The new normal

‘The frog does not drink up the pond in which it lives’. Human well-being is a multi-dimensional continuum, spanning across health, security, and self-determination.

Experiential in spirit and acting as a pivot amongst nature and society, it measures the progress of humans – the most dominant species to have ever lived on earth.

Ironically, since times immemorial, seeking dominance over natural resources and quest for wealth has led to humankind being colonized and ravaged by wars. These, in time, have been compounded by onslaught of famines, migrations, and perpetual conflicts. Unfortunately, this has resulted in the hindered livelihoods of a multitude, and forced us to rethink how we approach and value our natural environment.

Most familiar proxies such as HDI, GDP and, most recently, the Happiness Index have helped us measure human welfare. However, they have failed to account for the all-important basis that is the most crucial sustainer of humankind: natural capital. Defined as the world’s stocks of natural assets, natural capital comprises forests, water, air, minerals, soil, oil, gas, and encompasses all life on earth. Primarily allowing us to sustain livelihoods, it provides us with the crucially needed ecosystem services. These, though intangible in nature, perform critical structuring by ensuring climate regulation, carbon sequestration and air purification apart from many other regulatory functions.

GDP only accounts for the flow of capital and generated income, overlooking the wealth and assets of a nation. It does not take notice of the depreciation of a country’s natural assets, and disregards the externalities in a system that is both a market and an institutional failure.

Conversely, Natural Capital Accounting (NCA) is an approach that helps us realize the all-important contribution of natural assets to our collective livelihoods, and allows us to incorporate the value of nature in our fiscal budgets and policies. Addressing the economics of biodiversity, NCA is a scientific practice that creates a stock account of each natural asset, accounts for the extent and condition of the asset, and measures the services and value provided by the various ecosystem types.

NCA can help governments understand and manage their economies' reliance on natural ecosystems. It can also help identify ecological hotspots in the most fragile regions and absorb the trade-offs between conservation and sustainable development; educate us about the state of our ecosystems, impact of carbon and water footprints of individuals and businesses on society. It can also forecast and help keep abreast of how unsustainable resource exploitation affects the real income of a nation, vis-a-vis the extent and scale of climate changes in the most vulnerable global regions.

Nonetheless, arguments regarding nature’s cause and effects, ranging from dubbing it valueless against those who claim it to be priceless, remain. Repudiating the detractors, the Journal of Global Environmental Change attributes a value of $124.8 trillion per annum to the world’s ecosystem services; twice the global aggregate GDP. The wealth of 47 percent of the developing world depends on natural capital. However, with more than 90 countries including India and Nepal maintaining NCAs since the last decade, Pakistan remains bereft of utilizing its ecosystem assets.

Natural capital is the source of all forms of development, and its poor management not only runs the risk of global ecosystem collapse but also creates an economic liability. Current business systems and development patterns continue to degrade stocks of nature, pose financial risks, and bear higher inflation rates. As demand for fossil fuels and raw materials grows, businesses will be forced to quantify their dependence and impacts on natural ecosystems and manage potential climate risks. Given that we have to adopt a circular and post-growth economy rather than the basic linear model we follow, it is imperative to integrate NCA in our budgetary and fiscal allocations. This will ensure the culmination of a crucial imperative critical to the prime minister’s vision of a Clean-Green Pakistan.

Healthy ecosystems underpin well-being and expand planetary boundaries. It remains upon us to decide how we foster our ecosystems. It is now evident that capitalism, free markets, and romanticizing on fossil fuels will only trigger and intensify climate-induced disasters, worsen global hunger and trigger biodiversity loss. Knowing that our existence and growth as a human species is entirely dependent on natural capital, we nonetheless ominously tread towards the sixth extinction.

The road towards carbon neutrality will rest on how we utilize nature, and adopt more evidence-based and transformative changes. As we leapfrog through this era of the Anthropocene, integrating natural capital into polities is as critical as never before. Although rapid decarbonization and investment in nature-based solutions is the key to ensuring climate resilience, it will ultimately come down to how we actually approach natural capital and strive towards a more equitable and NCA-induced circular economy.

The writer is an environmental economist based in Islamabad.

Email: hashimzaman1@gmail.com