Valuing nature, changing economics

Bee on flowers Bees are worth a lot more dead than alive

The concept of natural capital accounting - valuing natural resources as accurately as possible, and including in national accounts the costs and benefits of conserving vs destroying them - has emerged as a major theme in international environmental circles in recent years.

It's the central idea of The Economics of Ecosytems and Biodiversity (Teeb) project, which, among other things, calculated a few years back that degradation of the world's forests is costing the global economy $2-5 trillion each year, with the brunt falling on the poor who live closest to tropical forests.

At the last meeting of the UN biodiversity convention 18 months ago, governments pledged to look at including natural capital accounts in their national systems; and it's set to be a major theme of the forthcoming Rio+20 summit.

Speaking on Tuesday evening in London at a meeting organised by the Globe International group of legislators, UK MP Barry Gardiner gave a rather pithy example of how this can work.

While environment minister a few years back, he recounted, he'd signed a grant for £6m for research on fungal disease in bees.

Treasury officials had objected, arguing that "you could build a hospital for that".

However, the objections disappeared after he pointed out that the decline in the UK's bee population was costing the economy about £200m a year, with worse to follow unless the trend was arrested.

Bleached coral Dead coral is good for little - certainly not for tourism

Over the years, academics have gathered countless examples from around the world of this sort of equation, from forests in the Amazon (protecting soil, purifying water), mangroves (fish nurseries, flood protection), glaciers (water regulation), peat (carbon storage, biodiversity) and many, many more.

The Stockholm Environment Institute (SEI) has come to the table this week with a weighty analysis of the oceans.

They've looked at a number of different ways in which climate change is set to impact economies through its effects on the oceans, from sea level rise to storm surges to perturbation of fish species.

Their overall conclusion is that by the end of the century, the difference between a "business-as-usual" trajectory for carbon emissions and a path of restraint that keeps the global average temperature rise below 2C is about $2 trillion per year.

As they point out, this is necessarily a simplification of the true picture facing the oceans because there are many other factors impacting them as well, including plastic pollution, acidification, hypoxia stimulated primarily by run-off from agricultural land, over-fishing and so on.

Table Climate change is projected to cause a financial hit via oceans by a number of mechanisms

When I spoke to the project's co-editor, Kevin Noone from the Royal Swedish Academy of Sciences and Stockholm University, he said that ways of calculating the effects of all of these factors in conjunction don't yet exist.

"Frankly we weren't able to say a whole lot about the economic impacts of the interactions," he admitted.

"We were able to say something about the ecological threat of these interactions; but in terms of the economic effects, many of these factors are taken by themselves - tourism and storms and sea level rise - the economic analysis of the impacts of those are done pretty much in isolation and then they're summed up, so the economic analysis doesn't yet take into account the full interaction."

What are 'ecosystem services'?

  • UN recognises four basic categories of service that nature provides to humanity:
  • Provisioning - providing timber, fish, etc
  • Regulating - disposing of pollutants, regulating rainfall, storing carbon
  • Cultural - sacred sites, tourism, enjoyment of countryside
  • Supporting - maintaining soils and plant growth

There are two subtly different reasons why various groups of people advocate natural capital accounting.

One is that by measuring the economic value of intact resources, you enable policymakers to make better decisions; that might be termed the economist's reasoning.

The other is a belief that the sums you come out with will be sufficiently high as to create an unanswerable case for protection; that's the conservationist's rationale.

In the case of Barry Gardiner's bees, the sums seem pretty conclusive.

I'm not so sure about the SEI analysis of the oceans. Two trillion dollars per year is a sum unlikely to reach the back pocket of even the most avaricious banker; but by 2100, SEI, says, it'll amount to just 0.37% of global GDP.

If the economic impacts of stopping some of the things that cause degradation is bigger, the economist is going to argue "keep on doing them".

A complicating factor is that the costs of stopping degrading activities and the costs of not stopping them are often borne by different countries.

Thames Barrier Flood defences for many cities will need to be strengthened - SEI argues it is a sound economic investment

Brazilian and UK parliamentarians at the Globe event this week emphasised that in their view, you have to have accurate natural capital accounting in order to make good economic decisions.

A hypothetical African country that is chopping down trees willy-nilly and selling the raw wood may see an economic return from the sales; but the economic losses from soil erosion, disturbance of water catchments and so on could far exceed it.

This was Mr Gardiner's illustration of a country thinking it was making a profit when actually it is making a loss, because of incomplete accounting.

The UK is, in principle at least, is in the vanguard of the new green economics, by establishing a Natural Accounts Committee that will advise Chancellor of the Exchequer George Osborne.

Other countries such as Costa Rica are arguably ahead of the UK, having implemented Payment for Ecosystem Services (PES) schemes for sectors of their economy.

As to whether this will always produce an argument for conservation, however... we will have to wait for a lot more real-world examples, I suspect, before we know.

Richard Black Article written by Richard Black Richard Black Former environment correspondent

Farewell and thanks for reading

This is my last entry for this page - I'm leaving the BBC to work, initially, on ocean conservation issues.

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  • rate this

    Comment number 23.

    4 "..we need to force the people to understand the science & isolate the deniers until most people get the message, one world gov is the way to go.."

    So 'enlightenment will set me free'?

    14 "...while I'm not naïve enough to believe...I think that (i) we'd have only 1 corrupt gov to endure, & (ii) there'd be no...reasons to go to war over resources."

    Ever heard of civil war or revolution?

  • rate this

    Comment number 22.

    19. "..but some people on here actually believe in this Pol Pot stuff."

    Pol Pot -- LOL.

    it probably hasn't occured to you that "some people on here" may simply be more civilised ('evolved higher' in Darwinian terms) than most. (cf bonobos vs chimpanzees)


  • rate this

    Comment number 21.

    'we need to force the people to understand the science & isolate the 'deniers until most people get the message'

    Leg duly pulled. But gets hard being told to ignore some stuff as it's false flag when it seems near identical to other stuff one is meant to embrace as sincere as the authors are, 'correct'. Apparently

    But just to be clear to assist the force of understanding, who is this 'we' again?

  • rate this

    Comment number 20.

    Looks like Chancellor Osbourne is, with the new plannining laws,saying to poorer nations; "you look after your wildlife,we will build for growth".

  • rate this

    Comment number 19.

    Remember, folks, that Wolfie Woods is pulling your leg - but some people on here actually believe in this Pol Pot stuff.

  • rate this

    Comment number 18.

    Re 17. Hello.
    Inherent greed and selfishness? Appears so--but true ?
    Maybe response to insignificance. If not felt valued for simply being, then mind seeks alternative source of significance and finds it can be apparently valued for simply having, but then finds it has to constantly have more than next, readily manipulated and exploited, but in turn becomes exploitative to pay cost.- and so on?

  • rate this

    Comment number 17.

    It has got to be worth a try - but whether it works is another matter.

    Us humans as a whole are inherantly greedy & selfish, that is the root cause of environmental destruction & global warming.

    The world changed for the worse 10,000 years ago when our forebearers invented farming.........

  • rate this

    Comment number 16.

    Hands up for a global conference of eco-accountants?

    Maybe fly off to the Maldives or Bermuda.

    Cannes is nice as well.

  • rate this

    Comment number 15.

    As has been, always will be. Nature will destroy herself and re-create a new.

    Might as well make the most of it while we can.

    Reading comments on this blog actually believing that we make a difference is mind boggling.

  • rate this

    Comment number 14.

    6. 11. "Who is goimg to run this 'Platonic Guardian" ruled world..."

    while I'm not naïve enough to believe that "the one administration you are advocating" will, in itself, leave us reposing in paradise, I think that (i) we'd have only one corrupt government to endure (instead of hundreds), and (ii) there'd be no excuses or reasons to go to war over resources. it would be a start, IMO.

  • rate this

    Comment number 13.

    Another scare story to frighten the feeble minded into giving unelected green tyrants even more control over our lives. Trouble is, folk are not buying it anymore, from death spirals in the Arctic to children not seeing snow again, it is just one scare story after another. One would expect better from the BBC.

  • rate this

    Comment number 12.

    The common cold is costing the world $xxx per year.
    Alcoholism is costing the world $yyy per year.
    Badly fitting shoes causing blisters is costing the world $zzz per year.

    There isn't a day goes by without another inflated assertion that something is "costing" some big number. Add them all up and you would find that everything is apparently costing us more than 100% of what we produce.

  • rate this

    Comment number 11.

    Who is goimg to run this 'Platonic Guardian" ruled world...the current elites, of course. The method neo-colonialism' with a green ideology--as intolerant as any theocracy ...and will have power of life and death.

    Fantasy? No. The logical outcome of greenist paternalism.

    Won't work.

    Humans are just too contrary for utopias.

    Best find another faith. Preferably de-fanged.

  • rate this

    Comment number 10.

    Once again some idjit is trying to "cost" an insoluble!
    Can these people not just leave the world as it is??
    First the global warming Nuts, then the spinoff of "Green taxes"(who voted for them?)
    Then the floating of "international political decisions" (neatly avoiding real democracy).
    Now it is quantify the oceans and "Cost" them!!
    No oceans, no humans! Simple!
    Haven`t the accountants done enough?

  • rate this

    Comment number 9.

    Also agree with 1.2.3.
    When prevailing mentality seems absorbed by, and addicted to, fulfilling short term desire for profit, power, position,etc. then the tools and systems developed and most used are likely to be those which best facilitate and/ or protect such ambition.
    Entrapped within the systems, so reliant upon the tools, are we able to recognise our addiction and choose differently?

  • rate this

    Comment number 8.

    This whole movement is insincere anyway

    If all the money used to prepare for Rio 2020 was used to educate people in the developing world, by 2020 there would be no need for global governance.

    This is just politicians and their cronies trying to subvert democracies and take power any way they can, its just a side effect of their chosen profession.

    I'm only surprised that people buy into it.

  • rate this

    Comment number 7.

    @4 and 5

    I knew it wouldn't be long before the misanthropic comments got involved advocating forced governance.

    History is our greatest teacher, knowledge of how things actually play out, not theoretically

    No forced governance has ever resulted in anything but tyranny, genocide and mass suffering and has also been devastating on the environment, mass deforestation, species eradication etc

  • rate this

    Comment number 6.

    I agree more education that teaches people to be curious, ask questions, and not just go along with arguments from authority and the precautionary principle.

    You realise the one administration you are advocating will be made up of the same "political elites" in all the current world governments. Honest bunch.

    Don't abandon civil liberties out of fear

    Change comes from people not politics

  • rate this

    Comment number 5.

    “A hypothetical African country that is chopping down trees willy-nilly”

    Bookkeeping will not stop this, it is simple, we have to physically stop people from doing such things, may be they need the wood but that is tough. It is high tine that the UN established it’s own security force separate from it’s own member states, funded & equipped to counter the armed forces of any rogue state.

  • rate this

    Comment number 4.

    Agree with all three posts above, we need to force the people to understand the science & isolate the deniers until most people get the message, one world government is the way to go, gutted to find that I missed the chance to comment on Richard’s excellent Global Governance article, still it shows that history is on our side. It will be the nwxt generation that has our hangover.


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