By IDN Environment Desk
(IDN) – Humankind will suffer annual losses of ‘natural capital’ valued at between 1.3 to 3.1 trillion Euros, if ‘business as usual’ deforestation and land use change continue, according to United Nations’ latest estimates. These stupendous figures exceed the total financial capital lost to Wall Street and City banks during 2008, their worst year in history.
The calculation has been made by the TEEB project of the UN Environment Programme’s Green Economy Initiative in the lead-up to the 10th Conference of Parties (COP10) of the UN Convention on Biodiversity (CBD) from October 18 to 29 in Nagoya, Japan.
The CBD is one of the three Rio Conventions, which emerged from the UN Conference on Environment and Development, popularly known as the Earth Summit, in June 1992 in Rio, the second largest city of Brazil.
“A central concern of our project TEEB (The Economics of Ecosystems and Biodiversity) is the economic invisibility of natural capital — the inability of our dominant economic model to recognize economic value delivered by nature to society,” says Pavan Sukhdev, special adviser to UNEP’s Green Economy Initiative.
Biodiversity and ecosystem services have conventionally been seen as public goods: enough for everyone and available to everyone. These include clean air, fresh water, species richness, and numerous other ecosystem services that come from forests.
“But many of these forests and their goods and services are now threatened with losses or scarcities,” writes Sukhdev in the IUCN Forest Conservation Programme Newsletter titled ‘arborvitae’.
“The cornucopian assumption of abundant and unfettered availability of these ‘public goods’ simply does not reflect the harsh reality. Ongoing losses of natural areas are significant, and their impact on human welfare benefits is palpable,” writes Sukhdev.
From common people to national governments, there is a lack of understanding of the finite nature of natural ‘public goods’, of their contribution to the economy, and of their larger significance in maintaining human wellbeing.
TEEB explains that the problems often lie with open access to natural resources, coupled with unclear property rights and the lack of applicable national laws or effective international treaties. Together, these effects lead to depletion of biodiversity and ecosystem services, in a race to the bottom called “the tragedy of the commons”.
For Sukhdev there is no doubt that within this exploitative and unsustainable framework, it is the poor who suffer most as their livelihoods depend heavily on environmental resources.
The long-term purpose of TEEB is to bring together and communicate the best available scientific and economic analysis on the economics of ecosystems and biodiversity.
“Through this exercise, our goal is to help policy-makers, administrators, businesses and citizens to formulate responses to address the losses we see all around us. These actions collectively have the power to halt and reverse the losses of natural capital and to improve well-being for humanity, especially the poor,” writes Sukhdev.
TEEB has released a number of reports on the subject, starting May 2008. More are planned ahead of the CBD — for a range of decision-makers or ‘end-users’.
TEEB reports for policy-makers and administrators analyze many examples of successful incentive structures, subsidy reforms, community based conservation schemes, effective protected areas, payments for ecosystem services, and new market mechanisms for rewarding ecosystem benefits.
TEEB is also working closely with the business world to identify their main opportunities, risks, and disclosure requirements, which will be condensed into a report for business. These sets of reports and their outreach will be strong steps towards reducing the economic invisibility of ecosystems and biodiversity.
MESSAGE STARTING TO GET THROUGH
Sukhdev feels that the message is starting to get through. As an example, biodiversity was on the agenda at this year’s World Economic Forum in Davos, Switzerland. Over half of the World Economic Forum’s 75 Global Agenda Councils evaluating global risks (for example, freshwater scarcity, food scarcity, migration, nutrition, pandemics, catastrophic events, illicit trade, etc.) recognized ecosystem and biodiversity losses as key underlying drivers.
“As this awareness outside the conservation sector grows, change will come,” writes Sukhdev, adding: “There are numerous examples where policy initiatives of national governments and investments by the private sector are changing this dynamic by rewarding unrecognized benefits.”
In Costa Rica for example, payments for environmental services are virtually a country-wide strategy for forest and biodiversity conservation as well as sustainable development. Private corporations are increasingly seeing value in biodiversity preservation and recognizing the interconnectivity with long-term business durability.
Insurance firms and shipping companies are financing the reforestation of the Panama Canal to restore freshwater flow and avoid increased shipping premiums caused by canal closures.
In Guyana, a private equity firm has bought the rights to 20 per cent of the value of environmental services from a 370,000 hectare rainforest reserve anticipating that its carbon storage, water storage, biodiversity maintenance, and rainfall regulation services will only become more valuable and be recognized.
According to Sukhdev, strong opportunities exist for governments to capture the worth of biodiversity, generate revenue streams internally and through international agreements, and create appropriate domestic institutional arrangements to protect it.
“National governments have the responsibility to effectively integrate conservation of resources into environmental and forestry policies and beyond, into finance and planning agendas of the country,” writes UNEP’s special adviser.
“Governments should further provide fiscal or other incentives for people to encourage participation from a diverse set of stakeholders that can change the common property exploitative design of public goods and inspire innovation in the environmental sector,” he adds.
Tropical forests will be key to implementing this paradigm shift, predicts Sukhdev. Internationally, REDD (Reducing Emissions from Deforestation and Forest Degradation in Developing Countries) plus is a game-changing mechanism seeking to compensate developing countries for the global carbon mitigation benefits of tropical forests.
With these forests being mostly located in developing countries, forest carbon becomes a prime opportunity to spearhead new international payments for ecosystem services (IPES), Sukhdev points out.
However, TEEB is not alone in stressing that a key priority is to develop eligibility and performance criteria for forest carbon initiatives that reflect not only their carbon capture or emission reduction potential, but also a range of ecological, socioeconomic and biodiversity criteria that more fully reflect the true economic value and development role of forests.
“If agreement can be reached on these issues, and we are hopeful that this will happen expeditiously, then we can collectively start to recognize the real value of our public goods, and address biodiversity loss and the tragedy of the commons,” Sukhdev concludes with an optimistic note.
[Ed-Apols for full quote]
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