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'Environment and economics are natural allies'

Apr 23, 2009

The concept of ‘natural capital’ makes us realise that economy and environment go hand in hand. Since no economic crisis can be solved at the cost of nature, India’s business community should make the most passionate environmentalists, argues Dr. D.K. Giri, Director, Schumacher Centre.

Try as they might, green campaigners are struggling to lead corporate India away from suicidal environmental recklessness with moralistic arguments. It is time, therefore, to appeal to wallets instead. The simple fact is that environmentally damaging business commits the cardinal sin of being uneconomic. 

The bankers and economists of this country don’t generally think of themselves as instinctive nature campaigners – tree hugging doesn’t hold much appeal when you’re wearing your best pinstripes. Business figures are often told by environmental protesters that they are the biggest obstacle to a greener, cleaner and more sustainable India.

But if you believe in the principles of economics, you are in fact a born ally of the natural world. How so? Well, the foundations of the entire global economy can be viewed in terms of ‘natural capital’.

Natural capital

Natural capital is the sum total of the world’s natural resources, including our soil, our water, trees, fossil fuels, and living creatures. Natural capital cannot be produced by human activity – it can only be spent. But currently, India and the wider world are recklessly spending natural capital as if it is simply generated income.

The worldwide economic crisis that we are experiencing is already almost a year old. These present financial woes will pass and we will be able to convince ourselves that things are rosy once again. But in the longer term, the threatened result of humanity’s lack of thrift with its natural capital is no less than global economic bankruptcy. 

To look at our nation alone, the degradation of India’s forests continues unabated. The glaciers in the Himalayan region, which supply water to one billion people, face extinction by 2035. India and the globe are facing a relentless loss of living systems that, if unchecked, unleashes the prospect of catastrophic poverty for all of us – not just those who are already poor.  

The concept of natural capital was first coined in the mid-20th century by economist and banker EF Schumacher (1911-1977). The current global economic crisis, coupled with the gathering storm of the global climate change crisis, has thrust German-born Schumacher’s views once again into the limelight.

A former chief economic advisor to the UK’s Coal Board, Schumacher also worked for India’s Planning Commission. His seminal book of 1973, ‘Small is Beautiful’, was moulded from his time in South Asia and his exposure to the thinking of Gandhi and the Buddha. The subtitle of the book: Economics As If People Mattered, made Schumacher’s intentions clear. The text was instrumental in the formation of our modern trade justice and environmental movements. It was subsequently chosen by the Times of London as one of the 100 most influential books published since the Second World War. 

Within its pages, Schumacher lamented that “modern man does not experience himself as a part of nature but as an outside force destined to dominate and conquer it. He even talks of a battle with nature, forgetting that, if he won the battle, he would find himself on the losing side.”

Green money

Schumacher highlighted our collective failure to “distinguish between income and capital where this distinction matters most.” He said: “Every economist is familiar with the distinction, and applies it conscientiously to all economic affairs – except where it really matters: namely, the irreplaceable capital which man has not made, but simply found, and without which he can do nothing.”

Delegates at this year’s Delhi Sustainable Development Summit acknowledged it is not an easy time for ministers to throw large quantities of cash at climate change, or anything else for that matter. But Schumacher taught us that it is impossible to separate environmental needs from economic needs – ‘natural capital’ shows they are one and the same. There is no solution to an economic crisis that comes at the cost of nature.

To quote one of President Barack Obama’s fledgling US administration, Rahm Emanuel, “a crisis is a terrible thing to waste.” We must capitalise on this financial crisis and period of economic re-evaluation, using it as an opportunity to realign the economy with the natural world. It is simply good business sense so do so. 

With all this in mind, the business community is not the enemy of the environmental movement but its most natural ally. The barriers of suspicion between these two groups must be torn down.
Dr D.K. Giri is Director of Schumacher Centre, a Delhi-based NGO that focuses on rural development, climate change and corporate social responsibility. He can be contacted at

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