Environmental wealth – the air we breathe, the water we drink, the land we live on, cultivate and enjoy – is a large component of human prosperity. Most of the things that we want and need in life are dependent upon it. Climate change is affecting the way in which those resources are used, and will do so much more as rainfall patterns are disrupted, sea levels rise and populations are displaced from previously fertile soils and inundated coastlines. Elsewhere, synthetic chemicals pervade soil, plant and river life, disrupting natural cycles such as pollination and the animal food chain, while in some cities the air is so laced with pollutants that it is dangerous to breathe.
Economic activity is largely to blame, and in measuring that activity GDP takes no account of the losses experienced by the many victims of environmental degradation. Nor does it account for losses to the physical environment in the form of extraction. Oil, gas and other minerals are finite resources in the earth’s crust – capital assets that are being rapidly depleted – but GDP ignores their asset value and instead of registering a balancing loss when they are consumed it treats them as a free input to the process of extraction. And when oil, gas and coal are burned, the greenhouse gases they emit are seen not as a cost to be offset against GDP, but as an opportunity to generate more GDP in the clean-up.
Similarly, environmental goods such as air, water and landscape are only recognised by GDP when they are capable of being monetised.