Paying off the debt

The recent study by Deutsche Bank (The Economics of Ecosystems and Biodiversity – aka TEEB) argues that the cost of the current financial crisis is miniscule compared to the annual cost of the environmental destruction we are doing to the rainforests. The study analysed all the “services” that the forests deliver by being there (carbon capture, water filtration etc) and looking at the costs of losing those services, or providing them ourselves by other means. The study estimates the costs in lost “natural capital” as being between $2 and $5 trillion per annum, compared to $1 to $1.5 for the current financial losses on Wall Street.

Both the BBC and George Monbiot report and comment on this study.

One thing that strikes me is a conceptual link between this study and the reports over the last year on personal debt in the UK. When times were good, we spent and spent and spent until levels of debt soared out of control. There are probably lots of people now wondering how they can pay back the interest on their debts, before they can even start to think about paying off the capital.

In the same way, by taking resources out of the natural world, we are borrowing against this natural capital, with no concept of how we’re going to pay it back. At some point, in the same way we’re seeing now with the economic crisis, that capital is going to run out. And if that happens, it’s difficult to see what environmental “bank” or “government” is going to jump in and magically supply a fix to sort it all out. And even if we could get round it, the “interest” will be the cost of clearing up the mess we’ve already made.

Translate all the lessons we’re currently learning from the disintegration of our deregulated and frankly free-wheeling economy into the various challenges that our attitude towards our environment pose and you have a fairly stark view of a possible future for all of us. Yet as with debt, the earlier we can reduce our borrowing, the less painful will be the payback in capital and interest. The quicker we start tackling the environmental issues highlighted in the report, we more able we will be to make long-term small steps to save ourselves, instead of the big, painful shock moves that will be the inevitable outcome.