Why Underpricing Natural Capital Creates Machines and Displaces Human Beings
By: Drew Hodel
Tags: Climate Action, Climate Change, Artificial Intelligence, Humanity, Nature

This story is simple and there is no way around it.

First, picture all of existence around you — everything you can sense with your eyes, ears, nose, and hands.

Second, divide it all up, and put all of it into three figurative buckets.

For the sake of argument, let’s call the buckets: (1) the natural capital bucket, (2) the human capital bucket, and (3) the reproducible capital bucket.

Here is what you put in the natural capital bucket: rivers, streams, skies, mountains, trees, animals, insects, hawks, horses, et cetera, et cetera — these are things that humans did not create.

Here is what you put in the human capital bucket: the habits, the feelings, the knowledge, the logic, the reasoning, and the social and personality attributes that reside within a human’s brain.

Here is what you put in the reproducible capital bucket: the cranes, the trains, the computers, the wires, the planes, et cetera, et cetera — these are the things that humans create.

Third, ask yourself one question.

“If I knew that I needed an apple tomorrow, would I spend more money buying an apple today if I knew that tomorrow there would be a million apples for me to choose from or that tomorrow there would be only one?”

This is called supply and demand.

When there is less of something, it becomes more expensive.

Fourth, ask yourself another question.

“Do you know what Earth Overshoot Day is?”

If not, let me tell you.

Earth Overshoot Day marks the date when humanity’s use of natural capital in a given year exceeds the amount of natural capital that the Earth can regenerate in that same year.

As you can see from the below graph, since 1970, Earth Overshoot Day has been moving closer and closer to the beginning of the year:

Fifth, ask yourself what this means.

Then, in case it’s not clear, understand that it means the bucket of “natural capital” has been getting smaller and smaller as we humans have moved through time.

Imagine the United States in 1776.

Imagine what it looked like.

Now imagine the United States today.

Can you envision any differences?

Perhaps a road or two?

In any case, the point is this: before the human population exploded and other species began dying back, and before we humans began creating reproducible capital and putting down pavement, natural capital was ubiquitous.

It was everywhere.

And so, when we first began using it, we sold it for next to nothing.

Notably, at the time, we also hadn’t discovered evolution or the Big Bang, and so we didn’t technically understand that we were selling ourselves and/or our ancestors.

But, in any case, what did this do?

Well.

Ask yourself another question.

“If you have $10 to spend on wood and you think you need to buy 10 trees worth of wood, what’s going to happen if a single tree is priced at $10 instead of $1?”

According to my math, when a single tree costs more, you’re going to buy less of it.

Right?

Now look at your three buckets.

How does a human create reproducible capital?

The way I see it, there are two obvious options.

Either: (1) a human uses his or her human capital to transform natural capital into reproducible capital, or (2) a human uses already created reproducible capital to create even more reproducible capital.

And this interrelationship is key.

It has serious consequences.

For instance, when natural capital is underpriced and cheap, it is consequently much easier to create reproducible capital.

And vice versa.

When natural capital is expensive, making reproducible capital is expensive.

If a tree is valued at an infinite number of dollars, for instance, then no one is going to cut it down because no one can afford to take on that cost.

And here is how all of this adds up:

We humans used to believe that this world’s natural capital was limitless (because it was — it regrew and regenerated faster than we could).

And so we sold it for next to nothing.

We priced it extremely low.

But then our population boomed, capitalism arose, and we began to consume natural capital at a voracious rate.

Now, we’re running out of natural capital and failing to value it correctly.

We’ve priced it too low.

And we overshoot earlier and earlier every year.

As a consequence, our reproducible capital is being created too quickly and our human capital can’t keep up with the ever increasing rate of technological change.

Our machines are becoming ever more plentiful and complex.

Our educational systems can’t keep up.

Fewer and fewer of us know how to build them, let alone operate them.

Tech Giants are paying larger and larger salaries for scarcer and scarcer A.I. talent.

And the vast majority of us humans are being left in the dust.

Therefore, we need to significantly reprice natural capital, to remember who we are and where we come from.

Humans — biological beings no different than the rest.