Natural capital – what gets measured gets trashed?

A couple of years ago, I briefly addressed the subject of “natural capital,” defined (in one place anyway) as “the stock of renewable and non-renewable natural resources (e.g., plants, animals, air, water, soils, minerals) that combine to yield a flow of benefits to people…”

At that time I referred to the “Natural Capital Protocol,” a somewhat stunning, if daunting, 136-page publication that sets out “a framework designed to help generate trusted, credible, and actionable information that business managers need to inform decisions.” As I quoted there, the basic premise is very simple: ““To value something means to understand what it is worth to us.” Google records over a million hits on the phrase “what gets measured gets managed,” popularized if not perhaps originated by Peter Drucker. This has all seemed to me a generally positive thing.

But even if only for the sake of testing one’s own assumptions, it’s interesting to consider a recent commentary in the Guardian by George Monblot. Here are some extracts:

  • The (British) government argues that without a price, the living world is accorded no value, so irrational decisions are made. By costing nature, you ensure that it commands the investment and protection that other forms of capital attract. This thinking is based on a series of extraordinary misconceptions. Even the name reveals a confusion: natural capital is a contradiction in terms. Capital is properly understood as the human-made segment of wealth that is deployed in production to create further financial returns. Concepts such as natural capital, human capital or social capital can be used as metaphors or analogies, though even these are misleading. But the 25-year plan defines natural capital as “the air, water, soil and ecosystems that support all forms of life”. In other words, nature is capital. In reality, natural wealth and human-made capital are neither comparable nor interchangeable. If the soil is washed off the land, we cannot grow crops on a bed of derivatives.
  • A similar fallacy applies to price. Unless something is redeemable for money, a pound or dollar sign placed in front of it is senseless: price represents an expectation of payment, in accordance with market rates. In pricing a river, a landscape or an ecosystem, either you are lining it up for sale, in which case the exercise is sinister, or you are not, in which case it is meaningless.
  • Still more deluded is the expectation that we can defend the living world through the mindset that’s destroying it. The notions that nature exists to serve us; that its value consists of the instrumental benefits we can extract; that this value can be measured in cash terms; and that what can’t be measured does not matter, have proved lethal to the rest of life on Earth. The way we name things and think about them – in other words the mental frames we use – helps determine the way we treat them.
  • As the cognitive linguist George Lakoff points out, when you use the frames and language of your opponents, you don’t persuade them to adopt your point of view. Instead you adopt theirs, while strengthening their resistance to your objectives. Lakoff argues that the key to political success is to promote your own values, rather than appease the mindset you contest. The natural capital agenda reinforces the notion that nature has no value unless you can extract cash from it…

Among other things, Monblot cites:

  • …in 2014 WWF commissioned research to test this approach. It showed that when people were reminded of the intrinsic value of nature, they were more likely to defend the living planet and support WWF than when they were exposed to financial arguments. It also discovered that using both arguments together produced the same result as just the financial one: the natural capital agenda undermined people’s intrinsic motivation.

The piece attracted over 500 comments – far more than I looked at. But a reader identified as “Raptou” summarizes one of the key lines of response:

  • It’s not that (the living world) has no value, it’s that you cannot easily quantify the value. That’s pretty standard economic thought. The reason natural habitats are often damaged, after all, is that there is little apparent cost (but plenty of actual cost) to doing so. What the government (among others) is trying to do is stop that gap by quantifying the value of these habitats so those costs can be imposed.

Raptou adds: “I know you have to be angry to order every week, but this really is a poor article.”

If we consider the debate in a corporate context, it’s not hard to see both sides though. There’s little doubt that some entities could plausibly claim to better control the adverse environmental implications of their activities, as a result of having a way of quantifying those impacts, and then setting targets and monitoring progress relating to them. On the other hand, most of us can recall examples from our past or present work lives of how the drive to meet numerical targets can be counterproductive, at worst ignoring or even undermining their underlying point. As another way of making the WWF-related point, there’s no doubt that a heartfelt expression of “I love you” is more effective than an assertion like “I ran some numbers and statistically concluded that I love you” would be. But love is transcendent whereas defending the living planet, to our tragedy, is (in society as we find it) just one thing fighting for attention among many others. Providing a more objective and comparable context for that fight, however limited and compromised, might still be a meaningful contribution.

But Monblot is right in many broader senses – about the possibility of perverse incentives, of placing a superficial scientific gloss on underlying malpractice, and so on. It’s true about any form of financial reporting of course – much better than having nothing, but always to be used with knowledge of its limitations, and with an awareness that the bigger story may lie elsewhere.

The opinions expressed are solely those of the author.

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