Cambridge professor says economy must value natural wealth

An economy that does not value its natural wealth is following an unsustainable development path, argues one Cambridge University professor.

Sir Partha Dasgupta told a Christian conference on ethical economy that modern day economics had become “strangely detached from the environmental sciences”.

Economists, he said, tended to view nature as nothing more than a “backdrop from which resources and services could be drawn in isolation”.

“In the quantitative models that appear in leading economics journals and textbooks, nature is taken to be a fixed, indestructible factor of production. The problem with the assumption is that it is wrong,” he said.

“Nature consists of degradable resources … [which] are capital assets that are self-regenerative, but suffer from depletion or deterioration when they are over-used.”

He said securing property rights to “natural capital” on the private, communal and global scale was necessary to prevent environmental degradation.

“The failure to establish secure property rights to natural wealth typically means that the services natural capital offers us are underpriced in the market, which is another way of saying that the use of nature's services is implicitly subsidised,” he said.

He criticised the “debacle” of climate negotiations in Copenhagen last December, which ended after weeks without a legally binding agreement on carbon emissions.

“Among the possible outcomes of international negotiations over climate change is the ‘null-treaty,’ meaning global non-cooperation, commonly referred to as ‘business as usual,’” the professor said, according to Ecumenical Press.

He said trust and cooperation had to be the primary forces of an economy that took into account its natural wealth, before a framework could be considered for climate policy.

“To be true to oneself is in all probability the surest route to being true to others,” Dasgupta said. “The mystery is how to enlarge the set of those ‘others’ beyond one's neighbours.”

Sir Dasgupta was addressing the conference “Building an Ethical Economy: Theology and the Marketplace”, hosted by Trinity Church on Wall Street. Fellow speaker the Archbishop of Canterbury Dr Rowan Williams blamed the global economic crisis on a failure to structure economic life “independently of intelligent choice about long-term goals for human beings”.

He said an ethical economy had to be rooted in stability and seeking the common wellbeing of people.

“Good housekeeping seeks common wellbeing so that all these things can happen and we should note that the one thing required in a background of wellbeing is stability,” he said.

“A theory that wanders too far from these basics is a recipe for damage to the vulnerable, to the regularity and usefulness of labour and to the possibilities human beings have for renewing (and challenging) themselves through leisure and creativity.”