Natural Capital: The True Wealth of Nations

Economists have still not caught up with the most important capital of all: Natural Capital.

Last year the UN Climate Change Convention met in Copenhagen, attracting an incredible media frenzy. In a month's time its sister Convention on Biological Diversity will meet in Nagoya, to discuss why whole species are moving into extinction at a rate that is (barring the loss of the dinosaurs) unprecedented in the entirety of the fossil record of life on this planet. So far this convention has met with total radio silence from the world's press. Why?

Top of the agenda will be the idea of Natural Capital. One of the great advances in economics over the past 100 years was the realization that there is such a thing as human and social capital. A well-functioning judicial or education system is just as much part of the wealth of a nation as its roads, ports and factories. But the irony is that economists have still not caught up with the most important capital of all: Natural Capital.

Natural capital can be defined as the benefits that accrue to human society from the different species of life that inhabit our world. Classical economics values things by seeing how much someone will pay for them. But this is where classical economics is wrong. What it fails to account for are all the "externalities"-- the services people regard as free goods: pollination services, flood protection, climate regulation, soil stabilization, carbon sequestration. Although immensely valuable, these wider benefits do not accrue to the individual property owner. They are benefits to the community at large. Because they are not captured by the land owner they do not feature in his decision about how to dispose of the land. His economic benefit increases. Everyone else's is reduced.

Last month saw the fifth anniversary of the sacking of New Orleans by Hurricane Katrina. In that tragedy 1,800 people died, damage has been estimated at up to $125 billion. Today a new 350 mile strong system of levees is being built at a cost of $16billion. Many saw this as an engineering failure: politicians and administrators had failed to maintain the levees around that city with devastating consequences. That is only partly true. It was actually the inevitable consequence of the failure to properly value Natural Capital.

In 1956 the U.S. Congress gave approval for the construction of The Mississippi River Gulf Outlet (MRGO). The economic case seemed overwhelming. This man-made navigational channel would reduce the passage by 40 miles and straighten the route making it a safer and more efficient passage for shipping than the winding channels of the Mississippi River below New Orleans. MRGO was cut through are shallow estuarine waters and sub-delta marshes. Much wetland was lost by the original excavation, but more important has been the soil erosion and rise in salinity that has seen the destruction of the cypress swamp.

Over 120,000 square miles of wetland habitat have been lost on the Lower Mississippi Basin. Recently the US Army Engineering Corps made an astonishing admission: every levee that had wetland protection in front of it remained intact. Every levee that had no wetland protection was breached.

In 50 years time we will look back and say that our governments were economically illiterate. They simply did not understand the true value of the most important service providers on our planet. We will marvel that they failed to capture and make explicit the value of Natural Capital and ecosystem services in their national accounts.

Barry Gardiner is Labour MP for Brent North and shadow minister for Energy and Climate Change. 

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Is there such a thing as responsible betting?

Punters are encouraged to bet responsibly. What a laugh that is. It’s like encouraging drunks to get drunk responsibly, to crash our cars responsibly, murder each other responsibly.

I try not to watch the commercials between matches, or the studio discussions, or anything really, before or after, except for the match itself. And yet there is one person I never manage to escape properly – Ray Winstone. His cracked face, his mesmerising voice, his endlessly repeated spiel follow me across the room as I escape for the lav, the kitchen, the drinks cupboard.

I’m not sure which betting company he is shouting about, there are just so many of them, offering incredible odds and supposedly free bets. In the past six years, since the laws changed, TV betting adverts have increased by 600 per cent, all offering amazingly simple ways to lose money with just one tap on a smartphone.

The one I hate is the ad for BetVictor. The man who has been fronting it, appearing at windows or on roofs, who I assume is Victor, is just so slimy and horrible.

Betting firms are the ultimate football parasites, second in wealth only to kit manufacturers. They have perfected the capitalist’s art of using OPM (Other People’s Money). They’re not directly involved in football – say, in training or managing – yet they make millions off the back of its popularity. Many of the firms are based offshore in Gibraltar.

Football betting is not new. In the Fifties, my job every week at five o’clock was to sit beside my father’s bed, where he lay paralysed with MS, and write down the football results as they were read out on Sports Report. I had not to breathe, make silly remarks or guess the score. By the inflection in the announcer’s voice you could tell if it was an away win.

Earlier in the week I had filled in his Treble Chance on the Littlewoods pools. The “treble” part was because you had three chances: three points if the game you picked was a score draw, two for a goalless draw and one point for a home or away win. You chose eight games and had to reach 24 points, or as near as possible, then you were in the money.

“Not a damn sausage,” my father would say every week, once I’d marked and handed him back his predictions. He never did win a sausage.

Football pools began in the 1920s, the main ones being Littlewoods and Vernons, both based in Liverpool. They gave employment to thousands of bright young women who checked the results and sang in company choirs in their spare time. Each firm spent millions on advertising. In 1935, Littlewoods flew an aeroplane over London with a banner saying: Littlewoods Above All!

Postwar, they blossomed again, taking in £50m a year. The nation stopped at five on a Saturday to hear the scores, whether they were interested in football or not, hoping to get rich. BBC Sports Report began in 1948 with John Webster reading the results. James Alexander Gordon took over in 1974 – a voice soon familiar throughout the land.

These past few decades, football pools have been left behind, old-fashioned, low-tech, replaced by online betting using smartphones. The betting industry has totally rebooted itself. You can bet while the match is still on, trying to predict who will get the next goal, the next corner, the next throw-in. I made the last one up, but in theory you can bet instantly, on anything, at any time.

The soft sell is interesting. With the old football pools, we knew it was a remote flutter, hoping to make some money. Today the ads imply that betting on football somehow enhances the experience, adds to the enjoyment, involves you in the game itself, hence they show lads all together, drinking and laughing and putting on bets.

At the same time, punters are encouraged to do it responsibly. What a laugh that is. It’s like encouraging drunks to get drunk responsibly, to crash our cars responsibly, murder each other responsibly. Responsibly and respect are now two of the most meaningless words in the football language. People have been gambling, in some form, since the beginning, watching two raindrops drip down inside the cave, lying around in Roman bathhouses playing games. All they’ve done is to change the technology. You have to respect that.

Hunter Davies is a journalist, broadcaster and profilic author perhaps best known for writing about the Beatles. He is an ardent Tottenham fan and writes a regular column on football for the New Statesman.

This article first appeared in the 05 February 2015 issue of the New Statesman, Putin's war