Partha Dasgupta, BBVA Frontiers of Knowledge Award for incorporating climate into economic research economy

The BBVA Foundation this Thursday announced the award of the Frontiers of Knowledge in Economics award to Cambridge University economist Partha Dasgupta (Dhaka, Bangladesh, 81 years old) for “his pioneering work in the interactions between economic life and the natural environment.” Biodiversity. The jury, chaired by Eric Maskin, highlights his research for measuring well-being beyond gross domestic product (GDP) and incorporating the “social value of nature” into accounting. “Their research formed the basis for analyzing how societies that have a fixed amount of non-renewable resources should distribute them over time and invest in alternative technologies,” he explained.

This year, the Foundation wanted to reward the pioneering work of Dasgupta, who began investigating one of the most pressing issues in the 1970s: the relationship between the environment and the economy. Amid debate over the path to fossil fuel elimination by 2050, the BBVA Foundation has recognized the research of an economist who more than half a century ago advocated measuring “sustainable development,” a term that Fortune eventually coined a Once the effects of global warming were confirmed. Today, climate objectives are, in fact, beginning to be embraced even by central banks. “These ideas have provided a framework for green accounting that is now widely accepted for measuring sustainable development,” the jury minutes note.

Dasgupta’s work is based on the impossibility of incorporating the environmental factor through market prices and the need to do so through its social value. The economist believes that economics, especially when examining the industrial sector, has long held that one good can always be substituted for another to solve a shortage. For this reason, Dasgupta goes beyond the concept of “good” and uses “process”. For example: The existence of the water cycle allows us to drink. And what is not consumed remains a part of nature. “If you disrupt the climate too much, you will also alter the water cycle, which will become vulnerable… If there is too much deforestation, if the biodiversity of the Amazon is lost, the climate system will deteriorate. It will happen,” the economist himself says in a note issued by the Foundation.

However, one of the major obstacles facing economists is finding appropriate tools to measure the ecological dimension of activity. Dasgupta rejects that this can be done with GDP, which measures goods and services produced over a period of time. The economist proposes to observe environmental welfare through variations in capital accumulation. “Just as companies have their balance sheets, in addition to profit and loss accounting, we must have balance sheets that include the development of nature, the development of natural capital, not just factories, trained people or machines that first are visible in national statistics since 2000, but also in nature,” he says. In fact, throughout history there has been high GDP growth while nature has declined.

“He is the economist of our times who has laid greatest emphasis on the vital interaction between economic life and the natural environment. In his work he emphasizes that all economic activities have an impact on our environment, almost always negative (degradation of the natural environment), and these must be taken into account in order to create and implement an economic policy that actually works. Makes sense, not just for the people of the world today, but for future generations,” said Eric Maskin. The jury also included Professor Manuel Arellano of the Center for Monetary and Financial Studies of the Bank of Spain; Antonio Ciccone, Professor of Economics at the University of Mannheim; Pinelopi Cousineau Goldberg, holder of the Elihu Chair in Economics and Global Affairs at Yale University; Also included are Andre Mas-Collel, emeritus professor of economics at Pompeu Fabra University, and Fabrizio Zilibotti from Yale.

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