A UN study highlights the price of nature.
THE global economy must be radically altered to put a value on forests, reefs and other elements of nature. The financial benefits of doing so will be enormous, according to a United Nations-backed report. The Economics of Ecosystems and Biodiversity (TEEB) report warned that allowing nature to remain unaccounted for within the economy would lead to the continuing rapid extinction of species, and ensuing massive financial costs. “TEEB’s approach can reset the economic compass and herald a new era in which the value of nature’s services is made visible and becomes an explicit part of policy and business decision-making,” said banker Pavan Sukhdev, who chaired a study that led to the report. After nearly three years of research, the report aims to raise global awareness about the economic costs of inaction on biodiversity in a similar way to British economist Nicholas Stern’s famous 2006 report on climate change. The TEEB report was released on Wednesday in Nagoya, Japan, where delegates from 193 countries are meeting at a UN summit in an effort to map out a strategy to stop humans from driving species to extinction. “We hope the next phase after Nagoya ... is going to be a change in policy, a change in the matrix, a change in consumer behaviour, a change in business behaviour. Do nothing, and not only do we lose trillions worth of current and future benefits to society, we also further impoverish the poor and put future generations at risk. “The time for ignoring biodiversity and persisting with conventional thinking regarding wealth creation and development is over. We must get onto the path towards a green economy,” said Sukhdev. The report highlighted the broad scope of so-called “ecosystem services” that are generally not valued in the economy. These included regulation of the environment – such as through water filtration by wetlands, pollination and disaster protection – and as a source of medicines and wild foods. Spiritual and recreational values, as well as the environment’s role in nutrient recycling and photosynthesis, also needed to be taken into account, the report urged. TEEB recommended that businesses and governments reveal in annual reports or national accounts how they depleted or damaged the environment. This depletion or damage would have an economic value, and businesses would need to compensate for their adverse environmental impacts. The TEEB reported cited a study by Britain-based consultancy TruCost that found the negative environmental impacts of the world’s top 3,000 listed companies were worth US$2.2trillion (RM7trillion) annually.
Effect on the poor
Many studies also found forests and other ecosystems to contribute significantly to the livelihoods of poor rural households. Conservation of these ecosystems, therefore, will help alleviate poverty. It has been estimated that ecosystem services and other non-marketed natural goods account for 47% to 89% of the so-called “GDP of the Poor” (the effective GDP or total sources of livelihoods of rural and forest-dwelling poor households) in some large developing countries. “In the past only traditional sectors such as manufacturing,