Sam Judd

Comment on the environment from nzherald.co.nz columnist Sam Judd

Sam Judd: GDP is no good to me

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When you translate Australia's growth trajectory out twenty years and take natural capital into account, it becomes grossly apparent that they are depleting non-renewable resources by mining materials that they will never get back.
When you translate Australia's growth trajectory out twenty years and take natural capital into account, it becomes grossly apparent that they are depleting non-renewable resources by mining materials that they will never get back.

I have long decried that GDP (Gross Domestic Product), has very little relevance as a measure for our wellbeing.

Capitalist policy pushers constantly seek to use the idea that our low productivity (compared to Australia in particular) was cause to say that we have a low standard of living, therefore we have the brain drain and a host of other problems.

But I have always countered this argument by saying that to me, there is a huge value in the fact that we have clean water and beautiful forests to enjoy, beaches to go surfing and fish that haven't been poisoned that we can eat. It is the reason I returned home to settle after my OE and no doubt plays a major factor for other educated Kiwi travellers.

This nature contributes to my wellbeing and undoubtedly, many of you would agree that there is a value to it.

But can we put a price tag on nature and is it even right to do so?

This week at the Valuing Nature conference in Wellington, Pavan Suhkdev from TEEB presented a welcome challenge to our standard concepts of value: "We are tied to a belief of a human wellbeing system which is determined by spending power" he said "and whether we like it or not, economics has become the language of policy." So he, alongside a consortium of some of the smartest people in the world, has been working on the concept of natural capital.

When you take this into account, New Zealand is a very wealthy country indeed. To preserve this newly formulated standard of living however, the baseline of how we measure it needs to change. No longer can we only look at profit and loss without taking the externalities (such as habitat destruction, water pollution and carbon emissions that affect our natural capital) into account.

Some businesses (such as Puma internationally) are electing to do this themselves, but this may not be fast enough to curb the extensive destruction that continues to go on in the name of profits. Even Hamish Bohannan, the managing director mining giant Bathhurst Resources that is widely despised by environmentalists said that "we simply cannot keep going on like this" with regard to burning fossil fuels.

Yet Bohannan, whose company is preparing - to the wide dismay of environmental groups - to cut an open cast mine in the Denniston Plateau, always has the ability to fall back on the demand argument, saying that the developing world needs electricity and coal is providing it for them. Who are we to say that the billions of people in China and India shouldn't be able to have a car, a computer and the benefit of electricity for their education?

To achieve the change may require something so radical as a change of the Companies Act so that we are forced to account for water displacement, plastic use, adverse labour conditions and damaging chemicals.

Insurance companies have long been looking at the concept of natural capital and it is no wonder that they are often seen sponsoring and supporting environmental organisations. The former CEO of Sovereign, Charles Anderson, told me: "The insurance world revolves around risk. So we need to put a value on the environment to the extent that looking after it avoids the risk of catastrophic events."

This video put together by Niwa boldly states that natural disasters have doubled over the last two decades from 200 to 400 per year.

The fact that GDP goes up when there is a natural disaster like the earthquakes in Christchurch reinforces that it is a measure purely of movement in equity and is therefore only useful to show such movement, not for actual progress.

And when you compare the progress of Australia (where only 20% of their electricity generation is renewable) to New Zealand, you find that when you take into account the externalities that our convict cousins are basically disregarding, the long term picture is not that rosy. Although they have three of the top ten most liveable cities in the world (Melbourne, Sydney and Adelaide), high wages and economic growth, when you translate their growth trajectory onto twenty years and take natural capital into account, it becomes grossly apparent that they are depleting non-renewable resources by mining materials that they will never get back and New Zealand shows more "good" growth.

The argument that supports taking natural capital into account does not say that we need to stop all extractive industry. It says that we should measure and account for the currently under-acknowledged externalities that impact others' ability to enjoy resources as a result.

For example, if you mine for minerals along the Galilee basin on the previously unexplored central Queensland coast, we know it will make money. We also know it will deliver a huge amount of silt that will smother and kill areas of the Great Barrier Reef which generates over $1 billion each year of tourism income.

Mining impacts the reef and the "ecosystem services" that the reef provides to other industries, but the diving and tourism industry has very little impact on anyone, least of all the miners.

So if we do decide to deplete our natural resources, we must at least account for the impacts that this will have on our natural capital and on other industries. This is readily apparent when it comes to the clean water that our agrarian and tourism economies rely on.

If you ask me, given how splendid our natural spaces are in New Zealand that we all enjoy, we are a very rich country indeed.

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