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Countries that invest in conservation will see higher financial returns, argues report

A new report issued by the The Economics of Ecosystems and Biodiversity (TEEB) initiative makes a strong case for valuing the planet’s ecosystem services. The report calls for investments in “ecological infrastructure” to protect wildlands and the services they provide; market-based valuation of ecosystem services; reductions in environmentally harmful subsidies; recognition of the link between environmental degradation and poverty; and a strong climate deal that includes forest carbon.

Policy-makers who factor the planet’s multi-trillion dollar ecosystem services into their national and international investment strategies are likely to see far higher rates of return and stronger economic growth in the 21st century, a new report issued today says.

Some countries have already made the link to a limited extent and are glimpsing benefits in terms of jobs, livelihoods and economic returns that outstrip those wedded to older economic models of the previous century.

The new report, prepared by The Economics of Ecosystems and Biodiversity (TEEB) initiative hosted by the UN Environment Programme (UNEP), calls on policy-makers to accelerate, scale-up and embed investments in the management and restoration of ecosystems.

It also calls for more sophisticated cost benefit analysis before policy-decisions are made. The report cites a study on mangroves in south Thailand on the conversion of mangroves into shrimp farms.

Rainforest in Borneo (April 2008).

Deforestation-induced erosion in Madagascar (October 2004). Photos by Rhett A. Butler

Subsidized commercial shrimp farms can generate returns of around US$1,220 per hectare by clearing mangrove forests. But this does not take into account the losses to local communities totaling over US$12,000 a hectare linked with wood and non-wood forest products, fisheries and coastal protection services (Barbier 2007).

Nor does the profit to the commercial operators take into account the costs of rehabilitating the abandoned sites after five years of exploitation – estimated at over US$9,000 a hectare.

Speaking at a press conference in Brussels today, Pavan Sukhdev, TEEB’s Study Leader, said: “Nature’s multiple and complex values have direct economic impacts on human well being and public and private spending. Recognizing and rewarding the value delivered to society by the natural environment must become a policy priority.

The economic invisibility of ecosystems and biodiversity is increased by our dominant economic model, which is consumption-led, production-driven, and GDP-measured. This model is in need of significant reform. The multiple crises we are experiencing – fuel, food, finance, and the economy – serve as reminders of the need for change.

It is now up to governments to provide fiscal or other incentives to move us from short-term opportunism to long term stewardship. The right policies can help us move toward a resource efficient economy.”

The report comes in advance of the UN climate convention meeting in Copenhagen where governments are expected to give the green light to funding developing countries to maintain forests.

Close to 20 percent of current global greenhouse gas emissions are linked with deforestation. Reduced Emissions from Deforestation and Forest Degradation (REDD) aims to counter this while also generating financial flows from North to South.

REDD and REDD+, which includes not only maintaining forests but planting and recovering forest systems, secured the backing of close 15 presidents and prime ministers at a special meeting hosted last month by UN Secretary General Ban Ki-moon.

Achim Steiner, UN Under-Secretary General and UNEP Executive Director, said:

Pastureland and transition forest in Mato Grosso, Brazil (April 2009).

The TEEB report cites the follow examples of ecosystem services:
  • In Venezuela, investment in the national protected area system is preventing sedimentation that otherwise could reduce farm earnings by around US$3.5 million a year (Pabon-Zamora et al.2008).

  • Planting and protecting nearly 12,000 hectares of mangroves in Vietnam costs just over US$1 million but saved annual expenditures on dyke maintenance of well over US$7 million (Tallis et al. 2008).

  • One in 40 jobs in Europe are now linked with the environment and ecosystem services ranging from clean tech ‘eco-industries’ to organic agriculture, sustainable forestry and eco-tourism.
  • Investment in the protection of Guatemala’s Maya Biosphere Reserve is generating an annual of income of close to US$50 million a year, has generated 7,000 jobs and boosted local family incomes (CBD 2008).

“Paying developing countries under REDD marks a fundamental step forward in terms of bringing the huge financial importance of ecosystems and biodiversity into the centre of economic activity.”

“It could open the door to more creative and forward-looking funds and mechanisms covering other nature-based infrastructure such as peatlands and wetlands en route to support for the services generated by coastal and marine ecosystems such as coral reefs to mangroves,” he said.

The report outlines a ten-point plan aimed at catalyzing a transition to more ecosystem savvy economies able to meet the multiple challenges and deliver the multiple opportunities on a planet of six billion people, rising to nine billion by 2050.

The report has a number of key recommendations for policymakers to consider:

  1. Invest in ecological infrastructure: This can provide cost-effective opportunities to increase resilience to climate change, reduce risk from natural hazards, improve food and water security, and contribute to poverty alleviation. Up-front investments in maintenance and conservation are almost always cheaper than trying to restore damaged ecosystems, and the social benefits that flow from restoration can be several times higher than the costs. Preliminary TEEB estimates suggest that the potential rates of return can reach 40 percent for mangrove and woodlands/shrublands, 50 percent for tropical forests and 79 percent for grasslands when the multiple ecosystems services are taken into account.

  2. Reward benefits through payments and markets: Payments for ecosystem services (PES schemes) from local (e.g. water provisioning) to global (the REDD-Plus proposal for Reduced Emissions from Deforestation and Degradation, as well as from afforestation, reforestation, and effective conservation).

  3. Reform environmentally harmful subsidies: Reforming subsidies that are inefficient, outdated or harmful makes double sense during a time of economic and ecological crisis.

  4. Address losses through regulation and pricing: The cost of losses of biodiversity and ecosystem services should be tackled through regulatory frameworks that establish environmental standards and liability regimes. Designing a robust instrumental and market framework to confront resource users with these costs is a key priority for policy makers.

  5. Recognize that protected areas are a cornerstone of conservation policies and provide multiple benefits: The global PA network covers around 13.9 percent of the Earth’s land surface, 5.9 percent of territorial seas, and only 0.5 percent of the high seas: nearly a sixth of the world’s population depend on protected areas for a significant percentage of their livelihoods. Investing US$45 billion in protected areas could secure vital nature-based services worth some US$5 trillion a year, including the sequestration of carbon, the protection and enhancement of water resources and protection against flooding (Balmford et al. 2002). There are also employment incentives, for example, in Bolivia protected-area tourism generates over 20,000 jobs, indirectly supporting over 100,000 people (Pabon-Zamora et al. 2009)

    The TEEB study shows that benefits of reform are multiple. It also reinforces the growing evidence that there are a number of urgent strategic ecosystem priorities that require policy shifts to address them:

  6. Halt deforestation and forest degradation should be an integral part of climate change mitigation and adaptation focused on ‘green carbon’. It has the added benefit of preserving the huge range of services and goods forests provide to local people and the wider community;

  7. Protect tropical coral reefs – and the associated livelihoods of half a billion people – through major efforts to avoid global temperature rise;

  8. Save and restore global fisheries, which are currently under threat of collapse from over fishing;

  9. Recognize the deep link between ecosystem degradation and the persistence of rural poverty and align policies across sectors with key Millennium Development Goals.

  10. Agree to a forest carbon deal at Copenhagen.

Download the report

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