Photo: The problem with conventional economics and the role of natural capital valuations

(Credit: Kris Krug)

By Michelle Molnar, Environmental Economist

British Columbia's Howe Sound region is captivating. This ancient riverbed where forested mountains climb from the sea is also home to humpback whales, Pacific white-sided dolphins and spawning salmon and herring — and, as might be expected in such a beautiful area, a growing human population. Like all societies, the region's communities must decide how to direct limited resources to their best and highest use. This question of how best to use limited resources is the domain of economists. It is the most fundamental economic problem, yet some community members are wary of the development advice they're getting from these specialists. Why? Because they are well aware of the consequences of omitting key variables from the economic calculus.

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Decades of hard work and tens of millions of dollars have gone into cleaning up the waters of Howe Sound. The legacy of industrial pollution has remained long after the mine, pulp mills and chemical plants closed, leaving a considerable portion of the clean-up costs to residents. Conventional economics fails to recognize that we live in an interconnected, multi-dimensional world of natural, social and economic realms. And just as economic benefits can ripple through a community, economic costs can do the same; yet the costs to nature and society are rarely captured. They should be.

Pollution in the sound created a marine dead zone, an area of water so polluted there was not enough oxygen to support life. The commercial salmon and shellfish fisheries closed, herring stopped spawning and recreational catch limits were imposed for salmon and rockfish. In addition to the obvious impacts to the local fishing and tourism industries, residents for whom fishing is a way of life — particularly First Nations — had no choice but to adjust.

Today, as marine life returns and fisheries reopen in the midst of a surprising marine revival, the return of industry also looms. Although people want a healthy, diverse economy they also want to know the costs of proposed nearshore developments. We've estimated the economic value of nature's services in Howe Sound to bring light to some of those missing costs in the economic analysis. The economic value of healthy ecosystems to provide food, clean water, a stable climate, protection from natural disasters and a place to relax, recreate and reconnect with nature is estimated at billions of dollars each year. These services underpin our health, economy and culture, yet they are not included in decision-making in any systematic manner. That needs to change. This study, Sound Investment: Measuring the Return on Howe Sound's Ecosystem Assets, is part of that change: a living document for the region's communities to use so that decision-making is no longer based solely on conventional economic priorities.

February 19, 2015
http://www.davidsuzuki.org/blogs/healthy-oceans-blog/2015/02/the-problem-with-conventional-economics-and-the-role-of-natural-capital-valuatio/

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