For more than 70 years our economic system has been using Gross Domestic Product (GDP) as the yardstick measurement of our economy.
This yardstick measures only economic activity. It was meant to help reduce poverty using “trickle down” economics. But after 70 years has it achieved this aim? No it hasn’t, that means our economic model is a busted flush, it is no longer viable. There are other measures that have been promoted, a sustainable economy or a circular one. But there is another one that is gaining some traction – Gross Ecosystem Product (GEP) – this takes into consideration our natural environment, our finite resources and human well being.
GPD promotes unsustainable practices as it encourages us to use up our finite resources. It makes no account of how nature has contributed to our health and well being. GPD has promoted policies that have contributed to the climate and biodiversity emergencies. It is an accounting trick that allows is to vent greenhouse gas into our atmosphere, destroy habitats to improve farming and build on them and neglect human well being without worrying about the consequences.
Of course, our current environmental problems were not considered when GDP was initially developed in the 1930’s. GDP has always had limitations, something known about in the beginning. These have been ignored as it became the main economic indicator in use today.
How can we fix this?
We need to start looking at alternative metrics such as Gross Ecosystem Product (GEP) so that we can account for nature’s contribution to economic activity and human well being.
Research into calculating GEP is in its infancy, it attempts to place a monetary value on things like clean water, soil quality, food security, healthcare and the culturally-significant landscapes that contribute to our happiness. In other words, GEP assigns a monetary value to the work of bees who act as nature’s pollinators, bogs that sequester carbon, and the stimulating effect nature has on our mental health.
While GDP looks exclusively at the value of production – or outputs – GEP instead places a value on nature’s input and incentivise policy makers to invest in nature. You can’t add GDP and GEP together as there are numerous overlaps and must be viewed separately. But it may be possible that the two measures can provide decision makers with complementary information that could help allow for a sustainable economy to be built.
GEP would allow bogs and woodlands to contribute to the economy. In such a scenario, cities could be compelled to pay rural regions to store some of the carbon they produce or to maintain culturally significant landscapes that enhance mental health and well being.
If we are to manage the complex trade-off’s needed to mitigate the climate crisis, radical new thinking is required.
By placing a value on the benefits that we derive from our natural environment, GEP would allow us to think differently about how we manage, maintain and grow those regions that have been neglected in favour of centralised growth strategies.