Anna Turns considers why GDP is defunct, and investigates the potential of investing in natural capital
The words ecology and economy stem from the same Greek word ‘oikos’ meaning home. Climate is inextricably linked with the flow of money. But business as usual will have costly consequences. Oxford University’s Kate Raworth, author of Doughnut Economics argues that all sectors need to shift away from economic growth towards a more circular system that focuses on living within social and ecological limits. Fundamentally, the main measure of market value - gross domestic product or GDP - does not take into account the inherent value of nature and sustainability. Natural capital represents the benefits we gain from nature – that includes everything from medicines to food and timber, carbon storage and wellbeing too. The outdated concept of GDP places no formal worth on biodiversity, habitats, ecosystems - all things being destroyed by the environmental crisis. Without them, the economy will collapse. So the concept of how we assign value needs to shift.