Our economic system needs to change, and fast

Jenna Coull, Principal Economist, The RSPB

Today, we're responding to an interview published in The Guardian this month with James Meadway , previously economic adviser to the Labour Party and the host of the climate podcast 'Macrodose'.

Meadway’s position is that?economists need to change how they view and treat the environment. He is right to say that the economy is embedded in nature.

The time to act and implement solutions is now.

The Economy is Embedded in Nature

Meadway joins a growing number of economists – including those at the RSPB – who recognise the limitations of our existing economic system and are advocating for change.

The Dasgupta Review of the economics of biodiversity emphasised that protecting and investing in nature is vital to sustain our economy in the long term.

At the RSPB, we want to see our economy transition to one that is nature-positive and net-zero, where people work together to deliver nature recovery and improved wellbeing for all.

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Less chat, more action

Meadway suggested that economists have not always considered the environment fully [1] . For example, our traditional GDP measures of economic growth fail to account for environmental degradation; the UK's regular position as a top global economy masks its steady decline to the bottom 10% of countries for biodiversity health [2] . Alternative measures are being explored, such as Natural Capital Accounts, but these are not yet mainstreamed and influencing decision-making.

"We need to use all the economic tools we do have...to do better for nature"

We need to use all the economic tools we do have, such as taxation and regulation, to do better for nature. 'Enabling a Natural Capital Approach ' , the Treasury's guidance on natural capital approaches in policy assessment, is not widely used in government and this needs to change. Businesses are encouraged to assess their nature risks and impacts through approaches such as the Taskforce on Nature-related Financial Disclosures (TNFD ) but are not regulated to do so.

Consumers need to be incentivised to make sounder environmental choices from the food they eat, to the clothes they buy or the cars they drive [3] .

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Invest now, save later

We know that it pays to protect nature now rather than paying to restore it later. Last year, BloombergNEF estimated it would cost $166 billion per year to restore the planet's most fragile ecosystems, compared to $1 trillion if we left it until 2030 [4] .

"We know it pays to protect nature now rather than paying to restore it later"

Previously, we have discussed the finance gap for nature, the gap between environmental policy and the funding committed to it [5] . There is some debate around what the total amount is – the GFI estimates it at ￡6 billion a year for the next 10 years – but it is sizable. As well as public funding, private investment needs to substantially scale up.

?A recent report published by LSE economists, including Nicholas Stern, on 'Boosting Growth and Productivity ' points to a desperate need to invest in low carbon infrastructure, including the natural environment, to boost the UK economy. Substantial increases in public investment – at around ￡26 billion a year – would also generate twice as much accompanying investment from the private sector.

The National Audit Office issued a report 'Environmental Tax Measures' in 2021 looking at the role of tax measures to implement environmental policies, but the focus of the Exchequer was on the revenue raised rather than the environmental impact of these measures.

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A call for action: The Spring Budget

?While progress is being made, more action is needed on nature. With over half our economy dependent on nature, it is time for the next big economic statement – the forthcoming Spring Budget – to move this agenda forward in four key areas:

• Address the Finance Gap: We need to see a full plan from the government to set out how the finance gap will be addressed. The decline in nature budgets needs to be reversed and nature-positive budgets, such as nature-friendly farming, need to be increased.
• Reform the Fiscal Framework for Nature: Encourage investment in nature and penalise environmentally damaging behaviour through well-designed tax and subsidy systems.
• Strengthening Nature Markets: Confidence in nature markets – a key way to bring in private investment – is low. Government intervention is necessary to ensure these markets operate with high integrity and to scale up action [6] .
• Accelerate Green Energy Development: Implement new policies to boost green energy growth, through measures such as home upgrades, and funding clean energy infrastructure.

Nature's survival and our long-term economic health are dependent on a step change.

The time for action is now. We should not lose hope that the current economic system cannot adjust to do a better job for nature, but likewise, we cannot procrastinate any longer.

Nature's survival and our long-term economic health are dependent on a step change.