TRANSCRIPT

The Green Alliance Podcast | The Dasgupta Review: how can we implement nature into economic decision making?

SPEAKERS

Prof. Anusha Shah, President of Institution of Civil Engineers (ICE), Michael Mainelli, Lord Mayor of the City of London, Sophia Greacen, policy adviser, Green Alliance.

 

Sophia Greacen:

Hello and welcome to the Green Alliance podcast. We are the charity and think tank that is all about achieving ambitious leadership for the environment. I’m Sophia Greacen, Policy Advisor at Green Alliance. For the last year, I’ve been working on our implementing desktop to project, where we’ve been looking at ways to help implement in UK policy the groundbreaking findings of Dasgupta’s research. In this episode, you’ll hear some highlights from our event in April where we convened people from business, finance, government and civil society to discuss ideas for implementing the review into economic decision -making. With speeches from Professor Anusha Shah, Senior Director of Resilient Cities at Arcadis, and Professor Michael Mainelli, Lord Mayor of City of London.

Commissioned by the UK Treasury and published in 2021, the Dasgupta Review set out the case for changing our economic system to reflect the fact that the economy does not exist outside of nature, but is embedded within it and is bound by its limitations. The findings of the Duskopter Review were groundbreaking, but three years on from publication and they’ve been largely ignored by government. For the past year, we’ve been working on specific policy ideas to implement aspects of the review, with the aim of getting the UK economy step by step closer to a Dasgupta aligned vision of an economy that values, maintains and enhances nature. Our work focuses on several areas, the need for pro -investment and greener fiscal rules, growing nature markets, greening central banks, introduction of a green taxonomy that takes nature restoration into account, and rethinking GDP as a measure of wealth. So far, we’ve published work setting out the state of play on nature markets and how to boost the supply side. Essentially, these are the projects and credits that the private sector can invest in or buy, and we’re finalising our thinking on the role for public investment banks in nature markets and on how to boost demand, which is essentially the buyers and quantity of private funding available for nature restoration. We’ve also published a briefing on how to make fiscal rules greener and more investment -friendly. All of these can be found on the Implementing Dasgupta page of the Green Alliance website. Implementing the Dasgupta review and our policy recommendations will require engagement and advocacy from both the private and public sector.

This brings us to our April event, where we brought together people from across these sectors to inspire connections, conversations and ideas sharing around the review, and to hear from influential speakers already integrating the ethos of Dasgupta into their leadership roles in government and business. First, we heard from Professor Michael Mainelli, Lord Mayor of the City of London, who reflected on London’s environmental past, the risks and benefits of valuing nature, and what we can do going forward.

 

Michael Mainelli:

The City of London cares deeply about nature. We truly do, and I just, for those of you who aren’t aware, we were the first government body to introduce a Clean Air Act in the world in 1953. We are on track to reach net zero in our own operations as the corporation by 2027. And I got news for you, it is not easy. We are supporting a net zero target for the entire square mile. That’s all of our estate by 2040. And we continue to oversee a number of environmental projects. And I would pick just one. For 52 years, we’ve had an annual Thames Fishery Research Experiment, which continues assessing the state and health of the Thames itself. Now last month I spoke at an event with Sir Partha Dasgupta, organised by the Royal Society with Mansion House, and we launched at that event three seminars which have been held here. They’re looking at planetary boundaries, monitoring nature, and the overshoots on large ecosystems, and each of these coffee the quizzes I call them, are there to prod and probe except it’s thinking, really trying to identify research gaps.

The comedian Jay Leno once joked, “According to a new UN report, the global warming outlook “is much worse than originally predicted.” Which is pretty bad, when they originally predicted it would destroy the planet. Sadly, that remark was in 2007 and the difficulty is an old one and the difficulty in valuing nature is also an old one It was summed up believe it or not two centuries ago by Adam Smith, who writes “Nothing is more useful than water, but it will purchase scarce anything, and scarce anything can be had in exchange for it. A Diamond on the contrary has scarce any value in use, but a very great quantity of other goods may frequently be had in exchange for it.” And the need to engage with nature sustainably and embed our economies within it was reiterated again last week with the news that March was the 10th consecutive month to set a heat record. Now, great work has been done on valuation, much of it heroic, not least the Dasgupta review. Yet we must take care when we’re using market tools and valuation mechanisms that lead to a single number being chosen for the value of life on earth or the value of an ecosystem.

Using a market approach needs a market. So perhaps we could place a value, a market value, on one of your kidneys, assuming you have to. But would you feel comfortable with me placing a singular market value on your heart, or for that matter, your brain. But that is what many of these approaches are trying to do. If we sell the earth because it’s got a market value, are we going to find a new planet to buy and move on to instead? So do be extremely careful. The descriptive review makes a huge point about assets but it doesn’t actually define assets and an accountant would look at an asset in typically seven characteristics, cost, ownership, disclosure, valuation, existence, resilience, and benefit. Those would be a typical accountancy type approach but if you’re not going to go that level of detail don’t waft around a word that you don’t understand really look at and define it. We’re learning as While the technical costing approaches can just create a lot of analytical work to little effect. In fact, I would point you on ESG to MIT’s really damning study, which is called aggregate confusion. It’s a continuing piece of work which demolishes most of the stuff that many of the large accountancy firms would tell you is already done and dusted.

We require, in my opinion, much simpler economic mechanisms and restrictions. Carbon markets have worked. We now have 23 % of global emissions covered by carbon markets, credible carbon markets. We need to do more there. We should be looking particularly in biodiversity and nature at reserves, set -asides and corridors. They have been proven to work. So I would argue ESG analysis at the moment is insufficient. We need a different way of doing it. If you look at reserves, they help limit human sprawl at the core of much of this is just overpopulation, and if you want to keep the population at the levels it is, we need to restrict the sprawl and give diverse species habitats of their own. Corridors from roaming species, particularly elephants, appeared to work at IFAW. We funded the research in southern Africa, which led, of course, to corridors there, but also was picked up by India. and in fact we’re still doing corridors today this year one of my projects with pollinating London together which is a collaboration of nearly a hundred city livery companies and other organizations we’re creating biodiversity corridors here in the city of London small perhaps slightly pathetic but we’re trying another economic mechanism that we can deploy is hard set asides this was proven very much over the last half century on the east coast of America. If you want to build a new golf course, sure, go for it, build it. But put two new golf courses worth of land into set aside. So some of these much harder mechanisms are much simpler than trying to do some of the economic and asset -based costing that many of the analysts would like.

I would end on one last point, which I’m quite passionate about, us exploring flooring, land value capture may sound technical to you. I might point out the Georgians were promoting this in the 1800s, it’s actually I believe Lib Dem policy and I’m not a Lib Dem. Land value capture seeks to ensure the fair distribution of increases in the value of privately owned land between landowners, the local community and government. And if you want to see it in action and at the same time shatter a common misperception. I challenge you to search for London and Hong Kong on Google Maps. If you search for London, you’ll get the M25. Make sure you’ve got the scales the same way. You’ll see this M25 equivalent for Hong Kong. You’ll see the surrounding sea, and you will see a swath of greenery that envelops one metropolis, but not the other, but try guessing which is the green metropolis. Spoiler alert, despite our green belt, it’s Hong Kong. Hong Kong is inordinately green. Now that’s not what I see. I was in Hong Kong two weeks ago and it certainly didn’t look very green to me, but it is. If you look at the whole southern side of the island, the new territories, and the fact that nearly half of it is sea, which is an interesting point. But why is that the case? Well it’s because starting in 1955 Hong Kong began using land value capture in the form of a land value tax. In this particular case it was an annual rent equal to three percent of the rateable rental value and extremely high rates for any use of greenfield land. This in turn encouraged the use of brownfield land and disincentivized and sprawl. So you get the sort of area where habitats are left intact. Now here we are in London, home to 40 learned societies, 70 institutes of higher education, 130 research institutes, 24 ,000 businesses and 300 languages spoken and all within two miles of where you’re standing tonight. We don’t need to go to Cambridge or Oxford. Sorry, Partha. We’ve got all of the skills that we need here and I would point out as well we have a responsibility. Our 615 ,000 workers manage 15 % of global assets under management. That’s 15 % of global assets under management in the sense of the UK managed by less than 1 % of the global population. So the UK can make a difference if we can get the economics right. So far We fail to find a way to make nature pay as a financial investment, yet we do have ways to calculate what it might be worth, and we do have some mechanisms to move a little way forward. I don’t need to tug at your heartstrings to remind you of the importance of solutions, but I think the question is, do we as society really want to address very hardly that economics, and do we really want to pay the price that is truly applied by it, or we just like the paperwork of ESG statements. So be in no doubt by combining the abundant talent of the scientific community with the unrivalled financial naus of the city’s business community, with a heart and spirit that Green Alliance is putting into all of this, I think we do have a chance of enacting meaningful change. And as I am wont to say, particularly late at night, if you’ve had a long day of discussing issues like this, I think it’s very important that tonight we are optimistic. Pessimism is for better times.

 

Sophia Greacen:

A very nice positive note to end on from the Lord Mayor there and a really interesting speech highlighting how difficult it is to place a value on nature and the different perceptions there are of what a more natural world can and should look like.
It’s certainly true that nature restoration will require land set aside for exactly that, which is why we’re advocating for landscape recovery to take up a bigger proportion of the government’s environmental land management budget, as it’s a good example of the scale of projects and cooperation needed from landowners, government and the private sector to protect and restore biodiversity in the UK. Next, we heard from Professor Anusha Shah, Senior Director of resilient cities at Arcadis who provided perspective of how industry has and can continue to take on the findings of the review.

 

Prof. Anusha Shah:

We as infrastructure professionals have a huge, a massive role to play in terms of land use change. Of course, it’s agriculture then infrastructure plays a huge point. And especially going forward, trillions of dollars of money is going to be spent on infrastructure. So it’s so critical to know why we’re building number one, where we’re building, and how we’re building. I think so far along the decades of development, somewhere with consciously or unconsciously there’s been a period of neglect, because we’ve just been rampant about construction without really thinking deeply about do we need all this to be built. And that’s why I think Sir Partha’s report was really kind of it gave a pause for all the industries, all the sectors to really think that is it enough to be just sympathetic to nature? You know, we were from complete neglect that we were just building to the time that we said, oh, actually, we should not really spoil nature because nature is quite important. It provides us all ecosystem services, the water we drink, the air we breathe, the soils need to be healthy so let’s do less harm. But I think we’ve come to a point where the biodiversity decline, the species decline is so unprecedented at a point where it’s no longer enough just to do less harm. It’s so important that every action we take in the built environment and all sectors is we have to give back to nature, We have to replenish nature. We have to revive nature. We have to increase the biodiversity we’ve taken away from nature.

So Sir Partha’s report really puts at the heart of things that the ecosystem services nature provides us. We can’t take it for granted and financial capital and natural capital actually gives us human prosperity. But we also know there’s so many examples around the world where The economic prosperity can go hand -in -hand with nature’s prosperity and human prosperity and Lord Mayor You talked about Hong Kong I was there just few months ago and I couldn’t agree more one of the things is because They get these laws. They’re very clear in their minds Even though they have less built -up area because of the land laws But equally even now within the space they have they are really trying hard and although I visited many regions around the world but the chair of the institution of civil engineers in Hong Kong is still messaging me and saying Anusha at this forum we talked about nature and we said what are the possibilities are there and there is in the heart of the city is called the River Jordan project. I was so amazed to look at the before and after pictures is like a ditch in the middle of the city and they call it river in the city. So they’ve, and I’ve seen such kind of drainage ditches in the whole of South Asia, which end up being the dumping grounds of solid waste. But what they had done is the ecologists worked very closely with engineers and they actually converted the whole channel into this beautiful gushing stream and the trappers, you know, the hydrologists worked with ecologists where they have fish, they have biodiversity, and now it’s become this nature haven in the middle of the city and I question like obviously they are quite astute with finances.

In Hong Kong they clearly saw that nature can give some financial benefits as well in terms of health and well -being in terms of capturing carbon in terms of helping when you have excessive flows and slowing down the water in heat risk when you know it’s like scorching heat which is going to get worse and worse and giving that pleasant that feeling of well -being what is not to like about these. The point I’m trying to make is this whole debate this whole construct around the financial people can’t see the return on investment, I think they’re not looking deep enough – there is return on investment. So my agenda my presidential agenda is how do you mainstream it? How do you flip the approach and not say on this project, can I do a little bit of a sustainable urban drainage system or a little wetland or green blue infrastructure? It’s about fundamentally thinking, is there a way where I can put nature at the heart? Is there a nature -based solution? Firstly, is there a need to build at all? Can we repurpose assets? Because that helps with carbon, that helps with everything else. And if we do need to build, have we exhausted every possibility to build with nature? And when you can’t, then blend it with grain infrastructure. And when you can’t, then go with your low carbon solutions and then go with your traditional way. You have to use concrete. I think that’s the hierarchy we need to use.

So within the industry, we have something called PAS -2080, very technical terms, which is publicly available specification. I wish they had given a more simple term for it. But what it does is the industry got together and looked at how do you,
it’s called the carbon management tool and looks through the whole value chain in the built environment. It’s pretty much looking at this hierarchy but making sure the financial regulators are there and everyone plays a part. So that’s happening. There are clear projects like Clifton Wastewater treatment works in Yorkshire, which has put nature at the heart, they pretty much they could have gone for treating the wastewater with chemicals and the traditional route, but they looked at watershed, they looked at wetlands, and they can clearly see the benefits of how much it’s going to cost. So there are lots and lots of examples. I’ve been talking to Nature Asset Initiative in Canada, who are actually putting nature as an asset in their asset registers. So, you know how you have assets of buildings and bridges and the grey assets, nature needs a line in the asset registers and that has really helped them. So, one of the cities in Canada, in Roseland, where the Chief Financial Officer has changed the whole procurement policy by saying, if we can’t do it with nature, we have to find every other possibility and also look at the only last option is just go traditional ways. And the chief financial officer has said, this is not for engineers, this is not for scientists, it is pretty much for accountants to really kind of thinking. So, you know, all those things are happening. And I must also give a shout out to one of my, like when I was chair for IC London and Olly Broadbent, who was a chair for the graduates and students, and him, along with James Norman, who’s a professor in Bristol University, have written an Excellent book the regenerative design for a structural engineer, please I although it say structural engineer But you know all they talk about is how do we make sure our built environment is where?

Human beings live with living ecosystems it talks about everything from mindset to thinking deeply about where we’re Sourcing the materials from how do we think about even things like we talk about projects and say is it safe enough but how do we get it at the same par as what else can we do to bring environment back how do we you know you’re just those positive conversations and also kind of thinking deeply about are we using local materials are we using local skills you know how do we build resilience around that so I think that all that is happening but we just want to make sure that it’s done at a level which is kind of you know mainstreaming all of that. One of the, he’s a biologist, Daniel Wall, talks about regeneration. And he says something quite profound, I thought, was, “It simply can’t be emphasized enough that our culturally dominant narrative of separation from power over and ownership of nature creates the mistaken belief that we can manage ideologically innovate and carbon trade ourselves out of the evolutionary dead end We have been heading in for a couple of centuries. I think it’s really important to understand that we Can’t be dominant over nature We have to have nature at the heart of it and really kind of build in the healing power of nature And I think as I said, you know nature is still ready to help us So I would just say there’s lots of solutions out there, but my call to action for all of you, whether you’re an engineer or a scientist, ecologist or a financial professional, yes, we can get, we want the return on investment. But as doctors and others, sometimes you can’t value every single bit of things. It’s good to get value, but financial value is not everything. How do you value happiness, health and well -being? I think a time has come that get the return on investment in terms of monetary value. There are lots of tools available, but in addition, start valuing health, happiness, and I think we are not going to go far. So this will at least help us to really kind of speed up things. And there’s no perfection. There’s no perfect tool out there. So all I’m saying is even with the tools we have, it is still better than giving zero value to nature. So let’s start putting nature and people at the heart of all our decisions. As engineers, all I can say is we need to connect with all of you to really make this happen. And as Nelson Mandela says, it all seems impossible until it’s done. So thank you very much for listening.

 

Sophia Greacen:

It’s really encouraging to hear from both speakers how seriously their sectors are taking the importance of our reliance on nature and the Dasgupta Review itself, and interesting to have a number of examples of work going on that we can look at and learn from. The UK is one of the most nature depleted countries in the world, so Professor Shah’s point that it is no longer enough to do less harm cannot be emphasised enough. And on looking deeper for returns on investment in nature, our upcoming work on nature markets will delve into that a little, exploring why there is often a mismatch between what different organisations and market players mean by invest and return in the context. More specifically, it’s great to hear how the infrastructure and civil engineering sectors could and ought to consider this challenge of incorporating nature restoration into projects and across the sector by default. As the Dasgupta Review and Professor Shah point out, we cannot expect to innovate our way out of the boundaries set by nature’s limited supply of goods and services, we are bound by this ultimate restriction, and we need to start measuring and genuinely valuing other sources of wealth beyond GDP. More on this to come from Green Alliance.

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