"There is a need for economic valuation of the benefits and costs of protecting biodiversity in order to make progress, and better guide and orient policymaking, while being aware that not everything can be valued in monetary terms," said François Wakenhut, head of the European Commission's biodiversity unit, speaking earlier this month at an event in the European Parliament.
The EU's new biodiversity strategy, to be unveiled next Wednesday (4 May), will consider measuring Europe's natural capital and integrating the value of ecosystem services into policymaking.
The strategy follows work by the EU executive's in-house research facility, the Joint Research Centre, on mapping ecosystem services at EU level, the first draft of which - known as "the atlas of ecosystem services" - was published in March.
It also follows work carried out by the European Environment Agency (EEA) on ecosystem services accounting in Europe.
The EEA's June 2010 baseline for European biodiversity showed that the majority of ecosystem services are no longer able to deliver the optimal quality and quantity of basic services, such as crop pollination, clean air and water, and control of floods or erosion.
Wakenhut underlined the importance of the baseline study in helping policymakers to get the starting point of EU biodiversity strategy exactly right, as "we need to be able to measure what we're managing".
Green infrastructure
The centrepiece of the EU's current nature and biodiversity policy is the Natura 2000 network of protected areas, which today represent 18% of the bloc's land mass.
However, according to the EU executive, the future ecosystem services cannot only be delivered only through such protected areas, and the remaining 82% will need to be addressed as well. Therefore, investment in natural capital, which the Commission refers to as "green infrastructure," is needed, Wakenhut said.
"The infrastructure administration will be a key element of our future biodiversity strategy," he added, stressing the need to invest in solutions that rely on enhanced ecosystem services and recognise "the cost-effective potential offered by the green infrastructure system approach".
As an example he highlighted the Danube river flood mitigation scheme, which cost €180 million to implement compared to the €400 million cost of 2005's floods and damage.
The Commission is set to table a green infrastructure initiative in late 2011.
According to the EU executive, investing in natural capital also includes opportunities for the "restoration" of ecosystems. While such a "positive" biodiversity agenda has been underdeveloped in recent years, the Commission stresses that there is a wealth of evidence of its high cost-benefit ratio.
Economics in support of biodiversity
While Payments for Ecosystem Services (PES) in the EU have so far primarily been harnessed by public funding – green schemes in the bloc's Common Agricultural Policy (CAP) being one example - the EU executive now plans to further develop this economic incentive system to include both public and private payments in order to maximise their potential.
Payments for Ecosystem Services are made by the beneficiaries of ecosystem services to natural resource managers in return for their adoption of sustainable practices that enhance or secure the provision of services.
The Commission also plans to fully examine the scope for expanding the PES concept in the context of green infrastructure investments.
Current EU tools for the restoration of environmental damage and compensation for damage include the Environmental Liability Directive and Article 6.4 of the Habitats Directive.
But Wakenhut stressed that "we need to go beyond" such tools and consider habitat banking as a possible way forward for development projects - in particular in areas which are not yet protected by biodiversity-related legislation already.
Cooperation with the European Investment Bank is also envisaged to attract funding from the private sector.
Global commitment
The EU's biodiversity strategy will also be in line with commitments made at UN global biodiversity talks in Nagoya last autumn.
There, some 200 countries together agreed to deliver on the 20 so-called 'Aichii biodiversity targets', which include integration of biodiversity values into national and local policy strategies (target 2) as well as eliminating subsidies harmful to the environment and developing positive incentives for conservation (target 3) instead.
Referring to the second target, Wakenhut said "this may not seem to be a significant thing but I can tell you that it truly is". He added that the Commission and other participants had spent hours discussing the inclusion of ecosystem values in accounting systems, as they faced a lot of resistance from China and India throughout the negotiations.
The official acknowledged that the inclusion of ecosystem values into national accounts would require a tremendous effort.
But "we are now on the way to including those values in our accounting systems" – a process which "owes much" to TEEB's achievements and "authoritative conclusions" on the matter in recent years, he added.
The 'Economics of Ecosystems and Biodiversity' (TEEB) project is part of the UN's Green Economy Initiative.
Along the lines of the UK's Stern Review on the economics of climate change, the initiative has made massive calculations in an attempt to put a price on nature services. By demonstrating the economic value of soil, forest or fresh water it is hoped that policymakers can be convinced to implement the 'polluter pays' principle to protect nature.
As one should never waste a good crisis, Wakenhut argued that TEEB provides "very useful ammunition to prepare a response to the [financial and economic] crisis that will be truly sustainable".
As for the global dimension of green economic incentives, the main financing mechanisms are currently being discussed in the context of following up on October 2010's UN biodiversity conference and "will be one of the main clusters of work discussed next year in Delhi," he said.
