Few people argue about why this is happening; there’s a lot that exists outside the market system as ‘externalities’. Society and the environment don’t easily conform to the demands of a balance sheet. So the question then becomes; what’s the best way to internalise these externalities? How can we treat social and natural capital as economic units, as tradable as financial capital and integral as land or labour, without tampering with their intrinsic value?

There are two immediate ‘textbook’ answers to the first question; taxes and property rights. Typically, the best way to deal with externalities has been in the form of direct economic intervention. The state levies taxes that raise the cost of negative externalities, or provides subsidies to promote positive externalities (think the UK’s ‘sugar tax’ for the former, and the NHS for the latter). Alternatively, granting property rights can lead to the protection of resources once there’s an owner that’s responsible for them. The idea of ‘loss aversion’ comes into play here.

But as Garrett Hardin said 50 years ago, there’s a class of problems that transcend technical solutions, and ours is a finite world. Both of the solutions above act upon the producer of the externality. They tax the person drinking the soft drink, and only indirectly deal with the health impacts of drinking too much soft drink. What we need is a fundamental shift in thinking about how the economy values things, bringing it more into line with what we value as a global community.

Dealing with the second question involves talking about the value of society and of the environment. But value to whom? When we speak about the economic value of the environment we’re talking about something worlds apart from the value of a picturesque scene to an individual. The former could never hope to be an accurate reflection of the latter. In the same way it’s impossible to put a price on the feeling of security or the trust between you and your neighbour. Social and natural capital, in the economic sense, isn’t (nor should it seek to be) a reflection of intrinsic value.

Without putting a price on social and natural capital, how can we expand the notion of economic value so it better integrates the social and the natural?

The secret - according to the Universal Commons Project - lies in better measurement. Not measurement of the intrinsic value of social and natural capital, but better measurement of its component parts - its qualities and quantities. For example, we can’t tell you the value of someone’s well-being but we can measure people’s health, their education, social connections and other components of well-being. We can’t measure the value of a pristine ecosystem but we could measure its biodiversity, the level of pollution and geographical spread.

If we can develop highly accurate and accepted metrics for the quantity and quality of social and natural capital, then we can start to think about what the changes in their quantity and quality are worth to us as a society. We can start to treat them as true economic 'capitals'. And we can do this without tampering with the intrinsic value of society or the environment. The development of these metrics is the aim of the Universal Commons Measurement Challenge.

This may sound like a bold idea, but it follows the well-trodden path every metric - the meter, the second, the gram - traced as it finds global acceptance. But it’s a tough job. The original Longitude Prize serves as a great reminder of what needs to be achieved: not just high quality metrics, but broad agreement on them. This is where a challenge prize really struts its stuff. In getting a panel of experts together - people who know how to measure, and who know what’s being measured - we think we can help to create the consensus needed to develop useful metrics for the social and natural capital that currently escapes effective measurement.

Just as every great journey starts with a first step, so too with the UCMC start with one area of social and natural capital. We’re now working to find best practice measurement in the social and natural capital space; areas we’re really good at measuring and where those measures are highly accepted. From this we’ll work to reward the most accurate expression of measurement on a scale, so changes in these capitals can be monetised.

But we need your help! Please comment below with all your questions, comments and queries, or contact [email protected]