Economist proposes remedy for markets overlooking natural resources

In a groundbreaking book titled "On Natural Capital: The Value of the World Around Us", published by Witness Books, economist Partha Dasgupta of the University of Cambridge presents a compelling argument about the underpricing of nature and its detrimental effects on the global economy.

Dasgupta, a renowned scholar, is concerned about the gap between the demand and supply side of natural capital. He highlights the destruction of natural habitats, such as coastal lands and forests, as a result of over-extension. This over-extension, he suggests, is a consequence of nature not being priced correctly in the market.

To address this issue, Dasgupta proposes several solutions. One such proposal is compensating countries with tropical rainforests for not deforesting, a concept explored through the Tropical Forest Finance Facility. He also advocates for the creation of an international Ocean Agency to manage the ocean and improve its pricing models.

Dasgupta believes that nature is underpriced and this is a fundamental problem facing the global economy. He argues that capital markets do not price in the use of nature, considering water systems and the atmosphere as free. As a result, consumers cannot infer the quality of a product's impact on the natural world from its price.

To remedy this, Dasgupta suggests pricing nature by determining the social value it provides and using that to help rebalance it. He advocates for mandatory disclosures to provide information missing from market prices, as nature is not included in current pricing models.

Regulators, according to Dasgupta, should have a dialogue with those setting standards, rather than just following instructions. He also emphasises the importance of regulators spending time with ecologists to better understand disclosures and reporting.

The book does not delve into the role of consumers in pricing nature, nor does it provide specific details about the disclosures or reporting that regulators should focus on. However, the publication of "On Natural Capital: The Value of the World Around Us" serves as a catalyst for a much-needed conversation about the role of nature in our economy and the need to price it appropriately.

This article was last updated on July 24, 2025, and while the publication date of Dasgupta's book is not specified in the provided text, it is clear that his ideas are timely and relevant in today's world.