Why the Economy Does Not Care About Nature, and How Can We Trick It to Care

The economy does not care about nature because it was never designed to. It is designed to focus on private (cars, houses, phones) and club goods (toll roads Netflix, etc.). It was not designed to care about public (clean air, biodiversity) and common goods (fisheries, habitats, etc.)

And so, people that produce private and club goods don’t have to account for nature (negative externalities), and those that do care about nature do so on their own dime (positive externalities). Yes, the economic system is working perfectly as designed, and there is very little chance we can change how it treats public and common goods.

How to Trick the Economic System

But there is a way to trick the economy to care about nature; by making it think public and common goods (things of nature) are private and club goods without making them private and club goods.

The economic trick starts by understanding why goods get categorized as private, club, public, and common in the first place.

Here is the kicker, goods are not categorized by their inherent traits (as most economists believe), but by society’s ability to create Excludability and/or Rivalry of the good.

No matter what the good or service is, if you can create the right mix of excludability and rivalry then you are in the economic business. If you can’t, then you are not in the economic business.

The Steep Uphill Battle

If society cannot figure out how to make a good act like a private or club good, then the only choice is for corporations, governments, and NGOs to create some program or incentive for people to be motivated to value the good that the economic system is unable to.

And that, my friend, is the biggest uphill battle. To constantly fight uphill, or plug new holes in the dike, or constantly fix what is being broken is not the economic playground we want to play in.

When the monetary and economic system does not receive feedback on how it is destroying nature, the government, corporate, and NGO substitutes are futile in the long run. I am not saying we should not be patching the dike, but that we should also be thinking about the flow of the river behind the dike.

How are Goods Categorized?

Goods are categorized based on excludability (whether access can be restricted) and rivalry (whether one person’s use diminishes availability for others).

1. Private Goods (Excludable, Rival)

Private goods, like food, clothing, or cars, are the backbone of the economy. They are bought and sold in markets, where prices are determined by supply and demand. Because these goods are both excludable and rival, their value is clear and measurable. A farmer growing crops on private land, for instance, has an incentive to maximize yield because those goods can be sold for profit.

However, this system often ignores the environmental costs of production. The water used to irrigate crops, the soil degraded by intensive farming, or the greenhouse gases emitted during transport — these are negative externalities that the market does not account for.

2. Club Goods (Excludable, Non-Rival)

Club goods, such as subscription services, private parks, or toll roads, are accessible only to those who pay for them but can be shared by many without being depleted.

3. Public Goods (Non-Excludable, Non-Rival)

Public goods, such as clean air, biodiversity, or climate stability, are available to everyone. These goods are vital for human survival but are notoriously undervalued in the economy because no one “owns” them.

The tragedy of public goods lies in their susceptibility to neglect. Because individuals and corporations cannot directly profit from them, there is little economic incentive to invest in their protection. Positive externalities — like the benefits of a reforested area improving air quality — go unpriced and unaccounted for, leaving public goods vulnerable to exploitation.

4. Common Goods (Non-Excludable, Rival)

Common goods, such as fisheries, freshwater, or forests, are accessible to all but subject to overuse and depletion. The “tragedy of the commons” highlights how individuals acting in their self-interest can exhaust shared resources, leaving everyone worse off.

Negative externalities dominate common goods. For example, overfishing depletes marine ecosystems, while deforestation for timber reduces biodiversity and carbon sequestration capacity. Without clear governance or economic incentives, these goods are exploited at unsustainable rates.

Pulling off the Greatest Economic Trick

Nature is a grand mix of tangible (trees, plants, animals) and less tangible (carbon sequestration, soil health, ecosystems, pollination, etc.) goods and services. The economic system enables transactions of many of the tangible goods and ignores many of the intangible goods and services.

The difference between the tangible and intangible is often their physicality. It is easy to put corn in a bushel and sell it as a private good. Or it is somewhat easy to stream Netflix to those that have subscriptions as a club good. In both cases, they have a physical nature about them, or there is a means via technology to create enough physicality to create excludability.

Making Positive Externalities Excludable

Positive economic externalities are valuable, but how they are accounted for does not create enough physicality to exclude them to recategorize them as tradable private and club goods.

The economic trick is to apply an accounting system that has the capacity to exclude the positive externalities, so individuals and entities can capitalize on their very real, but elusive value. The value of positive externalities related to nature are $50-$100T according to multiple sources such as the BlackRock, the US Government, and the United Nations.

What is neat about this trick is that when you internalize externalities you grow the economy by about that amount. Imagine if we could grow the global economy by $50-$100T and that growth would be directly related to nature’s capacity to provide more for society. A healthy ecology is beneficial to an economic system.

Conclusion

The economy does not care about nature because it was never designed to. The system’s focus on private and club goods has left public and common goods — and the positive externalities they provide — out in the cold. However, designing an intelligent geospatial accounting system can generate enough physicality and redefine how we and our economic system values and interact with the natural world.

Author

Timothy Gieseke’ career path has traversed through government, private business, and non-government sectors while focusing on the common issue of landscape sustainability from ecological and economic perspectives. This led him to explore the transcendence nature of solving complex, socially wicked issues.

He authored three books that outline the environmental, socio-economics, and governance of EcoCommerce for the purpose of addressing economic externalities. His third book Collaborative Environmental Governance Frameworks: A Practical Guide (2019) describes how shared governance can be used to organize socioeconomic efforts. His second book, Shared Governance for Sustainable Working Landscapes (2016) introduces the NCU (natural capital unit) that functions as a landscape accounting unit, a shared governance catalyst, and the source of a currency. His first book, EcoCommerce 101: Adding an ecological dimension to the economy (2011) describes the intimate relationship natural capital, the environment, and the economic have relative to the welfare of society and nature.