The Rich and the Poor is something people have talked about ever since. The educated and the uneducated have been added among many types of contrasting “identities” that we seem to enjoy identifying.
In a lecture on May 7 1959 (58 years ago) the British scientist C P Snow made the unsettling claim that intellectual life, in Europe at least, was split into “two cultures”: sciences and humanities, in a way he saw as harmful. Snow’s concern was that scientists knew too little about humanities – and people of the humanities knew too little about the progress of science. This split, and difference in outlook, would cause a hindrance to human progress. The two sides had difficulties in understanding each other. We need a common culture to work together. – A very vivid debate followed. I am not qualified to summarise and comment, but it seems that the passage of time has reduced the gap a bit, certainly to everyone’s advantage.
My point here is that we have for many years been living and working under the distorting influence of another gap – that between economists and “environmentalists”. (Others talk about a divorce of economic science from moral philosophy, but I stay away from “moral”, for now at least.) Decisions on land allocation, forest exploitation, and area-based production, made by investors and administrators, have been based on calculations where environmental, factors that cannot easily be expressed in monetary terms, are not included. The result is inevitably decisions in favour of financial returns to begin with, and in particular returns that will materialise early. And those decisions, through subsequent consequences here and there, have a very concrete impact on our daily life, and on the resources themselves, and our environment.
This is nothing new. Attempts have been made for long to come to grips with the “biased” procedure for bringing out data and making decisions. Still we seem to be at the same stage we were, for example in the eighties, when I was working with investments in forestry funded by the Asian Development Bank in Manila. At that time, the Environmental Impact Assessment was added to the “tool box” of analysts, but still as an “imponderable” that could not really be brought into the economist’s summary, and to what extent this tool has affected final decision making is not clear to me. (It has helped enhancing awareness among decision makers though, no doubt about that, and it has helped to open fora for debate.)
On April 21 I wrote about the Value of Nature: in the economic calculations Nature is made invisible. Therefore, we loose it. The discussion has continued.
At the Forest Asia Summit in May 2014 here in Jakarta, Mark Burrows, a banker with Credit Suisse, made a presentation I thought was “different” and very important – because the subject is so seldom touched – where he “drew attention to a ‘perception gap,’ noting that the public sector, private sector, and civil society often use sector-specific jargon to describe the same problems. He called for political will to correct market failures by rethinking financial systems and holistic approaches to green growth. He emphasized green bonds as a way to favour certain types of investments. He recommended standards, third-party verification of standards, and incentives to encourage investment in sustainable landscapes”. (From a IISD page). (I wish I could get hold of his paper.) Burrow pointed out that the global financial system is the most elaborate and complicated concept that mankind has ever created, and as such impossible to understand and control in its entirety. My impression was that he was worried that we are getting misled by the complexities. – I am not aware of any reactions in the wake of Mr Burrow’s speech. But the exploration has continued; for example the concept Gross Environmental Product GEP has been introduced. How has it been applied?
Perhaps the question should be: what does economics have to do with it?
To look back a bit again: in 1973 E F Schumacher published Small is beautiful – Economics as if People mattered. Schumacher wrote: Economics, which Lord Keynes had hoped would settle down as a modest occupation similar to dentistry, suddenly becomes the most important subject of all.
A commentator (Nom de Plume Elena) wrote: “The conception of economics as a free-standing, autonomous discipline and sphere of activity, and even as an end unto itself, is one of the costliest fallacies of our age.” This is a rather terse verdict – all the more unnerving when we consider how much economic calculus seems to guide decision making. (Note that Alfred Nobel – and his contemporaries – did not think of Economics as a science relevant to his purposes in his testament in 1901. The Sveriges Riksbank (Sweden’s central bank) established the Prize in Economic Sciences in Memory of Alfred Nobel, founder of the Nobel Prize, in 1968, a sign of an important change in social life and thinking.)
The work goes on. A team of researchers from the Center for International Forestry Research (CIFOR) and partner institutions has produced a study that makes the case for a ‘new school’ of ecosystem valuation practice, allowing for the weighing of multiple values in making land-use decisions.
“Ecosystem valuation can be difficult and controversial, and classical economists have often been criticized for trying to put a price tag on nature,” says Dr. Sander Jacobs, a researcher at the Research Institute for Nature and Forest and a lead author of the study. What is new? I will get back to this.
Is there another way but putting a price tag? A way that economists and environmentalists can agree on?