mazzucato59_EDUARDO SOTERASAFP via Getty Images_water insuecurity EDUARDO SOTERAS/AFP via Getty Images

Water and the High Price of Bad Economics

The increasingly well-documented links between climate change, biodiversity loss, and water insecurity point to a fundamental issue: our economic systems are based on flawed thinking. We are forever reacting to market failures when we should be pursuing proactive strategies to shape the economy for the common good.

LONDON – Nearly 30 years into global negotiations to address climate change, efforts to control the problem are lagging, reflecting stalled progress toward creating a sustainable trajectory more broadly. Each year of delay adds to the urgency of the problem, and of the need to maintain Earth’s resilience against the most severe effects of global warming.

It has been 17 years since the Stern Review alerted the world to the costs of inaction on climate change, and two years since the Dasgupta Review did the same for biodiversity and the ecological underpinnings of our economies. Now, a similar expert consensus is emerging around water security. But most countries still do not seem to understand that neglecting water could undo the progress made on other fronts. We are facing a global water crisis that warrants the same level of attention, ambition, and action as the climate and biodiversity crises.

The links between the climate, biodiversity, and water crises point to a fundamental issue: our economies are based on flawed economics. Current economic thinking leads us to consider only the proceeds of pillaging of the planet, while ignoring externalities such as environmental damage and the liabilities they imply. This bad accounting makes us look wealthier when we are actually becoming poorer, depleting the sources of our well-being at the cost of future generations.