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There's a silence at the heart of our economic statistics.
Every quarter, the Australian Bureau of Statistics (ABS) publishes a number that shows how much economic activity has taken place in Australia recently.
We've all been conditioned to think it's a good thing if that number goes up a little each time.
But what was the environmental cost of that increase in economic activity?
The ABS data doesn't tell us.
And economists who write analyses of the quarterly movements in economic growth don't talk about it either. And federal budgets don't mention it.
Everyone ignores the elephant in the room.
Who's accounting for the environment?
But our economic growth doesn't occur in a vacuum.
It still depends on the extraction and burning of fossil fuels and the exploitation of other elements of nature.
To achieve the latest quarter of economic growth, how many more hectares of native forest were logged, how many more animal species became extinct, and how much more plastic did we pump into the environment?
We're never told.
But imagine if that kind of environmental information was published alongside the quarterly gross domestic product (GDP) figure.
Every three months, the ABS would tell us economic growth increased by 0.6 per cent in the last quarter, say, and by 5.9 per cent through the year.
But it would also explain that New South Wales lost another 1,300 koalas last quarter, and Victoria logged another 750 hectares of its native forests, and our ocean fish stocks shrank by another 0.5 percentage points.
They could start with something like this, before getting far more granular:
If the information was presented that way, it would remind us that our economic system is constantly drawing down on the very resources that sustain life on earth: our forests, animals, soils, waterways and oceans.
And by making the relationship between economic growth and the environment transparent, it might change the national conversation.
The traditional way of thinking about 'growth'
So why don't we do it?
Partly for historical and technical reasons. And partly because vested interests haven't wanted the system to change.
But consider the historical aspects.
It was back in the 1930s and 1940s when economists created the system of "national accounting" that allowed them to calculate a nation's GDP.
In that same period, the British economist John Maynard Keynes invented macro-economics as a distinct discipline.
Both of those things helped to put "the economy" on a pedestal, a way of thinking about human economic activity that is an abstraction.
It's when the phrase "economic growth" entered the public discourse to refer to growth in the national economy, rather than growth in wealth or trade.
See below.
It was after World War II when "economic growth" became the guiding indicator of a country's economic health.
As the historian Stephen Macekura has written, political leaders, policymakers, and economists embraced the growth paradigm in that era to rebuild their economies and create as many jobs as possible for their restive populations after the war.
They also built new economic institutions to promote "national growth" around the world, and many of those institutions still exist today.
"The many international organisations and agreements established between 1944 and 1947 — from the International Monetary Fund (IMF) and World Bank to the General Agreement on Tariffs and Trade (GATT) to UN's Economic and Social Council — stemmed from the assumption that national economic growth required international arrangements to minimise geopolitical conflict," he says.
In 1947, the United Nations (UN) began to ask as many countries as possible to adopt a standardised system of national accounts so the "economic growth" framework could go international.
And that's the economic accounting system that's still in place today.
When the ABS tells us that Australia's economy grew by 0.6 per cent last quarter, it's using the framework developed by economists in the 1930s, 1940s and 1950s.
Problems with the GDP metric
However, that system of national accounting and the way we measure GDP have always had deficiencies.
One of the most glaring has to do with the environment.
The GDP metric only measures what counts as "economic activity" according to a very narrow definition.
It ignores things like species extinction, environmental destruction, soil depletion, and rising global temperatures.
Why? Because it follows the practice of economists from past eras to abstract "the economy" from the rest of nature, where damage to the environment is considered an "externality" — something external to the economic system.
When your priority is measuring economic activity that makes money, so you can figure out how to put money into more peoples' pockets to lift living standards everywhere, your attention is focused on goods and services that are traded in the market place.
What does pollution have to do with that? That's a problem for tomorrow.
But the traditional practice of abstracting "the economy" from the rest of nature has long had its critics, too.
It's been famously challenged by reports such as the Club of Rome's Limits to Growth report (1972) and the Brundtland Report (1987).
In recent decades, after hearing the criticisms, the United Nations has even been trying to develop an accounting framework that links the environment and economic activity.
It's called the System of Environmental Economic Accounting (SEEA), and it uses similar concepts and classifications as the original System of National Accounts (SNA) to try to make it possible — in the future — to integrate national environmental and economic statistics.
But that day hasn't arrived yet, and it won't be here for years.
All those yesterdays
And in the meantime, new "movements" within the broader environmental movement have been trying themselves to update the accounting and legal underpinnings of 21st-century capitalism.
In 2014, the Australian author and academic Jane Gleeson-White documented four of the new movements that she'd noticed in the 2010s.
She said each one was trying to tackle some of the key problems of our times, such as the inordinate power of modern corporations and the invisibility of the earth's living systems in global economic and accounting measures.
The four movements were:
- Natural capital and ecosystem accounting for nations
- The burgeoning rights of nature movement, which resonates with indigenous earth-centred laws and cultures
- The push for a new corporation, the B Corporation, which is legally bound to benefit society and the environment while also making a profit
- Multi-capital or integrated reporting, which accounts for the wealth of society and nature as well as profit
Dr Gleeson-White said she could sympathise with their projects, but she could see problems with them too.
"The movements I recount are problematic, but they are materialising rapidly in the real world and offer important ways for thinking beyond the current economic, accounting and legal structures that shape our extractive global economy towards more regenerative thinking and institutions," she wrote in 2020 (in an updated edition of her book).
"Today it is even more critical than when I was writing Six Capitals that we both attend to these movements and understand that when speaking about the natural world we must consider other, better ways of valuing nature than natural capital and ecosystem accounting," she said.
We need new markets to save the market system
Which brings us to the final section.
Last month, I wrote about the news that former Treasury secretary Ken Henry has been working on something significant in Australia.
Dr Henry is among a group of people who have been trying to develop a way to measure the health of the environment to help them track if environmental conditions are degrading or improving over time.
And they made an announcement last month.
They said in a world-first, the Burnett Mary Regional Group (BMRG) in Queensland had just finished using their new method to take a "stocktake" of the environment within its borders, which included all of its animals, plants, waterways, and soil.
The stocktake covered 56,000 square kilometres of land.
They said the BMRG stocktake created a dataset that will give scientists a benchmark against which to track changes in the environment in the region over coming decades, allowing people to see how human economic activity is impacting the area.
Dr Henry is a director of a not-for-profit called Accounting for Nature (AfN) that developed the methodology and scientifically-based framework for environmental accounting that was used in the Queensland pilot.
Other AfN board members include Peter Harper, the former deputy Australian statistician at the Bureau of Statistics who was responsible for the ABS's environmental statistics program, and chair Peter Cosier, the renowned conservationist and co-founder of the Wentworth Group of Concerned Scientists.
Dr Henry said he had become frustrated with the glacial pace of the UN's efforts to incorporate environmental accounting into its system of national accounts.
When thinking about Dr Gleeson-White's book, you can see that AfN (which was established four years ago) is part of the modern movement to develop natural capital and ecosystem accounting frameworks.
But it also begs the question: how do you put such frameworks to good use?
Dr Henry's answer is not a universal one.
He says we could hopefully use them to develop new markets that attach a financial value to the improvement in environment conditions.
He says if those kinds of markets can get up and running, they may incentivise businesses to start pouring billions of dollars into environmental projects because it will be the profitable thing to do.
And that would help businesses to abandon their old model of profit-maximisation that excludes environmental destruction from its calculations, by turning environmental regeneration into a profit-making venture, he said.
"I think this is a game changer," he told the ABC.
But if it feels like that's an unnatural idea, at least you know where it's coming from.