Earth, Inc. Sliding Into Bankruptcy
Build a shrimp farm in Thailand by cutting down mangrove forests and you will net about 8,000 dollars per hectare. Meanwhile, the destruction of the forest and pollution from the farm will result in a loss of ecosystems worth 35,000 dollars/ha per year.Many leading development institutions and policy-makers still fail to understand that this ruthless exploitation for short-term profits could trigger an Enron-like collapse of "Earth, Inc.", experts say.
For example, the World Bank and other economic development agencies would happily loan a shrimp farmer 100,000 dollars to clear more mangroves.
All economies depend on the natural capital lying within nature's lands, waters, forests, and reefs, but humans have often treated them as if they had little value or were inexhaustible.
"Up till now, humans have been exploiting natural capital to maximize production of food, timber, oil and minerals at the expense of soil, water and biodiversity," said Janet Ranganathan, director of people and ecosystems at the Washington-based World Resources Institute.
"Usually only a few people benefit from this exploitation," Ranganathan, who co-authored a new report called "Restoring Nature's Capital: An Action Agenda to Sustain Ecosystem Services", told IPS.
Worse still is that this approach to nature is extremely destructive and short-sighted, she said.
Since 1980, nearly 35 percent of the world's coastal mangroves have been cut down, most often for shrimp aquaculture. Vietnam, for example, has lost over 80 percent of its coastal mangroves to such operations.
The 2004 Indian Ocean tsunami that killed nearly 230,000 people provided ample evidence that mangroves can protect or at the very least buffer communities from the worst impacts of tidal waves and storms.
Unfortunately, that particular "service" is not captured or valued by the marketplace, said Ranganathan.
Nor does the market value the vital role mangroves play as a nursery habitat for marine life, crucial to the health of offshore fisheries, or the service they provide filtering pollutants which in turn protect coral reefs, another important nursery for fish. Ignored as well are the substantial economic benefits mangroves provide in preventing the shoreline erosion that is threatening many coastal countries like Thailand, where the shoreline is retreating 25 meters each year in some areas.
Nature's services, which are as real as any shrimp platter, are simply left out of the current economic system. Also ignored are the environmental and social costs of shrimp farming such as water pollution, land degradation and impacts on local fishers.
"Studies show that shrimp farms in southern Thailand have a lifespan of just five years," Ranganathan said. "If we valued ecosystems properly, it would change how we make development decisions."
After five years, the water is too polluted to raise shrimp and the operation moves down the coast. Such operations are often subsidized directly and indirectly with nominal land rent, taxes and even development grants and loans. When the real costs of shrimp aquaculture are taken into account, its value is 5,443 dollars per hectare, according to an in-depth analysis.
Meanwhile, the real value to society of intact mangroves is a whopping 35,696 dollars per hectare.
While the actual value of ecosystems and the services they provide can sometimes be hard to calculate, the fact of the matter is that they are not zero, says Ranganathan.
Of all places, New York City figured that out some years ago.
New York's tap water has never passed through a filtration plant and is considered some of best quality water available in any U.S. city. In the late 1980s, rather than building a six- to eight-billion-dollar water treatment plant, the city decided it was far cheaper and better to protect and restore the source of its water supply, the Catskill/Delaware forests and wetlands.
The total cost? One and a half billion dollars. And that's without subtracting the considerable value of the additional services the protected area provides in terms of human recreation, better air quality, and carbon sequestration.
Sadly, this approach is all too rare, as evidenced by the Millennium Ecosystem Assessment (MA), the first global scientific audit of the Earth's natural capital.
In 2005, the MA showed that 15 of the world's 24 ecosystem services are being degraded or used unsustainably. In business terms, this meant that nearly two-thirds of the "company's" 24 divisions examined are in the red; only four are profitable, while the other five showed mixed results regionally.
Clearly, "Earth, Inc." is in deep trouble.
Improvements in technology and modernization won't rescue our planet from the depletion of the Earth's natural capital, says Eugene Rosa, a professor of natural resources and environmental policy at Washington State University.
Rosa and colleagues have developed a scientific model called STIRPAT to assess human interactions with the environment. They determined that natural capital will continue its sharp decline due to growth in population and consumption.
Even if nations increased their energy and resource-use efficiency four-fold, there isn't enough natural capital left intact to continue business as usual, Rosa said in an interview.
"This really isn't a surprising result, but there has been little discussion about population and consumption patterns," he said.
North America and European lifestyles are simply not sustainable, he says. Other analyses have demonstrated the need for four or five more planets if everyone lived like the average U.S. citizen.
And let's not forget that climate change -- the dumping of vast quantities of carbon from the burning of fossil fuels into the atmosphere -- is another unaccounted cost that's having a major impact on ecosystem services.
"Lima in Peru, for example, is entirely dependent on water from glacial melt," noted Jonathan Lash, president of WRI.
"[But] the glaciers will be gone in 20 years," Lash said in a statement.
Solutions for Lima, such as a pipeline to the Amazon River or building energy-intensive desalination plants, are also vulnerable to changes in climate.
Lash urges a focus on how climate change is altering ecosystem services.
Turning around this dreadfully managed and exploited company "Earth, Inc." will be an enormous task, requiring fundamentally new approaches to managing its precious and declining assets "upon which all life depends", the WRI report concludes.
The question now is whether humanity is psychologically ready and willing to accept such fundamental changes.
*This article is part one of a three-part series on natural capital and how future global prosperity and equity can be achieved through the preservation of ecosystems.
Copyright © 2007 IPS-Inter Press Service