World Economic Forum’s Akanksha Khatri: Humanity must move to a circular economy

British economist Kate Raworth has compared the prevailing economic system to a caterpillar.

Like the caterpillar, it also works quite straightforwardly. From one end it swallows up natural resources and from the other end it pours out waste.

In the current system, nothing but money actually circulates. The economy is based entirely on the fact that industry produces products that people use up and throw away. Everything is once new, then old and finally garbage.

This economic model, called linear, has worked successfully in its own right. By always producing, consuming and throwing away, economic growth has been achieved, profits have been made, jobs have been created and wealth has been increased.

However, this cannot continue, says the World Economic Forum’s (WEF) Director of Nature and Biodiversity akanksha khatri In an interview with HS.

According to him, we should hurry away from the linear economic model as soon as possible.

Reason is clear. As a result of the caterpillar-like economic system, the carbon dioxide concentration in the atmosphere has risen to a dangerously high level and the depletion of the natural spectrum has accelerated. Life-sustaining systems have begun to experience unprecedented pressure.

“We have created economic growth by extracting natural resources on the assumption that nature is an inexhaustible resource. However, it is not like that. That’s why we are approaching the limits of nature’s carrying capacity,” says Khatri.

According to Khatri business as usual -thinking is not an option in this situation. It is no longer better to continue growing the economy with the centuries-old recipe of a linear model.

“We should recognize that natural capital is a limited resource. The basic principles of economics are that when a resource becomes scarce, its price rises. To avoid this with natural resources, we would have to move to a circular economy,” says Khatri.

Finely expressed, the economy should change from degenerative to regenerative, i.e. from degenerating to renewing.

Of course, development in the renewable direction has taken place.

The use of solar and wind power has increased in energy production. The European Union, on the other hand, banned several single-use plastic products three years ago the plastics directive. The goal of the regulation is to reduce single use and the amount of waste.

Still, in the big picture, the economic system still works very linearly. This is why Khatri visited Finland last week to speak to decision-makers and business leaders.

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People’s well-being, economic growth and natural diversity can be reconciled.

On Wednesday in Tampere, he met city managers and mayors, ministers and advisors to the President of the Republic, as well as the management of the Bank of Finland. On Thursday, he was in Helsinki speaking to business leaders and business representatives.

Speaking to decision makers and managers is Khatri’s job. He wants to convince them that it is only beneficial for the economy if humanity succeeds in slowing down climate change and stopping the loss of nature.

“I have succeeded in my job if I can make them understand that people’s well-being, economic growth and natural diversity can be reconciled.”

Publish since the corona pandemic, the economic discussion has been mainly dominated by inflation and rising interest rates. In Finland, on the other hand, politicians currently seem to consider adjusting the public finances their most important task.

Finland falling behind on climate goals for example, does not appear to be nearly as important an issue from the point of view of the economy as stopping indebtedness. Finance minister Riikka Purra (ps) has also said that Finland’s goal to be carbon neutral in 2035 is “extremely stupid climate policy”.

So the time does not seem very favorable for Khatri’s message. However, he himself does not feel this way.

“I wouldn’t say that the discussion about climate change and nature loss has taken a backseat. From what I can see, they are still on everyone’s agenda. For example, even five years ago, it was significantly more difficult to start a conversation about these topics than it is today.”

Secondly climate change and the loss of nature are not phenomena with which you can spend a “good time” for discussion. Not only are they progressing, they are also affecting the lives of humanity more and more.

The increase in carbon dioxide concentration in the atmosphere and the impoverishment of the natural spectrum cannot be prevented just by talking.

So what should be said so that words lead to actions?

Khatri states that turning carbon dioxide emissions in a downward direction and stopping the loss of nature is ultimately a matter of investment. Therefore, the whole group, from decision-makers to voters and company managers, must be convinced of the profitability of investments.

“First of all, we need to correct the misconception that investing in biodiversity and the climate is a luxury that can only be afforded in good times,” he says.

“Then it has to be shown that the investments create new jobs.”

“This is an opportunity worth tens of billions of dollars. This has been shown by research conducted by the World Economic Forum.”

HS asked Khatri if, during his visit to Finland, he had heard about the destruction of mussels in Suomussalmi.

At the end of the summer, it turned out that Stora Enso’s forest machine was repeatedly drove over the peak occurrence of the highly endangered river pearl mussel Suomussalmi’s Hukkajoki. It is estimated that thousands of river pearl mussels, or barnacles, had died in the overrun.

Khatri said that he had heard about the case and understood that there had been a lot of discussion around it. However, he refrained from commenting on the mussel destruction because he did not feel that he knew enough about the background of the matter.

HS would have liked to hear from Khatri what should change so that environmental damage such as mussel destruction is not just a splash for the natural resource industry that hurts when plastering.

Khatri prefers to talk on a more general level about how nature should be approached from an economic perspective.

In his opinion, much the same perspective as the state economy should be applied to nature. In the minds of both politicians and citizens, an economy with a surplus appears to be a desirable state, while a deficit economy is not.

“In the same way, nature should be approached from the point of view of whether we are leaving it in surplus or deficit. Like a state economy left in deficit, nature left in deficit also causes problems that ultimately need to be solved with difficult decisions.”