The
value of nature and the nature of value
Many
of Nature's services are literally priceless - we cannot live without
them and they have no known substitutes. "Pricing" these services
can focus attention on the importance of healthy ecosystems for
sustained development and poverty alleviation. But what's behind
the price tags?
Pollination, by for example butterflies, has been estimated to be
worth about 400 billion US dollars annually. Photo: Nils Kautsky
The
world's ecosystems provide a flow of vital services, like the generation
of fertile soils, purification of air and water, the mitigation
of floods and drought, pollination and pest control. The world economy
would crash without this "natural capital." In this sense, the value
of nature's services is infinite - we simply cannot live without
them. Unfortunately, "infinite" often becomes "zero" in the economic
calculations that guide land-use and policy decisions. In
this respect, human societies indirectly assign values to Nature
every time a land use decision is made - whether we like it or not.
Getting the prices right
An
ecosystem's services can be even more valuable than its goods. For
instance, the value of forest services, like flood control, recycling
of rainfall and carbon dioxide uptake, can be several times more
valuable than its timber yield. So even if forest clearcutting is
profitable for a logging firm, it might involve large costs for
society at large. This is what economists call a "market failure,"
when market prices do not reflect the full social costs or benefits
of a good or service. Another example is the price of gasoline,
which many argue does not reflect the full costs of emissions.
Therefore, many argue that the value of ecosystem services must
be incorporated into market prices so nations can make rational,
environmentally sustainable, economic choices. This is of special
importance to developing countries as poor people are generally
more directly dependent on the benefits provided by their local
natural systems and vulnerable to the effects of environmental hazards.
Economists
assign values to non-marketed ecosystem services using several valuation
methods such as calculating the cost of replacing them with technology,
or assessing how much people would be willing to pay for them (see
box).
In 1997, Robert Costanza of the University of Maryland and twelve
co-authors estimated the annual value of the world's ecosystem services
at US$33 trillion. It was more than the value of the global gross
national product (GNP) that year. Although the study was widely
criticised, many considered it a valuable tool in efforts to focus
attention on the importance of maintaining healthy natural ecosystems.
According to Costanza, most economists would have guessed that the
value of ecosystem services would only be 1 percent of global GNP
or less.
Valuation drawbacks
Some
criticise these types of studies, arguing that the true value of
these services comprises much more than their importance to the
world economy; there are moral, ethical, and aesthetic reasons to
protect nature. Others note that ecosystem services could never
be traded in open commerce, which is how prices of conventional
goods and services are determined. Moreover, basically all available
valuation methods are based on human preferences and are therefore
unreliable when applied to environmental services with which the
public is unfamiliar. Some also claim that it is not the role of
science to determine what is right or wrong or to assign values
based on human preferences at all.
Another major criticism is that no economic analysis can put a value
on the capacity of ecosystems to withstand stresses and shocks -
its resilience. The value of biodiversity in this broader sense
- that it is a prerequisite for the ecosystem's long-term survival
- is much higher than the value that can be assigned to the current
production of goods and services. Many ecologists have emphasised
this wider insurance value of diversity, but it is extremely difficult
- not to say impossible - to capture in economic valuations.
BOX:
Valuation methods
Productivity Method: (sometimes called the net factor income
or derived value method): estimates the value of ecosystem goods
or services used, along with other inputs, to produce a marketed
good. For example, the economic benefits of improved water quality
can be measured by valuing improved crop quality and agricultural
productivity.
Hedonic Pricing Method: estimates values for ecosystem or
environmental services that directly affect market prices, e.g.
variations in housing prices reflecting local air and water
quality or noise.
Travel Cost Method: estimates the value of ecosystems
that are used for recreation, based on how much people are willing
to pay to visit the site.
Damage Cost Avoided: estimates the value of ecosystem
services based on the costs of avoiding damages due to lost
services.
Replacement and Substitute Cost Method: estimates values
of ecosystem services based on the cost of replacing them, or
the cost of providing substitute services, e.g. valuing the
water purification services of a wetland by comparing it to
the cost of filtering and chemically treating water.
Contingent Valuation Method: estimates values by asking
people to directly state their willingness to pay for specific
ecosystem services, based on a hypothetical scenario. |
A new economy and a new model of development
There are several signs that a new economy that values natural systems
is beginning to take shape. Lester Brown, former president of the
Worldwatch Institute, is among those arguing for such an economy.
The needed restructuring of the global economy has already begun,
reports Brown in his book Eco-Economy. The past decade witnessed
a 25 percent annual increase in the use of wind power, a 20 percent
increase in solar cell use, and a 4 percent increase in geothermal
energy use. Oil consumption increased by only one percent a year
and coal use declined by one percent annually over the same period,
Brown notes.
Another interesting contribution is The New Economy of Nature,
by Stanford ecologist Gretchen Daily and Pulitzer Prize winning
journalist Katherine Ellison. The book highlights several new approaches
to ecosystem conservation that recognise the economic benefits of
protecting them. Examples are taken from both rich and poor countries.
In China's Yangtze River basin, 85 percent of the original forest
cover had been lost by 1998. When flooding of the river basin displaced
120 million people, causing US$30 billion worth of damage, Chinese
officials argued that standing trees were worth many times more
than felled trees and banned logging in the upper reaches of the
basin.
New York City spent US$1.5 billion to protect the upstate watershed
by buying land and upgrading polluting sewage treatment plants.
This saved the city the potentially enormous cost of an artificial
water filtration plant, estimated at US$6-$8 billion, plus US$300-$500
million in yearly maintenance expenses.
This new focus on the value of nature and calls for a shift to a
more sustainable economy has also been called "natural capitalism."
In their book of the same name, Paul Hawken, Amory Lovins and Hunter
Lovins describe the "next industrial revolution" in which business
and environmental interests increasingly overlap. This revolution,
however, will require abandoning assumptions that guided the first
industrial revolution. These assumptions were valid when natural
resources were abundant and labour was the limiting factor of production.
Today the opposite is true - there is a global surplus of labour
while natural resources and ecosystem services are dwindling, expensive
and often irreplaceable.
New methods are also being developed to measure welfare and the
quality of development, including indicators such as "wealth," "genuine
savings" and "comprehensive savings." These new national accounting
techniques include adjustments for effects on natural and human
capital and are now in use by the UN and World Bank. As reported
in SDU 1, 2001, these techniques are not able to internalise
all natural assets, but they are steps in the right direction.
More
at:
General information about ecosystem services:
Issue 2 of ESAs Issues in Ecology: www.esa.org/sbi/issues.htm
On valuation:
www.ecosystemvaluation.org/
www.wri.org/wr-98-99/ecoserv.htm
R. Costanza and others. 1997. "The Value of the World's Ecosystem
Services and Natural Capital," Nature (Vol. 387) can be found
at: www.uvm.edu/giee/publications/Nature_Paper.pdf
About "natural capitalism":
www.natcap.org/
The
ecosystem approach seeks an optimal balance between conservation
and utilisation of biodiversity as well as an understanding of ecosystems
in a socio-economic context. Twelve principles defining the ecosystem
approach appeared on the international political agenda in 1998
in Malawi during the Fourth Conference of the Parties of the Convention
on Biological Diversity. In the implementation
plan from the recent World Summit on Sustainable Development,
the ecosystem approach is emphasised several times.
The
ecosystem approach aims to maintain the capacity of ecosystems to
produce desired goods and services. Social and economic information
is integrated with environmental information to evaluate how human
exploitation of an ecosystem affects its functioning and productivity
in the short and long term. Urban areas, which depend on ecosystem
goods and services, must therefore be included in ecosystem management
systems, and human needs and activities should be integrated with
conservation goals, even in protected areas..
Instead of focusing on one dominant ecosystem good, such as fish,
or service, such as flood control, an ecosystem approach tries to
include all possible ecosystem benefits so that trade-offs become
efficient, transparent, and sustainable. It emphasises that ecosystems
should be managed as whole entities, including linkages to adjacent
ecosystems and across state or national borders when needed.
An
ecosystem approach requires an informed public discussion, and management
should be decentralised to the lowest possible level. Local and
indigenous stakeholders, who often have intimate knowledge of local
ecosystems and a direct interest in keeping them healthy, need to
be integrated into decision-making processes. However, local interests
must be balanced with the wider public interest
More
at:
www.biodiv.org/programmes/cross-cutting/ecosystem/principles.asp
Health
and environment at development conference
| A
third of the health burden in developing countries can be attributed
to environmental risk factors. This was reported at the Annual
Conference on Development in Stockholm, October 17. |
|
Health and its link to the economy and the environment was the theme
of the development conference, organised by the Swedish Ministry for
Foreign Affairs, UNDP and Sida. One of three parallel seminars was
lead by Marianne Kjellén, Stockholm Environment Institute, and Mats
Segnestam, head of the Environment Policy Division at Sida. Kjellén
presented several direct problems that the poor face in their home
environment, such as indoor and outdoor air pollution and the spread
of diseases due to poor sanitation. Segnestam added a list with more
indirect examples of how the environment is linked to poor peoples'
health (see box).
Anders Nordström, head of Sida's Health Division,
presented Sida's new policy for health and development: "Health
is wealth," which also emphasises environmental impacts on health.
Deepa Narayan, Senior Advisor at the World Bank noted "illness is
both a cause and consequence of poverty." People in good health are
better able to learn, earn a living and be more productive. Moreover,
poor people are more vulnerable to diseases like AIDS, malaria and
tuberculosis. Money alone will, however, not solve the problems, but
even the most well governed countries need more money as Professor
Jeffrey D. Sachs, of the Earth Institute at Columbia University, put
it. He was met by a long applause when he criticised his own government
for not allocating sufficient resources to world poverty and health
issues in poor countries in particular. "We need a war on disease"
was his message.
BOX:
Environment and health links
1) Water quality and quantity: e.g. clean water to avoid
diseases and water needed for food production;
2) Biodiversity loss: leading to the loss of a source of
medicines, food and ecosystem services as natural pest control;
3) The tropical coastal zone: fish from mangroves, coral
reefs and seagrass beds are often the most important animal
protein source;
4) Climate change: droughts in some places and floods
in others, both with effects on food production and disease;
5) Environmental refugees: people migrating because of
pollution and/or scarcity of resources;
6) Conflicts due to natural resources degradation: e.g.
the Rwanda genocide where population growth, soil erosion, unequal
distribution of land and marginalisation of people interacted;
7) "Unnatural" natural disasters: e.g. floods, storms
and droughts induced by human activities. Often the poor are
most affected since they tend to live in areas more prone to
disasters and do not have the economic resources to deal with
their effects;
8) "Chemicalisation": e.g. increased use of pesticides
leading both to acute poisoning and illness due to long term
exposure. |
More
at :
www.sida.se
Download the Issue
paper on Health and Environment. Prepared by Marianne Kjellén
for Sida's Health Division.
A
recipe for resilience management
Resilience
is the capacity of an ecosystem to cope with disturbance (like storms,
fire and pollutants) without shifting into a qualitatively different
state (see SDU 2, 2002). Earlier issues of SDU describe
the strong connections between resilience, diversity, and sustainable
use of ecosystem goods and services. This resilience is of special
importance to poor people, who have few or no possibilities to alternative
food or income sources if local ecosystem goods and services are
degraded. Whereas most current western resource management focuses
on only one or a few species in the ecosystem, resilience theory
emphasises management of entire natural systems and humanity as
"social-ecological systems." But, what is resilience in practice?
Who can identify it, and how?
In a recent article, Professor Brian Walker
and colleagues within the Resilience
Alliance propose a resilience management strategy. They provide
examples of how collaboration between researchers, agency managers,
and involved stakeholders has been used to identify resilience and
use it in practise to manage ecosystems. Their resilience management-recipe
(see box) is a step-by-step process involving identifying of key
issues, constraints, and stakeholders, developing scenarios and
models of various outcomes, and evaluating results. The strategy
emphasises cooperation among scientists, managers and local users.
BOX:
Resilience management
1)
Identify spatial boundaries of the social-ecological system.
2) Identify the key ecosystem services used.
3) Identify key human impacts on the ecosystem and the
different stakeholders including their preferences and future
expectations.
4) Identify key, often slow, controlling variables (e.g.
climate, technological change etc.) that influence the production
of ecosystem goods and services.
5) Make a historical profile of the system, including major
changes (ecological, technological, social, and economic). The
description should be made at local, regional and multi-regional
scales.
6) Identify the institutional arrangements (property rights,
power, access to information etc.) regarding the main ecosystem
goods and services.
7) Identify uncertainties about how the system will respond
to change.
8) Develop a number of scenarios, in collaboration with
the involved stakeholders, based on their experiences, preferences
and visions, and discuss possible outcomes.
9) Use various forms of modelling tools to identify and
discuss possible driving variables and processes that control
the most desired ecosystem goods and services.
10) Finally, scientists, managers and local stakeholders,
together evaluate the above-described process. |
Cecilia
Holmlund
More
at:
Walker, B. and others. 2002. "Resilience management in social-ecological
systems: a working hypothesis for a participatory approach." Conservation
Ecology 16(1), available online at: www.consecol.org/vol6/iss1/art14/main.html
Environmental
governance for people and ecosystems with equity
| The
World Resources Institute, together with UNEP, UNDP and the
World Bank, has released a summary of their report World
Resources 2002-2004. The subject of this year's report is
"environmental governance" - how environmental decisions are
made and by whom. |
 |
The
focus is on sustainable governance to "match human needs with Earth
's biological capacities - with equity and balance." The report
discusses how to increase public empowerment and participation,
especially among indigenous groups and the poor who are frequently
denied property rights and negotiation authority. An ecosystem approach
to environmental governance is suggested to represent the interests
of both affected communities and ecosystems.
This year's report deals with international
governance institutions and treaties such as the Convention on Biological
Diversity and the Kyoto protocol. It also discusses corporate and
individual environmental governance. The report argues that an institutional
structure for environmental governance should be determined by the
scale and dynamics of the natural system to be managed. A small
forest can often be managed by surrounding local communities, while
managing river basins or mitigating acid rain require cooperation
across national borders. For complex environmental issues like global
warming, the most effective recipe for environmental governance
is to find a balance between authorities from the local to higher
levels. The report discusses a variety of new institutional and
economic arrangements that link users with the ecosystems upon which
they depend.
More
at:
www.wri.org
(The full report "World Resources 2002-2004: Decisions for the
Earth: Balance, voice, and power" will be released in February
2003.)
Linking
poverty reduction and environmental management
A
recent publication sparked a lively debate at a number of side events
in Johannesburg: Linking Poverty Reduction and Environmental
Management: Policy Challenges and Opportunities. It was jointly
published by UK Department for International Development, the Directorate
General for Development of the European Commission, the United Nations
Development Programme and the World Bank. Several other donors contributed
to the publication, including the Environment Policy Division at
the Swedish International Development Cooperation Agency (Sida).
The report is optimistic about the future and focuses on win-win
opportunities that reduce poverty and sustain growth through sound
and equitable environmental management. The publication has also
been debated in an e-discussion that was reported in a previous
issue of SDU.
Source:
The e-discussion can be found at:
http://vx.worldbank.org/cgi-bin/lyris.pl?enter=env-rio-10
and the report at:
www.dfid.gov.uk/Pubs/files/epd_linking_poverty.pdf
FAO
report highlights global public goods
The
FAO has highlighted the importance of ecosystem services as global
public goods (GPGs) in this year's report "State of Food and
Agriculture." Focusing on GPGs can also contribute to poverty
alleviation.
The concept of global public goods (GPG) is being used increasingly
often in sustainable development discussions. Normally, GPGs refer
to health, knowledge, cultural heritage, financial stability, peace
and security, but the new FAO-report focuses on GPGs related to
agriculture and natural resources. These land-related GPGs include
ecosystem stability, biodiversity conservation, carbon sequestration,
forest biodiversity and hydrological stability.
The
report describes mixed results in efforts to improve the provision
of GPGs since the 1992 Rio Earth Summit. Progress rehabilitating
degraded lands has been slow, but more area is now protected for
the conservation of biodiversity. There is still a net loss in forest
cover, but deforestation rates have decreased, and there has been
a major shift towards sustainable agriculture.
The
report notes the importance of compensating those who make the provision
of GPGs possible, for example by refraining from logging a private
forest. However, official development assistance has decreased since
Rio, and has failed to reach the Rio-approved level: 0.7% of GNP.
Foreign direct investments are motivated by market opportunities
and cannot be expected to generate GPGs. However, international
initiatives such as the Global Environmental Facility have ensured
the provision of GPGs through multilateral environmental agreements.
New
funds are being established which could finance GPGs, including
the Clean Development Mechanism (CDM). The FAO report discusses
whether the CDM could reduce global net emissions of carbon dioxide
and also contribute to poverty alleviation. The CDM allows investors
from developed countries with high emissions to purchase a "carbon
credit" from developing countries, which, in return, reduce their
emissions or increase carbon sinks by for example conserving forests
or investing in clean technologies. Poor landowners can be compensated
for keeping their land in a state that maintains or increases the
rate at which carbon dioxide is sequestered. Specific efforts must,
however, be made to ensure that carbon credit payments will reach
the poor. It is also important to identify land-use patterns associated
with poor land-users, as well as the potential private and social
costs and benefits of the carbon credit system.
Louise Hård af Segerstad
More
at:
To download "State
of Food and Agriculture".
Another report,
"Forest
Carbon and Local Livelihoods" by Joyotee Smith from CIFOR (Center
for International Forestry Research) and Sara Scherr from Forest
Trends, looks at what CDM might mean for the rural poor.
Newly
mapped genome of Malaria parasite and mosquito:
Will it help eradicate the disease that kills one
million people a year?
Many now hope for better medicines and even a vaccine. But it is
important not to forget the underlying social, economical and ecological
causes of malaria's spread.
Researchers have now described the complete genomes of both the
parasite that causes malaria and the mosquito that spreads the disease.
Malaria kills over one million people every year, mainly in the
poorest part of Africa south of the Sahara. With these newly mapped
genomes, and the map of the human genome, it is hoped that new drugs
can be developed to help control or even vaccinate against malaria.
However, there is a risk that our models of how Nature works are
too simple. The malaria parasite has developed resistance to most
earlier drugs and also to some insecticides.
So while we wait for a vaccine, it is still
important to address the underlying social, economical and ecological
causes of malaria's spread. These include poverty, hunger, lack
of sanitation and public health infrastructure, land-use changes,
biodiversity and climate change.
The International
Panel on Climate Change has concluded that climate change will
likely increase the geographic spread and incidence of malaria.
Many ecologists claim that too much research funding is being spent
on molecular biology and not enough on basic ecological research.
For instance, one controversial proposal to replace wild mosquitoes
with insects made harmless by genetic engineering has not been evaluated
from an ecological point of view.
Ecological changes such as new irrigation
projects and the expansion of water-intensive crops have contributed
to the spread of malaria, since the mosquitoes need stagnant water
to breed. Scientists in malaria regions are therefore trying to
use organisms that naturally destroy the mosquito or the parasite,
a method called "biological control." Developing country scientists
underscore that more aid money should be used for capacity building
in poor countries to train their own researchers to combat the disease.
More
at:
www.nature.com/nature/malaria
Multilateral Initiative
on Malaria
Roll
Back Malaria
Increased Sida focus on biodiversity
Sida is establishing an international
programme on biodiversity organised in collaboration with the Swedish
Biodiversity Centre (CBM), at the Swedish University of Agricultural
Sciences (SLU) and Uppsala University.
Biodiversity is a prerequisite for sustainable development and will
be an important focus of future Swedish development aid. Biodiversity
issues are intimately linked to other aspects of development, such
as poverty, food security, livelihood, equity, health, and trade.
Sida therefore attempts to integrate biodiversity aspects in ongoing
bilateral and regional development cooperation programmes. Evaluation
of biodiversity impacts is one of Sida's environmental impact assessment
requirements and biodiversity is also an important component in
Sida's environmental training courses.
In 2001, the estimated
cost of contributions directly related to the biodiversity convention
was US $25 million. Sida supports a large number of organisations
that work for conservation and sustainable use of biological diversity.
These include the International
Centre for Living Aquatic Resources (ICLARM), the World
Wildlife Fund (WWF), the World
Conservation Union (IUCN), the World
Resources Institute (WRI), and the International
Institute for Environment and Development (IIED). Sida also
supports capacity building in several areas such as trade-related
intellectual property rights concerning biological material, access
to genetic resources, traditional knowledge, and the potential risks
posed by genetically modified organisms (biosafety).
As
part of the newly launched programme, CBM will support Sida's staff
in their work to further integrate biodiversity aspects in all areas
of their work. The programme will also function as an advisory body
to government officials and participate in projects such as capacity
building. Sida already has two external advisory boards on environmental
impact assessment and strategic environmental analysis and the new
programme will be linked to these boards.
More at:
Sida's work under the Convention on Biological Diversity
www.biodiv.org/doc/reports/fin-se-en.pdf
Web-focus on science and sustainable
development
The role of science in achieving sustainable development is emphasised
in a new web focus from the science journal Nature. It provides
free access to a wide selection of material regarding sustainable
development that Nature has published in recent years. The
collection includes both scientific articles and news and comments
from Nature's Science Update that writes in layman's terms
about the latest insights from the scientific community. Even readers
without a scientific background can appreciate the scientific articles.
Several articles relate to issues discussed
at this year's World Summit on Sustainable Development in Johannesburg,
including genetically modified crops, food security in Africa, aquaculture,
world fisheries and population forecasts.
More at:
www.nature.com/nature/sustainabledevelopment
The
quote:
"This Summit will be remembered not for the treaties, the commitments,
or the declarations it produced, but for the first stirrings of
a new way of governing the global commons - the beginnings of a
shift from the stiff formal waltz of traditional diplomacy to the
jazzier dance of improvisational solution-oriented partnerships
that may include non-government organisations, willing governments
and other stakeholders."
Source:
Jonathan Lash, president, World Resources Institute, on the recent
World Summit in Johannesburg
|
