Partha Dasgupta, BBVA Frontiers of Knowledge Award for including climate in economic research

The BBVA Foundation announced this Thursday the awarding of the Frontiers of Knowledge in Economics prize to the University of Cambridge economist Partha Dasgupta (Dhaka, Bangladesh, 81 years old) for “his pioneering work in the interaction between economic life and the natural environment, including biodiversity.

The jury, chaired by Eric Maskin, has highlighted his research to measure well-being beyond the Gross Domestic Product (GDP) and incorporate “the social value of nature” into accounting.

“His research constituted a 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 in the 1970s already began to investigate one of the most burning issues: the relationship between the environment and the economy.

In the midst of the debate on the path to the elimination of fossil fuels in 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 would end up making a fortune once confirmed the effects of global warming.

Today, climate objectives have, in fact, become assumed even by central banks.

“These ideas have provided a framework for green accounting that is now widely accepted to measure sustainable development,” the jury minutes note.

Dasgupta's works are based on the impossibility of incorporating the environmental factor through market prices and the need to do so through its social value.

The economist considers that economics, especially when examining the industrial sector, has long considered that one good could always be replaced by another to resolve the shortage.

For this reason, Dasgupta goes beyond the concept of “good” to use that of “process”.

For example: the existence of the water cycle allows us to drink.

And what is not consumed remains part of nature.

“If you disrupt the climate too much, you will also be altering the water cycle, which will be weakened... If there is too much deforestation, if the biodiversity of the Amazon is eliminated, the climate system will be exacerbated,” the economist himself points out in the note. released by the foundation.

One of the great obstacles that economists encounter, however, is finding the appropriate tools to measure the ecological dimension of the activity.

Dasgupta rejects that this can be done with the GDP, which measures the goods and services produced in a certain period of time.

The economist proposes to observe the well-being associated with the environment through variations in capital accumulation.

“In the same way that companies have their balance sheets, in addition to profit and loss accounting, we should have balance sheets that include the evolution of nature, of natural capital, not just factories, trained people or machines that already appear in national statistics, but also nature,” he maintains.

In fact, throughout history there has been high GDP growth while nature has been degraded.

“He is the economist of our time who has most emphasized the important interaction between economic life and the natural environment.

In his work he emphasizes that all economic activity has implications for our environment, almost always negative (the degradation of the natural environment), and that these must be taken into account to formulate and carry out an economic policy that really makes sense, not only for people in the world today, but for future generations,” said Eric Maskin.

Also on the jury were Manuel Arellano, professor at the Center for Monetary and Financial Studies of the Bank of Spain;

Antonio Ciccone, professor of Economics at the University of Mannheim;

Pinelopi Koujinaou Goldberg, holder of the Elihu Chair in Economics and Global Affairs at Yale University;

Andreu Mas-Colell, emeritus professor of Economics at the Pompeu Fabra University, and Fabrizio Zilibotti, also from Yale.

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