Center for the Advancement of the Steady State Economy
Regular Contributors:  Herman Daly, Brian Czech, Brent Blackwelder, James Magnus-Johnston, and Eric Zencey. Guest authors by invitation.

GDP: The Infinite Planet Indicator

by Eric Zencey

Eric ZenceyThe faults and flaws of Gross Domestic Product (GDP) as a measure of economic wellbeing are well-known. Nearly every introductory economics text lists the problems: it measures only the monetary value of final goods and services and doesn’t include non-market benefits like volunteer work and domestic production. It miscounts some costs as benefits, as when it adds in the money spent to prevent crime or remediate damage. And it doesn’t count the environmental costs of economic activity at all. Oddly, though, after listing all the shortcomings that prevent GDP from being an accurate measure of economic wellbeing, the typical introductory text goes on to use GDP as a measure of economic wellbeing.

“GDP is not the same as economic wellbeing,” Robert H. Franke and Ben S. Bernanke warn us in the second edition of their introductory textbook, Principles of Economics (emphasis in original). After a review of what GDP miscounts, they acknowledge “you might conclude…that GDP is useless as a measure of economic welfare.” But, they say, that conclusion isn’t justified: despite the measure’s flaws, there is nevertheless a strong correlation between GDP growth and growth in our material standard of living, which makes GDP an effective proxy measure of–yes–material wellbeing.

Or take Harvard Professor Gregory Mankiw, whose introductory text is widely used. “Surely,” he asks rhetorically, “we should value things that are not measured by GDP and that contribute to the quality of life and economic well-being . . . ?” But, like Franke and Bernanke, he falls into line with the status quo: while “GDP does not directly measure those things that make life worthwhile, . . . it does measure our ability to obtain the inputs into a worthwhile life,” which makes it a useful, important measure. (See Daniel Miller’s essay on Mankiw’s treatment of GDP.)

The cost of cleaning up this oil spill in Galveston, Texas is miscounted as a benefit in GDP. Photo Credit: Petty Officer 2nd Stephen Lehmann.

The cost of cleaning up this oil spill in Galveston, Texas is miscounted as a benefit in GDP. Photo Credit: Petty Officer 2nd Stephen Lehmann.

But the most puzzling case of the economics profession ignoring its own warnings can be found in the work of William Nordhaus, the Sterling Professor of Economics at Yale. Nordhaus was the co-originator (with James Tobin) of an alternative to GDP, the Measure of Economic Welfare (MEW). If any introductory textbook was going to be organized around a different economic indicator, you’d think it would be one that Nordhaus helped produce. In 1985 he began co-authoring the magisterially titled Economics, Paul Samuelson’s influential text, first published in 1948, which once had the market to itself and, despite competition, still manages to sell upwards of a quarter million copies a year. On the matter of GDP as an indicator of wellbeing, Nordhaus and Samuleson render these judgments: GNP (GDP’s predecessor statistic)

is an imperfect measure of genuine economic welfare . . . [because it] . . . includes many components that make no obvious contribution to individual well-being, and . . . some key satisfaction-producing consumption items are omitted.

These cautions are offered as a lead-in to the book’s brief discussion of Net Economic Welfare, a measure that traces to Nordhaus’ own work on the MEW. The idea behind both alternative indicators was the same: GNP needs to be corrected by subtracting costs that it ignores (like the cost of air and water pollution, or the lost leisure time that comes from longer working hours that bring higher wages) or mistakenly counts as benefits (like the costs of repairing infrastructure and replacing property after a destructive storm), and it needs to include economic benefits that don’t move through markets (like the value created through domestic production–cooking, cleaning, child- and eldercare, and so on).

Samuelson and Nordhaus have no problem in moving from objective description to the indicated prescription:

Along with adding in ‘goods,’ GNP should be adjusted so that it subtracts out ‘bads’ or the disamenities of modern life.

And yet, and yet: their text doesn’t follow their prescription; it generally ignores the alternative indicator they’ve introduced, the one that Nordhaus himself helped invent. The book’s 900-plus pages give the undergraduate reader a detailed introduction to a body of economic thinking that takes GNP as a useful and accurate measure of economic welfare. You find GNP throughout the book, from the flyleaf (on which a full-page graph compares “Real Output,” measured in inflation-corrected GNP, to Price Level over the years) to the index (which contains just two citations for the NEW but five and a half column inches, in 5 point type, on GNP).

In economics as in other professions, it takes vision and courage to break with consensus practice. And economists can always take shelter behind the myth that economics, properly understood, is purely descriptive–a science, not a species of prescriptive advocacy. And so it is that despite GNP’s flaws, and their own advocacy for using something better, Samuelson and Nordhaus tell beginning students of economics that this well-known statistic (and by implication its successor statistic, GDP) is “the best widely available measure of the level and growth of [economic] output” and “the carefully monitored pulse of the economy.” The message: we take GNP seriously as a measure of economic wellbeing because policy makers and other economists take it seriously as a measure of wellbeing, and while we’re perfectly capable of imagining an alternative measure, we’re not going to go against the professional consensus.

Thus is a perverse, anti-intellectual conservativism modeled for students of economics.

But we can still usefully ask: why does the discipline as a whole hang on to a statistical measurement that is so deeply flawed?

I think part of the answer is that GDP embodies a hidden presumption, one that is absolutely crucial to economics as it is widely practiced today. It’s a presumption that is killing us, literally. That presumption is that the planet is infinite.

The growth societies that developed in Western Europe in the past two centuries have, by and large, always treated the planet as though it were infinite, with an infinite capacity to offer up resources and an infinite capacity to absorb the wastes that industrial production inevitably generates. This counter-factual presumption is killing us, through climate change, species loss, and ecosystem degradation.

The tradition in economic theorizing that began in those growth societies needs the planet to be infinite, because even today its theorizing remains committed to economic growth as its primary project and takes that growth to be the measure of the success or failure of its theories.

If you adopt an alternative indicator and thereby begin to admit that economic development has environmental costs in pollution, climate change, resource depletion, lost leisure time, family dissolution, and other “disamenities,” then you have to be open to the possibility that there could be uneconomic growth–economic development that costs us more in damage and disamenities than it brings in benefits. To fix the flaws in GDP, to deduct environmental and social costs from economic benefits, is to call into question the perpetual growth dogmas of the discipline.

So, even though GDP fails in terms that are completely drawn from traditional economics, that failure has larger consequences for the tradition. Rejecting GDP as a basic economic indicator and adopting an alternative subverts a much larger body of economic theory and practice, because it encourages us to ask, and to get fresh answers to, a fundamental question: What’s the economy for, anyway?

As nations, states and localities begin developing their answers to that question, they are increasingly seeking to adopt and integrate into their policy making (economic and otherwise) new indicators that offer a more comprehensive measure of wellbeing.

In my next post, I’ll elaborate on last week’s post by John de Graaf, and talk more about how the state of Vermont has begun integrating the Genuine Progress Indicator into its policy processes.

 

Building a Movement for Happiness

by John de Graaf

John de GraafEditor’s note: this essay was first published in Truthout.

You probably missed it, but April 13, 2014, marked the third annual Pursuit of Happiness Day. April 13 just happens to be the birthday of Thomas Jefferson, who wrote those famous words “life, liberty and the pursuit of happiness” into our Declaration of Independence.

Jefferson and other American revolutionary leaders including Washington, Adams and Franklin all believed that the main purpose of government was increasing the happiness of its citizens. They said so on many occasions. But the idea of government promoting happiness or its corollary, “wellbeing,” is more often derided in contemporary politics – “social engineering,” some call it.

One significant exception is the state of Vermont. In addition to electing the most progressive and independent of US senators, Bernie Sanders, Vermont has become a laboratory for promoting new ways of understanding and promoting happiness and wellbeing. Its governor, Peter Shumlin, has proclaimed Pursuit of Happiness Day in Vermont for the past three years. Its legislature, with support from Democrats, Republicans and Progressive Party members, has established a state GPI or Genuine Progress Indicator, that uses some two dozen measures of health, wealth, education, leisure and sustainability to measure progress (Maryland has the same index and other states may follow soon).

So it’s probably not surprising that Vermont has been the site of three of four national Happiness conferences in the US (Seattle hosted the other) and will be sponsoring the 5th Gross National Happiness Conference - Happiness and Wellbeing: Building a National Movement - in Burlington at the end of this month. Organizers hope the conference will help create a strategy for building public policies and personal change based on the goal of Sustainable and Equitable Wellbeing and Happiness.

Bhutan’s Challenge

The conference was inspired by a United Nations meeting, Wellbeing and Happiness: Defining a New Economic Paradigm, held in April 2012. At that meeting, then-Prime Minister of Bhutan, Jigmi Thinley, declared that

The time has come for global action to build a new world economic system that is no longer based on the illusion that limitless growth is possible on our precious and finite planet or that endless material gain promotes wellbeing. Instead, it will be a system that promotes harmony and respect for nature and each other; that respects our ancient wisdom traditions and protects our most vulnerable people as our own family, and that gives us time to live and enjoy our lives and to appreciate rather than destroy our world. It will be an economic system, in short, that is fully sustainable and that is rooted in true abiding wellbeing and happiness.

Bhutan Monk - Credit-Otabi Kitahachi

Little Monk
Photo Credit: Otabi Kitahachi

The tiny Himalayan nation of Bhutan, population 750,000 (about the same as Vermont), has been trying to measure and promote happiness as the goal of its government since its then-16-year old King, Jigme Singye Wangchuck, proclaimed that “Gross National Happiness is more important than Gross National Product” four decades ago. Its challenge to Gross National Product (now Gross Domestic Product), the standard by which other nations measure success, followed an earlier observation by US Senator Bobby Kennedy that GNP “measures, in short, everything except that which makes life worthwhile.”

As is now well-understood, GNP (or GDP) is a poor indicator of wellbeing – it measures the churn of money in a society. It creates an upside-down world in which many bad things – oil spills, traffic accidents, cancer, etc. – are measured positively because money must be spent to alleviate them, while many things essential to wellbeing – housework, volunteering, natural beauty, good health, etc. – are not counted at all (prompting Kennedy’s comments). The Genuine Progress Indicators used in Vermont and Maryland are attempts to correct these clear design flaws in GDP.

Bhutan has brought leading experts in many disciplines from around the world to guide its progress toward its goal of Gross National Happiness. The country currently conducts bi-annual surveys to measure the wellbeing and happiness of its people, measuring progress in nine areas or “domains” of life considered especially important for happiness, including: physical health; mental health; education; quality of governance; social support and community vitality; environmental quality; time balance; access to arts, culture and recreation, and material wellbeing. In this model, material wellbeing – the primary goal of GDP – matters, but as only one of several important factors.

Bhutan has also created a “happiness policy tool” that allow lawmakers to understand the longer-term implications of proposed legislation on each domain of happiness. Its 24-member Gross National Happiness Commission evaluates major policy proposals using this tool and advises Bhutan’s parliament regarding their likely impact. For example, using the tool, Bhutan turned down an offer to join the World Trade Organization. The proposal scored only 42 of 92 possible points in the GNH Commission analysis; 69 points are required for a positive recommendation.

The New Science of Happiness

In the days of Jefferson, it wasn’t really possible to measure and assess national happiness and its causes. But in the past couple of decades, a new science of happiness, driven by advances in positive psychology and extensive studies of the brain, has allowed researchers to more thoroughly understand happiness and its roots in both public policy and human behavior. Gallup polls 1,000 Americans daily regarding their life satisfaction using a popular tool called the Cantril ladder: Perhaps not surprisingly, Americans are 20 percent happier on weekends than on workdays.

Gallup also uses the ladder and other measures to assess the happiness of 150 countries in the world each year. Consistently, northern European nations rank on top, with Denmark in the number one spot (at 7.7 out of 10) year after year. The United States, which ranked 11th in 2007, has dropped to 17th place (7.0 out of 10) since the great economic meltdown. Several factors in particular characterize the world’s happiest countries – a relatively small gap between rich and poor; excellent work-life balance; urban design favoring community over cars; high degrees of interpersonal trust; a strong social safety net, and, contrary to popularly-held US ideas, the highest tax rates in the world.

Putting Happiness First

Organizers of the Vermont conference hope to launch a movement that puts happiness and wellbeing at the forefront of policy ideas and educational goals. The event features more than 50 prominent speakers, including Vermont state Senator Anthony Pollina, author of the Vermont GPI legislation, Linda Wheatley and Tom Barefoot, lead organizers of GNHUSA, the Vermont organization that has been the primary conference organizer, Laura Musikanski of the Happiness Alliance based in Seattle, John Havens of Hacking H(app)iness and a writer for the British newspaper The Guardian. (Full disclosure: This author is also a speaker.)

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Bhutan’s Four Pillars of GNH
Photo Credit: Ritwick Dutta

“Bhutan may have first suggested that happiness and wellbeing be the primary focus of policymaking,” says Linda Wheatley, conference organizer and co-founder of Vermont-based GNHUSA, “but now, as we face indicators of economic, social and environmental distress, the whole world is seeing the value of that shift in orientation. It’s time for an informed and inspired grassroots movement. We’re thrilled to be part of that effort and invite everyone else to join us.”

Participants will gather to share the tools, skills and resources for building happiness initiatives in other towns and cities across the country. The formal conference, on Thursday and Friday, will explore four content areas: Policy and Community Engagement; the Power of Data; Developing Happiness Skills, and Movement Building. Each segment will include a keynote and plenary presentations by well-known academics and activists in a variety of related fields, followed by workshops for further skill development. The very practical efforts currently underway in Vermont will be an important focus of the conversation.

The formal conference, on Thursday, May 29 and Friday, May 30, will be followed on the weekend by a series of add-on trainings including a focus on spiritual traditions and on conducting happiness surveys and using happiness policy tools in local communities.

Until now, what has been happening in Bhutan, and more recently, in the state of Vermont, has been under the radar of most Americans. Conference organizers hope this gathering will help change that.

“We’ll be looking at best practices to improve wellbeing and happiness from throughout the world,” says Tom Barefoot of GNHUSA.

At a time when so much of our news is a litany of inequality and environmental destruction, making happiness our goal instead of more money, stuff and consumerism is common sense. The scientific evidence shows that social connection, participation, good health and access to nature matter far more for wellbeing than an ever-growing GDP. It’s time for that evidence to get out there more widely.

The Hidden Costs of Cheater Economics on Human Health & the Future of Life on Earth

by Brent Blackwelder

BlackwelderIn a true cost steady state economy, the real costs of goods and services would not be disguised, hidden, or kept off the accounting ledger. The former head of Friends of the Earth England, Tony Juniper, makes a significant contribution to the discussion of a true cost economy in his new book What Has Nature Ever Done For US? How Money Really Does Grow on Trees.

Cheater economics enables polluting products to be sold cheaper than many clean products. Cheater economics includes subsidies for fossil fuels, pesticides, and toxic chemicals. Cheater economics tolerates pollution externalities, as economists have noted. For example, many damages caused by air pollution from coal-fired power plants are not incorporated into the price of coal but simply borne by the victims. The act of mountain top mining eliminates forests and streams while air pollution from burning coal results in loss of crops, damage to buildings, health problems, and mercury contamination of fisheries, etc.

Here is a sample of the astonishing set of ecological costs stemming from economic activities that damage or rearrange ecosystems that are presented in What Has Nature Ever Done For US?

Vultures in India

Photo Credit:  Nagarjun Kandukuru

Perching vulture in India. Photo Credit: Nagarjun Kandukuru

India has almost lost its total population of 40 million vultures as a result of anti-inflammatory drugs injected into cattle and water buffalo. The vultures consumed the carcasses of these and other dead creatures and accumulated a fatal dosage. Now 12 million tonnes of animal flesh that vultures consumed annually is left rotting, fed upon by growing packs of dogs that have caused a massive outbreak of rabies among the human population. The annual medical costs exceed $30 billion as a result of the demise of the vulture population, which had previously provided free of charge essential garbage/carrion collection services.

Pollinators of Human Food Crops

About two thirds of the world’s food crops require animal pollination and one trillion dollars of the $3 trillion annual sales of agricultural products are dependent on animal pollinators such as honey bees and bumblebees. Certain pesticides are killing off these crucial pollinators. In the 1980s, extensive use of pesticides in part of Sichuan, China, eliminated the bee pollinators. Today in this region, about 40,000 people now have to pollinate apple and pear trees by hand.

The United Nations Food & Agriculture Organization (FAO) reports that in 146 countries, 90% of the food supply is provided by 100 crops. What is significant is that 71 of these 100 crops are pollinated primarily by wild bees. These crops include squashes, cherries, plums, cucumbers, strawberries, and pears.

Destruction of Ocean Fisheries via Subsidies

Ocean fisheries contribute $274 billion for global GDP but various countries provide $16 billion in subsidizing fishery harvesting practices that are highly damaging to fish stocks: i.e., the equivalent of killing the goose that laid the golden egg.

Photo Credit: Jim Winstead

Mangrove in Thailand. Photo Credit: Jim Winstead

Mangrove Forest Loss & Coastal Flooding

One square kilometer of mangrove forest is worth between $200,000 and $900,000 annually. Destruction of coastal mangrove forests, as occurs with Asian shrimp farms, eliminates the storm protection barrier that is increasingly important in the face of sea level rise.

High Health Care Costs as Result of Destroying Natural Areas

To deal with the poor health of people in the polluted Gateshead area in Northeast England, a group of British public agencies in 2004 initiated a program of walks in a 360 hectare mixed forest zone. Tony Juniper reports that these walks were very effective in improving patients’ health and were far superior to the alternative of exercise in a gymnasium.

A growing body of evidence points to the health benefits from interactions with nature. Dr. William Bird, a British doctor, ran a diabetic clinic in the 1990s in Oxfordshire where he initiated a very successful program of health walks in natural areas. But the sad fact is that natural areas are declining in many urban areas. In Sheffield, England, the “roaming” range for children has declined over 5 generations from six miles when the great-grandparents were children to about 300 yards today for children. The health costs of destroying natural areas globally is simply a pollution externality for developers and extractors and is shoved off on the public.

Pharmaceuticals & the Loss of Tropical Rainforests

Experts estimate that between a quarter and a half of the $640 billion global pharmaceutical market is based on natural genetic diversity. Tropical rainforests contain a significant portion of the genetic diversity on earth, but despite the grave concerns about deforestation, an area the size of Germany or Montana was lost between 2000 and 2013.

To establish a true cost economy, we must get the ecological price right on products and services. The examples presented in Juniper’s book illustrate the extraordinarily large benefits provided by nature but neglected in today’s economic accounting. These compelling illustrations can be of great benefit in pushing toward a paradigm shift in current mainstream economic thinking. They are straightforward matter-of-fact descriptions of externalities that are undermining the life-support ecosystems of the Earth.

The Securities and Exchange Commission (SEC) should be requiring companies to disclose their pollution externalities annually so as to alert investors and the public to the true cost of their products. However, not only will a steady state economy depend on accounting for these costs and putting an end to cheater economics, but will also depend on changing our macroeconomic policy goal of continuous growth. Only then can we begin to stop the destruction of our planet and ensure our health and the environment are protected for generations to come.

The One Percent: Not Kristallnacht but Lebensraum

By Brian Czech

BrianCzechRemember Tom Perkins? Probably nobody wants to, but with all the talk about the profligacy of the one percent, Perkins comes iconically to mind. He’s the billionaire who nauseated the ninety-nine percent by suggesting that American “progressive” (his word) thinking was tilting toward Kristallnacht, due to an attitude toward the one percent. As if he and his capitalist captain cronies were innocent street-corner merchants and the rest of us jack-booted Nazis. What a way to win friends and influence people!

If we’re going to use World War II analogies, let’s at least use the correct one.  In this case it’s not Kristallnacht, but Lebensraum. And the one percent would be the perpetrators, not the victims.

Recall that the pursuit of Lebensraum — living space — was Hitler’s stated excuse for invading Poland, the beginning of World War II. It’s a doctrine to be ever wary of, and it might not always be as explicit as Hitler made it. (The relevance to Putin and Ukraine, for example, is left for others to speculate on.)

To understand the logic of Lebensraum, we need a quick review of structural economics. The economy has three basic sectors: agricultural/extractive, manufacturing, and services. (The “financial sector” is fairly distinct, but falls within the general category of services.) It seems like this basic structure ought to be conventional wisdom, but in the age of the Internet, economic wisdom is disappearing by the bitcoin. If we’re not careful we’ll end up like King Midas, a foolish one percenter if there ever was one.

TL Most Basic With Caption III

The three basic sectors of the human economy, with agriculture/extraction lumped together as “producers” of food, energy, and raw materials.

 

Every economy on the planet — and every political state — depends on its agricultural and extractive base for everything else. It doesn’t matter where the agricultural base is situated, or who controls it. Whether it’s the financial sectors of Hong Kong, the ecotourism of Costa Rica, or the State of Rhode Island, it’s agricultural and extractive surplus, coming from somewhere, that frees the hands of society for the division of labor. Adam Smith noted as much in Wealth of Nations. It’s the stuff of statecraft. Thomas Jefferson knew all about it.

 

 

TL with Arrows with Caption

The basic sectors re-arranged as trophic levels. Strictly speaking, the producers (farmers and extractors) and manufacturing sectors (from heaviest to lightest) are true trophic levels. Service sectors operate throughout the trophic structure, much like pollinators, scavengers, and decomposers operate in the “economy of nature.”

The basic economic sectors amount to the “trophic levels” of economic activity, to borrow a term from ecology. It’s a term worth borrowing, too, given that ecology is all about the “economy of nature.” A little ecology goes a long way toward understanding the plight of Homo sapiens in the 21st century. Humans are stuck with the same physical and biological laws that operate in the economy of nature.  There’s no making something from nothing — Lebensraum for example — and no waving a magic wand to make all the competitors disappear. Guns and bombs are not magic wands.

Of course we all know that the American economy has a lot more than the basic farms, factories, and financial firms. For example there are some really fancy watches, 289-foot yachts, and even personal submarines. You know, the kind of stuff Tom Perkins has to have. Well, with plenty of agricultural and extractive surplus at the base, there’s enough money left over in society for such luxuries, at least for those who commandeer a high enough percentage of the money.

Note that word “money” in the context of trophic levels. This is the “trophic theory of money” — more and more real money (adjusted for inflation, technological progress, and purchasing power) requires more and more agricultural and extractive activity at the base of the economy.  In other words more and more money takes more and more resources.  It takes more… Lebensraum.

Now who among us contributes most to the pressure for Lebensraum? (Hint: It’s easy to tell with the trophic theory of money.) All else equal, it’s those who require and spend the most money, because the amount of money indicates the level of agricultural and extractive surplus that had to be issued from the base of the economy.

The point here seems even more obvious when the expenditure is on luxury material goods, say for example “your typical football field size yacht,” as Perkins referred to his “Maltese Falcon.” The point is more nuanced when it comes to spending hundreds of millions on, say, derivatives in Hong Kong or ecotourism in Costa Rica. But whether the millions are spent on nuts, bolts, or pure nonsense, the origination of the money required Lebensraum at the base.

Pressure for Leb With Caption

Unsustainable consumption of the one percent and pressure for Lebensraum. Note how disproportionate the extremely luxurious goods and services are. The alarming disproportionality indicates how the base of the economy must grow outward to support the acquisition of such goods and services. In other words, if agriculture and extraction is at full capacity within the borders, the nation must commandeer Lebensraum to support the luxurious consumption (Photo Credit: Greg Covey.)

At the Earth Summit in Rio de Janeiro, 1992, George H. W. Bush said, “The American way of life is not up for negotiation.” The problem with that attitude is the American way of life, taken as a whole, includes an unhealthy dose of Perkins-like consumption. If that’s not up for negotiation, war is a matter of time.

And please, don’t tell us the real onus is on the 99%. Obviously every bit of conservation helps, but how much do you spend in a year? Somewhere between $20,000 and $60,000? That means a guy like Perkins or Trump or Schwarzman spends not 10 times as much as you, not 100, but more like a thousand or even 10,000 times as much. That requires a helluva lot more Lebensraum! I don’t know about you, but I don’t think that should be part of the American way.

This is not to say the one percent is guilty of conspiring to precipitate a war for Lebensraum. It’s hard to imagine the Donald, for example, having any type of geopolitical strategy. And if there is one thing I have learned as a visiting professor of natural resource economics, it’s just how deeply misinformed people are about the trophic origins of money. Our society, political system, and even academia abound with fuzzy notions of “dematerializing” the economy and “green growth.” It would be hard to blame the one percent for an ignorance of ecological economics.

On the other hand, somewhere around 99% of us, if stopped for violating a relatively obscure statute or regulation, will be told, “Ignorance of the law is no excuse.” In this case we are talking about natural law; the physics and biology establishing the trophic structure of the economy.  A guy like Perkins is supposed to be a cut above the rest; a brilliant captain of industry, high-tech industry no less. Shouldn’t we expect more acumen with regard to the functioning of the economy he has supposedly mastered?

Frankly, I’m not so sure Perkins is blissfully ignorant after all.  His 60 Minutes interview suggested he knows something is wrong with the gaudy expenditures on yachts and moats and such.  In fact, he was too embarrassed to say how much he spent on the Maltese Falcon because he admitted the money could have been used for far more beneficial and charitable purposes.  Yet he just can’t control the urge to have the biggest and most expensive toys, largely to stroke his ego, he admits.

Now in America there are other behaviors, stemming from supposedly uncontrollable urges, that wreak havoc in society. These behaviors are not only frowned upon but punishable by law. Why are there no deterrents to reckless levels of consumption?

It bears repeating that pushing for perpetually more stuff — especially luxury goods and services, the biggest, best, and most expensive — is tantamount to Lebensraum doctrine. It may not be intentional, but it’s basic economics. And bad economics.

Krugman’s Growthism

by Herman Daly

Herman Daly

 

Paul Krugman often writes sensibly and cogently about economic policy. But like many economists, he can become incoherent on the subject of growth. Consider his New York Times piece, published earlier this month:

 

…let’s talk for a minute about the overall relationship between economic growth and the environment.

Other things equal, more G.D.P. tends to mean more pollution. What transformed China into the world’s largest emitter of greenhouse gases? Explosive economic growth. But other things don’t have to be equal. There’s no necessary one-to-one relationship between growth and pollution.

People on both the left and the right often fail to understand this point…On the left, you sometimes find environmentalists asserting that to save the planet we must give up on the idea of an ever-growing economy; on the right, you often find assertions that any attempt to limit pollution will have devastating impacts on growth…[Krugman says both are wrong]…But there’s no reason we can’t become richer while reducing our impact on the environment [emphasis mine].

Krugman distances himself from “leftist” environmentalists who say we must give up the idea of an ever-growing economy, and is himself apparently unwilling to give it up. But he thinks the “right-wingers” are wrong to believe that protecting the environment will devastate growth. Krugman then advocates the more sensible goal of “becoming richer,” but fails to ask if growth in GDP is any longer really making us richer. He seems to equate, or at least fails to distinguish, “growing GDP” from “becoming richer.” Does he assume that because GDP growth did make us richer in yesterday’s empty world it must still do so in today’s full world? The usual but unjustified assumption of many economists is that a growing GDP increases measured wealth by more than it increases unmeasured “illth” (a word coined by John Ruskin to designate the opposite of wealth).

To elaborate, illth is a joint product with wealth. At the current margin, it is likely that the GDP flow component of “bads” adds to the stock of “illth” faster than the GDP flow of goods adds to the stock of wealth. We fail to measure bads and illth because there is no demand for them, consequently no market and no price, so there is no easy measure of negative value. However, what is unmeasured does not for that reason become unreal. It continues to exist, and even grow. Since we do not measure illth, I cannot prove that growth is currently making us poorer, any more than Krugman can prove that it is making us richer. I am just pointing out that his GDP growthism assumes a proposition that, while true in the past, is very doubtful today in the US.

To see why it is doubtful, just consider a catalog of negative joint products whose value should be measured under the rubric of illth: climate change from excess carbon in the atmosphere; radioactive wastes and risks of nuclear power plants; biodiversity loss; depleted mines; deforestation; eroded topsoil; dry wells, rivers and aquifers; the dead zone in the Gulf of Mexico; gyres of plastic trash in the oceans; the ozone hole; exhausting and dangerous labor; and the un-repayable debt from trying to push growth in the symbolic financial sector beyond what is possible in the real sector (not to mention military expenditures to maintain access to global resources).

Deforestation–one of the many “illths” created by continual GDP growth

These negative joint products of GDP growth go far beyond Krugman’s minimal nondescript category of “pollution.” Not only are these public bads un-subtracted, but the private anti-bads they make necessary are added to GDP! For example, the bad of eroded topsoil is not subtracted, but the anti-bad of fertilizer is added. The bad of Gulf and Arctic oil spills is not subtracted, but the anti-bad of clean-up is added. The natural capital depletion of mines, wells, forests, and fisheries is falsely accounted as income rather than capital draw-down.

Such asymmetric accounting alone is sufficient to refute growthism, but for good measure note that the growthists also neglect the most basic laws of economics, namely, the diminishing marginal benefit of income and increasing marginal cost of production. Why do they think these two curves will never intersect? Is Krugman just advocating temporary growth up to some level of optimality or sufficiency, or an ever-growing economy? If the latter, then either the surface of the Earth must grow at a rate approximating the rate of interest, or real GDP must become “angel GDP” with no physical dimension.

Krugman is correct that that there is no necessary “one-to-one relationship between growth and pollution.” But there certainly is a very strong positive correlation between real GDP growth and resource throughput (the entropic physical flow that begins with depletion and ends with pollution). Since when do economists dismiss significant correlations just because they are not “one-to-one”?

Probably we could indeed become richer (increase net wealth) while reducing our impact on the environment, as Krugman hopes. But it will be by reducing uneconomic growth (in throughput and its close correlate, GDP) rather than by increasing it. I would be glad if this were what Krugman has in mind, but I doubt that it is.

In any case, it would be good if he would specify whether he thinks current growth in real GDP is still economic in the literal sense that its benefits exceed its costs at the margin. What specifically makes him think this is so? In other words, is GDP growth currently making us richer or poorer, and how do we know?

Since GDP is a conflation of both costly and beneficial activity, should we not separate the cost and benefit items into separate accounts and compare them at the margin, instead of adding them together? How do we know that growth in GDP is a sensible goal if we do not know if the associated benefits are growing more or less rapidly than the associated costs? Mainstream economists, including Krugman, need to free their thinking from dogmatic GDP growthism.

Depletion of Moral Capital as a Limit to Growth

by Herman Daly

In thHerman Dalye Social Limits to Growth, Fred Hirsh argues that

Morality of the minimum order necessary for the
functioning of a market system was assumed,
nearly always implicitly, to be a kind of permanent
free good, a natural resource of a non depleting kind.

Elaborating on the relation of Adam Smith’s Theory of Moral Sentiments to his Wealth of Nations, Hirsh points out that for Smith, men could safely be trusted not to harm the community in pursuing their own self interest not only because of the invisible hand of competition, but also because of built-in restraints on individual behavior derived from shared morals, religion, custom, and education. The problem that Hirsh sees is that

continuation of the growth process itself rests on certain preconditions that its own success has jeopardized through its individualistic ethos. Economic growth undermines its social foundations.

The undermining of moral restraint has sources on both the demand and supply sides of the market for commodities. In his essay, “The Growth of Affluence and the Decline of Welfare,” E. J. Mishan has noted that

a society in which ‘anything goes’ is ipso facto, a society in which anything sells.
(Economics, Ecology, Ethics)

A corollary is that self-restraint or abstinence in the interests of any higher claims than immediate gratification by consumption is bad for sales, therefore bad for production, employment, tax receipts, and everything else. The growth economy cannot grow unless it can sell. The idea that something should not be bought because it is frivolous, degrading, tawdry, or immoral is subversive to the growth imperative. If demand is to be sufficient for continual growth then everything must sell, which requires that “anything goes.”

On the supply side, the success of science-based technology has fostered the pseudo-religion of “scientism,” i.e., the elevation of the deterministic, materialistic, mechanistic, and reductionistic research program of science to the status of an ultimate World View. Undeniably, the methodological approach of scientific materialism has led to great increases in our technological prowess. Its practical success argues for its promotion from working hypothesis or research program to World View. But a World View of scientific materialism leaves no room for purpose, for good and evil, for better and worse states of the world. It erodes morality in general and moral restraint in economic life in particular. As power has increased, purpose has shrunk.

The baleful consequence of this fragmenting of the moral order, which we are depleting just as surely as we are wrecking the ecological order, is, as Mishan points out, that

effective argument [about policy] becomes impossible if there is no longer a common set of ultimate values or beliefs to which appeal can be made in the endeavor to persuade others.

Just as all research in the physical sciences must dogmatically assume the existence of objective order in the physical world, so must research in the policy sciences dogmatically assume the existence of objective value in the moral world. Policy must be aimed at moving the world toward a better state of affairs or else it is senseless. If “better” and “worse” have no objective meaning, then policy can only be arbitrary and capricious. C. S. Lewis forcefully stated this fundamental truth:

A dogmatic belief in objective value is necessary to the very idea of a rule which is not tyranny or an obedience which is not slavery.

Likewise, Mishan claims that

a moral consensus that is to be enduring and effective is the product of a belief only in its divine origin.

In other words, an enduring ethic must be more than a social convention. It must have some objective, transcendental authority, regardless of whether one calls that authority “God,” or ‘the Force,” or whatever. All attempts to treat moral value as entirely a part of nature to be manipulated and programmed by psychology or genetics only ends in a logical circularity.

Moral value cannot be reduced to or explained as a mere result of genetic chance and natural selection, without at the same time losing its authority. Even if we knew how to remake moral values as human artifacts, we must still have a criterion for deciding which values should be emphasized and which stifled in the new order. But if that necessary criterion is itself an artifact of humanly manipulated mutation and selection, then it too is a candidate for being remade. There is nowhere to stand.

Once the false belief spreads (and it already has) that morality has no basis other than random chance and natural selection under impermanent environmental conditions, then it will have about as much authority and truth claim as the Easter Bunny. In sum, the attitudes of scientific materialism and cultural relativism actively undercut belief in a transcendental basis for objective value, which in turn undercuts moral consensus. Lacking that consensus there is no longer the “morality of the minimum order necessary for the functioning of a market system” presupposed by Adam Smith and his followers.

What to Do When You Suspect We’re Headed for Collapse

by Rob Dietz

Dietz_Author_PhotoIf you’ve been paying attention to the environmental news, then you know people are pummeling the planet. Because of the way we run the economy, with continuously growing population and consumption, we are destabilizing the climate, depleting topsoil, drawing down aquifers, acidifying the oceans, and driving species to extinction. Even as we impoverish the Earth’s ecosystems, billions of us struggle daily to find enough food for a decent dinner.  In this age of worldwide environmental and social turmoil, it’s natural to want to help. It’s also natural to wonder how you can possibly make a difference. These troubled times prompt each of us to ask a simple, but absolutely critical question: “What should I do?”

Before tackling what to do, let’s get something out of the way — what not to do:

  • Deny the severity of the problems. Suppose you go swimming along a beach and notice an agitated 20-foot-long great white shark swimming directly below you. No matter how much you refuse to acknowledge its existence, the shark will still be there, cruising along and considering whether you’d make a satisfying snack. You are more likely to survive if you assess your situation accurately and react to your new reality. (The chances of actually meeting a great white shark are slim because of overexploitation — just like humanity’s relationship with so many species, but that’s another story).
  • Refuse to take responsibility. Too many people deny not only the severity of the problems, but even the very existence of the problems. A disconcerting number of climate change denialists (perhaps better termed de-nihilists) live in virtual bomb shelters they constructed to avoid having to confront reality. It’s up to the rest of us — those who live in the real world and understand the severity of humanity’s plight — to take responsibility. We have to move with purpose and we have to move now.
  • Stick with the status quo. As environmental scientists continue to overload us with sobering findings, the easiest thing to do is to keep walking the business-as-usual path. There’s a certain solace to having a “normal” career, carrying on without making sacrifices or changing behavior in ways that may cause difficulty and even pain. As social creatures, we are pre-programmed to conform to the dominant culture. But the difficulty of taking a countercultural path pales in comparison to the chronic difficulties you’ll experience if your way of life contradicts your core beliefs.
  • Leave it to a higher power. Calling on a spiritual or technological force to save the day offers a soothing strategy for escaping from our environmental and social traps, but it’s also an unconscionably irresponsible strategy. People have good reasons to believe God or Google can deliver some amount of help, but that doesn’t absolve us from doing our part. We got ourselves into this mess — we must look to ourselves to find a way out.

Back to the central question: “What should I do?” Like a flock of vultures, the problems circle ominously overhead. The solutions are more like songbirds; they hide in branches and thickets, but they’re there. Despite their presence all around us, it’s still hard to spot proper solutions. It would be a huge relief to have one simple method for scuttling the vultures, but it just doesn’t exist. Solutions come with a certain degree of complexity (e.g., multiple partial solutions that are related to one another). To begin piecing together your answer to “What should I do,” then, it’s helpful to divide actions into three categories: (1) learn something, (2) say something, and (3) do something.

Learn Something

Seek out colleagues who also recognize the problems, but especially people working on creative solutions. I have found myself in the most amazing, life-enriching company while trying to learn more about how to build a sustainable and fair economy. Listing the scholars and leaders who have taught me how to think in systems and see the world through an ecological lens seems like an ill-advised exercise; I know I would omit someone, and I would feel like a name dropper. But when I think about people I’ve met on my quest to learn something, I feel so fortunate (here’s a short list of heroic “Bills”: Bill McKibben, Bill Rees, Bill Ryerson, and Bill Twist).  I’m thankful to all my colleagues, even those not named Bill!

The upshot: you don’t have to slog your way through boring tomes in the dusty corners of the library. On the contrary, you can engage with some of the most compassionate and insightful people on the planet, just as long as you share their desire to help, and you commit to learning something.

Say Something

"Keep Consuming" Poster by Adbusters

As the writers and artists at Adbusters effectively demonstrate, there are always opportunities to speak up and ask, “Why?”

Saying something (at least saying something intelligent) is tougher than learning something, especially for us introverts. My method of saying something consists mostly of writing. I co-wrote a book. I wrote articles (for example, this one in USA Today). I wrote Daly News essays. It’s easier for me to say something clear with a pen or keyboard than with my vocal chords (although I occasionally work up the courage to stand in front of a live audience and pass along what I’ve learned).

If you keep your eyes, ears, and heart open, you’ll find opportunities to say something, and it doesn’t have to be on some grand stage. If you’re a student, ask your professors and classmates probing questions:

Why does the economy have to keep growing? How much consumption is enough for a person, a community, or a society? What are the ultimate goals of our economy?

If you read news reports, write comments and send letters to the editor. A continuous procession of articles in praise of continuous economic growth marches across the front pages of mainstream media sources, providing ample opportunities to respond.

If you participate in a book club, try Enough Is Enough or something similar. Where my coauthor, Dan O’Neill, lives in Leeds, UK, a dedicated group of activists is strategizing how to build the kind of economy described in the book. The same thing has happened where I live in Corvallis, Oregon, and we’ve heard about other groups forming in Bermuda and Wisconsin. Changes begin with the simple act of discussing and sharing ideas. We can all engage our families and friends — you never know what positive events will emerges from your conversations.

Do Something

Doing something represents another step up in commitment. In choosing what to do, the most important point is to make your behavior match your knowledge and values. For example, you can reduce consumption, especially fossil fuel. You can engage in acts of protest. You can give your time and money to organizations that are championing causes dear to you. I have chosen to live with my family in an aspiring ecovillage. We do our best to support the local economy and disengage from the unsustainable, cost-externalizing, globalized economy. We ride bikes. We make music. The idea is to spend time fostering needed changes and have fun doing it.

It’s in that spirit that I embark on my next career adventure. I’ve said enough for the moment as the editor of the Daly News. To understand the motive behind my move, consider this quote from Buckminster Fuller:

You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.

I am excited to be helping Farmland LP build a better agricultural model. We are out to prove that organic, ecologically sound farming practices outperform the outdated model we have been saddled with. The old model, based on 19th- and 20th-century ideas of industrial production, offers no future. In the new model, we manage farmland as an ecosystem — not a mine from which we extract and deplete resources. Farmland LP, founded by Jason Bradford and Craig Wichner, is doing something simple, elegant, and brilliant. The company raises money to buy conventional farmland and convert it to organic. The point is to bolster regional food systems, improve environmental conditions, create meaningful jobs, and provide investors with a good place to put their money. In a sense, we are performing an aikido move. We’re using the momentum of current financial and business systems to create a better way of managing landscapes and providing sustenance. I’m proud to play a role.

I’m also proud of my work on the Daly News. I’ve done my best to move the conversation along, and I look forward to learning more as CASSE continues to curate this forum. I’m engaged in a lifelong journey of learning something, saying something, and doing something. I hope you are too and that you’re bringing friends along. It’s not easy, but you’ll never regret doing what needs to be done. Onward!

Tensions in Ukraine: A Scramble for Growth?

by James Magnus-Johnston

The situation in Ukraine is undoubtedly complex, but it may be as much about a scramble for growth and fossil fuel as it is about ethno-cultural identity.

In a statement issued last week, Ukrainian Prime Minister Arseniy Yatsenyuk focused heavily upon energy politics. He accused Russia of using energy as a “new nuclear weapon.” The cold war reference is clear: just as the former Soviet Union used its nuclear arsenal to hold the world hostage to conflict, today it’s fossil fuel that’s used as a bargaining chip in the geopolitical game.

Europe’s dependence upon Russian fossil fuel helps explain why the Russian leadership has been able to act without fear of retribution. Over 50 percent of Russian gas exports to Europe pass through Ukraine, and Europe relies on Russia for 40 percent of its imported fuel.

The energy sector drives the European economy as well as the world’s high-finance casino, in which speculative claims on fossil fuel inflate dividends to inequitable heights. Yatsenyuk acknowledges that “[the Russians] sell oil and gas mainly to the EU and then take Euros, dollars and pounds — and buy weapons [and] military equipment.” This creates a vicious cycle in which super-inflated fossil fuel dividends can be leveraged to buy even more military equipment, which is in turn used to control fossil fuel infrastructure. And voila — uneconomic growth.

Danger in Ukraine

Pursuit of cheap energy and unending growth spell danger in Ukraine and elsewhere around the world (photo credit: Trey Ratcliff).

The resulting concentration of wealth in the hands of the few appears to feed nationalist fervor at home just as it buys political favor abroad. Russia’s biggest players have been investing around the world for years, but references to Russian power and influence belie the extent of Russian inequality. Russia “has the highest level of wealth inequality in the world, apart from small Caribbean nations with resident billionaires,” according to a 2013 report by Credit Suisse. In Russia, 110 billionaires hold a shocking 35% of all wealth; globally, billionaires collectively account for only 1-2% of total household wealth.

My intent is not to characterize Russia as the classic American villain. In fact, Ukrainian nationalists are, by some accounts, as menacing to Ukraine’s future as Putin’s Russia, and there is plenty of Western hypocrisy for a second editorial. What we need to consider is that the remaining Russian carbon should not be removed from the ground, and all of the supposed spinoff benefits — the military buildup, the further fuel extraction, the super-inflated dividends — generate harmful growth that benefits only a few.

Yet according to the outdated neoclassical script for economic success, growth is signalling to some that Russia is somehow on the right track — a display of power, progress, and innovation. Like other present-day examples, including nationalistic rhetoric surrounding tar-sands production in Canada, dogmatic support of growth is more accurately characterized as hubris, stagnation, and ill-advised development.

The planet’s life support system doesn’t have time for a rehearsal of twentieth-century nationalism fed by a rush for cheap oil; nor will the “victors” in any contemporary power struggle have the opportunity to cash in their casino winnings. Without embracing a post-growth paradigm shift, we’ll all be in for a gruesome ride. With cheap oil and the casino economy fading into history, we need to adopt a steady-state economy and give everyone a chance at winning; otherwise we’ll have to accept senseless land and resource grabs in which everyone loses.

James Magnus-Johnston is the Canadian Director of CASSE and a professor of political studies and economics at Canadian Mennonite University.

An Economic Game Plan to Prevent Water Pollution

by Brent Blackwelder

BlackwelderEven though the Clean Water Act is more than 40 years old, its goals have not been met, and America is still beset with chronic water ailments and acute pollution incidents. Already this year major toxic spills from coal operations in West Virginia and North Carolina have provided grounds for demanding comprehensive changes to a broken system of pollution control.

On January 9, 2014, people in Charleston, the capital of West Virginia, began vomiting while others complained of a strange pervasive licorice odor. The problem was traced to chemicals from a malfunctioning chemical/coal facility just upstream from the city’s water supply intake. A state of emergency was declared to provide after-the-fact protection to the 300,000 people who get their drinking water from this system. Both the water supply company and the chemical company allowed the emergency to unfold despite repeated warnings over the years about unsafe structures and operations.

On February 5, 2014, a spill from a coal ash impoundment unleashed 78 million pounds of arsenic-laden sludge into the Dan River, the source of drinking water for cities and towns in Virginia and North Carolina. Duke Energy, a giant utility, operates fourteen coal-fired power plants in North Carolina, and it dumps the toxic combustion byproduct, coal ash, into unlined ponds. The result: groundwater contamination and toxic spills into drinking water supplies. The Duke Energy spill comes with a sad, but familiar footnote. Pat McCrory, the governor of North Carolina, used to work for Duke Energy and has been on a crusade to weaken pollution controls ever since he took office.

Ongoing experience with such grotesque toxic spills, and even growing awareness of global water shortages have failed to generate sufficient responses. Today’s economic framework blocks significant progress on such crucial problems because it props up extractive and highly polluting industries.

Governments are stuck in a business-as-usual, growth-at-all-costs mindset, and they face constant pressure to deregulate industries. Since industry is fixated on profits and growth, it attempts to pay as few costs as possible; cost externalization is a built-in feature of the economic system. But someone always pays — just look at the people downstream or the species and ecosystems where spills occur.

The key to preventing and cleaning up water pollution is to shift the economy from the pursuit of unending growth to the pursuit of stability. Why would water pollution decline in a steady-state economy? Here are three reasons.

Coal ash in the Dan River

Coal ash in the Dan River from the Duke Energy spill in North Carolina (photo credit: Dan River Basin Association).

(1) Changing the macroeconomic goal away from growth and toward maintenance of life-support systems would change the way businesses and other institutions behave. The goal of a true-cost economy is sustainable and equitable well-being, rather than continuous growth. Actors in such an economy would care more about the medium and long-term future than quarterly returns.  For example, in a true-cost economy, chemical companies would engage in green chemistry, and utilities would produce renewable energy. The costs of using fossil fuels and other toxic substances would simply be too high to pay. Regarding the outrageous scenario of having decaying storage tanks full of dangerous chemicals directly upstream from the water supply intake for a state capital: it would never happen in a true-cost economy.

(2) Companies would be required to have eco-auditors just as they are now required to have financial auditors. Such eco-auditors would assess whether a company was externalizing costs and whether the company’s production was harming life-support systems. Eco-auditors could also show businesses how to avoid pollution. Companies would disclose their ecological impacts in an annual report just as they do with financial audits.

(3) There would be consequences for repeat polluters. For example, in the decade prior to its gigantic oil spill in the Gulf of Mexico in 2010, BP had been responsible for a refinery fire in Texas with significant loss of life and two oil spills in the Arctic Ocean from the Trans-Alaskan Pipeline. Why not three strikes and you’re out? Why not deny BP the right to do business in the U.S.? Instead, the Obama administration has done the opposite by giving BP the go-ahead to drill again in the Gulf of Mexico!

Another example: given the repeated incidents of pollution oozing from Duke Energy’s numerous coal ash ponds, despite years of complaints and penalties, shouldn’t it be denied the right to do business in North Carolina? Shouldn’t its facilities be turned over to more responsible utilities? After all, the vulnerability of coal ash impoundments has been making headlines since December of 2008 when a TVA storage pond in East Tennessee burst and contaminated the Clinch River. Clean-up efforts continue to this day, and costs have exceeded $1.5 billion. TVA said it could never happen again, but in January of 2009, not even a full month later, another coal ash pond failed, this time in Alabama.

We need to adopt a broader, transformative economic approach and stop thinking that pleading with companies and government agencies will suffice. We need to (1) change the goal from growth to sustainability, (2) change company reporting to include ecological audits, and (3) change incentives by denying companies the right to operate when they dodge their responsibilities. Under the current economic paradigm, pollution will persist and natural resources, including soils, waters, forests, and oceans, will continue to decline. Only a new economic game plan can protect our shared water resources and prevent pollution.

Biocultural Heritage: The Foundation of a Sustainable Economy

by Claudia Múnera

Claudia_MuneraPorta Palazzo in the city of Turin, Italy, is recognized as the largest open air market in Europe. Visiting this market provides a unique experience: vendors in all directions offer a seemingly endless supply of breads, pastas, meats, poultry, fish, vegetables, herbs, and olives. The kaleidoscope of colors and jumble of aromas threaten to overload the senses. Italians and foreigners alike gather here to find the foods they want – whether it’s a local ingredient for a traditional Italian dish or something exotic to summon the tastes of a faraway home.

Even though there’s such diversity, all the foods at Porta Palazzo share something in common. You can trace each type of food to a particular ecosystem and a particular way of life for the people who inhabit (or once inhabited) that ecosystem. Each food product in the market comes with its own biocultural heritage. Among all the products we buy and sell in today’s economy, food is probably the easiest to connect to biocultural heritage (assuming we’re not talking about a pre-packaged, frozen microwave dinner). For instance Colombians crave bocadillo veleños, the traditional confection made from guava and sugarcane. And Salvadorians keep an eye out for pupusas, which are made from a cornmeal dough that redefines the phrase “comfort food.” When living abroad, people from a given region often organize festivals in which traditional foods play a central role.

Biocultural heritage wraps a lot of concepts into one term. It’s about relationships between people and the natural environment. It consists of biological resources, from genes to landscapes. But biological heritage also consists of human history, from practices to pools of knowledge and the way humans shape their surroundings and vice versa. According to the International Institute for Environment and Development, some 370 million indigenous people in the world depend directly on natural resources — they rely on their biocultural heritage for survival. Biocultural heritage also influences religious beliefs, sense of place (especially sacred places), and sense of self. It’s easy to be overwhelmed by the tangle of connections when considering the biocultural heritage of a good or a service — maybe that’s why food is a good place to start when trying to get a feel for it. But an astute observer can recognize that other goods and services, such as medicinal plants, tourism, or even health services, also flow from a rich biocultural heritage.

Scenes from Porta Palazza

Colorful vegetables, colorful meats, and even more colorful characters make up the scene at Porta Palazza (photo credit: Claudia Munera).

Throughout my career, it has become increasingly clear that conservation of biocultural heritage is the long-term key to maintaining both healthy ecosystems and healthy economies. As a conservation biologist, I could probably be accused of having a biased viewpoint — I have always believed that endangered species, tracts of wilderness, and other aspects of biodiversity are intrinsically valuable and worthy of conservation. As a result, I have spent a lot of time and effort on projects aimed at protecting ecosystems and the species they contain. I believe that maintaining parks and protected areas is a worthy endeavor, but it’s not enough. Drawing boundaries around biodiversity hotspots or cherished scenic areas will fail in the face of ongoing exponential economic growth and mounting pressure to turn protected areas into commodities.

My research on biocultural heritage at the Rio San Juan Biosphere Reserve in southeastern Nicaragua aims to illustrate the point. Nicaragua is changing at a fast pace, trying to follow a European or North American model of economic growth at the expense of its rich natural capital. Deforestation is on the rise with forest cover diminishing from 42,340 square kilometers in 1994 to 30,440 in 2011. There are several causes, but the main one is to meet the demands of markets: cattle for dairy and meat, hardwood lumber, and crops such as palm oil, sugarcane, and peanuts. In short, forests are being transformed into commodity landscapes.

Poster for Chocolate Tours

Biocultural services: chocolate tours in Rio San Juan Biosphere Reserve (photo credit: Claudia Munera).

The intense pressure applied by economic growth is threatening flagship species such as the jaguar and tapir, internationally significant wetlands, and the species-rich (not to mention carbon-sequestering) forests of this region in Nicaragua. In light of such pressure, the best way to conserve the natural areas is to recognize the value of the biocultural heritage of these areas. Local communities and indigenous populations are making a living and thriving by growing traditional crops, creating handcrafts, and preparing traditional foods that are founded on the local environment and framed in Nicaraguan history and culture. Several communities are embracing ecotourism (it’s a lot easier to entice a tourist to visit the Rio San Juan, Bosawas, or Ometepe Biosphere Reserves if they haven’t been converted to palm oil plantations or cattle farms). Farmers are also having a go at organic cocoa production. A certain amount and certain types of economic activity are compatible with the natural resources of the region, but if we fail to conserve the biocultural heritage of the region, the natural resources will eventually become commodities in economic activities that are incompatible with the landscape.

Other places around the world also demonstrate how championing biocultural heritage can produce desirable results for people and ecosystems. For example, the provinces of Guangxi and Yunnan, China, contain rice terraces, mountain agriculture, and forests that have provided people with livelihoods for centuries. During the last three years, however, droughts have threatened the economy and local food security. Farmers have relied on their biocultural heritage to cope — planting traditional drought-resistant maize varieties and raising ducks in the rice fields as a pest control strategy. Farmers have accrued health benefits by eliminating pesticides and earned profits by selling their products in niche organic markets.

In Tuscany, Italy, the landscape has been shaped and preserved by centuries of human influence, but in recent times, the people have been engineering the landscape into a homogenized agricultural landscape of mechanized monocultures with no consideration of traditional farming and forestry practices. Consequences include biodiversity loss, erosion, and deteriorating quality of life for residents who have strong ties to their landscape. According to UNESCO, “Cultural landscapes originated by human action, as well as biodiversity connected to them, can only be maintained by preserving local cultural heritage. Abandonment of traditional practices can lead to reduction of landscape diversity with impacts on biodiversity, economy, and quality of life of rural communities. To overcome these problems, parts of the landscape have been included in the World Heritage Sites list (Medici Villas and Gardens). At the same time, ecological restoration of agricultural and natural areas has spurred tourism, revitalized local foods production, and led to the creation of markets for locally grown food that help preserve Tuscan culture.

Protecting the biosphere comes down to making sure enough ecosystems around the globe maintain their structures and functions. A strong appreciation of biocultural heritage is a key to doing this job, especially in the face of pressures from ongoing economic growth. Local economies in which people maintain a sense of place and a sense of their ecological and cultural limits provide an alternative, resilient model to the infinite growth paradigm.

Claudia Múnera is a conservation biologist and the director of CASSE’s Colombia Chapter.