Focus on Sustainability: Measuring the Wealth of Nature

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Sustainability scientist Ann Kinzig, a professor in ASU’s School of Sustainability and the School of Life Sciences, explains why we need to do a better job of measuring the value of nature if we hope to achieve a sustainable future.

Ted Simons: An ASU sustainability scientist says in order to achieve a sustainable future we must account for both the nature of wealth and the wealth of nature. But professor Ann Kinzigs: so far, we're only about half way there. Kinzig is the chief research strategist for the global snout of sustainability and also a professor in both the school of sustainability and the school of life sciences. I recently spoke with Ann Kinzig about her ideas on wealth and nature. Thanks for joining us tonight on "Arizona Horizon."
Ann Kinzig: Thank you for having me.
Ted Simons: And the idea of measure measuring the nature of wealth but not the wealth of nature. Talk to us more about this.
Ann Kinzig: So I connect this had notion of wealth to sustainability, and if you look at the definitions of sustainability, they are all basically focused on enhancing or delivering the wellbeing for future generations, our obligations to the future. And one of the most popular definitions was given by the bruntland commission report, and it says that sustainable development is development that meets the needs of current generations, without compromising the ability of future generations to meet their own needs, and on the face of it, that sounds great. It's an appealing, ethical principle that we should do that, that we cannot enhance our wellbeing by undermining the wellbeing of our descendants, but the problem is we cannot possibly know whether we're meeting that go goal. And how do we know whether our actions, or decisions today are enhancing or undermining the wellbeing of the future generations? The definition of sustainability that I like focuses on, on the concept of wealth. And now, the word for wealth, actually, comes from an old English word, wheel, which means wellbeing. And so, our wealth actually is the sum total of all of our assets. That contribute to our wellbeing. The problem, is we tend to focus too narrowly on particular aspects of wealth. So if we look at societal wealth, I think that we know that it includes the money that we have in the bank, this stocks, and Etc. And we know that it includes the things that we produce. Buildings and roads and cell phones and, and this table. So, we have that under control. We measured it perfectly. But, it also includes human capital, and it includes this notion that there is wealth in people's skills and knowledge and their creativity. And, and most importantly, and most overlooked, it includes the wealth and nature, nature provides us with a whole series of goods and services that deliver human wellbeing. And we don't tend to account for that wealth and nature very well at all.
Ted Simons: How do we account for that wealth?
Ann Kinzig: Well, so the closest that we have to wealth accounting, in this country, and in most nations, gross domestic product, everyone has heard of that, and what gross domestic product measures, is the, the value of marketed goods and services produced in the economy in a given year, that's what it measures. It is an imperfect measure of wealth. That's the goods and services that our assets can produce but not measure of the assets themselves. And so, we tend to assume if gdp is staying constant, or rising, that the value of the assets, that give rise to those goods and services is also rising. But, that does not have to be true. I could be creating the economy, the economy could be creating these goods and services by eating into the asset base, as it were. And I could create an income for myself this year by eating into my savings, but I cannot sustain that. So, we need a more direct measure of the asset base, that's one problem with gdp. But at least we are getting some measure of the value of goods and services produced in the market. So, for anything that we market, we look at prices as some measure of the value. The problem is, a lot of nature's services are not exchanged in the marketplace, so, we're only beginning to create measures for how we would value nature.
Ted Simons: And, I think you have given an example to where, you can measure the wealth in a tree, when you have cut it down, and you can use it for products, but, how do you measure the wealth of a tree still standing?
Ann Kinzig: Ok, so the value, I'm not an economist but let me tell you a bit of economics as I understand it. The value of any asset is what they say is the discounted stream of benefits that asset can provide. So, what we have to do for tree or for lake or riparian system, a whole forest, is ask what services that can provide to us over time and when the value of those services are. And now, those services fall into three basic categories. From our perspective. And one set of services of nature is the provisioning services, things that we use or consume. So, food, fiber, fuels. Actually, because those are marketed we have pretty good measure of their value. Not perfect, but pretty good. And the second set of services are what we call cultural services so these are the opportunities for recreation, the moral, satisfaction we might get from being good stewards, and a chance for spiritual renewal from being out in something that's beautiful and for the people of Arizona, and many other places, a cultural identity that comes with particular landscapes. And we account for some of those services reasonably well, and we pay money for recreation for instance, and others we don't do as well at, and the real category of overlooked service this is nature are what we call the regulating services, these are the protection that nature offers, so, for instance, the eco-systems can regulate the mosquito population and is they can carry diseases, so it can offer disease regulation, and a vegetated watershed, can reduce erosion or reduce the likelihood of flash floods. And nature offers protection in a variety of ways. We don't have a good handle on the, on that value of nature.
Ted Simons: I was going to say it, almost sounds as though you would have to look as far as to accommodate nature?
Ann Kinzig: You do need -- well, you cannot always -- not all commodities lend themselves to being put into the market. There are these things called public goods. National defense is one of them. We would never try to provide our national defense by asking individuals to buy aircraft carriers in the marketplace. So, by definition, you need Governments to provide public goods. That's going to also be true for some of nature's services, so, while we say that we have to pay for the things that we value, we don't always have to pay in the marketplace. We can pay by deciding to set land aside. We can pay by creating regulations that prevent certain erosion of natural capital. And so, yes, in a sense, we do have to commodify, we need to understand the value to us, and make sure we are securing it relative to that.
Ted Simons: Are we, we ready, though to, understand the natural capital, and to appreciate natural capital, and then to do something tangible to have that capital increased?
Ann Kinzig: Yes, we're ready. It's not going to be perfect when we first start so there are groups trying to calculate what they would call inclusive wealth. The sum total of produced in financial capital that we understand reasonably well, human capital that we have something of a handle on. We understand the value and labor and innovation, for instance, and natural capital, and they are starting to create the methods that would allow us to calculate inclusive wealth. They are not complete yet but we have a lot of scholars, economists and other people who have been working on that, this, they have preliminary measures of inclusive wealth, and if we start now, and improve those methods, it will get better, and it will give us much better understanding of the assets that we're managing, that support human wellbeing.
Ted Simons: If we do head in that direction, or at least appreciate where that direction is, but with that in mind, my last question, what kind of response have you and other people working in this field and on these ideas, what responses are you get something.
Ann Kinzig: Some positive and some, I think, more guarded. It's always hard to change the way that we do things. I think if you just talk to people logically and say, shouldn't we understand our are wealth? Shouldn't we understand whether the decisions we're taking today enhances or undermines that wealth? They would agree. The devil is always in the details. How do you do this accounting? And that's where people get bit less comfortable. It might alter the way that we have to do things, it might alter the way that we have to think about progress. Again, I think that the world in many ways is ready for that. I think that the latest recession tells us that maybe we should be rethinking the way that we think about progress in human wellbeing, and I think that, that ideas like inclusive wealth are sense be way forward for delivering sustainability.
Ted Simons: It's fascinating information, a lot to think when there. Thank you very much for joining us. We appreciate it.
Ann Kinzig: Thank you for having me. And that is it for now. I'm Ted Simons. Thank you very much for joining us. You have great evening.

Ann Kinzig:Professor, ASU School of Sustainability and the School of Life Sciences;

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