A fusion of economics and ecology is required to properly measure and capture the value of biodiversity. That was the message of an event at Parliament earlier today organised by Biodiversity, the UK all party parliamentary group, chaired by Barry Gardiner MP, and attended by the BES Policy Team.

Lord Deben, president of GLOBE International, began proceedings emphasising the need for an optimistic outlook by ecologists with regards to biodiversity, saying “misery never convinces” and that we should “celebrate 30 years of growing awareness for environmental issues”. Lord Deben went on to highlight the importance of establishing a method for the valuation of natural capital as quickly as possible so that biodiversity impoverishment “can no longer be avoided on the political agenda”.

Professor David Hill of the Environment Bank went on to discuss the need for moving away from seeing the environment as a “charitable exercise”, and to support the establishment of policies that enable financial markets to properly value ecosystems. Professor Hill echoed Lord Deben’s calls for action stating “don’t start, don’t go”.

Dr Tim Jenkins, director of the Great Transition Initiative suggested that well-being and not wealth needs to be the measure of progress within society and that the value of natural capital may be at a critical threshold. Dr Giles Atkinson, of the London School of Economics, agreed that wealth should be measured in more depth than from a purely financial point of view and joked that economists were “worried about adding together, literally, apples and oranges”.

Dr Roddy Farley of the Scottish Natural Heritage presented cause for optimism in his assessment that Scottish natural capital was on the rise but reinstated the need for a transparent, readily available measurement for the value of biodiversity which can be used on policy time frames.

The final speaker was Pandev Sukhdev, author of The Economics of Ecosystems and Biodiversity, who highlighted the problem of the economic invisibility of nature and how this can result in short term private profits but far more damaging long term public losses. He sited an example of shrimp farms in south Thailand where the initial short-term profit was grossly out weighed by the long-term cost when natural capital losses were factored in.

On Wednesday, 29 June, the Environment, Food and Rural Affairs Select Committee held a one-off evidence session to explore initial reaction to the Natural Environment White Paper (‘The Natural Choice: securing the value of nature’). Representatives of the National Farmers’ Union, the National Trust, Wildlife and Countryside Link, PricewaterhouseCoopers and Defra attended to face questioning from assembled Committee members on the content of the Paper and improvements which could be made.

You can watch the hearing in the Parliament TV Archive.

Pavan Sukhdev, leader of the TEEB (The Economics of Ecosystems and Biodiversity) study was also present, in Westminster prior to collecting the Institute Medal from the IEEM at a House of Lords reception later that afternoon. Pavan welcomed the inclusion of natural capital in the White Paper, along with plans to provide guidance for business in reporting their impact on natural capital. However, he warned that the results of TEEB should not be used to provide a cost-benefit analysis of nature when making decisions.

Chris Knight, PricewaterhouseCoopers (PwC), said that most of businesses consulted by PwC had responded favourably to the White Paper, but had expressed uncertainties over how the commitments outlined would connect with reforms to water regulation (expected in the Water White Paper in December this year) and to planning. Funding for the commitments was also a cause for concern. Greater incentives were needed for businesses to invest in environmentally friendly schemes, he suggested.

Planning reform, and the need for this to enable, not undermine, the commitments in the White Paper, was a topic touched upon by almost all those questioned, as was funding. The National Planning Policy Framework, expected for consultation this month, should include a spatial planning tool, to help farmers balance competing demands on their land, it was suggested.

The National Trust and Wilidlife and Countryside Link both suggested that the White Paper contained no clear funding strategy. An over-reliance on agri-environment schemes is unsustainable, the witnesses suggested during later questioning; instead there needs to be an exploration of what options for leveraging funding are most sensible. Several options were suggested, including biodiversity offsetting, competition between farmers to deliver environmental services, tax reform (such as tax breaks for particular land uses or reduced fertiliser application), or raising money through taxation on timber imports – whilst tracking illegally logged timber and reducing its passage into the UK market. Private sector funding was likely to be vital to the future of nature conservation, all acknowledged.

The NFU called for greater investment in research and development, arguing for more money to be put behind the development of new technology to allow farmers to deliver food production whilst reducing their environmental impacts; sustainable production is possible, they argued. There was also a plea for research into how to make it easier for businesses to invest in the environment.

Finally, witnesses suggested that more work is needed around engaging the public with the natural environment. The National Trust argued that the White Paper did not include enough detail on how the environment could become a mainstream concern for the population of England, assisting in health and education. There was a plea for the need to cut red-tape and beaurocracy around health and safety on school trips, to enable more children to experience the natural world.

Witnesses suggested that the Committee should reconvene in a year’s time to examine progress against the commitments made in the White Paper, and new tools for improving progress if the commitments are not being met.

The European commission yesterday proposed a new strategy to achieve the 2020 biodiversity targets by incorporating the valuation of natural capital. The new strategy, which is based on a report by The Economics of Ecosystems and Biodiversity (TEEB), states that the economic value of ecosystems in Europe must be factored into decision making at all levels.

This announcement follows the failure of the European Union to achieve the 2010 biodiversity target to halt and reverse the loss of biodiversity within Europe. It has become clear that current legislation is ineffective with only 11% of protected ecosystems in a favourable status despite the wide range of efforts deployed to protect nature, and the establishment of an extensive network of protected areas (Natura 2000). The new strategy blames, among other causes, lack of consideration for the economic value of biodiversity for the failure to meet past targets.

TEEB has estimated that the economic cost of loosing biodiversity dwarfs the cost of adequate protection. For example over fishing costs the fisheries industry over $50 billion annually. Janez Potočnik the EU environment commissioner stated that “It is a much smarter economic investment to protect the diversity of life and healthy ecosystems than face tragedy once diversity has been lost,”

The 2020 target to halt the loss of biodiversity and degradation of ecosystem services has been divided into six main goals covering the protection of biodiversity and ecosystem services, improving the contribution of agriculture forestry and fisheries to conservation, and addressing the worldwide biodiversity crisis.

Europe plans to achieve these goals by:
• Building on the biodiversity knowledge base by identifying research gaps, contributing to the intergovernmental science-policy platform on biodiversity and ecosystem services, and establishing a monitoring and review procedure for the strategy.
• Setting up market based mechanisms to attract funding for the protection of ecosystem services, and to encourage projects that deliver multiple benefits.
• Establish a coherent message about biodiversity in the common agricultural policy, fisheries policy and water framework directive.
• Interacting with a wide variety of stakeholders through the EU business and biodiversity platform to help share successful initiatives and best practice.
• Engaging civil society in the hope they will become actively involved in achieving the targets.

TEEB estimates that this strategy could create new jobs and business opportunities worth 2 to 6 trillion dollars by 2050.

The full communication can be seen here.

2,700 scientists in over 80 nations have collaborated to create the first ever Census of Marine Life (CoML). In a 64 page report, the highlights of over 10 years of marine biological research are presented, with some groundbreaking findings, including the discovery of over 200 new species. The census will contribute substantially to knowledge of global marine biodiversity and marine ecosystem function. It also includes reference to changes in species distribution across European Seas –the Baltic, Atlantic and Mediterranean- which indicate considerably high levels of threat to biodiversity in these waters.

An original paper, which describes the full inventory of life recorded was published as part of a special edition of PLoS ONE in August 2010. The CoML is widely welcomed, ahead of the final TEEB (Economics of Ecosystems and Biodiversity) report, to be published shortly with support from the European Commission, as part of it’s vision for Sustainable Devlopment

Source: Costello, M.J., Coll, M., Danovaro, R., Halpin, P., et al. (2010). A census of marine biodiversity knowledge, resources and future challenges. PLoS ONE. 5(8): e12110.

This week, as part of the Radio 4 series ‘Costing the Earth’, presenter Tom Heap interviewed various people who are interested in the idea of putting a price on nature.

Ian Bateman from the National Ecosystem Assessment explained how this project aims to use scientific assessment to put monetary value on the natural environment. This is important because decision makers need quantified information to be able to properly consider the trade offs of different decisions. Steven Trotter from Warwickshire Wildlife Trust gave the example of the planned development of a high speed rail link between Birmingham and London which will cut through an area of ancient woodland: the woodland is under threat because nature is not considered on an equal basis with the business case for development.

Pavan Sukhdev explained how The Economics of Ecosystems and Biodiversity study organises research into the valuation of global ecosystems so that policy-makers can use this in practice to assess the value of an area of land. Andrew Simms, Policy Director of the New Economics Foundation appreciated the importance of valuing ecosystems but warned of the dangers relating to the fact that pricing works on a short timescale whereas impacts on natural environments can work on a much longer timescale. In order to avoid degradation of ecosystems just because someone can afford to do it, it will be essential to create science based boundaries to cap the use of resources. Andy Atkins from Friends of the Earth expressed his concerns that focussing on the value of nature will detract from dealing with the root causes of destruction.

Tom Heap concluded by saying that it may be hard for people to accept that the implementation of a valuation approach to natural habitats will increase the cost of living, but this would be better than the current situation where these costs are being picked up by future generations and poor countries through destroying habitats for agriculture and importing food.

The concept of monetising biodiversity, generating a ‘net present value’ for a polar bear or a ‘discount rate’ for seasonally dry tropical forest, might fill ecologists and conservationists with dread. Still reeling from the after-effects of the financial crisis, do we really trust the bankers to decide what is a sensible investment in our ecosystems? One man has been brave enough try – Pavan Sukhdev, a leading banker in Deutsche Bank, special advisor to the UN Green Economy Initiative, and study leader of TEEB, The Economics of Ecosystems and Biodiversity, a ground-breaking report due for publication this autumn which aims to do just that.

Pavan Sukhdev addressed a packed audience last night at the SAID Business School, Oxford, at the 5th Oxford Earthwatch Lecture, jointly organised with the think tank SustainAbility. The event was co-chaired Elaine Dorward-King, Global Head of Health, Safety and the Environment at Rio Tinto, a leading mining concern with significant interests in the developing world.

Mr Sukhdev’s key question was to ask whether corporations can keep being profitable, and governments keep growing GDP, without measuring impacts on natural and human capital? Through excellent examples, he demonstrated the need to ‘internalise the externalities’; in other words, counting the cost of natural resources such as fresh water, clean air and an amenable climate which are normally taken for granted. A good case-study is the Rio de la Plata Basin, dubbed the granary of Latin America, which is worth about a trillion dollars per year. Rainfall in the Basin is dependant on water cycling provided by the Amazon Rainforest, but farmers pay nothing for the water supplied by intact rainforest. Pavan Sukhdev described this as the ‘economic invisibility of nature’. He requested that corporations begin to disclose their impacts on natural and human capital on their balance sheets, not just absolve them in a Corporate Social Responsibility report. Elaine Dorward-King, the representative from Rio Tinto, promised to take this on board.

Mr Sukhdev continued to describe the results of valuing natural capital insufficiently. Ecosystems generate wealth indirectly that is not valued but can be large, for example a mangrove forest could generate over $10,000/ha/yr through providing fish and storm protection. The cost of restoring a mangrove forest after it has been cut down is also non-significant. Weighing these two up over 40 years gives the internal rate of return on initial investment to maintain ecosystems, which for mangroves is 40% and for grasslands, 70%. To put this in perspective, your bank account is probably around 1%. For this reason, Mr Sukhdev stated that the economics can not only save wild nature, but wild nature could also save the economy.

Pavan Sukhdev addressed a packed audience in Westminister at a parliamentary event organised by the BES and Institute of Ecology and Environmental Management in October 2009. Find out more about this under ‘Policy Meetings and Events’ on the BES website.