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The Guardian/UK

Putting a Value on Nature Could Set Scene for True Green Economy

Much environmental damage has been caused by the way we do business. Is there a way of changing our economic models from being part of the problem into part of the solution?

Pavan Sukhdev

We are not using the right economic models to measure the cost of natural losses. (Photograph: Marcus Lyon/Getty Images)

The living fabric of this planet - its ecosystems and biodiversity - are in rapid decline worldwide.
This is visible and palpable and is variously due to commercial
over-exploitation, or population pressures, or a raft of unhelpful
policies, or some combination. At a very fundamental human level,
however, it is due to the lack of awareness that there is a problem
with human society being disconnected from nature.

Economics is
blamed for much of our woes these days and credited with little so two
questions need to be asked: is economics part of the problem of
ecosystem degradation and biodiversity loss? And is it part of the

The answer to the first question is a fairly obvious
"yes". The economic invisibility of nature in our dominant economic
model is both a symptom and a root cause of this problem. We value what
we price, but nature's services - providing clean air, fresh water,
soil fertility, flood prevention, drought control, climate stability,
etc - are, mostly, not traded in any markets and not priced. These
so-called "ecosystem services"
are all "public goods" provided free. Our tendency to value private
wealth creation over improving public wealth - creating a healthier
natural world, for example - doesn't help.

We cannot manage what
we do not measure and we are not measuring either the value of nature's
benefits or the costs of their loss. We seem to be navigating the new
and unfamiliar waters of ecological scarcities and climate risks with
faulty instruments. Replacing our obsolete economic compass could help
economics become part of the solution to reverse our declining
ecosystems and biodiversity loss.

We need a new compass to set
different policy directions, change incentive structures, reduce or
phase out perverse subsidies, and engage business leaders in a vision
for a new economy. Holistic economics - or economics that recognise the
value of nature's services and the costs of their loss - is needed to
set the stage for a new "green economy".

The crisis of
biodiversity loss can only begin to be addressed in earnest if the
values of biodiversity and ecosystem services are fully recognised and
represented in decision-making. This may reveal the true nature of the
trade-offs being made: between different ecosystem services (food
provision or carbon storage), between different beneficiaries (private
gain by some, public loss to many), at different scales (local costs,
global benefits) and across different time horizons. When the value of
ecosystem services are understood and included, what may have looked
like an "acceptable" trade-off may appear quite unacceptable.

benefits that were unrecognised become visible, and worth preserving.
In Costa Rica, payments to farmers who conserve forests on their land
rather than destroy them for low-earning pasture have become almost a
national environment programme. Soil and water benefits flow to
farmlands all around them. And this was funded by a small 3% tax on

In India, ecological restoration and water harvesting
is paid for by a national rural employment guarantee scheme, employing
millions. In San Francisco and New York, ecological infrastructure is
the reality: reservoirs and lake watersheds surrounded by well-managed
forests provide cities with a freshwater supply. Meanwhile, biomimicry
- using nature's methods to solve human problems, such as Velcro which
was inspired by dog hair and burrs - is offering opportunities for
innovative businesses across both developing and developed nations.

are all examples of new economic models for government and business in
which both private opportunity and "public goods" are being created and
rewarded by a new partnership between business, citizens, and their

Teeb (The Economics of Ecosystems and Biodiversity) has assembled a library of suggestions for policy-makers on how to use good economics to conserve wild nature (TEEB for Policy-Makers,
November 2009). In June, TEEB will publish a parallel document on what
role business can play in changing the rules of the game and herald a
society that profits and progresses yet lives in harmony with nature.

Pavan Sukhdev is a special adviser to the United Nations environment
programme's green economy initiative and study leader for Teeb. He is
speaking at the annual Earthwatch Oxford lecture tonight, co-hosted by
environmental charity Earthwatch and strategy consultancy and thinktank SustainAbility

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