The world’s poor, especially subsistence farmers and pastoralists are the first to suffer from the loss of services provided by ecosystems and biodiversity – in other words, the free benefits of nature. These include food and fuelwood from forests, the flow of water and nutrients from forest to field, flood and drought control and soil retention provided by forests, fish from the ocean, and so on. By assigning a value to these services flowing from nature to people, the global economy can start to account for the costs of biodiversity loss as well as reward the benefits that nature provides. This will help protect the natural world for future generations.
A problem of today’s economy is that we have become obsessed by “GDP growth” as the all-important measure of success. The political economist Bertrand de Jouvenel recognized the shortcomings of “GDP growth” as far back as 1968: He wrote ‘because national accounts are based on financial transactions they account nothing for Nature, to which don’t owe anything in terms of payments but to which we owe everything in terms of livelihood.’ Our economic compass is faulty and must be updated to reflect the role of human capital and natural capital in sustainable development, and to ensure that the costs and benefits of conserving nature are more fairly distributed.
Our tendency to discount future benefits compared todays discriminates against future generations. Using a discount rate of 4% (most studies use between 3% and 5%) arithmetically amounts to saying that we value and will trade off a benefit to our own grandchild, 50 years hence, at one-seventh of its value to us today. Furthermore, our use of indicators which are not weighted for poverty discriminates against the poor. We may dismiss ecosystem services as only “10-20% of GDP”, but they are actually “50-90% of the GDP of the poor”. These are all ethical choices that we make, not economic choices. Economics is mere weaponry – the direction in which we shoot is an ethical choice..
The challenge is not only to determine the values of biodiversity but to present these values in a way that is useful to people. It is not sufficient to provide one big global number; we must provide a range of local values that enable local policy makers to make decisions on (for example) conserving forest cover, enable corporations to know their footprint on ecosystems and the climate, and consumers to understand their impact on natural resources.
I am very hopeful that there will be increasing recognition of the economic importance of biodiversity and ecosystems, not just among economists but at the level of policy makers, administrators, businesses and the public.
Promising new initiatives on mechanisms and markets for ecosystem services are emerging in many places and these should be encouraged. The lessons of TEEB are being taken up by many leading governments and corporations. To be successful however, they will all need better institutional infrastructure, more incentives, easier access to financing, and good governance—in short : investment.
This is investment in our grandchildren, and in our poor. For governments, it is about investing public money into public wealth. Why would any sane government not do so ?