Ignoring nature carries steep price

Businesses and governments that don’t include the value of nature’s services to humanity are ignoring potential trillion-dollar impacts at their own peril, according to today’s launch of a two-year study on “The Economics of Ecosystems and Biodiversity” (TEEB).

“TEEB has documented not only the multi-trillion dollar importance to the global economy of the natural world, but the kinds of policy-shifts and smart market mechanisms that can embed fresh thinking in a world beset by a rising raft of multiple challenges,” said TEEB study leader, Pavan Sukhdev, a banker who heads up the Green Economy Initiative of the United Nations Environment Programme (UNEP). “The good news is that many communities and countries are already seeing the potential of incorporating the value of nature into decision-making.”

The TEEB study was released today during the Convention on Biological Diversity’s 10th Conference of Parties meeting in Nagoya, Japan.

Among the natural services the TEEB report put values to:

• $50 billion: The annual cost of opportunities lost through over-exploitation of global fisheries.
• €153 billion: The total value, in 2005, of insect pollination. That figure represents 9.5 per cent of the world’s agricultural output of human food that year.
• $30 billion to $172 billion: The annual value of human welfare benefits provided by coral reefs.
• $20 million to $67 million: The benefit, over a four-year period, of a tree planting programme in Canberra, Australia. Local authorities there have planted 400,000 trees to regulate microclimate and reduce pollution; the effort also helped to improve urban air quality, reduce energy costs for air-conditioning and store and sequester carbon.
• $6.5 billion: Savings reaped by New York by investing in maintenance of natural water purification services in the Catskills watershed ($1 billion to $1.5 billion) rather than opt for the man-made solution of a filtration plant ($6 billion to $8 billion, plus $300 million to $500 million in annual operating costs).
• 50: The number of millionaires (in rupees) in Hiware Bazaar, India, created through the regeneration of 70 hectares of degraded forests. This led to the number of active wells in the surrounding area doubling, grass production increasing and income from agriculture increasing due to the enhancement of local ecosystem services.

Countries such as India have already announced plans for implementing the economic valuation of their natural capital as well as the value of nature’s services in decision-making.

“The time for ignoring biodiversity and persisting with conventional thinking regarding wealth creation and development is over,” Sukhdev said. “We must get on to the path towards a green economy.”

The TEEB study concludes with the following recommendations:

1. Public disclosure of — and accountability for — impacts on nature should be essential outcomes of the biodiversity assessment.
2. The present system of national accounts should be rapidly upgraded to include the value of changes in natural capital stocks and ecosystem service flows.
3. An urgent priority is to draw up consistent physical accounts for forest stocks and ecosystem services, both of which are required, for example, for the development of new forest carbon mechanisms and incentives.
4. The annual reports and accounts of business and other organisations should disclose all major externalities, including environmental damage affecting society and changes in natural assets not currently disclosed in the statutory accounts.
5. The principles of “No Net Loss” or “Net Positive Impact” should be considered as normal business practice, using robust biodiversity performance benchmarks and assurance processes to avoid and mitigate damage, together with pro-biodiversity investment to compensate for adverse impacts that cannot be avoided.
6. The principles of “polluter pays” and “full-cost-recovery” are powerful guidelines for the realignment of incentive structures and fiscal reform. In some contexts, the principle of “beneficiary pays” can be invoked to support new positive incentives such as payments for ecosystem services, tax breaks and other fiscal transfers that aim to encourage private and public sector actors to provide ecosystem services.
7. Governments should aim for full disclosure of subsidies, measuring and reporting them annually so their perverse components can be recognised, tracked and eventually phased out.
8. The establishment of comprehensive, representative, effective and equitably managed systems of national and regional protected areas should be pursued (especially in the high seas) to conserve biodiversity and maintain a wide range of ecosystem services. Ecosystem valuation can help to justify protected areas policy, identify funding and investment opportunities, and inform conservation priorities.
9. Ecosystem conservation and restoration should be regarded as a viable investment option in support of climate change mitigation and adaptation.
10. Human dependence on ecosystem services, and particularly their role as a lifeline for many poor households, needs to be more fully integrated into policy. This applies both to targeting development interventions as well as to evaluating the social impacts of policies that affect the environment.