The unsentimental notion that quantifying the value of nature to the economy is the best way to protect it has received a boost in the form of a new United Nations framework. Announced on 11 March, the new system of ‘ecosystem accounting’ is designed to ensure that ‘natural capital’ is more accurately recognised in economic reporting.
The framework, officially dubbed the System of Environmental-Economic Accounting – Ecosystem Accounting (SEEA-EA), is designed to improve economic modelling by taking into account the services that ecosystems provide and the benefits they impart for people and local communities. Put simply, it should help to give a value to both the ‘stock’ of nature, such as the extent of forests, wetlands or grasslands, and its ‘flows’ – the benefits that nature provides, such as water purification and carbon sequestration. This, in turn, will allow these contributions to be more easily compared to other goods and services with which we’re familiar, enabling governments and industries to choose the correct course of action when it comes to weighing up conservation, restoration or extraction.
Applying a monetary value to nature has caused some to recoil in the past (we wrote all about this in our November 2018 Dossier). Nevertheless, many heavyweight international organisations, including the UN and the International Union for the Conservation of Nature (IUCN), have long sought to construct an economic toolkit to model the true value of the natural world. ‘Our economic, social and human well-being critically depends on nature,’ said Juha Siikamaki, chief economist at the IUCN. ‘The key contribution that we hope ecosystem accounting can do is to put those contributions from nature at the same level of importance as other economic considerations.’
A forest is a good example. In the economics of old, the value of a forest was calculated based on the timber that could be extracted from it. We now know that’s too reductive: forests sequester carbon and produce oxygen; they collect and filter rainfall, purifying drinking water; they support biodiversity, which can improve the resilience of the forest to climate change and boost populations of pollinating insects; they can contribute to tourism. ‘Using the forest example, the private benefi ts have traditionally been modelled economically, but the broader benefi ts that the public enjoys have not been thought about as much,’ says Kelvin Peh, lecturer in conservation science at the University of Southampton. ‘Th at’s very important, because when we do consider them, we find that conservation and ecological restoration can actually bring net economic benefit.’
A recent study in Nature Sustainability, coauthored by Peh, calculated the value of ecosystem services at 24 sites. Assuming that each tonne of carbon carries a conservative US$31 cost to society, more than 70 per cent of the assessed sites had greater monetary value as natural habitats than they would as sites of resource extraction. Even when carbon was removed from calculations, 42 per cent of sites were still worth more to society as natural habitats due to the provision of ecosystem services, such as water filtration and crop pollination. ‘Our study reverses the narrative that conservation and protection come at the expense of economic development,’ says Peh. ‘In fact, it’s exactly the opposite: the economy often benefits from environmental protection. In almost half of the cases we studied, exploitation subtracted rather than increased economic value.’ One studied site, Nepal’s Shivapuri–Nagarjun National Park, would incur a US$11 million a year deficit if it was converted from forest to farmland.
Peh’s study, along with the UN’s endorsement of the ecosystem accounting method, come just a few weeks after the landmark Dasgupta review on the economics of biodiversity, commissioned by the UK Treasury. Professor Partha Dasgupta from the University of Cambridge argued that GDP growth is inextricably linked to ecosystem health. As people produce GDP, they extract resources from nature and put waste and contaminants back into natural systems. When extraction outweighs nature’s capacity for repair, the stock of natural capital shrinks, along with the value of ecosystem services.
The report demonstrated that between 1992 and 2014, the value of produced capital (machines and buildings, for example) doubled, while human capital (workers and skills) rose by 13 per cent. In contrast, ‘natural capital’ declined by nearly 40 per cent. ‘The Dasgupta review summarised, very clearly, that demand on nature far exceeds its capacity to supply the goods and services that we all rely on,’ says Peh.
Some groups will still inevitably interpret such rigid quantification as an infringement on ‘priceless’ nature. ‘They are afraid that through ecosystem accounting, nature will be commodified and be subject to people’s trading; that ecosystem-service information will be misused,’ says Peh. ‘All of that is true and we shouldn’t see it as a magic bullet for conservation. Sometimes the outcome of an ecosystem-service assessment may not be favourable for conservation at all.’ He, like many other environmental economists, views ecosystem accounting simply as a decision-making tool that more accurately represents the natural world in economic modelling. It’s up to the people in power to interpret the information correctly.