 So the goal here is to get different disciplines, different groups of researchers, policymakers, etc. together to discuss the use and advancements of economic creation, including of course the cost analysis, or as we often call it in Europe, cost-benefit analysis. And I will be very brief, but the Society has since 2008 organized a conference in Washington. And this of course means that many of the participants at this conference are from North America. So we decided in 2019 to organize a conference here in Europe. And it was actually organized here in Jerusalem, Jerusalem Economics, and we didn't intend to organize a new conference last year, but due to the situation was postponed, but it will be a conference organized this year as well. Calls are open, it will be online, due to uncertainty. You have a link there to the conference. So please check it out if you're interested in the European conference by the Society for Cost Analysis. As I said, I want to be very brief so we can come to the main topic of today's talk. You have links to information about the Society, and it's the German Cost Analysis, both on the event page at the TC for this event, and also in the chat, Stephanie will share the links with you there. So then regarding this webinar, so after we held the European conference, we had a lot of positive feedback, so we decided to go on and hold a new conference, but we also thought it would be nice to complement this conference with an annual webinar. And this is why we're here today. So this webinar is a joint event by the Society for Cost Analysis and the Two School Economics, and it's hosted by the Two School Economics. And this is the first webinar. We hope it will be an annual event, and based on the interest we have today, it looks like we can at least have it another year. But I would like to mention that this is not only the SPCA and the TC that are involved in this organization. We have, well, we haven't come up with a better name. We call ourselves the SPCA European Task Force. This was a joint work from discussions with Susan Shilton from Newcastle University, Massimo Floria from University of Milan, Dani Helena from Palio D'Ofin, and Cristian from SLU and Eme Kine from the Paris School of Economics. And I also would like to express my thanks from the Society and from TC to our panelists colleagues at the UK Treasury, and the, yes, sorry, and also people here at TC. And, but the special thanks to Stephanie, who has really been the person who has made sure that we can have this event. So, without further ado, we'll move on to the webinar itself. We have incoming call. But the idea here with the first part is to provide a little bit of a background as I did present the panelists. And then we will have the discussion of the review, the descriptive review economics of biodiversity. And it will be a discussion between, we hope, both, Professor Dasgupta, who is with us, and Professor Jo Rockstone, who I hope will join us quite soon. And after that, we open up for a Q&A session. And due to the high number of participants, we have decided that at least as default, you will not be able to directly ask your question, but you will have to share them in the Q&A feature. But that will also allow you to vote for each other's question. So you can signal your interest in different questions. And if you and Rockstone is not able to join us, we will start soon over this Q&A session. And I would also like to mention that the webinar will be recorded and available on the TC's YouTube channel. Yes, so I will go ahead and introduce both Professor Dasgupta and Professor Rockstone, because I hope that you will join us soon. And I think it's still worth introducing him, even if he's not here yet. And they both have very impressive careers, but I will try to be as brief as possible because I know that you prefer to listen to them than listen to me talk about them. So, Professor Dasgupta, he is currently the Frank Ramsey Emeritus Professor of Economics at the University of Cambridge. His first degree was in physics from the University of Delhi in 62. And then he obtained a degree in mathematics from the University of Cambridge before he obtained his PhD in economics from the University of Cambridge. Before joining the University of Cambridge to become a professor, he spent a decade and a half at the London School of Economics where he became a professor of economics. He also held a position as a professor of economics and philosophy at Stanford University between 89 and 92. Broad research interest, welfare, development economics, economics, technology change, population, environmental resource economics, theory games. And of course what's interesting here is that in 2019 he was commissioned by the UK Treasury to lead a global independent review on the economics of biodiversity, which is why we're here today. Several honours and awards, including his Elected Fellow in Economics Society, British Academy, Royal Society, this is very long, some of us go on with that. Several honoured Doctorate degrees, including Harvard University. And also he was named Knight, but sure by the Magic Queen in 2002 for his services to economics. He's been very productive. The list is too long to go through here. But he's been extremely influential, not only in research academia, but also in policymaking. And his seminar today, or webinar today, this place is very well. So you want to hope with Jonas, he is the director of Potsdam Institute for Climate Impact Research. He's also professor of Institute of Earth and Arab Sciences at Potsdam University and Professor Walter and System and Global Sustainability at Stockholm University. He's first year was a Master of Science, University of Regular Science in Southern Sweden. And then he also got a post-doctoral degree in agronomy at Hofondi, at the Gander Co-Institute National Agronomy College in New York. And then he got his PhD from Stockholm University in National Resource Management. He was executive director and also the founding director of the Stockholm Revival Resilience Centre at Stockholm University. And he was the executive director of the Stockholm Environment Institute. And you feel involved in different research, question on Earth, the system, global sustainability and how human behaviour relates to ecological impact. And he's also been heavily involved in policymaking, providing guidelines or recommendation to European Commission, UN, etc. Honor degrees, awards, etc. including a prize by Aberta second of Monaco, 2020. And also worth mentioning here, since we are in France, this webinar, the Friends to Synchronite of the General Honor in 2016. Again, a very influential both research and policymaking. So, with that, I would like to leave the floor to Professor Sir Dasgupta, and hopefully we will have Johan Jonas soon. But to kick out this session here, start with two questions. So the review highlights the fact that humanity has consistently ignored nature in economic thinking. Why has nature been absent from economic models for so long? With the first question, and I posed the second question immediately. In the review, you state that countries should move away from the use of GDP as a measure of economic success. Why is GDP inappropriate and what do you feel should be used as an alternative? And as I mentioned, don't hesitate to already know, ask your question in the Q&A forum and we start to learn. Professor Sir Dasgupta, the floor is yours. Thank you very much. It's a pleasure to be with you. The first question, yes and no. Some will claim it's been there, it's called environmental and resource economics, but that's not the sense in which the question has been asked. I think the question is not denying the presence of existence of environmental and resource economics, which looks at specific resources, could be wetlands or whatever, and try and tease out the accounting prices for them. That's been long and running for quite some time, but I don't think the question was really addressing that. I'm not denying it, but it's asking something really substantial, which is how come they don't enter into models of growth and development, which influence our conception. When I say, I mean, citizens conception, not just economists, because we are influential, these economists are extremely influential, their conception of what is possible in the future. Why is that the case? I can't give you an answer because I'm not a historian of economic thought, nor do I study these matters well, I'm a research scientist. But I can give some hints at where I suspect the answer lies, the psychological reasons I cannot tell. One possibility is that we economists do not have a biological background. We come from maths a lot. It's not as though we economists are narrow-minded. We are very open to new ideas. Behavioral economics is an example of that. In about 15, 20 years it's taken over. It's now a very enlarged part of economics, teaching and training. But again, that doesn't require an awful lot of understanding of nature, of psychology either. Create a subject out of not knowing what the subject is about, if you like. And I don't mean this prejudice for Roger in a critical way. I mean, you can have real progress without really delving into psychology. You're looking at behavioral anomalies, that's what happens. And I think nothing like that has happened because ecology is a new subject. It's really a post-war one. There are mathematical models, Lotka equations, way back. But the hardcore ecology is an empirical science. And thank God it is because it's a very hard empirical subject. And I think it's roughly speaking 70 years old, if you like. Certainly in 1950, if you asked, is there a textbook in ecology and you wouldn't get it. The famous Ehrlich Holdren textbook is called Ecoscience. It doesn't call it ecology. So that's one side of it. It's new and we don't have a background in it, we economists. However, the structure of ecological models is so similar to economic models that it's hard to understand why we didn't move in that direction. But let's leave that aside. It's not a new phenomenon that it's absent from economic models. The classical political economists, as far as I can tell, didn't have nature in it either in their models of the stationary economy. Ricardo had land in it in his model. But land was indestructible. It was a fixed factor and which could not be degraded. And the whole point of my review is that nature is destroyable, not just degradable. So we are looking at regenerative resources which can be degraded. But then classical political economists didn't have technological progress either. So they may have talked about it, that their formal models were all about the stationary state where it was neither nature nor technological knowledge. Now in the post-war period from 1950 onwards when growth and development economics took off and was defined, for some reason we kept nature out but put technological progress in. Well, maybe not immediately, but certainly Solar's model didn't have technological progress. But let's say by the 60s, 70s technological progress was brought in pretty explicitly as an engine of economic dynamism. So you lost the dangerous part, the part that could sink us, you kept that apart but you brought in all the optimistic parts, the things that could propel us. And so that's given us a very, at least in my judgment, an extremely distorted view of what is possible. It's distorted because it ignores some fundamental facts about the workings of the biosphere and the review that you're asking about we're discussing today is not really so much the economics of biodiversity because biodiversity is really a characteristic of ecosystems. It's really the economics of the biosphere, the biggest subject that there is. So it's something I was very excited about when I realized that what I was writing on was the economics of the biosphere, you can't have a bigger subject than that. So I enjoyed writing it a lot. But there's a second question, so I'll address that as well for further questions that are asked. It's today I think quite a commonplace that GDP is an inappropriate measure of economic, the state of an economy and you can see why if you're a mathematician because GDP is a flaw. Let's say so many dollars of output, final output per year, let's say, so it's a flaw, whereas the state of an economy is not a flaw by definition, it's a stock, it's a state variable. So if you want to describe an economy by its state of affairs, what is it like now? It should be an inventory, statement of the inventory of the economy and the inventory consists of capital stocks, assets. And connecting with the first question, the assets that we're looking at in growth and development economics and that has influenced national accounting in a big way are human capital more recently and produced capital in previous generations. So we have essentially a study of produced capital and human capital, both of which can depreciate but the assumption underlying feeling is that the depreciation rate there is bounded because I mean, unless you of course have a war, you can have a huge rate of depreciation but in peace time. Basically the depreciation of a building is where you can manipulate, you can excessively use it and depreciate faster but it's not really like cutting down a rainforest in five days, if you see what I mean. So GDP is growth domestic product. So we already have a problem, we're looking at growth figures, not net, so depreciation is not included. On top of that, and rather to bolster that, this real problem is that you can have GDP growing up while you're mining the biosphere in order to preserve your growth, eating into it. And if you can do that, then you can have growth of GDP while your productive base is shrinking and you won't know it because the national statistics aren't giving it to you except when ecologists keep on complaining or NGOs, environmental NGOs come complaining. But then you don't take them seriously because you say in retort saying, well, okay, you're talking about small naturalistic. The main thing is that progress means GDP growth and we're after it. So economics itself, if it's used well, if we're honest with our profession, with our subject, and it's a great subject, it's been developed by some of the greatest minds of all time, Smith and Ricardo Marx. And in our own time, people like Kenneth Arrow, I mean, these are giants of, so what they've given us is an amazing grammar. And we really need to not belittle the subject but possibly criticize the way we've practiced it. So what the review does is to talk about progress measured in terms of stocks inventories. And the hallmark of the idea is to think of a representative index for that and the theory of economic theory tells us precisely the connection between intergenerational well-being and inclusive wealth, wealth including not just produced capital, but human capital and natural capital. Of course measured in accounting prices, not in market prices, because of course the whole problem with the economics of biosphere is the fact that nature is not priced well. In fact, it has a zero price in many cases, even though it's a scarce good. So I'll stop there. I hope I've responded to the two questions adequately. But if it hasn't, I apologize, but you can ask some subsidiary questions if you like. Thank you very much. I'm happy to announce that Professor Oaksum has joined us. So he will also address both the question and I will stop sharing so that instead of seeing my slide, we can see the R2 panelists a little bit more. So please, Professor Oaksum, produce yours. Thanks, Henrik. And great to see you, Partha, and hello everyone. And let me start by, I mean, we haven't talked, Partha, since you released your review and just to congratulate you for what I would argue to be the most significant economic analysis for humanity's ability to navigate our future and the Anthropocene we have at hand so far. So this is, in my mind, the guide to the future. So I really congratulate you on behalf of humanity, basically. On the two questions. So just to compliment your reflections here, I think from an earth system scientist perspective on question one, why has nature for so long been disconnected from economics? I think apart from your really important points about the disciplines being kept apart, I think incrementality has a significant part of explaining this. For basically the entire Holocene, the last 12,000 years since we left the last Ice Age and shifted over from hunters and gatherers through the Neolithic Revolution into the journey that has taken us to modern civilizations, we have been a very small world on a big planet. And we have not collided with the biophysically hardwired processes that leads to your conclusion, Partha, which is that we have a finite earth. We have allowed ourselves to basically exploit the earth system as if it was infinite because we were a relatively small world on a big planet. And the impacts were largely incremental. They were largely local. And moreover, the earth system tended not to send invoices back. There were some local invoices, but very rarely connected invoices. So we could trot along and scientifically we show that we could trot along all the way to the point of the Great Acceleration, which starts as recently as in the 1950s. So it isn't until the 1950s that we shift over from being the relatively small world on a big planet to turning into the large world on a small planet. We're starting to hit the ceiling of the hardwired processes. We've reached what my predecessor is the head of the Potsdam Institute defined as a saturation point. We basically exploited all the fish species in the ocean. We cut down so much forest that ecosystems started to be unstable. We did what you point out in the report, tip over freshwater systems from our oligotroph to our uterified systems. We start hitting planetary boundaries. And I think that is in a way almost like a defense line to explain how could economists for so long allow themselves to be blind to natural assets. And I think one explanation is this fact that we could go along quite successfully in this incremental world. The second potential explanation is something that you spend, is a chapter three, I think, on nonlinearities. I mean, you're a champion among world economists of explaining nonlinear dynamics and then bifurcation points and hysteresis. And as you know, better than any economist in the world, that's where earth system scientists are at heart. They recognize that the earth system is a complex, self-adaptive interactive system characterized by multiple stable states and nonlinear dynamics and thresholds. Now, that has come to the fore in terms of scientific evidence very recently. I mean, it's only the last 10 years basically that we have the unequivocal evidence that we can actually put so much stress on Greenland, on the Atlantic meridional overturning circulation of heat, on West Antarctic, on the Amazon rainforest, and so on and so forth, that we can actually tip them over into irreversible shifts that would lead to dramatic shifts in your accounting scheme for economics. So I think that as well has been a very important one. And then finally, I think the most important sentence in your review, if I can pick a favorite one, and if I may, Henrik, just to quote that line from your chapter six, we move away from the viewpoint that has given rise to the paradox, your paradox that built on the fact that we thought humanity to be external to the natural world, seeing us dipping into the biosphere for its goods and services, transforming them from our production and consumption, and then discharging the residue into the biosphere as waste. The review, your review, is in contrast built on the recognition that humanity is embedded in the natural world. And I think this transition from us being disconnected to now reconnecting is also an explanation of why we haven't seen the integration between the natural and the social world. So I think those are just complementary explanations on question one. On question two, I don't have to add anything more just to say that it's so much music in the ears of an earth system scientist. I mean, as you know, and you have a whole section on this, earth system sciences has come to the conclusion that we need to define planetary boundaries. Means setting quantitative scientific targets that define a safe operating space for humanity's future on a stable and resilient earth system. That in turn translates to budgets. It translates to stocks, stocks of freshwater stocks of phosphorus stocks of nitrogen stocks of carbon stocks of land stocks of assets in the living biosphere. So I think we have a fantastic breakthrough point in terms of realigning through what I call strong sustainability measures, pathways for economic development within a stable earth system. So I think that is really, you know, as an earth system scientist, I've read your report like the most inspiring document in my professional life, to be honest. And I'm not saying that because I have you in front of me. I'm saying it objectively. This is this is significant. Thank you very much. Thank you very much indeed. Your explanation was better than mine, by the way. So certainly the first question. That was their complimentary. Very complimentary. Exactly. I mean, that's not I think there's a very, very significant meeting point here. And I can tell you that I've been sitting down as as recent as yesterday with my co-director, Professor of Maidenhofer, a fellow economist of yours. And we are seeing for climate science the significance of your economic review on biodiversity. So there is, you're so right in emphasizing that that your report is an economics for the biospheres, not an economics for biodiversity or just a local ecosystem. It's for the system development. Thank you very much. I think one, one minor observation I would make for our economics colleagues who are listening in is that what is to an academic or any scientist really pleasing is the convergence of findings in the earth scientists on the one and one extreme. Through ecologists, through environmental scientists, and to a few demographers, and then to a few economists who work on this. We have different tools. We look at different measures, but they all are converging or have converged to one strap striking phenomenon, which Professor Rocks from the just alluded to, which is that if you plot the state variables in each of these and I'm being vague now here, but each of the disciplines will know what I mean by their state variables. Then they're pretty much flat right through the whole scene. Okay, a little bit of increase perhaps rise from the Industrial Revolution onwards, not surprisingly, but roughly speaking at the end of the Second World War onwards, it's really taken a leap. You see that in the climate literature, of course, the horse, the famous hockey stick, but that reappears in a variety of guises in all these disciplines, which is really nice because it's telling us that you can cut into the problem from any end you like. And you will have a meeting point with the others. Yeah, no, I think that is, that's a, you know, and it's taking us a long time to come to that empirical evidence. I mean, it's, that's also something I often need to remind that it isn't until 2007 that the first package of observational hockey sticks are truly published and put in place. Again, we can't explain why it's taken us quite some time to come to these deeper, deeper insights actually. So it's, it's, it's not an excuse, but it can explain that it has taken us some time, but now there's no excuse because now we are standing on this mountain of evidence. But one more question to you, Partha, I'm wondering, I mean, one of the challenges that I think we see on the rise and if we would implement your economic thinking in full in terms of having a stock based asset definition, which actually leads to the conclusion that there is not an infinite growth in GDP terms on a finite planet. How do we address the next 10, 20 years in terms of lifting the majority of people out of poverty? How do we, how do we deal with a social distribution of wealth in a finite earth where we are sharing the stocks in a very unequal way? Very good question. Of course, I know in advance I won't have an adequate answer to it, but we can only chip into it because each of us has reflected on this in our own way. But I think first thing we ought to avoid thinking in terms of is a redistribution of wealth as we currently measure it. It might be a better idea to remove so many of the distortions which are staring in our face. So maybe one. We thrive on the idea that we are living in a globalized world, increased trade, and if there's one thing that unites economists in general, it is the virtues of international trade. Opening up trade enhances everybody's well-being. But the theorem is correct only if you assume that all goods and services have ideal prices. We forget that when we deploy the theorem for practical policy purposes. Why is that important? It's important because much, because of the distribution of ecosystems, much of our, if you like, natural wealth lies in the tropics. One type of natural wealth. Say a tropical rainforest if you want to use as a simple example. Certainly a great deal of biodiversity lies in the tropics, which have also happened to have some of the world's poorest countries. Now, think of it straightforward example. You have forests in the uplands of a watershed and you're deforesting it because you need to export. You want to earn foreign exchange, you cut down for it, trees export it. But you do not compensate for the fact that there are losses downstream. I do not need to elaborate on what the losses would be. These are externalities, but you're not compensating for it. Therefore, your price you're setting for your exports is lower than the price, the cost that you're actually bearing as a nation. Which means what? Something very, very ugly, which is a transfer of wealth in our sense, in the sense that we're discussing here, from the poor to the rich. So we have many of these distortions to get rid of. If we do that, I think the idea that there is a conflict between poverty alleviation and minding our home, nature that is, that conflict is attenuate. Now, to be sure there will be some gift that we have to make, but that gift will only come if we price our goods correctly. So for example, when we fish in the open oceans, nobody pays a rent. For using the oceans for as a fishery. Nobody owns the ocean, open access resource. And much of the fishing is done by rich countries because they have the equipment to be able to do that, you know, big trawlers and so forth. So again, you have a distortion, what we don't pay the appropriate price for the fish we eat. See if we can get rid of these one after another, these distortions. And on top of that, of course, there is about, the review said there's a four to six trillion US dollars worth of subsidies we pay ourselves to eat into nature. So that's really, you've got a negative price for nature in those cases. Okay. So if you start saying, it's not a question of us giving to the poor, we just pay up for what we consume. Well, of course, we'll consume less goes that same because demand functions a downward slope. So if the price goes up, we'll consume this, but at least we'll be doing it honestly. We shouldn't then complain that we're happy to do this because up to now we're not paying for it. I think that's how I would begin addressing that issue. This is quite over and above any question of redistribution because they're poor and so forth. That's happening anyway for an aid, but I'm not talking, we're talking just wanting to in the language that you've introduced here today, which is how do we manage the biosphere. The plain truth is we're treating it as a free good. Yeah. A lot largely as a free good. But do you think I'm also, I mean, we're in the super year 2021 with with three UN summits lined up. I mean, we had the Kunming biodiversity summit in China. We have the UN food system summits unclear where it will be geographically and we have the COP26 in Glasgow, the climate summit in November. And in the run up to Kunming, there is quite quite an exciting and very relevant movement towards trying to ramp up the policy targets on protecting nature and going from the 30% you know, safeguarding on terrestrial and marine ecosystems to even considering a 1.5 degrees Celsius equivalent that we have on climate for nature that's such a such an apex target for nature would be essentially net and net zero loss of nature, basically from now onwards, which of course is impossible to accomplish because we're losing biodiversity at such a high rate but that it would be a starting point to start measuring against and you put a lot of F you put a lot of emphasis on the need to measure to be able to then come to an inflection point by 2030, which would be defined as a net net positive point resurfacing and then moving towards a restoration future by 2050. Now, do you think that economic incentives, like putting a right price on natural assets would be enough to, to so to say, turn around at this urgency point that that we see that we're in right now what do we need strong political regulatory means as well or how do you see that mix between regulations and economic incentives to to turn around the asset management on on natural capital. It was very good question and the might expect my answer anticipate my answer which is you really need both. I think of regulations as really a very extreme non linear pricing system extreme form of it. Somebody says that this is a protected zone, as they say 30% protected zone, it means no entry, which is another way of saying have been infinite price to enter it. I use the pricing, the word pricing. I have in mind the range from linear prices prices independent quantity to quantity constraints and good economics tells us that for these hugely non linear systems with the kinds of boundaries that you yourself contributed to thinking about and uncertainty in their location. That's extremely important. We know that the planetary boundaries are there. We don't know where they are. So you better be very careful because you cross if you enter into that you know it's not going to be funny. Okay. So take those two things into account and a third ingredient, which is nobody knows everything. You know certain things. I know some things. If I'm the regulator, I know some things that I don't know your activities. You know your activities better than I do. So the companies who are cutting down rainforest have more information or societies who are living in rainforest, they have more information about the rainforest than the regulator does. This asymmetry combined with uncertainty and non linearity gives us a potent reason for going in for regulation. That's an extremely important reason. I mean, purists will say it's not really regulation. It's a very highly non linear tax or something. Okay. Well, that's that's just being pedantic. The idea really is that, you know, for all practical purposes. Yeah. That's exactly right. I think that's the scenario you're portrayed is the kind of thing you ought to go for in this these meetings. But they will have to have it simultaneously. And the thing is that it operates. I was about to say it may be that at the global level, you need quantities, but in the local, you don't. But that's not true. You need it even at the local level. And in fact, local communities have practice prohibitions all over the world. The anthropological literature is replete with examples of fishing communities, farming communities. Who have instituted local norms of behavior regarding what they can take from the neighborhood. When, how much, and so forth. I mean, some of the literature is just amazingly rich. I mean, you can take leaves from this plant in this part of the year, but not that type of part of the year. And this kind of plant in October, that kind of plant in November, I'm making up the number of the dates, but it can be as rich as richly detailed as that. But these are all regulations. They're not saying if you pay a price, you can take the leaf from it. So we are used to regulations. Societies in the past have been even for their local ecosystems. And I rightly pointed out local communities have suffered from biodiversity losses, not a new thing. Distress migration is a symptom of that. So I think we need to have both payment for ecosystem services is a kind of market as a pricing mechanism. So that's where you have a pricing system. So if I'm benefiting from your land, which is your river that flows through your land is cleaning, doing things for me, then I pay you for something. But that's a price. But at the same time, at the same society, there will be certain types of controls over it. So I think it's a mixture. No question about it might be. Yeah. And then one, I think one question that that is on many people's mind. When one starts understanding the fact that basically we have been subsidizing our GDP based growth for 150 years plus from from basically exploiting for free assets in the planet and that this is simply has come to the end of the road. Then of course, the immediate worry is, oh my God, what will that mean to the cost of our lives? And that's the number one question, of course, is food. Because if you look at the at the relative net share of incomes, particularly in the in the more wealthy parts of the world, food has become relatively cheaper and cheaper and cheaper over the last 50 years. Thanks to the fact that we become more and more effective in over exploiting natural capital, which has been done at zero cost. If we now start pricing that capital in the right way, food prices must rise. How do we handle that without having uprisings? You know, Jean and France or the origins of the Arab Spring, even that were connected to food price exponential rise of food prices in Cairo, for example. I mean, how do we handle that risk? Well, it's a very good question. Of course, in poor countries, that's going to be just have to have contravailing payment to soften the blow. But let me put it the other way to in terms of what happens in the rich countries. It's let's say 10% is what you spend on food. Let's say people are rich people. And we subsidizing food. And notice we waste about a third of the food that's produced. So it must mean that we're underpricing it. If we can waste it. 30% is approximately the figure that I picked up while writing their interview. One of my colleagues picked it up, one of my team, and we have a chapter on food prospects. So again, it's questionable whether we will need to pay the price for what we actually consume. And we've been living off on the cheap because we're not paying for it. Now, of course, if that same price or some transform of it hits the poor household, we're in trouble. But then you just have to compensate for that. And there are so many ways in which we have methods of making that compensation. But the underlying point is not that we are, I think we just need to persuade ourselves that the logic of the science of biodiversity or science of the biosphere is telling us that we have not been paying for the goods we consume. And that's the first step. And then the owners should be on the objective to say why we should carry on when we're not actually paying. And how does that, how does that marry with that same objectives, objective of looking after his children, his grandchildren, his great grandchildren, and leaving behind a dynasty which can thrive rather than which goes under. So these things we all have to face up to. So there has to be some adjustment. We can't, you know, you can't have it, you know, there's not one of the situations where everything can be made better off at the same time because we started at a very distorted world. Yeah, yeah, I know that that's a very interesting reflection. No, thanks. So so then part if I may I'd like to drag you back to to an encounter between the two of us that I'm sure you don't remember because I was. I was a young, younger researcher at the time and it was in the run up to to the last time there was a similar review as far as I'm concerned and that is when. When Nick Stern came out I was working with with a stern review and then we got the first assessment on the economics of climate change and the assessment of the costs of action versus inaction. And as you recall so well and I was actually in a in a meeting in Cambridge where where there was a debate around discount rates and. And then Nick Stern was was defending a lower discount rate while the convention economists were arguing against that. And I think it was in a sideline but you might have made it publicly actually you you made a statement as I if I recall it right that if you have nonlinearities I mean if you have tipping points and you thereby go from incremental costs to infinite costs. Then you must be open to consider negative discount rates that that you could actually have a situation where you need to value the present even more than the future because the risks are too high. Are you are you still standing by that conclusion and are there any new insights you derive from from your from this review in that regard. Thank you very much for asking it say it say yeah I'm fairly settled on my views on this, and the settled view is that it's not an platonic answer, there's no objective notion of a social discount rate. It's built on many ideas but let me try it out and still sticking to that idea. All the methods that have been used to the discount rates that have been used at least let's let's be vulgar and say across the Atlantic on climate change economics of climate change, have on the whole taken the view that you can tease it out of market interest rates. Now that's really bad economics, I mean literally this is just flat bad economics why because it's based on the idea that you can mimic an entire economy as a representative household maximization problem. Now in some ways you can do it, but the world that will look be suit that transformation is widely different from what the data are telling. So why is that a bad idea. The reason is well counter argument could be why not because each of us cares about his children or her children, and they know that our children will care about their children, and so on down the dynasty. So by recursion you are interested in your, you're taking into account your all your children, all your descendants. So, okay, so if you have a representative household. The problem with it is that you, your hand may be taking that line to your dynasty. I may be taking that line with my dynasty, but I won't be taking that line with your dynasty and you won't be taking your time with my dynasty. And we are looking at a world with externalities. That's the whole reason you're discussing economics of climate change or biodiversity laws. So therefore, the market outcome, decentralized outcome, and you can easily show that the discount rate should be lower. So that's what I'm very happy with in the move that Nick did. The trouble I had with Nick's was that it's a very absolutist view of, of, of, of, of ethics. And it said that ideally you do not wish to discount future generations just because they happen to be in the future. The problem with that argument is that like any other moral principle, it can clash with other moral principles that you can, you probably hold. And to have say that one moral principle overrides or trumps every other moral principle I have can get you into serious trouble. Now in a great series of papers, the late Jaleen Kukmans showed that to treat all generations equally on their welfare space. Okay. In a world in which there is an arrow of time, which is mimicked by the productivity of capital. The fact that if you plant a seed, it'll grow. So tomorrow that seed will be but bigger than what it is now. That fact, that yield can lead to paradoxes in assuming can lead to very unequal treatment across the generations. I take that very seriously, that result, because it's telling me that never, but never be so monotheistic as to say this is one principle I hold. Because if you hold it, you can run up into a world in which it's giving you the reverse of that. That you start with assuming that you want to give equal weight to everybody. And the answer is treat the generations extremely unequal. So that's why the entire review is at least that chapter opens up that pragmatic view of ethics by saying we should really, we should do what we do elsewhere in life. You trial and error, choose a discount rate and see how it works and then comes back and so forth. And finally, you're absolutely right. The discount rate that you were talking about is not over time, it's over consumption. And there certainly, when you face a possible dip in consumption because you're hitting against and certainly would be wanting to have a negative discount rate because there's a risk that tomorrow I'll be poorer than I am today. So a dollar tomorrow in goods is worth more to me now than dollar of that same good today. So yes, very much so negative. You can just imagine what a signal it would give to global markets if you would put a reasonable floor price on natural capital and negative discount rates where there's scientific evidence in support of the risks of losing out in consumption over time. I think that would be a tremendous, you know, that would be a bifurcation also in the evolution of economics. I have a final question to you before handing back to Henry for for an open Q&A. And we both have, you know, friend, colleague, the late Nobel laureate Eleanor Ostrom. You referred to her work in your review on polycentricity and how to govern the commons. And this is one of the things that I'm spending a lot of my research time on today. How does the planetary boundary framework with an earth system scientific analysis translate into new principles for governance of the global commons? It's not only that the planetary boundaries translate to natural stocks. It also translates to the tipping element systems, the big biomes that you talk of so eloquent in the review that contributes to regulate the state of the planet. So let's take, for example, the Amazon rainforest, the richest habitat of biodiversity. How can we, I mean, we know that that is a natural asset that has national borders that we need to respect. There are actually integrity points for, in this case, the Brazilian economy, for example, if we take that part of the Amazon. But at the same time, we know that we all depend on the functioning of the Amazon. So there is a commons factor here. How can we, through your economic approach or paradigm in your review, handle that? How would we do that? Is there an economic mechanism here? Would you advocate compensating Brazil in one way or another for providing that commons service to humanity? Or how could we go about saving the Amazon as a commons for humanity while at the same time respecting the Brazilian national integrity? Well, I'm so glad you asked me this question, because I would have sneaked in the answer. My response, even if you hadn't asked me the question. It's not something that I expect to see happen in COP 15, but I wish it had. Maybe it's too late. Maybe we're not bold enough. But if you think of what happened at the end of the Second World War, when countries where nations were bold enough to have a Marshall Plan, the United States was generous enough to consider the Marshall Plan, which resurrected from the ashes of the Second World War in Europe. And then the nations had the generosity and vision to establish the World Bank, IMF. These are global, these are transnational institutions handling global public goods. In the one case, Reconstruction Development, that's the World Bank. Now IMF Financial Stability, which both are global public goods. So these are transnational institutions. So one of the recommendations, which I don't foresee happening, but it's certainly worth, there's no way I could not propose it. Economics tells us that somebody has to something, some institutional arrangement must be made to protect the global commons, whether they're confined to national, within geographical borders, as in the case of the Peatlands or the rainforest, tropical rainforest, or whether they're open access, like the open oceans and the atmosphere. Now, I think the moment you think about an international institution, immediately people say, oh, it's going to be too costly. Who's going to pay for it? I'd like to argue that if you combine the rainforest, the case that you just now mentioned, with the open oceans, then there is a possibility such an institution could actually collect, if it's collecting rents from the open access resources, and now it's governing the commons. And then compensating for the Peatlands and the rainforests, because they're within national boundaries. Obviously, you need to compensate the logic says so, because they have the right, quote unquote, to do what they want with it, and they have a vision of what they're doing, and they can legitimately say, OK, that's fine. You're telling me I shouldn't cut it down, but on the other hand, I do have some needs. And let's assume that it's an honest expression, by the way. And just because they say so, that their development requires this, I don't have to believe it, but never mind. That's how it is. When two people bargain, there will be a lot of jockeying and posturing. I mean, we're not exactly, I mean, politicians in particular should be used to that idea. You and I may not, but certainly political leaders should be. So leave that aside. The logic says, yes, we should collect rents for the use of the open access resources, global open access resources in this case, and then also subsidize the protection of the global commons, which are within national boundaries. And very, very crude calculations. And I would not wish to be in record in saying that I said so. Very crude calculations suggest there would be a huge surplus. Okay. I mean, there's a hell of a lot of ocean out there. And they're extremely, we are using it to, in all the stuff we are shipping, you know, can you imagine the containers that are going back and forth through the Atlantic Ocean and Pacific and so forth. Plus the fisheries. Well, fisheries are smaller, smaller beer relative to the transportation. But if we start charging rent, so when I say we, an international institution. We have to summarize your instincts exactly right. Good economics says, yes, we have to compensate. That's called payment for ecosystem services. We practice it in small areas of discourse. And that's what you're suggesting for the larger ones. But on top of that, we should be charging for the open access resources, make them no longer open access. But yes, so long as you pay. And if there is an international agency, we can trust to do that for us. That would be enormous gain. And unfortunately, we haven't gone that route for climate change you see. Climate change are all these estimates of the social cost of carbon. All right, social price of carbon. But question arises, who is going to set up. Is it based on the whole world. Let's say somebody says it's $100 a ton. Is that $100 a ton to be collected by a transnational agency? Or do you say to all countries $100? Well, then nobody's going to pay. You said because different countries are in a different state. So it leaves me a bit worried as to why we didn't go into the direction of a more imaginative construction, institutional construction. Instead, what we have is agreements about, it has its virtue, by the way. The idea that you ask the earth scientists, where are the boundaries? And let's say they say 1.5 degrees above pre-industrial. Let's say I'm okay. So that's a quantity target now globally. And you say, well, we're going to work within it. So the next question will be, how do you allocate this constraint onto the various countries? And of course, that's exactly what's been happening. Each country takes a pledge, let's say, to limit the contribution. And then works out a tax, let's say, which will be required in order for that country to be able to match. And that tax will be national tax as it were. And that has a logic as well. Certainly, I can see a logic in which that happens. But when I read that $100 a ton is the tax of social costs, I don't understand it because I don't know who is actually imposing it. Yeah, no, but that's an incredibly interesting and intriguing suggestion actually. So one could think of just like the high seas institutionally being entrusted. Yeah, exactly. Basically take out a cost for using that free public, global public good. You could entrust the atmosphere to an institution and who we trust and to collect the tax for the pollution that we're causing. And we distribute that to the vulnerable communities. Exactly. Yeah, I think that's a good suggestion for President Biden and Ursula von der Leyen. But it won't fly. It won't even hit the first base as we call it. It won't come to first place. Well, but you know, the times they are changing and we're in a turbulent world right now. So all good ideas need to be put forward at this moment. But thank you, Partha. I'm giving back to you, Henrik, for the... Well, thank you so much, Johan. Good to see you. Yeah, lovely to see you as well. I'll be continued to join to the end here. But I know that there are many, many questions from the Q&A. So thanks, Henrik. Thank you, Johan, and thank you both for this very nice and very interesting lot of thoughts here in discussion. Yes, we have many questions. So I will actually try to be a bit efficient and give you two questions. So the two questions that's been seen out here as the most popular question are two slightly different questions. And the first one is about the common observation that economic thinking has ignored nature. And it's from Susan Shilton. And what she says is that the discipline of ecological economics developed explicitly to address this issue. And in the early 2000s, there was real excitement. I worked at the University of York at the time through mentions. Why do you think it gained less traction than might have been hoped? Where these fingers just ahead of time? Or is it something more fundamental? So that's the first question. Why didn't ecological economics has a larger impact? The second question is from Nicola Thresch. And different question, there are millions of species on Earth. But welfare criteria only consider one species, ours. That sounds morally dubious to ignore other species, especially sentient animals as a source of welfare. Rousing the early stage of the otherwise excellent report on biodiversity, I essentially saw nothing about this issue. Why? Question mark. So those are the two question I. Thank you very much. First, it's very hard for me to answer. I'm not a sociologist of thought. So to be pertinent on my part to say why ecological economics suffered. I should say that from about 1991, one small group of ecologists and economists and earth scientists have developed a very powerful relationship, which actually Johan and I were alluding to. He came out of it actually himself from 1991 when the Bear Institute for Ecological Economics was reinstituted reconstructed by the Swedish Academy of Science. And Carl-Iran Maylor was the first director and he was an economist. So the deputy director was Carl Volker, who was an ecologist. And when Carl-Iran retired, the directorship passed on to Carl Volker. So and now the deputy director is an economist. So it's entirely the scientific board has always had 50% ecologists and economics economists in it. And when I say ecologists, I include people who have been involved in serious nonlinear studies of nonlinear systems, including scientists in particular. So I'm talking about let's say isospheric scientists and the human economies scientists. So it's been very productive. It takes time. It takes enormous amount of time and care. I was chairman of the board of the Bear when it was initially first instituted. And there was no question. The first set of meetings, there was some suspicion from each of the other. It's very natural suspicion. It's not, but we didn't worry about it. One reason I didn't worry about it, I was much younger then and that's why I was made chairman because then the senior people would accept anything I said. There was no rivalry issue. You see what I suspect because we had giants like Ken of Arrow and Paul Ehrlich and Simon Levin sitting together and Bert Boleyn, they were all on the board. And with their authority in place, there was no problem of any and it has really blossomed. I can assure you the number of papers that have been published in P&S, Science, Nature with the authorship of these disciplines together, 20, 30 names at each time. They have made an impact, no question. You can't simply say this is a fringe activity because the people who are involved in it are mainstream, powerful people in the mainstream of their discipline like Levin for example or Arrow, these were people who were as mainstream as they can be. So don't give up hope, it's been happening. But it hasn't really penetrated the economics profession in their teaching and that has to be accepted. In other words, I can't deny that nor would I wish to deny it because it is something that I really care about and I feel very disappointed in it. I can't, even my own department doesn't have anything remotely resembling what I do. And it's not that they don't like me, they let me know we are friends and I was chairman of the department but we don't have it. So I don't know how to answer your question but don't despair, there is a seriously good work that's being done by some seriously good people from these disciplines developing ecological economics and I like to think my review is a reflection of that. The Resilience Center for example was something that many of us from the Bayer Institute promoted and that made it happen. The second question is really hard in the sense that I don't quite know how to write about it but we do allude to it in the review. It's more than allude to there's a whole set of sections. Economists have looked at this issue and at least those who have studied evaluation techniques for natural capital have looked at it primarily initially of course in terms of the use value of nature. Not so much species but use value of nature. So if there is a wetland, what's it doing for us? Let's say being a habitat for birds and bees and so forth to our power nature. So you look at the thing as a production function way. Okay, that's the use value. Then a number of economists in the 1980s and 1990s asked the question, what about amenities? They don't have that kind of a use value there's no market for it but we use it and we can treasure out of it. How do you value that? So you look for existence value and these are usually done by questionnaires. You ask people how much you're willing to pay to ensure that the flight path of these geese is not disrupted. Now there are problems with answers but at least you're trying to get a sense of how people value these remarkable features of the biosphere. These flight paths for example, thousands of migrating birds, thousands of miles. Now it's a phenomenon. You can't see this mind blowing how it's happening and you want to know how much you should pay to protect it. So that's been taken into account and the moment you ask for that you really looking at a little bit towards species. There's a whole community of birds who are doing this family of birds and you're trying to protect them. Then there are of course, societies are cleverer than we, academics by the way, a lot clever. So there are societies where every society has sacred aspects of nature. We all have them. It's not a prerogative of traditional societies. Even we in the West feel that certain things are sacred. Don't want to damage them. So what do you do? Your hand was hinting at. You don't price it. The whole point about it being sacred is it's priceless. You ban news of it. So you protect it. So there's a good deal of that in the review as well. And I think the codifying that is something that can only happen from the citizens' demands in my judgment. A society says this is sacred to us. But before I finish, I should say that bear in mind that the world is a very wicked place because of all the demands that are made of us. And yesterday I was pointing out to the example of the Ganges River, which is a holy river to Hindus. I mean, as holy as it can be, she's a goddess. She sprang out of the locks, through the locks of the Lord Shiva. And some 500 to 600 million people live in the Indo-Gangeli plain. People bathe there to cleanse themselves and so forth. But the whole works is there. And yet it's one of the most polluted rivers in the world. We dump everything in it. We dump everything in it. You name it. Including dead bodies. Chemicals and so forth. How do you come to terms with that? And I've been reflecting on it. And when I was writing the review, I reflected on that. And I realized that we all come to terms with it. Even in sophisticated societies like us, we rationalize it. So a good Hindu would say, and has been known to say, that no, we're not polluting the river when we throw chemicals into it. She's unpollutable. She's a goddess. So it's okay. And then I asked myself when I was, in my middle years raising children and busy with my work, there's no question I neglected my parents. They lived in India. Weeks went by. This is long before the internet. Weeks went by. I hadn't written. Telephones were bad. Really bad connections and so forth. So it could be months that we didn't. I used to feel very guilty. Now, how do I salvage my guilt? Well, they will understand. Of course, they know I'm busy. Well, that satisfies or at least balances the book if you like. But the fact is parents, I can't be, I can't think of a more sacred agency than the parent. So I was in the same dilemma as people who are polluting the Ganges. So it's a complex thing that we accommodate these things and do the best we can. Thank you very much. You want to add something? No, the only thing I could do because you were referring to the Bayer Institute and to the Stockholm resilience center just to confirm your assessment here that ecological economics has accomplished perhaps more than is really out there in the, let's say, the most public domain. But I would also like to emphasize that even though it goes too slowly, things are happening across the whole economic discipline at large, I would argue. I mean, we are, for example, working quite actively with very conventional business schools around the world building in planetary boundary thinking and the Anthropocene basically reconnecting economics to the biosphere and conventional economics. You have the whole donut economics movement in the world right now trying to get the economics to function within planetary boundaries. I mean, I think we shouldn't dismay too much. I mean, one can definitely still argue that we're locked in a paradigm which is still disconnected to go back to your review, Partha and we still have a way to go but we're at least moving in a, you know, I think more aligned direction with regards to the earth system challenges we're facing. Thank you. So you mentioned donut economics. I will ask you a free question. So one question was actually on donut economics. So how relevant do you find this concept to be? So that's from anonymous attendee. But then I would add to other question related to a growth. They are the most proper comments at the moment. So you have addressed growth a little bit before but I will still ask a question because that's slightly different from what you discussed before. So the first one is from Eric Owens. We talk about growth and development in poor countries but our biosystem are already stressed with the current standards of living as we see around the world. But those in developing countries to increase the standard of living to those of us in OECD countries would create additional strains on our system. How can these paradox be addressed? And the second question related to growth is from Scott Farrow. While I'm part of the choir in agreement this reminds me of the limits to growth debate in the 60s, 70s. Economists then tended to argue that substitution was ignored and substitution along with price changes would avoid limits to growth. It's the new biosphere economics message and a different than limits to growth. So those are the two question on growth and then there was a donut question at the start. Thank you very much. If you want me to respond to them, they are related of course, all of them. Let me try and answer it in a different way. You can always say it can track any idea back to something else before and the bite lies in whether it's rhetoric or whether it's really backed with measurable concrete scientifically based objects. So some time ago I was responding to the idea that I was suggesting that the classical economists, political economists did not have nature very much in their, they didn't have nature in their models, in their implicit models, nor did they have technological progress and I think Johan gave an extremely good answer as to why they could avoid the first because you know small scale and so forth. So that's fine. What we took away after the war was the technological absence of technological progress but we didn't put in the nature. That's something I mentioned before. So we have to counter that argument. Simply to say something is a donut or a cycle circle doesn't mean very much because you can think of an expanding donut, you can think of an expanding cycle. So in some deep sense you have to argue against the idea that human ingenuity on its own can keep us out of the planetary boundaries, keep away from the planetary boundaries by being ingenious if you like. And the models that we've had, including natural capital, the model that I worked on with exhaustible resources have, if you have an exhaustible resource that's the only one and it's an essential exhaustible resource in the sense that without it, if it's zero, then the output is zero, where you might say that's about as rich a model you can think of and extreme a model you can think of with the finite boundary. What did we show? We showed that if the substitution possibilities are sufficiently large, which is in this case actually only one copy of this function would do, you could asymptotically go to zero stock, but if you have to accumulate produced capital sufficiently fast, you can have indefinite output growth. Okay, now the limits to growth is not going to help you with those metaphors. That's the point. If you're a scientist you really have to fight or if you address or argue against the best there is in your science. It's simply not good enough to say the biosphere is bounded, therefore the human economy is bound and you need to show something more. And what we've tried to do in the review I think I like to think successfully is through the balance, the demand versus supply inequality which Yuan was referring to before is that the efficiency with which we can transform nature's goods and services into final products, that's the conversion factor that depends on institutions and technology. And what we argue is that just as you cannot have an engine which transforms heat into work at 100% efficiency, you cannot have that efficiency parameter that I mentioned just now go to infinity. And if it cannot go to infinity then even the human economy is bounded. Now that argument is far in the head of anything I've seen before and that's why I haven't really alluded to the limits to growth literature and so forth. Simply saying that the biosphere is bounded and therefore there is limits to growth can be easily countered and I had to counter my colleagues, the best of my colleagues, not simply assertions. That's enough. That's about as good as I can make it. And I'd just like to support part that you're also from an earth system science perspective to say that I am personally agnostic to growth or no growth in the sense that we are all aiming for something else which is human well-being. And I think again you spell out that very well in the review that what everyone is aiming for is good lives for your own families and for your coming families and that we need an inclusive wealth metric to be able to measure our progress as human beings and as communities, societies in harmony with nature as we move along in the world. And that in that context, I do not see any direct limitation or contradiction between finite planetary boundaries and good human development that we can have an economy that develops within the physical boundaries on earth. And of course institutions and technologies will allow us to have dynamic responses here. I mean, you have a very classic example of what's happening right now shifting from fossil fuels to renewable energy systems can theoretically provide us with the same level of really good energy access in a modern world but one is destroying the climate and the other one is within the safe operating space on the climate boundary. So I think there is no real contradiction here but we have to integrate both boundaries, hard boundaries with policy measures that put pricing on natural assets and that allows us to have an economy that provides the right incentives and I think that's the magic of that mix, so to say. And then on the donut economics, for me the donut economics is more of a paradigm inspiration, it's not an operational tool and it's largely based on the same principles fundamentally as your conclusions part of it I think which is that our societies and economies must now evolve within the stability of a function of your system. So it's a kind of a bounded system in terms of the economy and societies evolve within the planet meaning we need to reconnect. We cannot be an external component of natural assets basically and then where you take that operationally is a completely different story. Yeah, so and then there was a question there on developing country paradox but I think that's a question that perhaps is closer to you part. I think this comes down to this inequity challenge we have that we cannot, how do we transition to a future where we don't allow a rich minority to basically vacuum clean the natural assets on earth and not share in an equal way with the vast majority of poor communities in the world and I mean that's if anything the grand challenge we're facing I mean the grandest of challenges perhaps. And there's a good deal of truth in what you've said I agree with you and some of my comments previously alluded to that whether we are paying for the goods we take from we buy from the poor countries adequately enough but remember we are looking at the wealth of nations we're not looking at the GDP or nations and wealth will include these will be national wealth expressed in terms of their natural capital so you can have a world in which the wealth grows for quite some time but I keep mentioning that it's very important you can have formal models as I said with exhaustible resources and produce capital and human capital in which everything is kosher in the sense that without any of them there will be no output so there's an essential and yet accumulation of capital and knowledge can override the biosphere that's it's really I have to say at the end of the day you have to match the best of existing models and before you can progress otherwise a critic of metaphors will say okay yeah but here's my model tell me where it doesn't match your metaphor it does and yet I can show you mathematically that you can have unlimited growth so a great deal of my last 30 years has been spent in trying to do essentially have a dialogue internal dialogue with the best there is in economics which I still think is misguided and see how to meet that and remove the misguidedness so to speak and that does require work a lot of work and the reviewer tried to do that they're trying to express that so do bear in mind metaphors are good but one reason they don't seem to be have an effect on the economics profession is they can come up with these counter examples all right so that's just a reflection on my own experience put it that way thank you again both of you so we I think we can go on the whole day and all leave me here but I think we need to finish soon so I will ask a few last questions and the last one of those I think could be seen as a good ending point here so there is one question from again from Sushilton about evaluation so we move on to a more practical question so Sushilton writes that we are well defined framework to value human safety so that is physical life for instance risk is fairly fundamental to this and then she writes this is not the case with environmental valuation risk may be added empirically it seems problematic to me so is environmental valuation fit for purpose going forward or does it need a fundamental overall the more fluidly encompassed risk and uncertainty and I add another question that's related to that from Monika Fultin Salishta do you think that the scale from monetary based valuation in policy planning could be an alternative path is it possible in your opinion could it reduce the pressure on economic estimates of GDP as we have today so two question on valuation and then there is another question is especially for professor if one were to begin analyzing some of the issues that you raise from global perspective to estimate cost and benefits what would be the global social discount rate if you would use so that's a very precise question and then the question that I would say summarize everything here and also it's currently the one of the most popular one from James Hamid what are the prospects for some form of green GDP becoming important in governments and policymaking so that's the last question sorry what was that question again what are the prospects for some form of green GDP becoming important in governance and policymaking well thank you very much I'll go the reverse direction first of all the green GDP at one level you're asking for taking depreciation into account when you do your income expenditure calculation so it's an NDP if you like that domestic product taking into account depreciation of natural capital which will include environmental degradation the problem is that increasing GDP the NDP is not equivalent to increasing wealth because for wealth to increase inclusive wealth I'm always going to be referring to inclusive wealth here to increase inclusive wealth consumption must be less than NDP so you need to add that additional condition otherwise you won't have net investment and if you don't have net investment your wealth doesn't grow okay so carry your entire intuition about changes in capital stocks you know the asset management problem that we economists are good at analyzing but always include natural capital in it and then you'll be safe in your discussion so yes green GDP is the first cut but it's not on its own good because the result says that welfare and wealth are two sides of the same coin if one goes up the other goes up if one goes down the other goes down okay so that's the idea of a discount rate you know very well I can't give you an answer to that because the social discount rate is the rate of change of a accounting price of the numerary good that's the definition of a social that you choose your numerary good that's a produced capital it doesn't have to be produced capital it could be something else it could be some ecosystem which is your unit of account and you express values of everything else in terms of that that's okay it could be produced capital expressed in produced capital and the social discount rate in other words the rate at which you're discounting this numerary good over time depends on both economic possibilities and your welfare criteria so without knowing the way the two marry each other you won't be able to get an answer the question that you had was asking as to whether it could be negative was precipitated by the idea that you're looking to make a forecast of the economy projection of the economy based on the best model that you've got and then you ask suppose I introduced include a new project investment project an investment project is really a perturbation of that projection of that forecast because if you accept it the economy goes in one way if you don't accept it it goes another way but a neighboring, neighborly way in the sense that they're not very different and then you ask whether the perturbation is worth undertaking and what we usually do is to look at the net present value of the project which summarizes the value of that change that the project thinks about if it's positive you say well maybe we should accept it if it's negative you say we reject it but then ask yourself the following question what does NPV mean well NPV is the discounted value of flows of net benefits and the sum of net flows is a stock so what NPV something we are very familiar with is telling us is measuring the change in the wealth brought about by the project so you've got a nice complete story now here well for economics here the only thing is when you do the NPV calculation don't forget to include natural capital so that's that I can't answer the social rate of discount any further other than the fact that if your forecast tells you and I want to go back to your hands question suppose the forecast that you have tells you that you are going to hit the boundary or come too close to a boundary boundary in say 20 years time on the other hand you're going to have a lot of good things coming out for the first 18 years of the project then you have a project and you are thinking of how to think about that project well because you will be on the 20th year you're really in danger so you're going to have a serious negative discount rate which will then amplify the losses you will be suffering at that age that stage when you bring it back to today so instead of diffusing it reducing it through a positive discount rate the negative discount rate amplifies it and so that will be a signal don't go there, don't accept the project try and avoid this part that's the motive behind your hands question because that's exactly right and it says that if you follow the chronic logic correctly you shouldn't go wrong at least not in your intuition you can still make a mistake but that's a different matter the valuation issue well there is very little for me to say there is all I can say is that nothing is perfect everything is approximate particularly when you do it for the first time when the whole category of goods and services come to the he has never or she has had no experience with them but then ask yourself if you feel that despondent and say it can't be done just ask yourself what must have been like for Kuznet, Simon Kuznet in the 1930s to prepare the first set of national accounts I mean he was making horrible mistakes and he knew it that's the main thing he was cutting corners left, right and center and he knew it the main thing is we have to take the risk we have to go the right route we'll make mistakes but the good thing or having good theory is that you know what mistakes you're making where you're making you don't know the order of magnitude of the mistake by the way because you don't have that kind of information but you know that you are you're being guided by theory to do the right modifications and of course over time if you have the time where you hadn't come in we'll say well look we don't have much time you could have trial and error and then make moves we really have to be very careful now we need to engage hugely the national accountants really need to engage hugely with earth scientists and ecologists and one of the things that the review recommends is that every department of government ought to have ecologists in it not the environment ministry bank of England treasury they all ought to have it because every project should be screened for its impact on the biosphere that's as practical thing I can just say now the second question monetary GDP I'm not sure the entire review is on the real economy money is just a way of expressing we're not looking at short run management of the financial sector we're looking at the real economy throughout I express it in dollars or international dollars but it really is about goods and services that's why I began by saying we're looking at nature's goods and services not the monitoring value of it that's an expression it's a trade-offs between the relationship between the processes that are driving the system and the economic system and the biosphere system thank you I think you answered all the questions do you like to add something these were very exhaustive answers my only compliment would be on Surai's question on evaluation as well on risk and uncertainty just to add to part this assessment here of the need to recognize or to build in our ability to handle uncertainties and really let's say operationalized precaution because we know that we are facing non-linearities but the risk remain uncertain but the interesting thing is that the way we generally define risk is probability times impact and if impacts are infinite in terms of being unacceptable then risks are high even at low probabilities so a low probability times a very high impact gives high risk that's exactly where we are now we are facing high risks and I would even define emergency or urgency as equal to risk multiplied by time so an emergency arises when you have high risk multiplied by limited time and that's exactly what we have come to we've come to a point where we have a decade to turn things around to avoid high risk despite uncertainties so in that sense I think it lends even more support to take your review Partha and start really broad conversations and try to translate it into policy measures and that precaution to handle a certain risk must form central stage also in our ability to value natural capital and stay away from what I call the danger zones meaning transgressing the boundaries so again a very nice alignment from entering the challenges we're facing from two very different entry points I'd like to just have a epilogue to the point you just now made which I should have made but you've made it very eloquently incorrectly so that's not a problem when zero meets infinity we have a problem that's what Johann is rightly pointing to those of you who are listening in and who are economists will recognize that this problem was faced by the 18th century mathematician Bernoulli from the St. Petersburg Paradox is exactly this and what one of the problem when zero meets infinity the decision criterion can't be expected utility because the data are so ambiguous and there are there is work on the axiomatics of ambiguity and that is to say obviously relax assumptions that you made before for expected savages theory expected utility theory because you don't have the kind of you can't even have subjective probabilities because the data are all over the place it's just very noisy but you do know that this and then there are axioms we give you something like a maximin for example which is of course now comes back to these problems we've been discussing if it's maximin then you don't talk about probabilities you simply say I'm going to avoid the bad bad case like crazy you know that's the least the Steinbeck so again we do have the tools to do that and in some ways we do use it we have prohibitions I mean we do look at covid under covid we've given a huge amount of individual liberty which in the west we take as absolutely sacrosan that's our religion why did we do that? because there's a public goods problem here and we're not having lockdown and so forth all the constraints that we've been facing the last year are to avoid spreading the disease you giving it to me and so forth so you've got a serious externality problem and we've agreed on quantity constraints to meet it so I think we need to I like to think that economics is done best if we work on very tight models but then step away from it and use life to illuminate the model so to speak and so you can use covid to say yes but we've been giving up freedoms and we've agreed to give up freedoms we've done that in order to have better higher freedom later if that's the case so we're not too far from this idea that if we're near these planetary boundaries we're really in serious trouble no question about it and that's all the sciences are telling us that and we really need to think through the things that we need to give up to be able to have a prosperous future for our descendants thank you so as a share of this session I would take liberty to ask one final question Partha this is an important and very urgent question sorry topic and that the review is covering so my question will be a bit more summarise the discussion and have your thoughts about the future so the UK government has said that they will respond to a review later this year what your hope can be done globally this year on this issue so what's your hope that can be done well the ideal hope of course the hope that I would have which is completely unreachable with the recommendations that are carried out but this was sponsored by the UK government and the UK Treasury so there is a powerful country no question but on the other hand it's only one country so it can't possibly be responsible for carrying out the recommendations say having a transnational introducing a transnational creating a transnational institution it can at best if it thinks it's a good idea to advocate it and see where it goes but there are many things that can happen domestically obviously there are domestic policies the way say projects are appraised even in the Treasury would be something that the Treasury could do and I hope they will I don't know what the there are political issues political feasibilities which of course as an academic I am not privy to and I shouldn't be privy to because if I took political constraints into account when doing my science I would be doing really bad science that would be just wrong look for possibilities and then see and hope that our representatives in government will carry through and there are many other things we have very strong things which we haven't discussed over here as population for example which is the review has quite a lot on which is unusual on environment you don't talk about population but it's absolutely central to the issue because it's one of the key variables affecting our total demand population size and standard of living it's obvious but in order to show what the trade offs are you need models can't simply say that if you increase one you have to reduce the other you have to see how they respond to each other because these are endogenous variables in these models and my review has that and within population there is a lot we can do we can have greater expenditure on family planning in foreign aid for example component of foreign aid because some of the you know we haven't fertility transition we may have gone through in the west and in China and in Korea, South Korea and Taiwan but Africa is nowhere near a fertility transition and there is an unmet need for their need not ours women's need they've expressed a desire for the need for family planning services so we can boost that enormously, the EU can but less than 1% of EU aid goes to family planning because it's a forgettable aspect of the home the host nations don't take family planning seriously so the aid givers don't and it's really the NGOs, Gates foundation and so forth who promoted so there's something we can do, we can do a lot it will help the Africans future Africans because they're growing at a very fast rate population wise and that's creating pressure on their ecosystems so it's in their interest but quite apart from that it's empowering women so even if you start from a much more primitive notion of the good in the basic how fundamental like people should be empowered have power over their own bodies control over their own bodies this is what we're talking about then it seems to me to ignore these aspects it's really bad science never mind the ethics so the review goes into that as well and I'm hoping that there will be some things which are quite cheap and family planning is very cheap other things like women's education that's much more expensive so the roots to empowerment we've got used to the idea that only education that's the thing that matches because it's comfortable doesn't take you into how can you be against education either way that's not quite true there are societies where males don't like women to be educated but never mind that so if you really go into all these in detail some of them can be enacted but what will be I can't tell all I can say is that I was the Treasury was a remarkable host to my review they made no demands on what I wrote absolutely nothing at all they gave me an amazingly creative team amazingly good team and it's a collaborative adventure between my team and I in producing the review and so I mean all I can say is that it's been a fantastic experience doing this and I've tried to repay the debt I owed them by producing as honest a piece as I could what they do with it is something I can't predict thank you I would like to thank you all for participating here all the attendees and of course especially Park and Johan for your very valuable contribution to this webinar providing a very interesting discussion so we've run a little bit over time but discussion was so interesting so I blame you a little bit, both of you that we spent a little bit more time because you were serving that discussion thank you very much it's been a pleasure