01 jun 2017
Capitalising Nature? // The Nexus Approach for a Green Economy
By Haeun Kim. Many politicians and economists would agree with quantifying the value of nature. Decision making at every level of society would be affected. At a single glance, consumers will be provided a measurement representing how much of nature they are consuming. Economists can incorporate nature through its monetary value; investors can factor in environmental risks and opportunities, while government officials will have the policy tools to reflect the environmental agenda. However, making this work in practice is neither as easy nor simple as it sounds.
Thought piece by Haeun Kim, Intern, Water Resources Management Unit. Haeun attended the PAGE Ministerial Conference 2017 in Berlin. This article was originally published on UNU-FLORES news site and is reposted here with kind permissin by the author.
Many politicians and economists would agree with quantifying the value of nature. Decision making at every level of society would be affected. At a single glance, consumers will be provided a measurement representing how much of nature they are consuming. Economists can incorporate nature through its monetary value; investors can factor in environmental risks and opportunities, while government officials will have the policy tools to reflect the environmental agenda. However, making this work in practice is neither as easy nor simple as it sounds. Perhaps it is no surprise that the term “Natural Capital” was the buzzword among approximately 40 ministers, CEOs, high-level representatives of UN entities, non-governmental organisations as well as over 300 sustainable development experts at the PAGE Ministerial Conference 2017 (27–28 March 2017) held in Berlin. Hosted by PAGE (Partnership Action for Green Economy), a platform of five UN entities – UN Environment Programme, International Labour Organization, UN Development Programme, UN Industrial Development Organization, and UN Institute for Training and Research – various topics from inclusive growth, investment, to lifestyle were covered in an effort to share good practices and efforts in pursuing an inclusive green economy. Green economy, according to UN Environment’s definition, is an economy that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities. Nature as capital in drawing pro-environmental decisions is one of the fundamental concepts that the idea of green economy is based upon. As implied by the term “capital”, deriving Natural Capital is an effort to convert the value of environment into numerical terms to make it calculable. The simple yet seemingly innocuous term is not without its problems, and ideological flaws lie beneath the whole concept. First, the term itself implies somewhat conflicting views on nature. Nature is seen on one hand, as a commodity to be spent, and on the other, as a value to be preserved. Second, by defining nature as economic goods, “Natural Capital” implies the exclusion of people who cannot afford it. Instead of benefitting those who need it, capital is used to benefit first those who can pay for it. Certainly, we need nature for our own survival, and perhaps pricing nature and letting it follow the rule of supply and demand can help preserve nature. Yet, we must ask how we can best utilise nature in the least harmful manner, and how we can pursue inclusiveness in the capitalisation of nature should the idea of ‘Natural Capital’ truly support the transition toward a green economy. The conceptual backdrop of the Nexus Approach can shed light on some of these questions. The novelty of the Nexus Approach is that it sees nature as a bigger concept than the Nature Capital discourse does. Nature consists of a system that we cannot live apart from, not just a set of end products we purchase at the market. Thus, it is the ecosystem services and resources that we should evaluate and put a price on. “What we need now is a great acceleration – a new green revolution – to make sure we achieve inclusive green economy while there is still enough green to go around.”
– UN Environment Executive Director Erik Solheim, opening the PAGE Ministerial Conference 2017 The Natural Capital lens, on the other hand, sees nature as a set of separate, independent commodities, ignoring the delicate complexities of nature. The Nexus Approach, however, tries to capture the social and environmental benefits and examines the interrelatedness and interdependencies of environmental resources. This integrated and systemic perspective seeks the methods how we can utilise nature in the most optimal way. The Nexus Approach also puts a strong emphasis on the human right to nature. Smarter use of resources and integrated management leads to a more sustainable growth, but the environment itself is the human ‘life supporting system’ on which the poorest depend the most (Hoff 2011). The Nexus Approach is not just about efficiency but also about equity. Commodities are only for those with the economic means to access them. But nature is a common good that should be claimed by anyone according to their human right, not by their financial status. What the green economy aims for is to transform economies into drivers of sustainability and social equity. Neither sustainability nor social equity should be compromised for the sake of the other. The concept of Natural Capital has been devised to solve this conundrum, but it has critical drawbacks. The Nexus Approach, which sees nature as an integrated system instead of a set of commodities and as commons, must be considered and further discussed not only to help complement the Natural Capital discourse but also to directly support the transition to a green economy.
Haeun attended the PAGE Ministerial Conference 2017 in Berlin.
Many politicians and economists would agree with quantifying the value of nature. Decision making at every level of society would be affected. At a single glance, consumers will be provided a measurement representing how much of nature they are consuming. Economists can incorporate nature through its monetary value; investors can factor in environmental risks and opportunities, while government officials will have the policy tools to reflect the environmental agenda. However, making this work in practice is neither as easy nor simple as it sounds. Perhaps it is no surprise that the term “Natural Capital” was the buzzword among approximately 40 ministers, CEOs, high-level representatives of UN entities, non-governmental organisations as well as over 300 sustainable development experts at the PAGE Ministerial Conference 2017 (27–28 March 2017) held in Berlin. Hosted by PAGE (Partnership Action for Green Economy), a platform of five UN entities – UN Environment Programme, International Labour Organization, UN Development Programme, UN Industrial Development Organization, and UN Institute for Training and Research – various topics from inclusive growth, investment, to lifestyle were covered in an effort to share good practices and efforts in pursuing an inclusive green economy. Green economy, according to UN Environment’s definition, is an economy that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities. Nature as capital in drawing pro-environmental decisions is one of the fundamental concepts that the idea of green economy is based upon. As implied by the term “capital”, deriving Natural Capital is an effort to convert the value of environment into numerical terms to make it calculable. The simple yet seemingly innocuous term is not without its problems, and ideological flaws lie beneath the whole concept. First, the term itself implies somewhat conflicting views on nature. Nature is seen on one hand, as a commodity to be spent, and on the other, as a value to be preserved. Second, by defining nature as economic goods, “Natural Capital” implies the exclusion of people who cannot afford it. Instead of benefitting those who need it, capital is used to benefit first those who can pay for it. Certainly, we need nature for our own survival, and perhaps pricing nature and letting it follow the rule of supply and demand can help preserve nature. Yet, we must ask how we can best utilise nature in the least harmful manner, and how we can pursue inclusiveness in the capitalisation of nature should the idea of ‘Natural Capital’ truly support the transition toward a green economy. The conceptual backdrop of the Nexus Approach can shed light on some of these questions. The novelty of the Nexus Approach is that it sees nature as a bigger concept than the Nature Capital discourse does. Nature consists of a system that we cannot live apart from, not just a set of end products we purchase at the market. Thus, it is the ecosystem services and resources that we should evaluate and put a price on. “What we need now is a great acceleration – a new green revolution – to make sure we achieve inclusive green economy while there is still enough green to go around.”
– UN Environment Executive Director Erik Solheim, opening the PAGE Ministerial Conference 2017 The Natural Capital lens, on the other hand, sees nature as a set of separate, independent commodities, ignoring the delicate complexities of nature. The Nexus Approach, however, tries to capture the social and environmental benefits and examines the interrelatedness and interdependencies of environmental resources. This integrated and systemic perspective seeks the methods how we can utilise nature in the most optimal way. The Nexus Approach also puts a strong emphasis on the human right to nature. Smarter use of resources and integrated management leads to a more sustainable growth, but the environment itself is the human ‘life supporting system’ on which the poorest depend the most (Hoff 2011). The Nexus Approach is not just about efficiency but also about equity. Commodities are only for those with the economic means to access them. But nature is a common good that should be claimed by anyone according to their human right, not by their financial status. What the green economy aims for is to transform economies into drivers of sustainability and social equity. Neither sustainability nor social equity should be compromised for the sake of the other. The concept of Natural Capital has been devised to solve this conundrum, but it has critical drawbacks. The Nexus Approach, which sees nature as an integrated system instead of a set of commodities and as commons, must be considered and further discussed not only to help complement the Natural Capital discourse but also to directly support the transition to a green economy.
Reference
Hoff, Holger. 2011. Understanding the NEXUS. Background Paper for the Bonn2011 Conference: The Water, Energy and Food Security Nexus. Stockholm: Stockholm Environment Institute.About the Author
Haeun Kim has been an Intern at the Water Resources Management Unit of UNU-FLORES.Haeun attended the PAGE Ministerial Conference 2017 in Berlin.