Rethinking the Relationship between the Environment, the Economy and Society
The Art
The Graph
What’s Inspiring
The financial sector is clearly taking notice of climate change and its potential impacts on global economies. Central banks of the world are tasked to find ways to avoid financially disruptive risks, such as those arising from climate change, but are challenged to find new tools to address this risk, in part because traditional accounting and other economic performance measurements do not distinguish between natural capital (natural ecosystems, e.g.,air, land, soil, water) and human created capital (e.g. machines and buildings). Current accounting frameworks assume that a loss of natural capital can be offset by an increase in manufactured capital. “…(P)roponents of an alternative ‘strong sustainability’ argue that the existing stocks of natural capital and the flow of ecosystem services they provide must be maintained because their loss cannot be compensated by an increase in manufactured or human capital…For instance, the depletion of natural capital in a warming world cannot be compensated by higher income. In this view, the economy is embedded in social and biophysical systems…and is not a separate entity as the traditional approach to sustainable development is framed…” page 63
Graph 19 (art is based on right-hand panel)
