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Putting A Value On Nature Could
Set Scene For True Green Economy

By Pavan Sukhdev

14 February, 2010

The living fabric of this planet - its ecosystems and biodiversity - are in rapid decline worldwide. This is visible and palpable and is variously due to commercial over-exploitation, or population pressures, or a raft of unhelpful policies, or some combination. At a very fundamental human level, however, it is due to the lack of awareness that there is a problem with human society being disconnected from nature.

Economics is blamed for much of our woes these days and credited with little so two questions need to be asked: is economics part of the problem of ecosystem degradation and biodiversity loss? And is it part of the solution?

The answer to the first question is a fairly obvious "yes". The economic invisibility of nature in our dominant economic model is both a symptom and a root cause of this problem. We value what we price, but nature's services - providing clean air, fresh water, soil fertility, flood prevention, drought control, climate stability, etc - are, mostly, not traded in any markets and not priced. These so-called "ecosystem services" are all "public goods" provided free. Our tendency to value private wealth creation over improving public wealth - creating a healthier natural world, for example - doesn't help.

We cannot manage what we do not measure and we are not measuring either the value of nature's benefits or the costs of their loss. We seem to be navigating the new and unfamiliar waters of ecological scarcities and climate risks with faulty instruments. Replacing our obsolete economic compass could help economics become part of the solution to reverse our declining ecosystems and biodiversity loss.

We need a new compass to set different policy directions, change incentive structures, reduce or phase out perverse subsidies, and engage business leaders in a vision for a new economy. Holistic economics – or economics that recognise the value of nature's services and the costs of their loss – is needed to set the stage for a new "green economy".

The crisis of biodiversity loss can only begin to be addressed in earnest if the values of biodiversity and ecosystem services are fully recognised and represented in decision-making. This may reveal the true nature of the trade-offs being made: between different ecosystem services (food provision or carbon storage), between different beneficiaries (private gain by some, public loss to many), at different scales (local costs, global benefits) and across different time horizons. When the value of ecosystem services are understood and included, what may have looked like an "acceptable" trade-off may appear quite unacceptable.

Conversely, benefits that were unrecognised become visible, and worth preserving. In Costa Rica, payments to farmers who conserve forests on their land rather than destroy them for low-earning pasture have become almost a national environment programme. Soil and water benefits flow to farmlands all around them. And this was funded by a small 3% tax on transport.

In India, ecological restoration and water harvesting is paid for by a national rural employment guarantee scheme, employing millions. In San Francisco and New York, ecological infrastructure is the reality: reservoirs and lake watersheds surrounded by well-managed forests provide cities with a freshwater supply. Meanwhile, biomimicry - using nature's methods to solve human problems, such as Velcro which was inspired by dog hair and burrs - is offering opportunities for innovative businesses across both developing and developed nations.

These are all examples of new economic models for government and business in which both private opportunity and "public goods" are being created and rewarded by a new partnership between business, citizens, and their government.

Teeb (The Economics of Ecosystems and Biodiversity) has assembled a library of suggestions for policy-makers on how to use good economics to conserve wild nature (TEEB for Policy-Makers, November 2009). In June, TEEB will publish a parallel document on what role business can play in changing the rules of the game and herald a society that profits and progresses yet lives in harmony with nature.

• Pavan Sukhdev is a special adviser to the United Nations environment programme's green economy initiative and study leader for Teeb. He is speaking at the annual Earthwatch Oxford lecture tonight, co-hosted by environmental charity Earthwatch and strategy consultancy and thinktank SustainAbility

guardian.co.uk © Guardian News and Media Limited 2010





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