This is the fifth part of a guest post series by Nuno Gas­par de Oliveira who works as con­sul­tant and advi­sor in Esporão, a por­tuguese main wine and olive oil com­pany, in the area of Strate­gic Man­age­ment for sus­tain­abil­ity using ‘Busi­ness Ecosys­tems’ models,

This guest post has pre­vi­ously been pub­lished on LinkedIn. It is the expres­sion of the author’s thoughts and expe­ri­ences and as such is acknowl­edged as a fruit­ful con­tri­bu­tion to the dis­cus­sion on bio­di­ver­sity off­sets. If you want to react or clar­ify your own posi­tion (under­pin or dis­prove), please leave a reply below!

On April 20 1939, a woman that would for­ever be asso­ci­ated with the sus­tain­abil­ity rev­o­lu­tion was born in Oslo, Nor­way, Gro Harlem Brundt­land. When she was 10 years old, the fam­ily moved to the United States where her father, a med­ical doc­tor, had been awarded a Rock­e­feller schol­ar­ship. Fol­low­ing his foot­steps, she stud­ied to become a med­ical doc­tor as well and con­cluded a Mas­ter of Pub­lic Health (MPH). So, her first choice of career was nei­ther envi­ron­men­tal­ist nor politi­cian, but polit­i­cal activism was already part of her way of life since very ten­der age, becom­ing a mem­ber of the Nor­we­gian Labour Move­ment in its children’s sec­tion at age seven.

In 1965, after spend­ing a few years in the US, she was back in Oslo to assume the posi­tion of Min­istry of Health, but her enthu­si­asm and active com­mit­ment with well­be­ing pro­vided her with the oppor­tu­nity to be offered the posi­tion of Min­is­ter of the Envi­ron­ment in 1974. Albeit reluc­tant at the begin­ning, her con­vic­tion of the link between health and the envi­ron­ment changed her mind. Her rep­u­ta­tion and deeds gained such recog­ni­tion that, in 1981, she was appointed Prime Min­is­ter for the first time, as the youngest per­son and the first woman ever to hold the office of Prime Min­is­ter in Norway.

But why are we ana­lyz­ing the ven­er­a­ble career of Dr Brunt­land? Well, she’s about to star in our story…

In 1983 the then United Nations Secretary-General invited her to estab­lish and chair the World Com­mis­sion on Envi­ron­ment and Devel­op­ment and in 1987, on the aus­pice of the UN Gen­eral Assem­bly, the World Com­mis­sion on Envi­ron­ment and Devel­op­ment (WCED), Gro Harlem Brunt­land, pre­sented what would become widely known as the ‘Brundtland-Report’. This was a major land­mark in terms of the inter­na­tional dis­cus­sion in the polit­i­cal as well as the sci­en­tific field. The report ‘Our Com­mon Future’opens with the chairman’s fore­word stating:

“A global agenda for change” — this was what the World Com­mis­sion on Envi­ron­ment and Devel­op­ment was asked to for­mu­late.

When this report was pub­lished, the notion of sus­tain­able devel­op­ment was not asso­ci­ated with the notion of ‘nat­ural cap­i­tal’ as under­stood in eco­nomic terms. Although the report refers to ‘the planet’s eco­log­i­cal cap­i­tal’, it is mainly for­mu­lated in mere qual­i­ta­tive terms of needs, abil­i­ties and equity:

“Human­ity has the abil­ity to make devel­op­ment sus­tain­able—to ensure that it meets the needs of the present with­out com­pro­mis­ing the abil­ity of future gen­er­a­tions to meet their own needs.”

The ‘Brunt­land Report’, as it was called since then, pro­vided funda­men­tal insights and rec­om­men­da­tions on what regards the foun­da­tions for a post-modern view of sus­tain­abil­ity and will for­ever rep­re­sent a turn­ing of the page in what con­sid­ers the role of polit­i­cal lead­ers in pres­sur­ing the global agenda in terms of link­ing envi­ron­ment to gov­er­nance and eco­nom­ics. Yet, some­thing was still very illu­sive. The def­i­n­i­tion of nat­ural cap­i­tal was still largely unde­fined and loosely accounted for.

The ‘offi­cial’ con­tem­po­rary eco­nomic for­mu­la­tion in terms of ‘nat­ural cap­i­tal’ was pop­u­lar­ized by David Pearce and Kerry Turner (‘Eco­nom­ics of Nat­ural Resources and the Envi­ron­ment’, 1990), pre­cisely under the con­text of sus­tain­able development.

These two econ­o­mists argued that the main­te­nance of the nat­ural cap­i­tal stock is a sine qua non con­di­tion for sus­tain­abil­ity, as pur­sued by Schu­macher, Mead­ows, Brunt­land and so on. By point­ing out that ‘the resource stock should be held con­stant over time’, Pearce & Turner focused on the prob­lem­atic of not hav­ing per­fect infor­ma­tion (some­thing that clas­si­cal econ­o­mists love dearly) on how the bios­phere works nor of its ser­vicesregard­ing human life sup­port and well-being. Restrain­ing from erod­ing that which sus­tains us seemed per­fectly log­i­cal, even in eco­nomic terms!

In a sim­i­lar wave­length, in 1991, Michael Porter, an Har­vard Busi­ness School researcher and a star on the rise to become one of the most influ­ent busi­ness strat­egy thinkers, lead an essay on how adding some hur­dles to the eco­nomic full throt­tle would in fact be good for the eco­nomic pace.Porter chal­lenged the busi­ness world wis­dom about the impact of envi­ron­men­tal reg­u­la­tion by argu­ing in his essay ‘America’s Green Strat­egy’(1991) that well-designed reg­u­la­tion could actu­ally increase com­pet­i­tive­ness, known as ‘Porter’s (Green) Hypothesis’:

“Strict envi­ron­men­tal reg­u­la­tions do not inevitably hin­der com­pet­i­tive advan­tage against rivals; indeed, they often enhance it”

Until that time, the tra­di­tional view of envi­ron­men­tal reg­u­la­tion, held by vir­tu­ally all econ­o­mists, was that requir­ing firms to reduce an exter­nal­ity like pol­lu­tion nec­es­sar­ily restricted their options and thus by def­i­n­i­tion reduced their prof­its. After all, if prof­itable oppor­tu­ni­ties existed to reduce pol­lu­tion, profit-maximizing firms would already be tak­ing advan­tage of them.20 years later, this hypoth­e­sis still seems largely mis­un­der­stood by most busi­nesses and cor­po­ra­tions (Ambec et al., 2013)

The lat­ter 25 years have been prodi­gal in research on nat­ural capital’s impor­tance to the econ­omy and well­be­ing, with mul­ti­ple views on its role on the post-modern soci­ety and spe­cially lever­ag­ing the con­sumerism spree that might have led us to a dire sit­u­a­tion where we have finally come to real­ize that, like Galileo said, the world is round and yet it moves and as Coper­ni­cus insin­u­ated, we are not the cen­ter of the universe.

Maybe one of the most sig­nif­i­cant ‘wake up calls’ came from the sem­i­nal work pro­moted by Robert Costanza, acclaimed in the 1997’s Nature paper ‘The Value of the World’s Ecosys­tem Ser­vices and Nat­ural Cap­i­tal’ (Costanza et al., 1997). The paper opens with a breath tak­ing statement:

“The ser­vices of eco­log­i­cal sys­tems and the Nat­ural Cap­i­tal stocks that pro­duce them are crit­i­cal to the func­tion­ing of the earth’s life sup­port sys­tem. They con­tribute sig­nif­i­cantly to human wel­fare, both directly and indi­rectly, and there­fore rep­re­sent a sig­nif­i­cant por­tion of the total eco­nomic value of the planet. Because these ser­vices are not fully cap­tured in mar­kets or ade­quately quan­ti­fied in terms com­pa­ra­ble with eco­nomic ser­vices and man­u­fac­tured cap­i­tal, they are often given too lit­tle weight in pol­icy deci­sions. This neglect may ulti­matelycom­pro­mise the sus­tain­abil­ity of humans in the bios­phere. The economies of the earth would grind to a halt with­out the ser­vices of eco­log­i­cal life sup­port sys­tems, so in one sense their total value to the econ­omy is infinite.”

Nev­er­the­less, Costanza et al. dared to put a num­ber in the Earth’s nat­ural cap­i­tal, stat­ing that, by then, the eco­nomic value of 17 ecosys­tem ser­vices for 16 bio­mes, based on a syn­the­sis of pub­lished stud­ies and a few orig­i­nal cal­cu­la­tions, the value (most of which is out­side the mar­ket) was esti­mated to be in the range of $16 — 54 trillion/yr., with an aver­age of $33 trillion/yr. Because of the nature of the uncer­tain­ties, this should be con­sid­ered a min­i­mum esti­mate. In 1997 the Global GNP is around $18 trillion/year…

But like War­ren Buf­fett once (allegedly) stated, ‘Price is what you pay. Value is what you get’. And in this econ­omy, where the value of nat­ural cap­i­tal is clearly under­stated, are we about to dis­cover the price of our (in)action?

On the next and final chap­ter, nat­ural cap­i­tal­ists and black swans lead the way to a brave new world…