology rather than economics

• Can be largely self-sufficient in terms of basic resources such as water, food, products and services.

• Enshrine the principle of trade subsidiarity

Key characteristics of the bioregional economy—

•Locality

•Accountability through reconnection

•Community and conviviality

Conviviality instead of productivity

• I believe that, in any society, as conviviality is reduced below a certain level, no amount of industrial productivity can effectively satisfy the needs it creates among society's members. (Illich, 1974).

• ‘Indigenous people believe that if they cause harm to nature, then they will themselves come to harm, whether it is speaking without respect of certain animals, or whether it is overfishing a lake or hunting out a certain type of animal. This is something that we in the industrialized world have lost, and perhaps need to remember.’

Find out more

gaianeconomics.blogspot.com

Green House thinktank

www.greeneconomist.org

Green Economics: AnIntroduction to Theory, Policy and Practice (Earthscan, 2009)

The Bioregional Economy: Land, Liberty and the Pursuit of Happiness(Earthcan, 2012)