On 29th May, a report setting out a “comprehensive and compelling economic case for the conservation of biodiversity” was presented by the report’s author Mr. Pavan Sukhdev. The work was launched in 2007 by Minister Sigmar Gabriel of Germany and Stavros Dimas the Commissioner responsible for Environment in the European Commission, to promote a better understanding of the true economic value of the benefits we receive from nature. The report presented today is the interim report of the work which will continue in 2009 and 2010. It’s entitled The Economics of Ecosystems and Biodiversity.
Mr Sukhdev, a senior figure in Deutsche Bank, said that the interim report showed “we are trying to navigate uncharted and turbulent waters with an old and defective economic compass and that this was affecting our ability to forge a sustainable economy in harmony with nature.”
Nature provides human society with a vast diversity of benefits such as food, fibres fuel, clean water, healthy soil, protection from floods, protection from soil erosion, medicines, storing carbon (important in the fight against climate change) and many more. Though our wellbeing is totally dependent upon these “ecosystem services” they are predominantly public goods with no markets and no prices, so they often are not detected by our current economic compass. As a result, due to the pressures coming from population growth, changing diets, urbanisation and also climate change, biodiversity is declining, our ecosystems are being continuously degraded and we, in turn, are suffering the consequences.
What is Happening to Our Biodiversity and Ecosystems?
The report presented today shows that if we do not adopt the right policies, the current decline in biodiversity and the related loss of ecosystem services will continue and in some cases even accelerate. Some ecosystems are likely to be damaged beyond repair. With a “business as usual” scenario, by 2050 we will be faced with serious consequences:
o 11% of the natural areas remaining in 2000 could be lost, chiefly as a result of conversion for agriculture, the expansion of infrastructure, and climate change
o almost 40% of the land currently under low-impact forms of agriculture could be converted to intensive agricultural use, with further biodiversity losses
o 60% of coral reefs could be lost – even by 2030 – through fishing, pollution, diseases, invasive alien species, and coral bleaching due to climate change.
Current trends on land and in the oceans demonstrate the severe dangers that biodiversity loss poses to human health and welfare. Climate change is exacerbating this problem. And again, as with climate change, it is the world’s poor who are most at risk from the continuing loss of biodiversity. They are the ones most reliant on the ecosystem services which are being undermined by flawed economic analysis and policy mistakes.
Biodiversity Protection and Questions of Equity and Ethics
Poverty and the loss of biodiversity are inextricably linked: the real beneficiaries of many of the services of ecosystems and biodiversity are predominantly the poor. The livelihoods most affected are subsistence farming, animal husbandry, fishing and informal forestry – most of the world’s poor are dependent on them. The annual losses of biodiversity and ecosystems are typically estimated, in terms of social wellbeing, as equivalent to a few percentage points of GDP. If, however, we re-express these in human terms, based on the principle of equity, then the argument for reducing such losses gains considerable strength.
Ethical choices are so deeply engrained into the building blocks of our economic models that we are no longer aware of them. However, if you take the very obvious example of discount rates, a 4% discount rate (most are between 3 and 5 %) means that we value a natural service to our own grandchildren (50 years hence) at one-seventh the benefit we derive from it, a difficult ethical standpoint to defend.
Incorporating the true value of biodiversity and ecosystem services into policy decisions is the ultimate aim of the work being carried out by Pavan Sukhdev and his team. There are ethical choices involved in particular between present and future generations and between people in different parts of the world.
