If there are too few bakers, bread becomes expensive. As a result, more people open bakeries, and bread prices drop again. Adam Smith called this the “invisible hand” of markets. But when it comes to the biosphere, this invisible hand is failing completely. The overuse of Earth’s biological capacity isn’t being corrected—it’s a massive market failure. So what does this mean?
Currently, those who provide the biocapacity that supports the global economy—farmers, foresters, fishing folks, and others—are poorly compensated. The result is large-scale overuse. Humanity’s resource use today is equivalent to 1.7 Earths. We’ve been in global overshoot since the early 1970s. Yet, to maintain biodiversity and ecological stability, our use would need to be closer to 0.5 Earths—3.4 times less.
This raises a critical question: how much higher would the prices of raw materials need to be to reduce demand from 1.7 Earths to 0.5? The required price might be so high that our economies could no longer function as they currently do—highlighting just how far out of balance we are. Still, failing to adapt to a 0.5-Earth world would be far more costly. It would erode the regenerative capacity of the planet, on which all value chains depend. We may not be paying the full cost now, but it’s on the balance sheet. Delaying the transition only turns today’s neglect into tomorrow’s liabilities.
This leads to an essential economic question: what is the clearing price that would reduce biocapacity demand to regenerative levels—from 1.7 to 0.5 Earths? Economists might call this the “overshoot clearing price.” It could be very high, especially if demand is largely inelastic—meaning that even with rising prices, the demand doesn’t drop significantly. The clearing price could be an order of magnitude higher than what is currently paid for biocapacity-based goods and services.
These goods and services include: crops, fruits, animal products, fish, timber, fibers, flowers, freshwater, and carbon sequestration. In short, the stewards of biocapacity are being vastly underpaid.
This underpayment is not just unjust—it fuels the depletion of humanity’s most vital asset. It poses a systemic risk to the global economy. Reversing this market failure is not just about fairness to biocapacity stewards; it’s essential for building a resilient and viable future for all of humanity.
How would you estimate the “overshoot clearing price”? We’d love to hear from you!