The report urges international policymakers to scale-up investments in the management and restoration of ecosystems and to value the economic capital of nature in decision-making.
It was prepared by the Economics of Ecosystems and Biodiversity (TEEB) initiative, which is hosted by the United Nations Environment Programme (UNEP).
The report stresses that destruction of nature has direct economic repercussions which are systematically underestimated, and that valuing ecosystems makes "economic sense".
To increase protection of biodiversity, it argues that a price tag should be put on nature's different ecosystem services to make them visible to economies and society as a whole.
According to the authors, the lack of market prices for ecosystem services and biodiversity means that the "benefits we derive from these goods [which are often public in nature] are often neglected or under-valued in decision-making," leading to policies that result in biodiversity loss and negatively affect human well-being.
Country-specific policy mixes
The report underlines that there is no one solution, as each country's economy relies on nature in a different way and countries already have different sets of policies in place.
Meanwhile, "the policy response should not be limited to environmental policymaking processes, but should also come from other sectoral policies," the report stresses.
It invites politicians to first consider what ecosystem and biodiversity means for a given economy and then evaluate current policies to identify potential improvements.
Reforming global subsidies to reward ecosystem services
The report stresses that it is necessary to rethink the allocation of the one trillion dollars or so of annual global subsidies that are handed out to the agriculture, fisheries, energy, transport and other sectors.
Some of these subsidies, which together represent over 1% of global GDP, are inefficient, outdated and harmful to the environment and should be freed up to reward "the unrecognised benefits" of ecosystem services and biodiversity, it argues.
Protecting the seas
Study leader Pavan Sukhdev, a senior banker at Deutsche Bank who is currently at the UNEP leading the agency's Green Economy Initiative, said the report shows that societal benefits of nature conservation and protected areas far outweigh the cost of conservation.
He stressed the need to improve protection of marine environments in particular. Currently, under 0.5% of open seas and under 6% of territorial waters are protected, compared to 13% of land-based protected areas.
While mankind has learned to manage land, "we still behave like hunter-gatherers at sea," he said, with annual losses of potential fisheries output estimated at $50 billion due to unsustainable fishing.
Sukhdev argued that protected area networks should be expanded to cover 15% of land and 30% of seas.
While this would cost some $45 billion a year in management, compensation for direct costs and expenditure on acquiring new land, the areas "would deliver goods and services with a net annual value of $4.5-5.2 trillion," he said.
The report offers evidence that protected areas are "in society's best interests." Local, national and global public benefits outweigh by far the costs and opportunity costs of conservation, it says, making "a compelling economic case for conservation for world governments to consider," said Sukhdev.
Addressing losses through regulation and pricing
However, expanding protected area coverage with payments for ecosystem service schemes and reforming subsidies "will never be enough to halt continuing losses," reads the report.
These measures need to be accompanied by "a coherent strategy to make the full costs of loss visible and payable" for all.
The basic principles of such a policy design should be based on the two key principles of 'polluter pays' and 'full cost recovery', the report notes.
For this, the potential of environmental regulation needs to be fully exploited in the form of "prohibitions, standards and technical conditions" and the value of ecosystem services need to be accurately priced through "taxes, charges, fees, fines, compensation mechanisms and/or tradable permits" as part of wider fiscal reform in favour of biodiversity.
