The Natural Resource Crisis: Humanity’s Toughest Challenge

Of all the crises facing the world today, the one with the potential for having the most profound impact on human life is the environmental crisis. The global financial crisis that began in 2008 as well as the economic crisis we are experiencing now during the Covid-19 epidemic, are mainly human and not natural catastrophes.

By employing the most appropriate human interventions, we can certainly resolve such crises, including the global inequality crisis. Through economic reform and restructuring, as well as technological innovation, production and wealth can increase and be redistributed, and poor, destitute areas can become affluent within a short time.

History witnessed how rapidly the European and Japanese economies rebounded after WWII. So, yes, an economy in crisis can, if proper means are applied, be restored rather quickly, but it is not so easy when faced with an environmental crisis. Especially not if we run out of certain irreplaceable, natural resources. 

Britain, Norway, the Netherlands, Austria and 23 other industrialized countries are importing more than half the water they consume when buying goods from developing countries.

We are currently experiencing a very grave resource crisis, an ecological “credit crunch” caused by our overuse of the world’s natural elements. And for the future of humanity, this is a far more serious problem than any financial crisis. Yet most people living in industrialized countries are oblivious to the fact that we are living beyond our means.

Most are unaware, for example, that Britain, Norway, the Netherlands, Austria and 23 other industrialized countries are, in effect, importing more than half the water they consume when buying goods such as cotton, rice, wheat, and so on from developing countries.

“We are using 50% more resources than the Earth can provide, and unless we change course that number will grow very fast— by 2030, even two planets will not be enough,” writes Jim Leape, Director General of WWF International in his organization’s 2012 Living Planet Report. ^[1]

The report concludes that if the average citizen on planet earth lived like a citizen of the USA, four planets would be required to produce enough resources.  Since the average citizen of China, with nearly one-sixth of the earth’s population will, according to Chinese planners, shortly consume as much as an American citizen, we may soon run out of many resources, especially fresh water, which is already scarce in many parts of the world. 

That is, unless we from now on make dramatic changes in the way we produce, use, and reuse goods which nature “freely” provides.

In order to understand the magnitude of this looming crisis, we need to have a better understanding of what nature actually takes care of for humankind.

Shortages of oil and other energy resources would have an enormous impact on our lives. However, the non-renewable resources we may run out of in the near future, such as hydrocarbons from crude oil and rare minerals used in the high-tech industry, are resources nature itself is not very dependent on.

Sure, a lack of these resources may destroy civilisation as we know it, and reduce the number of people the world can support, but the very functioning of the earth as a living, breathing eco-system will not be affected. With time, we must and we will invent new and more effective renewable sources of energy and find other ways to develop sophisticated technology to support our energy needs.

Further, there are aspects of the environmental crisis far greater than our dependency on non-renewable sources of energy, such as oil and coal. If our dependency on nature’s services from air, water, soil and forests are threatened on a global scale, or if global warming reaches catastrophic levels, there is no technological, economic or political solution available to counter these effects.

We cannot simply reinvent what nature has provided for us for hundreds of thousands of years. Together with the plants and the animals, we are ecological creatures, and in order to understand the magnitude of this looming crisis, we need to have a better understanding of what nature actually takes care of for humankind. We need to better understand our relationship to nature and, most importantly, the relationship between economy and the ecology of the biosphere.

No Nature, No Economy

Human beings, like all other creatures, are completely dependent on the gifts provided by nature. A report issued in 1997 by a team of biologists and economists put the ‘business services’ provided by the global ecosystem, through free pollination of crops, the recycling of nutrients by the oceans, etc. to $33 trillion, at that time twice the global GDP.^[2]

It is not clear exactly what the commonly used definition of ‘business services’ is, but regardless of what services were included in the report, it certainly did not include the total value of services provided to us by nature, which also includes how its beauty positively affects our health and wellbeing.

Yes, what is the value of a family picnic in the grass under the trees; what is the value of fresh water in a creek—to the fish, the frogs, and to human beings who relax by its banks? What is the real value nature provide us when we grow a vegetable crop in the backyard?

It is not possible to make up an economic formula or accurate price tag on neither nature’s partial nor its total value.

The many ways nature contributes to our life and wellbeing is, to say the least, priceless. We do not have any other means than nature’s to bind solar energy with carbon dioxide and water to produce organic compounds. We are totally dependent on nature to accomplish this vitally important undertaking.

Since we cannot replicate the enormous economic and aesthetic contributions made by nature, its services are invaluable to us. It is not possible to make up an economic formula or accurate price tag on neither nature’s partial nor its total value.

The great power source that fuels the works of nature is the sun. Without this source of energy, the Earth would be incapable of sustaining life. The scale of our own attempts to harvest solar energy directly, in terms of solar cells and passive solar houses, is miniscule compared to the amount of solar energy harnessed by nature through photosynthesis, water cycles, etc. Indeed, it is almost negligible in comparison.

Therefore, we must learn to more efficiently harness the energy directly or indirectly provided by the sun, including the use of wind, wave, and geo-thermal energy, so that we can continue to sustain life long into the foreseeable future on this green planet of ours. Hence, the value of the sun’s energy and its many complex functions in nature is beyond comparison, beyond any finite value in pounds or in dollars. 

In the current market economy natural capital is seen as free, or largely undervalued, and thus used up at an alarming rate.

At the end of the day, all we human beings can do is to find various ways to utilize the services nature already provide us. This observation is quite different from the labor theory of value, emphasized by both Karl Marx and Adam Smith, which stipulates that all economic value derives from human labor.

Far from it, it is nature that provides the underlying and lasting value for all wealth utilized by human society. All the technological inventions, capital investments, production hours, and infrastructure involved in creating a product is but a small part of the total capital we are using.

The total capital provided by nature in the form of land, raw materials, water, sun, air and space is by far the largest of all forms of capital, but unfortunately in the current market economy natural capital is seen as free, or largely undervalued, and thus used up at an alarming rate.   

To remedy this predicament, scientists have made various attempts to put a price tag on nature’s services. In 2011, The Department for Environment, Food and Rural Affairs in the UK announced the findings of a national ecosystem assessment, a project involving 500 experts, who had established “the true value of nature … for the very first time”.

Some of the services provided by UKs ecosystems “may in fact be infinite in value”.

The report further stated that this exercise was “theoretically challenging to complete, and considered by some not to be a theoretically sound endeavor.” Some of the services provided by UKs ecosystems, it pointed out, “may in fact be infinite in value”. ^[3]

It is clear that even the work that is attributed to human beings and accounted for in the world’s GDP is indirectly made possible by the aid of nature. Human beings cannot exist in the absence of nature, but nature can easily exist without human beings.

Given the enormous contribution nature provides, the current degradation of the natural systems that provide us with free services is a virtual threat to our very survival. If nature stops, or even reduces its provisions of beneficial, natural services, it will have drastic and immediate effects on our life. In a worst case scenario, humanity’s very survival may be threatened beyond repair.

In 2005, the United Nations Environmental Project, (UNEP), published the Millennium Ecosystem Assessment.^[4] The report, authored by 1,360 scientists from 95 countries, concluded that two-thirds of the natural machinery providing free services to humanity has been damaged by human activities. The report states that, “Human activity is putting such a strain on the natural functions of Earth that the ability of the planet’s ecosystems to sustain future generations can no longer be taken for granted.”

Economists, however, have taken nature for granted virtually since the beginning of the profession. Economists do not generally calculate the value of the free services provided by nature. Naturally, regardless of how large the contribution is, nature’s capital will not show up as a minus in the accounting books.

Just for the sake of illustration, let us say that the real value created by nature in the form of a forest is 100, and the value contributed by the cutting of the forest and using the trees is 10. If we include the value created by the forest, we would immediately see that cutting the forest would be a losing proposition, as we would lose 100 to gain 10.

If we ignore the contribution by the forest provided by nature, then we would gain 10 by cutting it down and lose nothing. That means, due to our flawed accounting methods, we have drawn the conclusion that it will add more value to cut down the forest. Indeed, we have concluded that nature’s main value is its monetary contribution. Naturally, the 100 contributed by nature may not accrue to an individual company, whereas the 10 gained from cutting down the forest will go into the profit of individuals. Hence, from the view of the company, cutting down the forest is better, even if it would make a loss for the world. And this is exactly the way the market economy has conducted its business so far—by completely disregarding the value of nature.

The Solution: Calculating Nature’s Real Value

Only when we learn to calculate the real value of the contributions of nature, and we start to take this value into account in our planning, can we hope to save our habitat from destruction. Insights such as these are already gaining traction among some business leaders and economists.

At the World Forum on Natural Capital, business and sustainability leaders come together to do just that—to discuss “how the value of natural assets like clean air, clean water, forests and other natural assets is factored into business decision-making and countries’ systems of national accounting.” ^[5]

Moreover, ecological economists, such as Herman Daly and Paul Hawken see economics as a subsystem of the ecosystem, and they emphasize the need to preserve natural capital.

Environmental columnist for the Guardian, George Monbiot, writes that “Rarely will the money to be made by protecting nature match the money to be made by destroying it.  Nature offers low rates of return by comparison to other investments.“ His point? We should protect nature regardless of whether or not it makes financial sense in the short run. Because, in order to survive and thrive, we not only depend on nature as a source of energy and food, we also need nature for recreation and inspiration. And these latter provisions—as anyone who has enjoyed a hike in the wilderness; or gone for a swim in a pristine lake knows—they are priceless. 

[1] Living Planet Report, 2012, produced by The WWF International and other organizations.

[2] http://www.guardian.co.uk/science/2005/mar/30/environment.research

[3] George Monbiot , Op. Cit.

[4] The Millennium Ecosystem Assessment Report, the UN, 2005

[5] http://www.naturalcapitalforum.com/programme

Top Photo by Karsten Würth