Natural Capital: Valuing the Planet

by Dieter Helm

Hard-hitting recommendations for what must be done to manage global natural capital and reverse environmental destruction

Natural capital is what nature provides to us for free. Renewables—like species—keep on coming, provided we do not drive them towards extinction. Non-renewables—like oil and gas—can only be used once. Together, they are the foundation that ensures our survival and well-being, and the basis of all economic activity. In the face of the global, local, and national destruction of biodiversity and ecosystems, economist Dieter Helm here offers a crucial set of strategies for establishing natural capital policy that is balanced, economically sustainable, and politically viable.
 
Helm shows why the commonly held view that environmental protection poses obstacles to economic progress is false, and he explains why the environment must be at the very core of economic planning. He presents the first real attempt to calibrate, measure, and value natural capital from an economic perspective and goes on to outline a stable new framework for sustainable growth. Bristling with ideas of immediate global relevance, Helm’s book shifts the parameters of current environmental debate. As inspiring as his trailblazing The Carbon Crunch , this volume will be essential reading for anyone concerned with reversing the headlong destruction of our environment.

Genres: Economics, Environment, Climate Change, Sustainability, Education, Nonfiction, Politics

296 pages, Hardcover

First published April 28, 2015

About the author

Dieter Helm is Fellow in Economics, New College, Oxford. He is also Professor of Energy Policy and Professorial Research Fellow, Smith School of Enterprise and the Environment, University of Oxford.

Reviews

[David Allison · Rating 3 out of 5]

Contains a lot of very good and complicated thinking on how we could price the value of nature and rework our economy accordingly.

Some of these thoughts are so good and complicated that you find yourself longing for the sort of radically transformational politics that are totally absent from this fine volume...

[Mark Avery · Rating 4 out of 5]

This is a book written by an eminent economist who is also passionately interested in wildlife. There may be lots of such people but I haven’t met many of them. And Professor Dieter Helm has been since 2012, the chair of the Natural Capital Committee in England.

The author states in his preface that ‘The central argument of this book is that only by putting the environment at the heart of the economy can there be much hope of addressing the scale of destruction that will otherwise happen. It is perfectly possible to achieve sustainable economic growth. The prize is great and it can be financed. The loss of biodiversity and much of our natural environment may be a physical and biological process, but the solutions lie squarely in the allocation of scarce resources – in other words with economics‘.

That’s a characteristically clear and forthright statement and the book is full of many more. You don’t have to be an economist to get a lot from this book (I’m not, and I did).

One could take the paragraph of Helm’s (above) and substitute ‘politics’ for ‘the economy’ in the first sentence, and ‘politics’ for ‘economics’ at the end, and I think it would be true. How one feels about the approach of valuing nature objectively, as an economist might, depends a little for those of us who care more about nature than economics, on how useful we think the economics will be in influencing the politics and saving nature. For a non-economist nature conservationist a large part of the ambivalence about valuing nature is about whether it will lead to more nature being conserved or less.

The early chapter ‘Facing up to the Challenges’ is a clear-eyed, hard-headed look at where we are and where we will head on a business as usual track. It is a joltingly sobering read.

In ‘Sustaining economic growth‘ Helm suggests that although we could opt for a zero-growth future, which would be feasible if vegetarianism were adopted very widely globally and if we shared the world’s resources much more equally, it isn’t the only possibility. He makes the distinction between renewable and non-renewable assets. Looking to the future, he suggests that non-renewables (think North Sea Oil) can be used up provided that they are replaced by something else (a load of solar power that will propel the cars of the future, perhaps) and that is fair to future generations. Renewables can be depleted too, but not beyond a threshold from which they could bounce back, and that threshold is difficult to identify very clearly in complex cases such as rainforest function.

You may find it hard to believe that a chapter entitled ‘Defining the Aggregate Natural Capital Rule‘ is the fulcrum around which this book attempts to change the future – but it is. And it’s a very good chapter. It puts forward the idea that we should concentrate on handing on, as per the Brundtland report, a set of assets that will allow future generations of people to make their own choices about the world. But which assets need special care and attention in being bequeathed to future generations? Helm suggests, for several good reasons (read the book!) that natural assets deserve and require a special place in the legacy we give to our children and grandchildren and beyond. And he argues strongly that natural assets are a form of natural infrastructure which come in systems (habitats, ecosystems) that are rather like man-made infrastructure such as transport systems or electricity systems. We need roads and electricity for the future; they don’t have to be exactly the same in the future as now (and aren’t remotely the same now as they were in the past) but we should pass them on. Natural assets are similar and are valuable and should be valued and should be part of our contract with future generations. We will pass on a road system to the future whether we like it or not, and we shall pass on a natural world too – both should be part of our conscious legacy to the future.

If you were to accept that handing on assets to the future is a large part of living sustainably in the present, and that that is a large part of sustainable living, it gets you away from measuring economic growth all the time and into stock-taking assets – including the neglected natural assets such as Skylarks and Bluebells. This is a good way of thinking about things, and one that is quite likely to appeal to people of many political persuasions, in theory.

Once you sign up to this idea than the rest is just about deciding which assets, how to measure them and how to protect them. Helm is good on these things and even if you might not find yourself agreeing with him always, his case is put very clearly and in a way that engages the brain of the reader.

And so I believe that Helm’s book persuaded me that his approach is a good one – which really means that it suits me. If we hold to the idea that we should (ethically) pass on a certain collection of assets to future generations, and that those should include defined and measured natural assets, then that would, as Helm states, be a big step forward from the present position. It wouldn’t make the road ahead completely smooth, or much less steep, but it does provide a path to the future.

This subject is not a jolly one but it is important. And this book is not a trivial read but it is very accessible if one is in the mood for thinking. The author makes a good case and makes it well. If politically adopted, the Aggregate Natural Capital Rule could mean that there is more nature in the future than there would be without it.

this review first appeared on my blog on 4 October 2015 http://markavery.info/2015/10/04/sund...

[LesPam Brenes · Rating 3 out of 5]

I think this an intermediate book on the topic. You must have some knowledge of Economics. I also found that my expectations for the book weren't fulfilled since I was expecting a more concrete steps into the solution rather than just leaving the vague idea of what "should/could" be done by other people (in this case, the creation of institutions).

However the book is great if you're looking in a way to introduce the topic into an agenda since it gives some examples on how difficult is to value Natural Capital and how some governmental and international institutions could (or could not) fulfill the needs of its incorporation into the economic system.

My findings are: incorporation of natural capital is a complex problem but a good idea that need a lot of lobbying and cooperations between private and public organizations and the creation of new institutions to accomplish the accountability needed to assure the preservation of natural capital to the generations to come.

[Charlotte · Rating 5 out of 5]

Helm provides the what, why and how of "natural capital", that is the renewable and nonrenewable resources and the rules for maintaining,accounting for and appropriately valuing them. Having recently read The 6th Mass Extinction and The Wizard and the Prophet, both written by journalists, I appreciated following with this as Helm is an economist who is equally deft at describing environmental, engineering and economic challenges and how they interrelate. This book is heavy on macroeconomics and finance, but it's worthwhile. I'm buying copies for all my colleagues, because Helm outlines that the only way to get politicians, industry and consumers moving in the same direction with respect to environmental preservation (basic stewardship, really) is to value natural (renewal and non renewable) resources explicitly throughout their lifecycle.

[J.smyth.pdx · Rating 4 out of 5]

This was a slog of a read, even for an Econ major. It’s important, and really informed my understanding of how nature should be accounted for in an economic sense, but many parts were an act of dedication rather than interest. The book is not intended to be a beach read, I realize that, but to make the subject approachable by the organizations that need to understand it, a step back from the accounting principles to more practical examples would have been useful. I liked it overall, and the margins of my book are full of notes, but I don’t know if I’d be inclined to pick this up again.

[Julius · Rating 4 out of 5]

Sehr gute Erklärung, warum eine vermögensbasierte Berechnung des "Reichtums" eines Landes möglicherweise besser geeignet ist als stumpfes Anbeten des GDP. Manchmal geht er nicht genug auf die Komplexität ein, finde ich.

[Russell Chee · Rating 2 out of 5]

The first book I've read in a while where sections genuinely caused my eyes to glaze over.

While this normally wouldn't be a critique, more an impetus for me to brush up on whatever area of knowledge in which I had been found lacking, the issue is that this really is an issue of the public arena - one might say, "oh, but surely only politicians can act!", to which I would retort, yes, but not until there is public pressure on these politicians.

I did think it was important that the author genuinely presented an alternative to overthrowing capitalism, yet I found myself asking: what's the point? This is so obviously not going to happen in our society. Read to understand, but not believing any of this will come to pass, for sure.

[Mark Isaak · Rating 4 out of 5]

A very good book on the vital concept of including natural capital into economic accounting. It does not minimize the difficulties of such an approach, but by showing incremental steps for improvement and giving multiple real-life examples, Helm shows that natural capital accounting is not only practical, but beneficial. The book's balance of technical language vs. accessibility to the layperson perhaps leans a bit towards technical, but that probably works in the books favor, as it communicates more directly with the professionals who need to read this book, too.

[Tim Nowotny · Rating 3 out of 5]

I have the feeling that this book could have done with a few years more of formulating its thoughts.
I have great respect for Dieter Helm and know that he usually gives you a good run for your money but this felt at times a bit thin.
In my opinion there is many times within his chain of arguments the problem with complexity. Yes, there is more value in doing a 80% approach than nothing at all but I simply cannot see this without further inquiry. Otherwise many interesting ways to go.