Earlier this year the Dasgupta review on the economics of biodiversity concluded that at the heart of nature’s loss lies deep-rooted, widespread institutional failure. Minna Hartikainen discusses what institutional failure means and what environmental governance options are available to address global environmental problems.

At the heart of nature’s loss lies institutional failure

Institutions are social structures in which people cooperate. Collective action would be impossible without institutions. Within them we make rules that organise social, political and economic relations, including written laws and unwritten social norms as well as the policies and frameworks that drive government and other decision-making. So, the choices made by institutions have big implications for us all. 

Earlier this year the Dasgupta review on the economics of biodiversity concluded that there is a link between the ongoing losses of nature and a deep-rooted, widespread institutional failure, which results in nature’s value not being reflected in our economies and governments paying people more to exploit nature than to protect it. Not only that but we lack institutional arrangements to protect global public goods such as the oceans.

There is no consensus on the most effective ways to manage natural resources and protect nature. Some want to solve problems through private institutions, others advocate for more government control or local decision-making. With any institution, decisions need to be made across sectors and bottom-up as well as top-down. So, what could we be considering to try to make things better?

Effective governance shares knowledge and perspectives

Nobel-prize winning economist Elinor Ostrom promoted polycentric governance for coping with environmental change. Polycentric decision-making tends to enhance trust, innovation, learning, collaboration and the achievement of more effective, equitable and sustainable outcomes. Also the Dasgupta Review argues for polycentric governance for sharing perspectives and knowledge.

Overall, we need a common vision for effective environmental governance. Partnerships between government, businesses and civil society are needed to bring different interests together to share best practice and to transform behaviour. The Natural Capital Initiative has championed Wholescape thinking for integrated catchment management through partnerships, and similar whole-site approaches have emerged in the marine environment.

Recently, systems thinking has become part of government policy as well as research programmes. New tools have been developed to address complex environmental issues, such as participatory systems mapping and adaptive governance of food, energy and water. There is a growing understanding of the links between environmental, social and economic issues, and the Dasgupta Review challenges us to start working on the environmental governance problems that have resulted in nature’s loss.


The road ahead

How can we transform our political and financial institutions to ensure better environmental governance? Our priorities include embedding values of nature in economic valuation, implementing environmental policies across government departments, and mainstreaming natural capital thinking into local and national decision-making. Recent nature-based solutions dialogues recommended more communication and collaboration between public and private sectors from local to national levels.

Financial institutions have an important role to play in directing financial flows towards the protection and restoration of nature. The Dasgupta Review calls for change in how we value nature and measure economic success. Instead of GDP, we should measure inclusive wealth, including social and natural capital into the equation. National and local natural capital accounting is one step towards valuing nature in our economies.

The UN nature and climate conferences are an opportunity to set new directions for the coming decade but we need institutional arrangements to ensure the ambitious commitments are met. 2020 showed that we cannot rely on intergovernmental agreements alone. Good environmental governance requires collaboration from local to national levels but we also need a behavioural change towards more sustainable lifestyles. We need social norms that support environmental policy and promote fairness and prosperity for all.

Ultimately, we need to incorporate the values that so many people hold about the environment into the rules and structures that govern our lives.