LSE Public Lectures and Events

On Natural Capital: The Value of the World Around Us

Date: September 29, 2025
Host: London School of Economics and Political Science
Featured Speaker: Professor Sir Partha Dasgupta
Moderator: Unnamed LSE Economist

Episode Overview

This episode explores the concept of "natural capital"—the value inherent in the world's ecological assets—and its critical relationship to economics, policy, and human wellbeing. Professor Sir Partha Dasgupta, a leading thinker in ecological economics, discusses his longstanding journey bridging economics and ecology, the impetus behind his accessible book on natural capital, the necessity (and difficulty) of integrating ecological realities into economic models and national accounting, and the pressing global need to rethink our relationship with nature amid rapid environmental degradation. The conversation covers foundational models, measurement challenges, the intertwining of poverty and development with nature, and cautious hope for more effective, equitable solutions.

Key Discussion Points and Insights

1. Personal and Academic Journey into Natural Capital

(00:57–05:44)

• Inspiration & Early Influences: Partha reflects on the impact of a middle-school geography teacher and how he “probably am a frustrated geographer” (01:40).
• Pivotal Book: The chance discovery of Ecoscience by Paul Ehrlich et al. (1978), and his later friendship with Ehrlich at Stanford, pivotally shaped his interest in ecology.
• Blending Disciplines: These relationships “enabled me to learn rather quickly… I began to work with them on problems” (03:32), culminating in pivotal, much-cited interdisciplinary papers.

2. Writing for a Broader Audience

(05:44–11:58)

• Partha describes how his technical review for Cambridge University Press grew out of years of note-taking and COVID-era writing.
• Requested by Penguin, he attempted a “briefer piece without annexes, without boxes, without maths” (08:30), but admits:

  “I really can't write for love to write for the general public. But I don't think I've got it in me somehow… I have to dot the i’s and cross the t’s and that can deflect attention.” (09:17)

• Relevance to Our Lives: Unlike cosmology, natural capital “is really about us. And there is an affinity that each reader would have to the subject. It's sort of immediate.” (10:38)

3. Natural Capital versus Climate Change: A Broader Lens

(11:58–13:38 | 13:38–21:43)

• Nature’s Regenerative Capacity: The book brings forward “the nature side of the equation… the regenerative capacity of nature.” (12:42)
• Climate Change as a Subset:

  “Climate change, of course, is just a manifestation of a process, one of the zillions and zillions of processes that Mother Nature is engaged in… the climate change literature has… diverted attention away from a far vaster enterprise that the human economy is engaged in.” (13:38)

• The last 70 years of unprecedented economic growth have a hidden cost:

  “That success is in fact in some ways an illusion because the underbelly of this success has been the mining of Mother Nature, which is not reflected in the statistics we look at.” (16:12)

• GDP tells us about outputs; the foundations—the stocks of natural assets—are ignored.

4. Measuring Regenerative Capacity and The Impact Inequality

(21:43–32:44)

• Shift from flows (GDP, output) to stocks—particularly natural capital.
• Estimation: By decomposing final goods into their natural capital components, we assess human extraction versus nature’s regeneration.
• Market Failure: Most natural capital lacks market prices, leading to unchecked exploitation:

  “Pay for what you consume. The source of our problem is that we don't, because we don't have necessarily a mechanism for many of the things that we consume for payment because there is no recipient, nobody who is charging.” (26:16)

• Warning of Incremental Damage:

  “At each stage of development, it's always a marginal one… But if it keeps on trumping at each marginal case, then of course you have a denuded nature and biodiversity loss.” (30:26)

5. Where Human Welfare and Environmental Degradation Meet

(32:44–38:50)

• Mass awareness usually follows dramatic impacts (like climate-induced deaths), but natural capital degradation is more locally acute.
• Displacement and cultural loss among indigenous peoples are early warning signals.
• Historical Amnesia:

  “We in the West depend on the biodiversity and primary products of the poorer parts of the world… It’s easy to overlook the excess demand that we are making because we don’t see what’s happening in the ecosystems from which we are drawing.” (47:09)

6. The Role and Limits of Population and Innovation

(38:50–52:02)

• Math of Sustainability: If global extraction (reflected via GDP) exceeds regeneration, collapse is a certainty over time.
• Population Matters:

  “Population enters directly into our demand side. That’s why it’s extremely important to take population seriously.” (40:43)

• Optimism About Innovation: Partha critiques the belief that “technological progress will always save us,” noting that all innovation ultimately requires physical resources for its development.
• Current Overreach:

  “The ratio of the demand and that sustainable supply [of nature] is far greater than 1… about 1.6, 1.7. That’s not sustainable.” (47:30)

• Extinction rates are 1,000+ times the background rate—a stark indicator of crisis.

7. Economic Policy Solutions and the Oceans Example

(52:02–57:11)

• At COP30, Partha would advocate for more robust governance and taxation of open-access resources, especially the oceans.
• Current frameworks neglect the true cost of resource extraction on vast ecological systems.
• He stresses:

  “We really need to put nature central to the human economy.” (57:11)

8. Audience Q&A Highlights

a) Biodiversity Credits

(58:52–68:18)

• Partha is cautious, noting the challenge of quantifying biodiversity. Productivity and ecosystem health may be better measures than raw species counts.

  “Biodiversity, you don't actually observe… you look at the result of biodiversity. That's the way I want to put it… you look at the productivity of ecosystem and you say… this ecosystem is healthy because it's got the complementary sets of species.” (64:46)

b) Natural vs. Human Capital

• Human capital is about individual productivity, natural capital is ecosystem-based; both are stocks, but fundamentally different in their societal roles.

c) Data Gaps

• Data is improving but underfunded—demand for better models and metrics must drive supply.

d) Natural Capital in Wealth Accounting

• Partha and colleagues have tried to create “inclusive wealth” accounts, adding natural capital to conventional measures.
• On data quality:

  “It's better to be roughly right than precisely wrong… natural capital is given value of zero in so much of our activities in our calculations, and that's precise, but it's dead wrong.” (71:19)

e) Development vs. Conservation in Poor Countries

• Poor populations bear the costs of environmental devastation, often without legal protection.

  “I'm very suspicious of governments in poor countries saying we can't afford to look after nature… The price that is paid when an ecosystem goes under… is paid by some of the poorest people who have far less political voice.” (76:23)

f) Degrowth?

• It’s not about blanket “degrowth,” but aligning policy with “inclusive wealth” that truly accounts for all assets, including nature.

Notable Quotes & Memorable Moments

• On the mismeasurement of success:

  “The underbelly of this success has been the mining of Mother Nature, which is not reflected in the statistics we look at.” (16:12, A)

• On the simplicity and dangers of GDP:

  “GDP will be telling you about what comes out of the system. But what is going on underneath it is what's allowing us to have that output is missed.” (20:40, A)

• On the ethos of paying for nature:

  “Pay for what you consume. The source of our problem is that we don't.” (26:16, A)

• On incremental environmental loss:

  “If it keeps on trumping at each marginal case, then of course you have a denuded nature and biodiversity loss.” (30:26, A)

• On policy priorities:

  “We really need to put nature central to the human economy.” (57:11, A)

• On the right economic metric:

  “It is wealth accounting that we should be concerned with.” (87:17, A)

Important Timestamps

• 00:57–05:44: Origins of Partha’s intellectual focus and entry into ecological economics.
• 11:58–13:38: The book’s aims; relationship between natural capital and climate change.
• 16:12: The illusion of growth; GDP’s blind spots.
• 22:08–27:12: Stock-flow distinction and why the market fails with natural capital.
• 40:43: The logic and necessity of factoring population into sustainability.
• 47:30: Humanity’s ecological overshoot, today’s unsustainable ratio.
• 57:11: Policy prescription — putting nature at the center of economic decision-making.
• 64:46–68:18: Reflections on biodiversity credits and the meaning of biodiversity.
• 71:19: How adding natural capital to national accounts changes our sense of wealth.

Conclusion & Tone

The tone is collegial, inquisitive, and occasionally humorous (Partha’s self-deprecation about writing for general audiences). There’s a strong sense of humility—Partha often says he doesn’t have complete answers, but that reorienting economics around the real, physical world is both urgent and overdue. The discussion is participatory, dense with ideas, but patient and methodical—seeking to sharpen both the vocabulary and the conceptual tools for creating a more sustainable, equitable future.

Final Call:
“We should be thinking of policy as directed at wealth, how do you increase the wealth… and we don’t do that. If you do economic theory correctly, that's the message: wealth accounting.” (87:17, A)

For further learning:
Copies of Professor Dasgupta’s book are available at the event entrance, and listeners are encouraged to revisit the LSE website for upcoming events that continue these critical conversations.