Ecosystem economics - Can we put a price on nature?
On January 25th, a panel of leading experts chaired by Tim Radford debated the issue of valuing nature and its services as part of the series of Earth debates initiated by the Natural History Museum of London.
Beyond talks of GDP, and other economic tools to measure growth, how can we really understand the value of nature, and put this into a language that decision makers as well as businesses understand? To what extent will the new economics of ecosystem services change our attitudes towards sustainable development? In front of the Rio+20 earth summit, the United Nations conference on sustainable development, these are some of the questions the panel raised.
Ecosystem services "give us our basic needs", said Claire Brown, a Senior Programme Officer for Ecosystem Services and Assessment at the United Nations Environment Programme (UNEP) and they have monetary and social value. But the term value remains subjective, which represents, according to Will Evison, environmental economist at PricewaterhouseCoopers (PwC) and lead contributor to the Economics of Ecosystems and Biodiversity Report for Business (TEEB) the importance nature has for individuals and society.
To translate the value of ecosystems in economic terms, economists have different tools. While it's easier to put a price (fair or unfair) on food or fuel, items that are traded on a daily basis, more abstract concepts such as climate regulation, carbon sequestration or seed dispersal is harder to translate into monetary value, and furthermore determine who should pay. Such things as the value of mangroves, which act as a sea defence or the waste treatment provided by wetland habitats avoiding health costs can be determined with the cost based approach, which looks at the costs of avoidance, replacement and clean up. But with all these tools, the question remain how will this help the public and private sector to make wise decisions?
In times of economic downturn a question that was raised by the panel was how this valuation of nature will connect to mainstream politics when governments are trying to cut spending and create jobs. Professor Watson brought in the well documented case of the Catskills mountains in New York. The restoration of the rural nature of the Catskill watershed from which New York city gets most of its water cost less than the construction of a water purification plant.
Professor Watson also talked about the importance of schemes aimed at conserving ecosystems by paying the caretakers of the land and environment. Such initiatives have already started with REDD, the UN programme aimed at Reducing Emissions from Deforestation and Forest Degradation in Developing countries, in which governments finance developing countries' strategies to keep their forests standing while everyone benefits are universal : climate regulation, conservation of biodiversity and carbon sequestration.
With assessments taking place worldwide like TEEB and the Millennium Ecosystem Assessment the international attention has been drawn to the growing costs of biodiversity loss and ecosystem degradation. As a result of these initiatives, the importance of these services, whether they are environmental, spiritual or social argued professor Sir Robert Watson, chief Scientific Advisor to the Department for Environment, Food and Rural Affairs (Defra) is beginning to be recognised. More importantly, the value of ecosystems need to be determined before they disappear as their value is often better understood once they have vanished.
Moving forward, the green economy in times of economic, environmental and political change and volatility is all about risk management. Ian Dickie, director of the Aldersgate Group, on a final note argued that partnerships will be needed between all sectors of society; between natural scientists and economists, private and public sectors, countries from the south and the north. The panel remained hopeful that the conclusion that ecosystems are degrading, which constitutes a threat to human beings will brought us together, fuel technology sharing and bring the motivation to find solutions and use resources more efficiently.
The next Earth Debates will focus on:
- 22 February 2012 Beyond GDP – how to measure progress?
- 14 March 2012 Green cities in a green economy - how to pioneer a sustainable transition?
- 11 April 2012 Food security – how to feed the population in 2050?
Text: Geneviève Lavoie-Mathieu