Economic value of nature 'still invisible', says UN
A United Nations initiative is making massive calculations in an attempt to put a price on nature services such as soil, forest or fresh water in a drive to convince policymakers to implement the 'polluter pays' principle to protect nature, said Pavan Sukhdev, who leads the initiative.
"Unfortunately our current economic systems are not geared to defending or preserving anything that does not carry economic value," Pavan deplored.
As a result, he says, "society destroys nature," adding that it does not necessarily have to be that way.
For example, when forests are cut down, the cost downstream may amount to billions of euros as deforestation leads to flooding. Biodiversity loss thus leads to losses in the economy, which then raises the interest of policymakers.
The UN initiative is trying to demonstrate and capture the value nature delivers to society before economic losses can occur, Pavan explained. But he denied that the aim of the Economics of Ecosystems and Biodiversity (TEEB) initiative hosted by the United Nations Environment Programme (UNEP) is to put a price tag on nature.
Making value of nature visible
Rather, the initiative strives to make the value of nature visible by calculating the cost of alternatives for nature's various 'services'.
"In other terms, if you don't have clean air, fresh water or bee-based pollination, for example, how much do you need to spend on alternatives?" Pavan asked. According to him, the value of nutrients and fresh water flowing into farmers' fields can be established by calculating the cost of alternatives, such as nitrogen, phosphorus or potassium-based fertilisers and purpose-built irrigation systems.
"We are going through massive calculations to establish these values," he said.
Sparking policy changes
Sometimes the mere recognition of value can push policymakers to make policy changes and action is not necessarily always the consequence of massive losses suffered, Pavan said, pointing to the EU's Natura 2000 network of protected site as an example.
However, sometimes you need to capture the value and "reward the benefits of conservation and ecosystem services," he said.
The change in corporate behaviour that is being sought with carbon markets, for example, "is basically a way of recognising that public bad can be converted into private bad by forcing laws to change and then you capture the value of that through the market," he explained.
Poor depend most on nature
"Lack of nature first and most importantly affects the poor," Pavan added. He said that in India for example, 480 million people - some 44% of the India's 1.1 billion people – depend on ecosystem services for their food, livelihoods and freshwater supplies.
"And when the pressures of business and society destroy nature, a few people may make private profits, but mostly you are depriving the poor of their wealth," he said.
Polluter to pay
Asked how and who should pay for damage and the restoration of nature, Pavan said one could start by asking who benefited from its destruction.
"Clearly, the poor did not benefit, so there must have been some private profiteer who destroyed the forest for timber and benefited from it or a property developer who converted the forest," and they should pay, he concluded.
Nature should be compensated via pricing and taxes, but also rules must make sure that the poor are not deprived of it, Pavan stressed.
For 15 years, he said, Costa Rica has been applying a 3% 'pollution tax' on private transport and uses the money to pay farmers to preserve forests on their land.
As a result, biodiversity is being conserved, soil quality is improving and freshwater absorbed by forests is released gradually during the year. All this has led to improved land productivity and increased agricultural yields, making even poor farmers richer, Pavan said.
The net result is that Costa Rica now has a GDP per capita four times higher than when it began applying payments for environmental services (PES) 15 years ago – and poor have got richer. "That is what development is. In a poor country, biodiversity policy and development policy are one," Pavan stressed.
The first in a series of TEEB reports, published in November, said that charges, compensation mechanisms and tradable permits are all possible fiscal reforms to achieve 'full cost recovery' for the destruction of ecosystems and biodiversity (EurActiv 16/11/09).
In November 2009, the Economics of Ecosystems and Biodiversity (TEEB), an initiative hosted by the United Nations Environment Programme (UNEP), published a report arguing that the cost of nature conservation is by far outweighed by societal and economic benefits (EurActiv 16/11/09).
The report stressed that destruction of nature has direct economic repercussions which are systematically underestimated, and that valuing ecosystems makes "economic sense". Therefore, it urged international policymakers to scale-up investments in the management and restoration of ecosystems and to value the economic capital of nature in decision-making.
To increase protection of biodiversity, the report argues that the value of nature's different ecosystem services should be made visible to economies and society by applying the 'polluter pays' principle.