Societal Pivot Points or Climate Tipping Points – Which will come first?
An analysis of system roadblocks and potential solutions in our race against climate change. We must find the societal pivot points back to true sustainability, before we cross the point of no return. The situation demands global investment in Nature restoration, in the face of climate impacts of increasing magnitude and gravity.
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Introduction
Last week’s post ‘Managing Climate Impact Risk and Uncertainty - The Pivot Point in Finance’ examined the risk disclosure and quantification traps in finance around climate risks and their impacts. The conclusion being that a ‘race to the top’ and Nature-based investments may prevail, once the bad news (everyone is in for massive losses) is out in the open. Such traps are a subset of a larger problem – we all suffer from short-termism.
Short-termism is omnipresent in our societies, and in the systems and institutions we have created. In the socio-economic sphere it leads to profiteering behaviour, economic bubbles and 'races to the bottom'. And the negative application of power (in all its forms) to defend the status quo. As short-termist entities we discount the future and pay attention to the present. Behaviourally we appear to be entrapped by the systems we have created.
By contrast, Nature’s ‘races to the bottom’ – climate feedback loops - are long-term processes, with impacts over time that will crush our current systems and way of life. They are currently progressing at greater speed and impact than any climate actions of humanity. Faced with problems of such gravity, we don't yet seem to be capable of making the necessary system pivots and transformations, to get back to a path of safety.
Today’s post examines the structural short-termism and defects in our governance and economics systems. How these act as traps and roadblocks to prevent greater climate action. Despite much global momentum, we appear to be stuck in stasis – unable to take the greater corrective climate actions necessary.
It is becoming an 'all or nothing' situation - the default scenario is BAU (Business-As-Usual) with some net zero aspirations to be realised ("Stated Net Zero"). The optimal scenario is to quickly make some structural changes to enable the finance and full scale up of Nature Restoration and Nature Positive solutions.
Securing the future for humanity and all species should be our leaders' prime objective. Yet the short-term is seemingly always dominated by economics, real wars, trade wars and an increasingly desperate attempt to maintain past levels of economic progress. Instead of moving towards our sustainable destiny, we are witnessing entrenchment and regression away from such goals.
As explored further below, this is in part a function of Nature being unpriced and not part of the current economic system. Nature is still exploited as a free asset, to be polluted and used for resources. When it comes to capital expenditures for the benefit of Nature, there is no direct asset value from which to finance purchase or restoration.
Greater climate finance channels to restore Nature and biodiversity are essential, to save an economic system that does not yet appreciate their proper valuation and place in society. Large-scale restoration therefore goes hand in hand with new systems of investment and valuation for Nature.
Section 1 - Global Economic and Ecological Footprints
“At present we are stealing the future, selling it in the present, and calling it gross domestic product. We can just as easily have an economy that is based on healing the future instead of stealing it. We can either create assets for the future or take the assets of the future. One is called restoration and the other exploitation”
— Paul G. Hawken (Co-founder of Project Drawdown)
1A. Global Economic Footprint
GDP (Gross Domestic Product)
GDP is used throughout the world as the main measure of output and economic activity. Historically, a country’s level of development and 'progress' has been measured using economic statistics, such as GDP, GNP and GNI. Such statistics capture the 'spot' market value of economic activity at a given time. Providing a consistent method to measure national or regional output - the value of goods and services produced - and to guide economic policy.
However, such "economic measures" have drawbacks, when assessing overall human development and what we as societies should aspire to. They do not reflect well-being / quality of life, nor the societal losses and distortions from e.g. inequality and climate change.
"the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile."
Robert F. Kennedy
Limitations of GDP - Excluded Items
While GDP growth is a traditionally important policy goal, GDP does not represent the total amount of economic activity in an economy, as it excludes items and activities that do not have a market value. Examples include:
- the value of personal /household activities such as unpaid housework, DIY or volunteering
- the value of black market /underground economic activities
- the “wear and tear” (depreciation) of capital stock (buildings, assets, inventories, machinery etc.) that are used across the economy (GDP less depreciation gives NDP, net domestic product)
- the intangible costs of environmental harm /degradation - whether from disasters (natural and man-made) or more systematic behaviour ('negative externalities' of business - wastes, pollution)
- environmental damages from economic activity (clean-up and remediation efforts are ultimately counted, but not Nature's ecosystem services)
- the intangible costs of social harm /degradation - e.g. inequities and inequalities - the split of wealth/ output /income between rich and poor (growth benefits owners far more than workers)
- the quality of the goods produced - with cost and price inflation, there is a natural trend towards decreasing product quality in all its forms
- the welfare or well-being of society
- the value of unpriced Nature services (and undervalued Natural capital) to society - Nature performs a great many 'ecosystem services' all over the planet, on a 24/7/365 basis, which are yet to be formally valued or accounted for in our economic systems.
A great deal of economic activity is unpaid, off-the-books, or intangible in value. In particular, the (intrinsic) value of Nature and ecosystem services provided are greater than the 'world economy' as currently defined.
“While there may be no ‘right’ way to value a forest or a river, there is a wrong way, which is to give it no value at all. How do we decide the value of a 700-year-old tree? We need only to ask how much it would cost to make a new one, or a new river, or even a new atmosphere.”
Paul G. Hawken (Co-founder of Project Drawdown)
There is also an actuarial / inter-temporal dimension to the above. Today's expenditures are accounted for as part of GDP, but there is no provision in GDP for future risk budgets or future generations.
Excluded Items also consist of future unaddressed costs that competent governments should be including in their long-term economic management :
- future costs relating to climate change damages and their mitigation, social adaptation
- future pension and social provision costs relating to anageing population with increasingly variable migration, birth and employment rates
- future costs relating to defence and key sectors, arising from geopolitical and economic security tensions
- other long-term factors that put downward pressure on revenues and upward pressure on spending
Such items would need to be financed through new debt issuance (future debt/GDP ratios will be much much higher) - ranging between 300-500% of GDP, depending on timing.
To prevent an uncontrollable debt spiral would require severe and long-term fiscal tightening and other forms of long-term funding / savings. Accordingly, something will have to give.
"Economics was like psychology, a pseudoscience trying to hide that fact with intense theoretical hyperelaboration. And gross domestic product was one of those unfortunate measurement concepts, like inches or the British thermal unit, that ought to have been retired long before"
Cumulative Value and Effect of Excluded Items
Depending on the country concerned, the Excluded Items above are arguably larger than the measured GDP. And properly-assessed, the value of Nature and its ecosystem services should be larger than both combined.
The most logical solution would be to capitalise Nature on the balance sheet, and include it in a formally revised GDP measure.
As above, Excluded Items have social, environmental and economic dimensions. They accumulate in size and without interventions, can become stressors to the economy and stability. They are also unpriced. The cumulative costs of restoring unpriced Excluded items can therefore lead to intractable or unaddressed problems - the preference being to kick the problem down the road of time. The lack of valuation is problematic as it means that capital expenditures to fix unpriced elements must come from capital reserves (or a revaluation from putting Nature on the balance sheet).
If left unsolved, local social and environmental problems may ultimately lead to reforms and revolts, particularly in less stable economies. In larger economies the problems remain partially solved or unsolved, typically financed by new debt. Their externalisation as regional and global problems (as with climate change) is but a temporary situation. The true cost of pushing costs further into the future is a multiple of current costs. Only early corrective spending (on Nature and water cycle restoration) will offset / mitigate later problems.
The problem with climate change is a cumulative one - all nations must pay the full bill for climate change together. Now and in the future. This brings up all manner of issues related to capacity, fairness, historical behaviour and contributions. And the most rational ways to pay for such is through new debts, new assets on the balance sheet (Nature assets, funds and trusts), new taxes and international cooperation.
This is the path foreseen - new GDPs, new balance sheet items, and much greater debt issuance / money printing.
1B. Paying the Climate Change bills
Paying for climate change recovery will be one of the most expensive economic transitions in history. The alternative is to continue with BAU, which will ultimately become unsustainable and dystopian.
Indicative simplified modelling for such a scenario provides further insight on the economic path to be contemplated. The UK is used as an example.
A. Current Extrapolations of UK OBR (Office of Budget Responsibility)
The current official UK (OBR Sep 2024) long-term projections assume 5% and 3% drops in real GDP by 2074/75, under "below 3C" and "below 2C" temperature scenarios. As set out in previous post Managing Climate Impact Risk and Uncertainty - The Pivot Point in Finance, projections such as these are unrealistic for several reasons:
- restoration and adaptation costs will escalate - the earlier the process begins the better
- a 5% GDP impact over 50 years of future climate change (without proper qualification) is an extremely optimistic result, contrary to realistic climate impact modelling
- the impacts on GDP of climate damages, mitigation and adaptation costs will be much greater than expected (and progressively so). As an original polluting nation, no doubt the UK will also be expected to contribute a decent share to the wider Loss and Damage budgets.
- in a continuing BAU / Stated Net Zero scenario, temperatures will rise faster than expected, and climate damages will be an order of magnitude higher than the 5% of GDP forecast
B. Illustrative Extrapolation (for the UK)- Modelling the True Cost of Climate Change
With assumed periodic jumps in government expenditure, and a consistent budget deficit as % of GDP, UK public debt (with new green and social bonds) will climb continually, perhaps reaching a new equilibrium range of 300-500% of GDP.
However this is likely unsustainable, such that GDP will become obsolete and a new GDP* measure including Nature will be adopted (the dashed lines in the chart below). The transition is assumed to occur over a 20 year period (2035-2055). Even including the value of Nature (with conservative values), this does not completely offset the overall expansion in debt/GDP expansion - a necessary part of the transition to a sustainable world.
As further explored in Section 3, the problem of climate change qualifies as a 'super wicked' problem. The solutions require all stakeholders to find a workable but realistic solution, and to stay the course.
System Health vs Economic Growth - Economics as a subset of Nature
Properly understood and represented, the economic system is a sub-system of Society, which is a sub-system of Nature, the real-world or Earth system. Historically, GDP growth has come from 'cannibalising' Nature in order to grow.
Two centuries ago, the effect of this was imperceptible. And many regions experienced a tremendous rise in prosperity. But the modern economy and 8.2 billion population now dwarf all historical trends, with a gigantic ecological footprint.
The sheer size and cumulative effects of climate change / Excluded Items are now coming home to roost in the form of the 'polycrisis' - increasing climate instability, huge economic imbalances, land and sea degradation, and ecological decline. And in the future sea level rise, tipping points, social collapse, resource conflicts and the like.
The 'system balances' are highly distorted - far away from any natural equilibrium.
The system has performed well according to economic-world considerations - GDP is still increasing in most countries - but this is not the same as well-being or system health.
A system reset is long overdue. One that brings the economic sub-system back in harmony with the real-world (mother Earth) system. GDP is dependent on Nature - and further declines in Nature will cause great upheavals in GDP. It is the system health (and longevity) that we should care most about.
Whether that system reset means degrowth, prolonged decline, or a hybrid system misses the point. Planetary boundaries are our only safe space. Moving beyond them is extremely dangerous and heralds an ultimately dystopian future.
Genuine Progress Indicator (GPI)
GPI is an attempt to measure the real increase in economic welfare. GPI measures the improvement in economic welfare, minus the costs associated with economic growth.
GPI does not measure the value of Nature, rather it puts a value on non-market welfare and the deterioration of Nature. In other words, reducing GDP for some of the major Excluded Items,
By adjusting GDP for the Excluded Items, we obtain some very revealing results:
• Global GPI/capita peaked in 1978
• Globally, GPI/capita does not increase beyond a GDP/capita of around $6,500
• Life satisfaction in almost all countries has not improved significantly since 1975
Source: Kubiszewski, Costanza et al (2013)
Source: Costanza, Kubiszewski et al (2014) - Time to leave GDP behind
Other Indicators designed to capture human well-being, environmental and social effects are set out in the Appendix.
1C. Planetary Boundaries
"We don’t know how long we can keep transgressing these key boundaries before combined pressures lead to irreversible change and harm"
Johan Rockström, Potsdam Centre (PIK)
The planetary boundaries as mapped by the Stockholm Resilience Centre
The 'safe operating space' model seeks to reconcile current societal requirements with non-negotiable environmental limits (planetary boundaries).
These are not climate tipping elements - rather they are system boundaries, beyond which we see increasing loss in stability and resilience of the Earth system.
The processes operating in the Earth system are inter-related. Therefore respecting all 9 boundaries is required, in order to maintain the safe operating space.
Land-based Planetary Boundaries
The 6 boundary breaches so far are all land-based planetary boundaries - 7 of the 9 planetary boundaries are already substantially affected, with 6 already breached.
Interactions between the land-based planetary processes
"But for all this, you never could quite see past the limits of the here and now, or the barriers of your own selves. Even though you knew what you were doing, you couldn’t bring yourself to stop. It was only just out of reach, you know. If only you’d been just that little bit wiser, that little bit more compassionate, well, you wouldn’t be in this mess.
It’s not your fault of course. You’re barely out of the trees; it’s a bit unfair to expect you to have to deal with an existential crisis of planetary proportions. But as you’re belatedly starting to understand, it really isn’t looking too good right now."
Stuart Capstick (A Letter to the Human Race, 2019)
1D. Global Ecological Footprint
“We’ve tried, in every way we know, to control and contain water on this planet. But there are limits to our power, which become clearer as escalating cycles of flooding and drought increasingly make a mockery of our efforts"
Bill McKibben
Biodiversity - Historical Trends
“For terrestrial and freshwater ecosystems, land-use change has had the largest relative negative impact on nature since 1970, followed by the direct exploitation, in particular overexploitation, of animals, plants and other organisms, mainly via harvesting, logging, hunting and fishing.
In marine ecosystems, direct exploitation of organisms (mainly fishing) has had the largest relative impact, followed by land-/sea-use change.
Agricultural expansion is the most widespread form of land-use change, with over one third of the terrestrial land surface being used for cropping or animal husbandry ...
In freshwater ecosystems, a series of combined threats that include land-use change, including water extraction, exploitation, pollution, climate change and invasive species, are prevalent.”
"The negative trends in biodiversity and ecosystem functions are projected to continue or worsen in many future scenarios in response to indirect drivers such as rapid human population growth, unsustainable production and consumption and associated technological development.”
IPBES Global Assessment Report on Biodiversity and Ecosystem Services (2019)
The IUCN Red List of Ecosystems highlights extinction risks and the increasing risks of ecosystem collapse.
Source: Living Planet Report 2024, Zoological Society of London (ZSL)
The modern historical trend has clearly been negative for biodiversity, with steady declines in many populations.
In addition to climate-related impacts, the main drivers of biodiversity loss are deforestation, habitat loss, hunting, overfishing, and other environmental impacts of food production.
While the impacts of climate change on biodiversity are currently less substantial than these direct drivers, they are expected to intensify as temperatures rise, with species retreats and migrations to cooler climes.
Extreme weather events can also become extreme biodiversity events:
- Major wildfires extinguish uncountable numbers of vertebrates and invertebrates, and colossal amounts of biomass, while causing regional pollution. The 2019/20 Australian Bushfires burned 24.3 million hectares, with the loss of 3 billion animals. The 2023 Canadian wildfires burned 18 million hectares, with an unknown loss of animals, and the 2020 Brazil wildfires led to an unknown loss, estimated at 17 million vertebrates, destroying 30% of the world's largest tropical wetland. The larger 2023 and 2024 Brazil wildfires collectively burned 29 million hectares.
- Back-to-back hurricanes (Helene, Milton and Debby) in southeastern USA are still being assessed - along with the LA wildfires, damages may exceed $450 billion. Hurricanes are growing in size and intensity, with major effects on marine and terrestrial wildlife populations and vegetation.
- More generally, extreme weather events and variability are also reducing the resilience of ecosystems to other stressors.
Source: Tyack et al.(2022) - Managing the effects of multiple stressors on wildlife populations in their ecosystems: developing a cumulative risk approach
In summary, we are losing biodiversity, polluting lands and seas, with degradation of living conditions, habitats, soil quality, species numbers and populations.
- The CBD's Global Biodiversity Outlook (2020) showed that none of the Aichi Targets for the UN Decade on Biodiversity (2011-2020) had been achieved
- In the marine biosphere, ocean warming, acidification and deoxygenation are putting tremendous pressures on marine systems and the biodiversity they support
- In the terrestrial biosphere, our land, freshwater and climatic systems are undergoing dramatic changes and their capacity to support life is rapidly decreasing
- the Global Wetland Outlook shows a 35% decrease in the extent of wetlands since 1970
- the First World Ocean Assessment indicates severe and increasing human impacts through climate change, fisheries, ocean use and pollution
- the IPCC reports show that anthropogenic GHG emissions have caused a breach of 1.5°C global warming above pre-industrial levels (ignoring the averaging) with widespread negative impacts. Net zero needs a new, more realistic target (overshoot and recovery is not a likely scenario).
- The UNCCD's Global Land Outlook shows productivity declines from 20% of vegetated land 1998–2013.
- With accelerating climate change impacts, soil and crop risks, reforms and dialogues have begun, to address changes in agricultural strategy.
- A Jan 2025 open letter from the World Food Foundation highlights the need for financial and political backing to develop solutions to avert a hunger catastrophe by 2050. It warns that the world is not even close to meeting future food needs.
"Today, 700,000,000 people are food insecure and desperately poor. About half that number don’t know where their next meal is coming from. And 60,000,000 children under the age of five are stunted- cognitively and physically impaired for life - due to nutritional deficiencies. Yet as difficult and as uncomfortable as it might be to imagine, humanity is headed towards an even more food insecure, unstable world by mid-century than exists today, worsened by a vicious cycle of conflict and food insecurity."
World Food Prize Foundation
Looking Forwards - The Global Biodiversity Framework
In response to the historic trends of decline, the Kunming-Montreal Global Biodiversity Framework (GBF) was adopted at CBD COP15 (2022), with an ambitious set of 2050 goals and 23 targets for 2030. The GBF '30x30 target' upgrades the Aichi Target 11 (protection of 17% of land and 10% of coastal and marine areas) - targeting 30% of the Earth’s land and sea through the establishment of protected areas (PAs) and other area-based conservation measures (OECMs).
The UN Decade of Ecosystem Restoration was announced in support, with the aim to "prevent, halt and reverse the degradation of ecosystems on every continent and in every ocean".
Partial or full coverage of protected and conserved areas has increased in all regions in recent years. Global coverage has just passed 17% on land and 8% at sea. More work is needed to scale up coverage and secure protection over key biodiversity areas.
Notwithstanding the very recent US rollbacks, the trend is improving and the majority of global biodiversity hotspots are within protected areas.
According to the Protected Planet Report 2024, 51 nations and territories have already exceeded the 30% global protection target on land, with a further 31 exceeding 30% at sea. Over two-thirds of these areas are the most important places on Earth for biodiversity .
Source: Global Wetland Outlook, Special Edition 2021
We have the solutions to reverse declines in biodiversity, but we must solve climate change in parallel.
- Reduce the amount of land we use for agriculture and other development
- Reduce fertilisers, pesticides and other inputs, to eliminate harmful excesses / toxicity
- Implement net zero then absolute zero for deforestation
- Protect areas with rich or unique biodiversity - through designated NPAs, MPAs, KBAs
- Reduce overfishing through designated MPAs, sustainable quotas and stronger policing
- Implement ecocide laws with national and international jurisdiction
- Reduce waste and pollution; further development ofcircular economies and cleaner energies
And in parallel
- Massively scale up Nature conservation and restoration efforts - it is not enough to simply attempt to stem the flow of damages, we must actively restore what has been damaged
- Improve ecosystems resilience with interventions, water cycle restoration, Nature restoration
- Improve below-ground biodiversity and the condition of soils - soils are the foundation of our food systems, providing clean water and habitats for biodiversity and climate resilience. UNESCO have warned that 90% of soils could be degraded by 2050.
- Implement integrated restoration and wildlife reintroduction programs - the below European example shows what is possible.
- Greater high level funding is essential if the Global Biodiversity Framework is to be successful and these trends are to be reversed.
- As we move towards 2030, the commitments to provide international financing to developing countries must be met. The COP29 NCQG commitments have increased finance to developing countries from $100 billion p.a. to $300 billion p.a. by 2035. With a target to scale up finance from all sources to $1.3 trillion p.a. by 2035.
"This new finance goal is an insurance policy for humanity, amid worsening climate impacts hitting every country... But like any insurance policy – it only works – if premiums are paid in full, and on time. Promises must be kept, to protect billions of lives.”
Simon Stiell, Executive Secretary of UN Climate Change
Section 2 - Climate Tipping Points and Feedback Loops
2A. Positive Feedback Effects
The balance of the hydrological cycle is being disrupted by climate change and feedback mechanisms linked to human activities. In the short-term, climate change is manifesting as a regular series of natural disasters, such that many governments and scientists have already declared a climate emergency. Over the longer term, climate change is an existential threat (for the bulk of humanity).
The long-term existential threat comes from tipping points. Climate tipping points occur when positive system feedbacks (from existing global warming) lead to a further jump in global average temperatures. Once triggered, feedbacks can occur without any additional anthropogenic emissions or other actions. The resulting transition may be abrupt or gradual.
A number of these positive feedbacks are already occurring at a faster rate than scientists had previously predicted e.g. the disappearing Arctic ice pack, the weakening AMOC, thawing permafrost. As a result the risks of dangerous climate change are steadily increasing, with the Earth system tipping to a less hospitable ‘hothouse’ climate system.
The severity of climate losses is a function of time:
- Temperatures are rising over time, as a result of fast and slow Earth system feedbacks
- As temperatures rise, so does the amount of atmospheric water vapour and the vapour pressure deficit over land and sea – key determinants of extreme weather events, drought, dry seasons, crop failures and so on.
2B. Feedback Loops
Summary of amplifying physical feedback loops
Summary of amplifying biological feedback loops
“Look at the world around you. It may seem like an immovable, implacable place. It is not, With the slightest push — in just the right place — it can be tipped.”
Malcolm Gladwell
2C. Climate Tipping Elements
If humanity fails to rapidly mitigate climate change, the impacts will increase in number and strength and irreversibly, due to these positive feedback effects. And once unleashed, new tipping elements will begin to destabilise and cause further problems. These include:
- The weakening of the natural ocean sinks
- The weakening of the natural land sinks
- Major changes in evapotranspiration, atmospheric and ocean circulations
- The increasing release of methane from peat deposits, wetlands and thawing permafrost
- The progressive melting of reflective sea ice
- The progressive failure of crops and transformation to new heat-resistant crops and diets
- The disintegration of the Greenland and West Antarctica Ice Sheets
The paleoclimate record evidences the repeated occurrence of tipping events (global and sub‐global) throughout Earth's history, and most recently towards the end of the last ice age. Earth system instability last took place under relatively weak forcing (from natural changes in the Earth's orbit).
The Earth system is now the subject of much stronger non-natural forcing - with atmospheric CO2 and global temperature increases an order of magnitude higher. This forcing is strong enough to dwarf any natural cooling we might otherwise have benefited from. Therefore we should expect much greater system instability ahead - making the need to take actions now of supreme importance.
2D. Nearer Term Tipping Elements
It should be added that there remains considerable uncertainty over when tipping point thresholds will be reached and therefore breached. We could already be on the cusp of some thresholds (1.5-2 C), decades away from others. But the likelihood of occurrence is increasing with each year we remain on the BAU (Business-As-Usual) trajectory.
- Greenland Ice Sheet
- AMOC
- Monsoons
- Amazon Rainforest dieback
- West Antarctic Ice Sheet
- Permafrost
Tipping points, tipping elements and the EEI (Earth Energy Imbalance) are further explored in previous posts The Environmental Imperative and Earth's Energy Imbalance and Global Warming Solutions.
Section 3 - Short-Termism and Other Policy Barriers
“a spectre is haunting our time; the spectre of the short term”
- Guldi and Armitage, The History Manifesto (2014)
3A. Myopia and Short-Termism
First, a look at actual myopia, or physical short-sightedness.
50% of the world population will be myopic by 2050. According to a study by Holden et al (2016), the global prevalence of myopia and high myopia will be 50% (4.76 billion) and 10% (0.94 billion) of world population.
In the same way that humans have generally become myopic in response to the non-natural surroundings we have made for ourselves, so we have become short-termist (temporally myopic) in response to the non-natural operational systems we have created for commerce, governance and society.
Structural Short-Termism
While it can be said that 'temporal myopia' is a human fundamental bias (we have a preference for short-term advantages and gratification) our modern society makes short-termism a structural phenomenon.
The corporations, institutions and societies we create follow these same short-termist preferences - for example profits, lower costs, lower quality (over time) and high availability. This preference is in the ‘money code’ or economic DNA – over time displacing alternatives that provide for better quality, long-term value and satisfaction/authenticity.
The challenge in future will be how we create forward-looking governance structures that can help us correct for the structural short-termism bias. So that we might actually solve our current and future predicaments.
Various characteristics of human psychology leave societies structurally ill-equipped to address long-term problems:
- a concern for our own interests over those of others
- tendencies to ignore problems that are not present and visible
- failure to detect problems - gradual or systemic in nature - that creep up on us slowly
- the 'identifiable victim' syndrome - people respond well to specific threats, but not to statistics with long-term implications
- people respond well to ‘vivid’ risks, ones that they experience or witness (‘hot’ mechanisms), but not to information derived from general social scientific trends (‘cold’ mechanisms)
- people tend to procrastinate and postpone tackling difficult challenges
- people also tend to manifest 'positive illusions' - such as over-estimation of capabilities, illusion of control over events, and perceived invulnerability to risk
“… the key question then becomes can democratic politics deliver long-termism? Can politics confront tough choices? Can democratic politics legitimate short-term sacrifices for long-term gain? Can it take on and defeat powerful and vested interests? …. I think it can, but only if a new politics is on offer. This is a politics that seeks to establish common ownership of the major public policy problems that we are confronting such as reform of the federation, climate change or infrastructure. We need a new politics that thinks long term and engages citizens directly in the fundamentals of reform thinking.”
Mark Evans - Deputy Vice Chancellor Research , Charles Sturt University
3B. Harmful Short-Termism
As it becomes structural, focus on the short-term can harm both current generations and future generations.
- Failure to pre-emptively tackle problems - economic and socio-political considerations can make it easier to let things slide, allowing problems to collect and develop and go unaddressed. Such poly-problems become much more expensive to fix later.
- Examples are waste and pollution clean-up, climate change, and tackling negative externalities that first pollute then degrade the functionality / quality of our commons.
- Other examples are pensions and social security provision– with trillions worth of liabilities (age-threshold pension benefits), demographic changes, migration and rising cost of living, benefits are less affordable and must be reduced. Current and future generations will have to pay the price – with less certain benefits, higher contributions, later retirement, increased taxes etc. And disaster preparation - investing in protection against disasters makes for better protection of the population, properties and businesses, and at much lower cost if done early.
- A clear case is climate policy. Governments have failed to engage in aggressive mitigation policies.
- The upshot of this myopia (and in many cases, capture by fossil fuel interests) is that future generations will inherit a much-degraded world with increased temperatures, rising sea levels and greater extremes in weather. This jeopardizes their rights to life basics - health, food and water, and will degrade the standard of living for all.
- Governments frequently fail to honour their responsibilities to future generations – failing to invest in infrastructure, education, employment, housing etc. Leaving future generations with chronic problems – degraded environment, degraded opportunities, mass unaffordability.
China's long-term approach in a short-termist world
China's long-term approach and impressive re-emergence deserves special mention as an outlier, even though it has brought mixed environmental effects. Despite massively increasing its emissions (and economy) in the last two decades, it has carried out unique strategies and policies to address some structural problems - problems that are faced by many nations.
It has restructured economic sectors and rapidly grown infrastructure, directing resources towards long-term solutions for its population size, energy system and environment.
- While some social and environmental problems are yet to be addressed, China has implemented large-scale reforestation and afforestation programmes, regrowing some 70 million hectares of forest in a decade i.e. over 25% of the world's new green areas. In 2022 China’s Special Envoy for Climate Change announced its plan to plant and conserve 70 billion trees by 2030.
- Through its long-term 'one child' policy (1979-2015, with some relaxations) it has managed to arrest its population growth. Population in 2025 is slightly lower than 2020, with peak population reached in 2021.
- China has invested heavily in the production and operation of cleaner technologies. Becoming the world's dominant manufacturer of products and materials for solar power, wind turbines, electric vehicles, batteries and others.
“Beyond constitutional and legal reforms, it is the culture of a society which has the greatest influence on its sense of time. The building up of the Chinese economy owes a great deal to the long-termist approach built into the basics of its culture…
In the west, our culture has become more short-termist in its approach.... The frenetic media and frenetic behaviour of most people in senior positions in the west is not the best way to get wise decisions made…
A key element in ‘the good transition’ should be using the political system to overcome the bias of the market towards the short-term.However, that in turn requires changes in politics, government and basic cultural attitudes.”
Professor Victor Anderson - Global Sustainability Institute, Anglia Ruskin University
Political short-termism
The short-termist character of current political institutions is widely recognized. Many governments (and institutions) focus on the short-term and neglect the interests of people in the long-term. They are typically unable to tackle deep structural issues that afflict the nation and wider regions.
Citizens themselves are focused on the short-term. Unsurprisingly therefore, political leaders rarely adopt long-term perspectives that are likely to be less popular (spending less today, to save/earmark funds for the future). Policy (and survival) are short-termist disciplines.
“And when human politicians choose between the next election and the next generation, it’s clear what usually happens.”
Warren Buffett (1977)
Short-termist focuses have generated discontent all around the world – from ‘quick fix’ policymaking, shadowy electoral campaign finances, to corruption and enrichment, to dubious contractual awards at public expense. The response is to crave “real leadership”, but also a sense of resignation that they are “all as bad as each other”.
With typically short-term (4-5 year) democratic election cycles, it rewards political parties to focus on what they need to do in order to win the next general election, gaming the system, rather than focusing on longer-term policies and prudent future planning.
Unpopular policies - raising taxes, lowering benefits, or variations on a theme - are vote losers and therefore election losers. It is politically expedient for governments to borrow money over the long-term, to fund spending in the short-term.
“How do you deal with the fact that politicians typically only think as far as the next election, and as such do not as a rule pay much attention to the long term effects of their decisions? Short-termism in politics is a chronic affliction, manifesting itself both in inaction (let’s not bother reforming social security – its eventual collapse is going to be someone else’s problem) and in action (let’s have a fiscal giveaway now and worry about the deficit once we’ve bought ourselves the next election)”
Tom Cloughterty, Tackling short-termism (Adam Smith Institute, 2011)
Upper houses in bicameral parliaments are meant to be long-term bodies counterbalancing decisions in the lower houses. Many have lost power or have seen their historical roles changed over time. As with company boards they should not simply be about procedure and applying the brakes, but assisting the lower house in facing future issues and strategic policy.
Source: IPU Parline - Structure of Parliament (2025)
There are several mechanisms which can assist governments to provide checks on short-termism and to think about the future more systematically.
- National constitutions can bind governments to respect the rights of both current and future generations. Many nations have constitutions with an explicit duty of stewardship. For example, the German constitution: “Mindful also of its responsibility toward future generations, the State shall protect the natural foundations of life and animals by legislation and ... by executive and judicial action, all within the framework of constitutional order.”
- Build into the legislative process a nexus for focus on long-term issues, with public accountability. For example formal plans to address long-term issues, as identified by independent scientific and policy councils.
- Similarly the other parliamentary parties and invited groups can be given the opportunity to present alternative strategies, and to consult on national plans for the future.
- Revision of the economic methodology that many states use (typically with a high discount rate for the future), would also give additional weight to the interests of future generations.
- Legal protection can be used to prevent excessive financial short-termism by politicians, such as debt and debt ratio limits, and balanced budget amendments (as in many European nations).
“The problems of the market are often reflected in problems in political systems. The short-termism of the way markets often function, creating instability for business and for whole national economies ...can unfortunately be amplified by the short-termism of democratic political systems.
Where we should be able to look to politics and government to correct, regulate, or compensate for, the failings of the market, we often instead get ‘political failure’ alongside ‘market failure’. For the ‘good transition’ to a green economy, the problem of short-termism in government and politics is a key problem”
Professor Victor Anderson, in Addressing short-termism in government and politics (2011)
Another strategy is giving parliamentary representation to future generations, not in the future but now. A Minister for children and future generations, to safeguard their interests and provide another counterbalance and nexus for future horizon affairs within government.
- Hungary is a pioneer in this field - Dr Sándor Fülöp was appointed to act as Hungary’s first ombudsman for future generations in 2007.
- The UN issued a report in 2013 on ‘Intergenerational Solidarity and the Needs of Future Generations’. This acknowledged the importance of responsibilities to future generations, and recognized the need to address our current failure to comply with those responsibilities.
- the Well-being of Future Generations (Wales) Act became law in April 2015. This affirms a commitment to sustainable development, a set of performance indicators; and requires Welsh Ministers to report yearly on progress towards long-term goals (“the well-being goals”). The 100th person graduated from the Future Generations Leadership Academy in 2025.
- In 2014, Sweden created a new post of Minister for Strategic Development and Nordic Cooperation (known as ‘Minister for the Future’).
- Europe has since launched an EU-wide Foresight Network, with Ministers for the Future in each Member state, under the responsibility of the EU Commissioner for Intergenerational Fairness, Youth, Culture and Sport (Glenn Micallef 2024-29).
- Relevant work includes the Resilience Dashboards Report (Nov 2021) and updates – with both European and global analysis, Strategic Foresight Reports and JRC Science for Policy Report.
Source: European Commission - Resilience dashboards for the social and economic, green, digital and geopolitical dimensions (Nov 2021)
One of the most long-term strategies a nation can pursue is to set up one or more sovereign wealth funds (SWF) on behalf of the nation - building up a financial reserve for future demands on the nation's resources. Such SWFs can provide a buffer for more challenging times in the future, and to help finance unforeseen demands on the country's future balance sheet. The funding for SWF often comes from a natural resources windfall e.g. the Norwegian and Middle Eastern SWF are funded by the income from oil and gas reserves.
Corporate and Financial Short Termism
Homo economicus, or economic man, is the concept in many economic theories portraying humans as consistently rational and narrowly self-interested.
“Homo economicus would cheat only if he stood to benefit by enough and if the odds of being caught were sufficiently low. So the mere fact that he does not have a reputation for being a cheat tells us only that he’s been prudent.”
Robert H. Frank - Professor of Management Emeritus and Professor of Economics, Cornell University
The same principle exists for corporations, who indeed have a legal mandate (and duty) to pursue profits and to overcome obstacles to such profit making. This typically means relegating ethical, social and environmental concerns where possible.
“The corporate design contained in hundreds of corporate laws throughout the world is nearly identical … the people who run corporations have a legal duty to shareholders, and that duty is to make money. Failing this duty can leave directors and officers open to being sued by shareholders. [The law] dedicates the corporation to the pursuit of its own self-interest (and equates corporate self-interest with shareholder self-interest). No mention is made of responsibility to the public interest … Corporate law thus casts ethical and social concerns as irrelevant, or as stumbling blocks to the corporation’s fundamental mandate”
Robert C. Hinkley – How corporate law inhibits social responsibility (2002) (Former Partner -Skadden, Arps)
“Many economists... postulate the existence of an ‘economic man,’ who rationally and objectively computes... and makes a decision that will maximize profits. ...[T]his imaginary construct is the dynamic implicitly assumed for almost all of the economic theories from the late 1800s to the present. ...[T]hey continue to use it because without economic man most of their theories would be invalidated.”
Martin Gerhard Giesbrecht - The Evolution of Economic Society (1972)
As with the above Excluded Items that are unpriced and not included in GDP, so this creates negative incentives - to disregard externalities, to bend rules or operate in grey areas, in the pursuit of greater profits. And in the modern era, faced with pressures from potential competitors all over the world, this may lead to greater non-financial barriers to entry, less ethical behaviours, 'races to the bottom' and protectionism. Politicians may also be subject to corporate capture for short-termist gains - corporate interests will lobby them for relaxation of laws/standards, lucrative contracts, assets, mining rights and so on.
“Corporate rule must be challenged in order to revive the values and practices it contradicts: democracy, social justice, equality and compassion… We believe that some things are too vulnerable, precious or important to exploit for profit… The best argument against corporate rule is to look at who we really are and to understand how poorly the corporation’s tenets reflect us… No social and ideological order that represses essential parts of ourselves can last .... how dangerously distorted is the corporation’s order of narrow self-interest”
Prof. Joel Bakan – The Corporation – The Pathological Pursuit of Profit and Power (2004)
The capitalist system is also hard-wired to short-term gain.
- Firms report results periodically and there is a constant need to produce better numbers and more growth. Growth may be organic, or it may be manufactured through acquisitions and partnerships.
- Acquisitions provide a way to extract gains from efficiencies (buy low, streamline, increase margins and profits) and ideas (buy, absorb, expand product range and growth). Acquired firms may be absorbed or asset stripped, with restructuring/ reassemblage of the component parts. In industries with captive customer bases such as energy and water, this extraction of gains can create perverse incentives for owners (e.g. private equity) and material conflicts for customers and regulators.
- Similarly, the financial sector is incentivised to take risks and to introduce new financial products and activities. These invariably generate high short-term profits and other benefits for the purchasers, but may have long-term indigestion and market impacts. Other financial activities may be legal and lucrative (lending for new mines, oil & gas, farms) but indirectly negative to the environment.
- Traditional long-term sources of capital (pension funds, life assurance funds, social security) are inevitably subject to ‘modernisation’, with the result that ‘excess’ capital is extracted as profit, efficiency is improved.
- Each time gains are extracted, the resultant system is left with less surplus capital. Making it more vulnerable to risks than before.
- More generally, the efficiency of the capitalist system pushes us more to the ‘just in time’ model of operation. This model is very efficient, but more vulnerable to supply chain disruptions, funding and liquidity changes - there is a trade-off between the trend towards efficiency/ profitability, and redundancy/safety. This is a form of ‘procyclicality’ which encourages excesses and bubbles to build, increasing systemic risks. Which are then released by periodic market corrections and crashes. As the number of bubbles continues to build, so we may have still larger bubbles – so that great crashes are also a longer term feature of the system.
- In other words, short-termism creates instabilities and ultimately leads to bubbles and crashes.
“Step by step, capitalism’s shotgun marriage with democracy since 1945 is breaking up. On the three frontiers of commodification -labour, nature and money -regulatory institutions restraining the advance of capitalism for its own good have collapsed, and after the final victory of capitalism over its enemies, no political agency capable of rebuilding them is in sight.
The capitalist system is at present stricken with at least five worsening disorders for which no cure is at hand: declining growth, oligarchy, starvation of the public sphere, corruption and international anarchy. What is to be expected, on the basis of capitalism’s recent historical record, is a long and painful period of cumulative decay: of intensifying frictions, of fragility and uncertainty, and of a steady succession of ‘normal accidents’—not necessarily but quite possibly on the scale of the global breakdown of the 1930s.”
- Wolfgang Streeck, in How will Capitalism End? (2016)
The long-term governance problem, and how to address it, constitutes one of the most daunting challenges facing humanity. The whole system exhibits short termism, typically of a financial nature. Profits and longevity depend on balancing the finances, steering an economic ship in the face of cyclical weather.
But what happens when the weather forecast turns extreme and permanently negative?
3C. Dimensions of the Polycrisis
We have accumulated a polycrisis of problems, through not adequately addressing previous problems. Rio was 33 years ago, Kyoto 28 years ago, Paris 10 years ago, the last two COPs have been hosted by fossil fuel interests. There has never been a more critical need for a shake up.
Given that Nature-based climate change solutions exist and should be prioritised, why are we not pursuing these with vigour?
Global environmental problems such as climate change come with characteristics that make them difficult to address.
- They are complex in nature - arising from multiple activities and interactions across socioeconomic and natural systems.
- Such complexity leads to increased implementation risk - proposed solutions may have unintended consequences.
- Actions may also be delimited by imperfect knowledge - what is known and not known, both in terms of cause and effect.
- Risk impacts are cumulative and emergent - requiring significant interventions long before the most severe consequences of the problem manifest.
Even with a firm grasp on what is happening, there is still a lack of action for reasons of entrenched human behaviour - we are entrapped by the various interconnected and inter-reliant systems we have created.
Discounting - Necessary actions today can appear very costly in the short term, for what may be perceived as uncertain benefits in the future. Individually we may apply negative discounting or hyperbolic discounting to the problem.
Our economic systems are set up to value short-term gains and benefits, rather than benefits in the distant future (subject to economic discounting and myopic bias). Justifying large budgets for necessary but wide-ranging climate actions can therefore elicit unfavourable default responses - as may be seen at any COP negotiation. The problem may become still more acute, when the funding is for Nature i.e. for natural assets and services that are not priced today.
Cumulative Causation: Long-term system problems (such as the planetary boundary variables) tend to combine and reinforce each other, spiralling out of control if left unaddressed. Cumulative causation arises when a process is self-reinforcing and grows ever stronger, so that it does not equilibrate (positive feedback). This can lead to vicious / virtuous cycles, races to the bottom etc. These may be punctuated over time (decades and centuries) or will continue indefinitely - until checked by outside intervention or a systemic breakdown (Jackson, 2020 – Collective Causation). Cumulative causation patterns can be very difficult to stop as they have multiple existing sources of momentum and interaction (e.g. the ‘money code’ system, corporate and institutional preferences, system short-termism, regulations and agreements that perpetuate the system).
Systemic failure is also more probable when the status quo power structures reject the necessary solutions. In the case of climate change, they continue to pursue BAU and with established momentum. Decarbonisation is happening in some parts of the world regardless of BAU, as it is easier to implement within the current system (electricity sector, fully priced and financed with offtakes). Whereas Nature protection and restoration is a more difficult sector to scale up. Cumulative causation keeps BAU going. The virtuous cycles for Nature are fragmented and under-investment currently keeps it from becoming a mainstream solution.
Source: Herbert Block,1992. Library of Congress Prints and Photographs Division
Status Quo - A non-changing status quo (BAU) is indicative of a less governable system, with structural problems and syndromes. Prolonged lack of change typically leads to a weakened or destabilized system, and dissatisfaction - triggering reforms, new laws, movements /pivots, and revolts (historically revolts are 3 times as likely). The current political volatility may well provide a reset opportunity.
Source: Buchheim and Albricht - Dynamics of Political Systems, 2018
Given the difficulties in resetting the status quo of the biosphere, the status quo of our social and economic systems must be the focus. Given the current and projected global ecological footprints, BAU (Business-As-Usual) is quite simply going to kill the patient and severely damage the host. So we have no other choice but to (i) massively scale up Nature-based restoration activities and (ii) aggressively pivot our economies towards sustainable activities and outcomes.
Systemic problems, syndromes and their solutions are further explored in previous post series - Man-Earth system problems and solutions, Part 1, Part 2 and Part 3.
3D. Characterising Complex Problems
Wicked Problems
According to Lönngren & van Poeck (2020) - Wicked problems: a mapping review of the literature, the term was first introduced in 1967 in a seminar at the University of California Architecture Department.
“the term ‘wicked problem’ refer [sic] to that class of social system problems which are ill-formulated, where the information is confusing, where there are many clients and decision makers with conflicting values, and where the ramifications in the whole system are thoroughly confusing. The adjective ‘wicked’ is supposed to describe the mischievous and even evil quality of these problems, where proposed ‘solutions’ often turn out to be worse than the symptoms.”
Rittel and Webber published their seminal paper (1973) on wicked problems and since then, the number of research papers using the term has grown greatly.
Source: T. Ritchey - Acta Morphologica Generalis Vol. 2. No. 1, 2013
Original Source: Rittel and Webber - Dilemmas in a General Theory of Planning, 1973
The use of the term 'wicked problem' is now in vogue to describe all manner of complex issues that affect society. Indeed there are even stronger derivatives used to describe the current polycrisis and climate change - e.g. ‘super wicked’ problems.
Alternative conceptualisations and frameworks of analysis can always be made. Partial solutions and new frameworks for analysis lead to ways forward, and a better understanding of the problems - their origins, nature, interactions and solutions.
Super wicked problems
Termed as such, because the world's most urgent problems will ultimately threaten human survival itself – Hothouse Earth, Biodiversity Collapse, Climate Tipping Points, Pollution at macro and molecular levels etc. However partial solutions do exist – the restoration of nature and biodiversity is the most important of these.
Concept of ‘super wicked problems’
This concept is meant to capture the nature of significant policy problems facing contemporary governments. Defining characteristics, in addition to those used to define wicked problems, are:
- Time is running out - the element of time becomes more important. This time element is most apparent with climate change for which there are a number of clear tipping points and compelling predictions of irreversible harm if there are not significant policy interventions.
- No central authority - decision makers do not control all the choices required to alleviate the problem. Lack of centralized governance (or weak /diffuse governance) has repercussions at multiple levels in the case of climate change since responses require multi-level coordination among states, economic sectors and policy subsystems. Even with a strong global agreement, mechanisms and programs are likely to operate wherever sufficient authority can be generated. Fragmentation and diffuse authority characterizes the overall global policy regime.
- Those seeking to end the problem are also causing it – Although the bulk of emissions are caused by fossil fuel companies, anthropogenic climate change is structural, resulting from everyday activities and choices at multiple scales.
- Policies discount the future irrationally - The level of discounting of the future also plays a role in understanding these problems, and in addressing them through public sector action. The argument being made here is that these issues are inherently long-term, and also perhaps large scale.
Super wicked problems generate a situation in which the public and decision makers, even in the face of overwhelming evidence of significant risks or even catastrophic impacts from inaction, make decisions that disregard this information and reflect very short time horizons. The phenomenon is analogous to smokers who, while they know the high probability of significant health problems and even death, continue to smoke based on immediate gratification.
Policy Problems
Assuming policy makers are not being overly influenced by one group of stakeholders, and actually want to solve the problems in front of them, then good policymaking is typically a function of knowledge and acceptability to stakeholders.
The intractability of a policy problem depends on the extent of divergence among stakeholder viewpoints, their values and approaches. Also their assessments of often uncertain and complex knowledge. Policy problems are more likely to be seen as intractable when the following conditions are present:
• Structural complexity - intractability of the technical (non-stakeholder) issues
• Knowability - the problem (or solution) is unknowable i.e. the relevant information is complex, hidden, disguised or intangible, or requires further work
• Knowledge fragmentation - the available knowledge is fragmented among many stakeholders
• Knowledge framing – understanding of the problem is distorted by the presentation / framing of the knowledge, with some knowledge receiving too much attention, other knowledge too little
• Conflicting interests - the various stakeholders have interests (or values) which are substantially in conflict
• Distribution of Power - the distribution of power among stakeholders leads to dysfunction. For example very powerful actors can prevail over others (even majorities) or where interests and power bases are conflicting yet matched.
The capacity to manage difficult problems also depends on governance capacities. Given the inadequate development of governance arrangements for dealing with complex problems, rational policy planning may not be possible. More pragmatic approaches are often needed, with partial solutions the order of the day.
3E. Mapping Complex Problems
Unaddressed Impacts from Cumulative Causation - Simplified System Mapping
Source: Author (2025), based on Valentinov (2024) - Advancing a system-level perspective in stakeholder theory: Insights from the institutional economics of John R. Commons
Risk Mapping
Source: Future Earth - Risk Perceptions Report, 1st Edition (2020)
Source: Future Earth – Global Risks Perceptions Report (2021)
Causal Interactions / Feedbacks Mapping
3F. Policy Objectives for Nature and Nature-based Solutions
Tackling climate change requires significant and sustained investment across many planetary boundaries. And a holistic approach that deals with the multi-faceted nature of the problem and the presence of disruptive stakeholders with opposite interests.
The policy structures that support the integration of Nature and Nature-based solutions must be robust in nature, but flexible enough for buy-in from the different stakeholders.
The prime objectives are to:
- drive a system-wide integration of Nature and Nature-based solutions
- create a series of adjustments (pivots) to our governance and economic systems, so that we can properly implement the full restoration of Nature over the next decades
“The problem is not to find the answer, it's to face the answer”
Terence McKenna
In preparation for the integration of Nature-related economics by say 2035, we must build appropriate long-term initiatives and incentives to encourage the mainstream integration of Nature across the system:
- Nature investments, regeneration and restoration as core financeable activities
- Nature-positive land-use change as the default, and
- Sanctions against bad actors who continue to pursue or finance Nature-negative activities
- Development of related support infrastructure - to support Nature and societies as we experience the current climate destabilisation
3G. Policy Pivots and Transition Actions
A. GOVERNMENTAL / LEGAL
- Grants and Incentive Programs for Conservation, Restoration and Remediation
- National environmental taxes and tax incentives
- New legislation for Protection of Nature, Well-being of Future Generations
- Massive expansion of NPAs (Nature Protected Areas) - to cover all KBAs (Key Biodiversity Areas)
- Public Natural Capital Finances - for transition, valuation, conservation and restoration
- Natural capital accounting frameworks at government and enterprise level - the formal valuation of natural capital
- New legislation for Ecocide, Waste and Pollution – robustly enforced through environmental reporting, monitoring and policing
- The end of significant negative land-use changes i.e. not Nature-Positive or Nature-neutral
B. FINANCIAL / MARKETS
- Payments for ecosystem services (PES) - conservation of and gains in bio-productivity
- Payments for Nature Restoration and Remediation (PNR)
- Nature Infrastructural Payments e.g. to local collectives and indigenous workforces; for desalination, alkalinisation etc. ; to local trusts and environmental management companies
- A Long-Term Environmental Funds (Common Wealth) sector
- New regulations for Nature investmentand finance - to support mainstream adoption in finance, accounting and investment sectors
C. INTERNATIONAL AND DOMESTIC
- Scale up (and re-design) of multilateral funding channels - World Bank, IMF, Adaptation Fund, Green Climate Fund (GCF), Global Environment Facility (GEF) and others to be established.
- A Long-Term Environmental Funds (Common Wealth) sector - a global framework of Environmental Funds, Conservation Trusts and Funds for the Future Generations
- International environmental taxes and tax incentives
- Funding for Technological and Infrastructural solutions – including science-based GHG-neutralisation and climate intervention strategies
- International and national water pipeline and desalination infrastructures (for back-up water systems and infrastructure for times of water stress)
- Community-driven initiatives, private-sector engagement and philanthropic support
- Governments partnering with alternative Nature funders / financial sector - to provide equity, low-interest loans or guarantees for Nature restoration and conservation projects.
- The end of existing fossil subsidies (c.$7 trillion p.a. - IMF) - direct and indirect.
- The end of Nature-negative finance and investment – still currently a multiple of private investment in NbS (Nature-based Solutions). Raising of new finance to include strict enforcement of emissions taxes and penalties - phase-out of fossil energy through finance removal and penalties for fossil lenders.
- Multi-jurisdictional / International NPA protection - changes to be approved by an internationally-coordinated authority
- International funding guarantees, binding agreements and laws for the above.
D. THEMES
- We can reverse / offset the current trends - investing in Nature restoration and infrastructure
- Environment over Economics – acceptance of increasing Debt burden in order to pay for Nature
- Revised Investment regulations - to permit long-term holdings in Nature-based assets
- The Closing of the Funding Gap for Nature and Nature in Developing Countries in particular
- Nature Assets of Global Importance (NAGI) - to be designated as international priorities
- New Funding through Centralised Tax Revenues
- Tax Incentives for Nature, Environmental Funds, Circular /Clean Economy Activity
- Reaching Agreement on Funding, historical differences and Environmental Governance
- Carbon Debt-for-Nature Asset Swaps - innovation as a way to solve historical differences
- Mutualisation of Risks - All Nations will have problems in the future
- Start now with 70-80% of the world on board
Source: Potsdam Institute - Stepping back from the Precipice (2024): Transforming land management to stay within planetary boundaries
"Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limit – in a world that is limited. Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons. Freedom in a commons brings ruin to all."
Garrett Hardin, The Tragedy of the Commons (1968)
Future Scenarios
- Continued BAU (Business-As-Usual) - No significant system change. System deteriorates and the world becomes swept up in a hothouse Earth / Darwinian subsistence and survival scenario.
- Adjusted BAU - There is no meaningful system change. Finance sector continues with BAU, with some modifications for Stated Net Zero. Nature-Positive investment continues but there is no great restoration of Nature. Similar to Continued BAU scenario, but actions buy more time.
- BAU with Climate intervention - Geoengineering technologies are deployed, with mixed results. Similar to Continued BAU scenario, but actions buy more time.
- Permanent Decline with Adaptation - Society attempts system changes without meaningful success. The system heads towards partial failures and regional bloc approaches. Self-determination of local regions, Regional Umbrellas (part local domain, part government) make laws and provide finance and 'last resort' support for societies.
- Phased transition to BAER(Business Adaptation and Environment Restoration) - Nature is prioritised albeit late. A mass scale up of restoration is adopted. An 'all of the above' approach is adopted to buy as much time as possible. Society makes progress but remains in a race against time to mitigate an acceleration of climate change.
- BAERis the only scenario that will ensure we retain the ability to mitigate climate change and achieve Net Zero.
4. Conclusion
Solving the polycrisis requires
- Societal Mapping - to determine optimal paths and to realise 'social tipping points'
- Complex Problem / Crisis Mapping - to optimally design and manage system transformation (planetary-scale regenerative solutions and frameworks)
- Supportive legal reforms - expected in 2025 are the ICJ / IACHR advisory opinions, ecocide laws, rights of nature, indigenous peoples and the future generations
- Policy pivots to address short-termism - political and economic short-termism in particular
- Political transitioning (reform, revolt, pivot)- a transition in social and political structures is inevitable at some point - but currently unacceptable for many (most) nations. Others might follow /integrate with the differentiated, long-termist path of China.
- Shrinking to sustainable levels – global population, GDP / GPI, global GHG, waste and pollution footprints - to within the carrying capacities of the planet.
- Restoring Nature as fast as possible – Massively scaling up Nature-Based Solutions, Nature protection, restoration and remediation - from global government-level downwards.
- Creating Pivot points in Finance - to fund the solutions and infrastructure as early as possible, and to achieve the most scale and progress
- Pending a centralised environmental funds sector and environmental taxes - New funds and digital platforms to accelerate funding progress at all levels - and access / influence with 'the last mile' /everybody investor base (a self-interested global movement)
- Distributed funding solutions - to create the nexus and opportunity for greater funding sources and international buy-in and further expansion - a virtuous circle, or 'race to the top'.
- Nature finance as a new asset class with excellent value and yield (PES/PNR) potential - going from unpriced /exploited to a core asset in future portfolios, in the space of 20 years.
- Global funding for a new, diversified long-term Environmental Funds /Nature Finance sector
- Nature-regenerative solutions will need as much funding as possible, alongside funding of the wider infrastructure to support them. With forward-looking solutions and new laws for food, water, land and energy sectors in particular.
- With funding for interconnected regional solutions, we can begin to address the cumulative declines in nature. This is far more optimal than trying to arrest and provide adaptation solutions for local symptoms of a systemic problem.
Running in parallel to the energy / carbon transformation, the solutions are well known:
- Restoration projects on a massive scale.
- Champion water and restoration - the water cycle is the main offset to the greenhouse effect
- Remove industry waste streams and existing wastes from land, waterways and oceans
- Build out the circular economy - produce as nature does (closed loops, no waste, no toxicity)
- Restore arable land - by re-establishing the soil food web in whole regions
- Reforest and re-vegetate large regions - improving evapotranspiration /biotic pump, albedo
- Re-establish natural biodiversity of flora and fauna - with biodiversity inventory monitoring
- Invest in and protect natural capital assets, and supporting infrastructure - NPAs, KBAs etc.
- Build out a global Common Wealth entities industry - Long-term finance /trust vehicles
- Integrate natural capital valuation, PES/PNR and accounting into Nature Finance systems
- Introduce environmental and resource taxes; new environmental laws and protections
- Increase policing and monitoring infrastructure for NPAs, KBAs, Sustainable Quotas
Such systemic solutions will take place over decades – to undo the harms built up over many decades. There are no easy fixes. Depending on the scale of restoration, we should see the cumulative benefits by the mid-2030s.
Recent posts:
Societal Pivot Points or Climate Tipping Points – Which will come first? 22.04.2025
An analysis of system roadblocks in our race against climate change. We must find the societal pivot points back to true sustainability, before we cross the point of no return - climate tipping points. The situation demands global investment in and restoration of Nature in the face of climate changes of increasing magnitude and gravity.
Managing Climate Impact Risk and Uncertainty - The Pivot Point in Finance 02.04.2025
The precautionary approach to climate risks and their impacts on finance. With most climate impact risk assessments ranging from 0% to -20% losses, more work and knowledge are sorely needed. A ‘race to the top’ and Nature-based investments may prevail, once the bad news (everyone is in for massive losses) is out in the open.
The ICJ Climate Hearings 07.12.2024
The collective whole and the law are going to have to get all (or most) nations to commit to Carbon Liability Funds, Loss and Damage, Environmental Protection Funds, and Funds for Future Generations. A positive ICJ opinion will assist to put a straightjacket on future argumentation, and legal weight to the commitment process. In the long run no one is above the law. The alternative is to reform the UN COP process and for the 'most willing' nations to go it alone with other nations, as a 'super majority'.
Man-Earth system problems and solutions – Part 3 24.11.2024
Towards Ecologically Wiser Management Systems
Introducing a new blueprint for the ecological transition. As the new tools and systems needed for biodiversity measurement and valuation come online, true sustainability is not far away.
Man-Earth system problems and solutions – Part 2 17.11.2024
The Great Restoration of Nature – Nature and Water
Nature is still the best carbon removal and climate change solution we have. And water is the best protector and regenerator of Nature. As the COP process meets new hurdles, how will the new Nature and Climate solutions actually work?
Man-Earth system problems and solutions – Part 1 10.11.2024
The Great Restoration of Nature – A Proposed Global Environmental Framework
An examination of global system problems and potential solutions. Nature is still the best carbon removal and climate change solution we have. As Nations remain stuck in their orbits and revisit old ground, new structural Climate Finance commitments and solutions must take precedence.
An Update on the 2024 COPs 1.11.2024
Global Nature Financing - As we enter November and with COP 29 just under 2 weeks away, a brief run down of the recent COP events and publications/ announcements. Also the upcoming UNCCD COP16 in Riyadh - the biennial forum for reviewing progress to combat desertification.
Nature Protection in 2045 – The Impending Necessity of Nature Funding 27.10.2024
The Global Call for Ecosystem Restoration continued - In this decisive decade, our challenge is to scale up conservation, restoration and Nature Protected Areas. Greater finance for Nature is the goal - And it may come from some unexpected sources!
The 2024 COPs and Climate Finance Solutions 20.10.2024
Global Climate Financing - The 2024 COPs provide the opportunity to garner much greater commitments for climate action. The way forward is to create a centralised Environmental Funds sector - with ongoing funding that is automatic, rather than piecemeal and hard-fought.
Restoring Nature’s Green and Blue Lungs 13.10.2024
A Global Call for Ecosystem Restoration - There has never been a more urgent need to restore ecosystems than now. In this decisive decade, the challenge is to scale up the quantity and quality of projects, and redirect greater finance to nature, for as much impact as possible.
Beyond Normal - The Mechanisms behind our Extreme Weather 3.10.2024
The sheer number and severity of recent extreme weather events is a sign of things to come. With COP29 just a month away, what are the world's leaders going to do about it?
COP29 and New Climate Finance Initiatives 2.10.2024
With just 6 weeks to go, the world’s nations are set to decide on a new climate-finance goal, to go beyond the $100 billion per year target set at COP15 in 2009.
Earth's Energy Imbalance and Global Warming Solutions 25.09.2024
Alongside the massive expansion (and funding) of land restoration and regenerative agriculture schemes and the reduction of CO2, are other solutions on the horizon?
Restoring Natural Capital, Diversity and Resilience 21.09.2024
Despite a slew of international accords over the past three decades, along with 28 COPs, the rate of decline continues. Focus has diverted away from direct physical solutions, towards technology & market solutions supporting decarbonisation. Yet we have the solutions and available funding.
The Environmental Imperative 15.9.2024
The tipping risk elements of the Earth system, their nature and interdependence, and how to mitigate these risks going forwards.
Appendix - Alternative Measures to GDP
Source: World Inequality Database
Source: Costanza, Kubiszewski et al (2014) - Time to leave GDP behind
Source: EU JUST2CE project (Just Transition to Circular Economy) – ebook Ch10
1. Genuine Progress Indicator (GPI)
The Genuine Progress Indicator (GPI) is an attempt to measure the real increase in economic welfare.
The GPI measures the improvement in economic welfare – costs associated with growth. It is measured using the following formula.
The GPI is an extension of ISEW (see below) that stresses genuine and real progress of the society and seeks to monitor welfare and ecological sustainability of the economy.
The GPI seeks to take a more accurate account of a nation’s well being than just GDP (gross domestic product). GPI starts with GDP as its base but also takes into account environmental and social factors: pollution, poverty rates, health standards, inequality rates, crime rates, cost of pollution abatement, cost of commuting, cost of road accidents, value of education, value of housework and parenting.
Highlights from Kubiszewski et al (2013) - Beyond GDP: Measuring and Achieving Global Genuine Progress:
• Global GPI/capita peaked in 1978.
• Globally, GPI/capita does not increase beyond a GDP/capita of around $6,500/capita.
• With more equitable distribution, current world GDP ($67 trillion/yr) could support 9.6 billion people at $7,000/capita.
• Life satisfaction in almost all countries has also not improved significantly since 1975.
Thus it is much harder to increase GPI than GDP.
Advantages of GPI
- GDP doesn’t take into account the negative externalities of growth and can be misleading as an account of economic welfare.
- Higher GDP may lead to a large rise in pollution, crime and congestion, leaving people with lower economic welfare and lower levels of happiness.
- GDP only measures output – not how it actually affects people’s living standards and how it is used in society. By focusing on a wider measure of indicators, it encourages policymakers to think in broader terms of economic welfare and not just crude GDP statistics.
- Encourages long-term planning. i.e. sustainable growth rather than short-term measures which increase GDP at the expense of environmental damage.
Disadvantages of GPI
- Many non-economic variables such as the value of leisure time/environment are very subjective, making it difficult to assign an economic value. GDP is simpler and gives less normative results.
- GPI is not useful for judging the state of the business cycle.
2. Index of sustainable economic welfare (ISEW)
Similar to GPI, the ISEW takes into account non-marketable services, e.g. domestic labour and environmental degradation. Defensive expenditures are spending on dealing with problems, e.g. if you consume petrol, but spend time in traffic jams, this spending is removed.
Trend of ISEW in the West
According to the results, sustainable economic welfare rose steadily in the 1970s and early 1980s, but has since declined and stabilised, despite GDP continuing to grow. This mirrors the results for GPI.
The external effects of production and inequity of income distribution are the main reasons for this trend - production does not necessarily lead to an increase in welfare.
In the mid-1980s income disparities started to grow again, flows of capital (investments) abroad increased and environmental hazards escalated, resulting in a decline in the weighted personal consumption.
3. Measure of Economic Welfare (MEW)
In their 1973 article ‘Is Growth Obsolete?’ Tobin and Nordhaus called for an index reflecting consumption rather than production, as this comes closer to representing welfare. They proposed the Measure of Economic Welfare (MEW), or Net Economic Welfare.
However, they realized that it is hard to estimate how well individual and collective happiness are correlated with consumption. Therefore, the authors themselves referred to MEW as a ‘primitive and experimental’ measure of welfare.
4. OECD Better Life Initiative
The OECD BLI Index allows you to compare well-being across countries, based on 11 topics the OECD has identified as essential, in the areas of material living conditions and quality of life.
5. Human Development Index (HDI)
The HDI gives an overall index of economic development, with a weighting to national income, life expectancy, and quality of education. The human development index was created by Mahbub ul Haq and Amartya Sen.
- Life Expectancy Index. Average life expectancy compared to a global expected life expectancy
- Education Index. Mean years of schooling and expected years of schooling
- Income Index. GNI at PPP
Limitations of Human Development Index
- Wide divergence within countries
- HDI reflects long-term changes (e.g. life expectancy) and may not respond to recent changes
- Higher national wealth does not indicate welfare. GNI may not necessarily increase economic welfare; it depends on how it is spent e.g. military spending may actually lower welfare.
6. Human Poverty Index (HPI)
The human poverty index (HPI) was introduced by UN Development Programme (UNDP)
To measure rates of economic development for low-income countries it examines education, life expectancy, rates of absolute poverty and access to health care and safe drinking water.
- Probability at birth of not surviving to age 40 (times 100)
- Adult illiteracy rate
- Arithmetic average of the percentage of (i) the population without access to safe water; (ii) the population without access to health services; and (iii) malnourished children under five.
7. Gross National Happiness (GNH)
The term ‘gross national happiness’ was first coined by the 4th King of Bhutan, King Jigme Singye Wangchuck, in the late 1970s, who stated “Gross National Happiness is more important than Gross Domestic Product.”
GNH looks at nine different factors including psychological well-being, health, time use, education, cultural diversity and resilience, good governance, community vitality, ecological diversity and resilience, and living standards.
The four pillars of GNH are:
- Sustainable and equitable socio-economic development;
- Environmental conservation;
- Preservation and promotion of culture
- Good governance.
Strongly influenced by Buddhist concepts, it has been adopted by Bhutan since 2008.
This is a measure of human well being adjusted for environmental impact. It looks at life expectancy and life satisfaction, divided by the ecological impact of the nation. If a country has a high carbon footprint, it will tend to have a lower HPI score because more resources are needed. A high HPI score would have a high life satisfaction combined with low ecological footprint. The highest-ranking countries are in Central America – Colombia, Costa Rica, Dominican Republic and Panama. The US carbon footprint means it is ranked one of the lowest.
9. Green GDP
Green GDP was first mooted by the United Nations Environment Program (UNEP) at the Rio+20 conference on sustainable development.
Green GDP adjusts GDP for “development of human capital” and “development of natural capital”. Output that is accompanied by a deterioration in human capital (e.g. health or education) or by environmental damage (e.g. emissions or deforestation) is reduced by the amount of capital consumed, and vice versa.
In 2004, China experimented with green GDP. But, once pollution and environmental costs were added in, it displayed zero growth. It was discarded in 2007.
UNEP compared growth in GDP per capita with green GDP per capita for 40 countries over a nineteen-year period, from 1990 to 2008.
The Green GDP (or “inclusive wealth index”) has been analysed to be too much of an aggregator to be useful for achieving sustainable development.
10. "Gross and Net Destructive Power" (GDP*, NDP*)
The flip side to global economic output (GDP), would be to measure the steadily accumulating environmental deficits created by such output, in terms of (i) the overall negative effect on the environment /biosphere (GDP*) and (ii) the overall effect allowing for the capacity of the biosphere to act as a sink for such damage (NDP*).
GDP* and NDP* are generalised environmental footprint measures, to measure the combined damage caused to the environment by a region, country, state or city.
11. Net National Disposable income (NNDI)
Net National Disposable Income (NNDI) may be derived from Net National Income by adding all current transfers in cash or in kind receivable by resident institutional units from non-resident units and subtracting all current transfers in cash or in kind payable by resident institutional units to non-resident units.
NNDI adjusts for profit and rents that flow abroad due to firms and assets being owned by foreign investors. NNDI adjusts for capital consumption (depreciation on machines, vehicles, infrastructure).
12. Median Income
Since the great recession, the USA in particular is producing more millionaires and billionaires, but 75% of jobs in US created are only marginally above the minimum wage.
The median income is the income amount that divides a population into two groups, half having an income above that amount, and half having an income below that amount. Due to distortions in the distribution of incomes (and the benefits of economic growth), it may differ from average income and provides an understanding of the average worker's prosperity.