The Dasgupta Review

29 Jul 2021

Sir Partha Dasgupta, RES Past President, answers our questions about biodiversity and his landmark Review.

How did you come to write the Review?

In April 2019 I was invited by the Chancellor of the Exchequer to prepare an independent, global review of the economics of biodiversity.

Did you have a sense of what was expected of it?

No, nor for that matter did I know where I would be heading with it. For a while I thought I would elaborate on environmental and resource economics, using the received economics of climate change as a template. It wasn’t until November 2019 that I realised it would be a disservice to the UK government if I did that. I felt instead that what was wanted was a treatise on the economics of the biosphere, as all-encompassing a subject as there is for us social scientists. I was ready to attempt that, because over the previous three decades I had been educated in anthropology, demography, ecology, and the Earth sciences by some of the world’s most renowned experts. My thought was to rework growth and development economics and the eco[1]nomics of poverty by embedding the human economy in Nature, not keeping it external to Nature. The Review is that exercise.

How has the Review been received? Have there been responses that especially pleased you, or others that were especially frustrating?

It’s hard to tell how it has been received generally, because understandably, there has been self-selection at work. Those who have invited me to participate in events – to date over 100 events, involving interviews, lectures, Q&As – have presumably done so because they are concerned about the state of the biosphere. I have been struck by how informed and enquiring are those business leaders, bankers, and parliamentarians who have discussed the Review with me. There have been unexpected hosts, such as the Chief Economist at the Bank of England, the Managing Director of the IMF, and the Director of the LSE. On the other hand, other than you and Ned Phelps, I have not been invited by anyone in any university economics department to discuss the Review.

Were there sections that were especially difficult to write?

No. Interestingly, though, the chapters that had no ready template in the economics literature were the easiest to compose. The harder ones were those on which there is an extensive mainstream literature, but which I found to be inadequate for putting to work on the demands we make on the biosphere. Finding my way through those mazes took a while.

Have you had some reactions to the formal theory presented in the Review?

Each chapter draft was sent out for review, in several cases by four or more experts. Mostly they were anonymous, as my team handled the process, but I was able to identify them by reading their style. I can’t recall a single negative review. Mostly, reviewers pointed me to material I had missed or ideas that I hadn’t paid sufficient attention to. In one, striking instance, an Earth scientist suggested I reorder the chapters and reorder the sections of the chapter he had been asked to read. I followed his advice, of course, but I was struck by how deeply he had thought through the chapters he had read – he had asked to be sent all chapters.

The Review asks economists to rethink how they frame growth and development – if you had to persuade a sceptic, what would you say first? I would ask sceptics to compare what mainstream growth and development economics and the economics of poverty say about economic possibilities open to us, and what the Review says, and place the two before the vast gap that now exists between the demands humanity today makes on the biosphere, and the ability of the biosphere to meet those demands on a sustainable basis. The Review has four chapters that collate and explain empirical estimates of that gap.

One reading of the Review is that economists should focus on planetary boundaries rather than try to choose functional forms and parameters for quantitative modelling of the whole biosphere. Is that a fair reading?

The ordering in your question is exactly right. Fighting fires requires first a brisk appraisal of relative dangers to the terrain. Fine tuning the fire-fighting strategy comes later.

 

Are there intellectual parallels between the economic analysis of biodiversity and that of climate change?

Yes, but the former is a lot harder than the latter because the biosphere’s activities cover far more than climate regulation. Moreover, the vast numbers of regulating and maintenance services (soil regeneration, climate regulation, pollination, water filtration, nitrogen fixation, waste decomposition, and so on) are complementary to one another, they are not independent of one another, far less, substitutes of one another. Separating climate regulation from the rest has been a most unfortunate feature of mainstream climate economics.

How can national and local governments in rich countries best lower the ecological footprints of their citizens? Where should they start?

At the local level, invest a lot more toward creating green spaces in urban areas – there are serious health benefits from doing that. At the national level, reduce environmentally-harmful subsidies (currently to the tune of 4-6 trillion US dollars a year globally). At the international level help to create a transnational institution with the remit to manage the global commons such as the open seas (e.g. charging people for their use) and help to negotiate resource transfers to countries that house peatlands and the tropical rainforests (they are global public goods). Crude calculations suggest that such an institution could be self-supporting, perhaps even enjoy a surplus that could be used for development purposes.

Your interest in these questions goes back a long way. How frustrated have you been that mainstream economists were slow to take an interest?

Puzzlement would be more accurate. But I haven’t been alone. There are plenty of ecological economists, in Agri Econ. departments and Environmental Schools, some are in geography departments – you won’t find them in economics departments. Some study the economics of poverty, and many teach in less-than-prominent universities – in South Asia, Latin America, and Africa. It’s because of their isolation that Karl Goran Maler and I set things in motion to establish the journal Environment and Development Economics (EDE) so that their work gets published in an international journal. What they have produced is terrific stuff. My Review cites and reports their work at length and builds on them.

Do you think economists are, albeit belatedly, becoming more open to the importance of biodiversity and more inclusive concepts of wealth?

 ‘No’ to the first and ‘yes’ to the second. Even the second took time to be absorbed in mainstream economics, which was surprising to me because Maler and I proved the equivalence between wealth and well-being analytically, in EDE in 2000. I used to think a theorem is a theorem, but I was wrong. As late as 2004 I received a letter from one of the world’s most prominent climate economists, in which he wrote that the “the jury was still out” on the theorem.

How can governments in rich countries ensure that consumption is lower than a net measure of domestic product, accounting for net changes in natural capital?

Try as far as is possible to make us pay the marginal social cost of what we consume and introduce fiscal measures to encourage society to invest in such a manner that inclusive wealth does not decline over time.

 

Do you have thoughts on how biodiversity and inclusive wealth can best be integrated into the economics curriculum?

That should be easy. A start would be by recognising that ecosystems are capital assets, followed by reading an ecology textbook. Any well-trained economist would see how to incorporate natural capital in eco[1]nomic life. Interestingly, I know of business schools where natural capital is included in the portfolio analysis that is taught.

 

Do you have thoughts on how biodiversity and inclusive wealth can best be integrated into the economics curriculum?

That should be easy. A start would be by recognising that ecosystems are capital assets, followed by reading an ecology textbook. Any well-trained economist would see how to incorporate natural capital in eco[1]nomic life. Interestingly, I know of business schools where natural capital is included in the portfolio analysis that is taught.

 

For an economist who has read the Review and wants to learn more, what books or papers would you especially recommend?

Choose a particular class of natural assets, say, mangrove forests, and go to a textbook on ecology to get a sense of the processes that shape them. The obvious next step would be to read a paper, say, in EDE, on the way such assets can be built into economic reasoning seamlessly.

 

The analysis in your book Time and the Generations might imply that aid donors should place greater emphasis on family planning. Is that a fair reading?

Absolutely! The Review contains a chapter on the salience of family planning in the economics of biodiversity. Investment in family planning and reproductive health is also the cheapest way I know to help empower women in the poorest countries of the world. That OECD countries allocate less than 1% of their aid budget to it and recipient governments place it at the bottom of their concerns is unconscionable.

 

What do you think of radical ideas such as E. O. Wilson’s Half Earth?

Governments are moving in that direction of thinking, for example, in a proposal that 30% of land and the seas should be designated as protected zones. That’s not 50%, but it’s the idea that counts. We should all be in favour of such a move but should still worry how we should manage the remaining 70%. We economists know better than most others of unintended consequences of policies that need to be attended to in advance.

 

Contemplating the state of the planet can be depressing. Are there some developments that are more positive? Plenty – at the community level as well as the national level. My Treasury team and I have not shied away from trumpeting them in the Review.

 

THE DASGUPTA REVIEW The Economics of Diversity: The Dasgupta Review Final and abridged versions can be found at: https://www.gov.uk/government/publications/final-report-the-economics-of-biodiversity-the-dasgupta-review