Ecosystem valuation is gaining momentum as a strategy to protect the environment while speaking the language of costs and benefits that governments and taxpayers understand. The classic environmentalist position that "nature is priceless" has, all too often, been translated into "nature is valueless;' ecosystem valuation confronts the price issue head-on, and increasingly often, comes up with compelling reasons why preservation provides more economic gain than resource extraction.
The latest example of the importance of this approach emerged last week in Canada, as the Canadian Boreal Initiative released a report (PDF) demonstrating that Canada's boreal forests -- which cover nearly 60 percent of the Canadian land mass -- are worth substantially more as ecosystem services than if cut down for lumber, cleared for mining, or inundated for hydroelectric power.
The estimated market value of boreal natural capital extraction, in 2002 dollars (the point the study began), is C$48.9 billion, minus an estimated C$11.1 billion in direct air pollution from the work and government subsidies, for a total of C$37.8 billion. The estimated non-market value of boreal ecosystem services in 2002 totaled C$93.2 billion. The ecosystem services are twice the value of natural capital extraction, even if costs are ignored:
The ecosystem services with the highest economic value per year are (1) flood control and water filtering by peatlands—$77.0 billion; (2) pest control services by birds in the boreal forests—$5.4 billion; (3) nature-related activities—$4.5 billion; (4) flood control, water filtering, and biodiversity value by non-peatland wet-lands—$3.4 billion; and (5) net carbon sequestration by the boreal forest-$1.85 billion.
The report is a terrific example of how to do natural capital valuation. It explains the methodology in great detail, and provides abundant evidence for both the market value of extraction and the non-market value of ecosystem services. These aren't numbers just pulled out of a hat; Canadian Boreal Initiative shows where they come from, and why they're valid.
We've talked about ecosystem valuation quite a bit. Some good places to start, if you're not familiar with the term: Joel Makower discusses ecosystem marketplaces; Alex writes about restoration for profit; Nicole Boyer tells us of the mainstreaming of environmental economics; and Hassan Massum gives us a lengthy exploration of environmental accounting and the new wealth of nations.
(Thanks for the tip, Michael Slavitch!)
Comments (3)
Direct carbon fuel cell technology will allow direct conversion of carbon-containing waste into energy:
http://www.wired.com/news/planet/0,2782,69713,00.html
I wonder if this could be a powerful approach to waste treatment, as ever-expanding heaps of garbage are a problem facing the world as well. Comments?
Posted by sanman | December 3, 2005 4:25 PM
Posted on December 3, 2005 16:25
This is very interesting and helpful. I sometimes run in to trouble when I bring the value of an eco-service into the discussion. Is there a set of validated standards for estimating the value of ecosystems and the services they provide? Could you provide references? How do you address those that dismiss the estimated values as "exaggerated"?
Thanks for any help or suggestions
Posted by KP | December 4, 2005 3:52 AM
Posted on December 4, 2005 03:52
Nice to see this movement gaining some ground. But it's very problematic.
One horrible and ultra-simple idea which I recall having heard from one of my history professors, and which undermines the exercise, is that "in primitive capitalism, nothing is worth a thing, until it's been converted into hard cash."
Economists would surely disagree, given that mere market expectations about 'future values' (of investments, stocks, shares, etc...) result in real cash, when these valuations are merely pronounced.
But the fact remains that there's a difference between pointing out that something may be valuable as such, and the actual possibility to cash in on this value.
Ecosystem valuation basically comes down to preventing private enterprises to "cash in", by keeping the value of the ecosystem as a 'virtual' public good.
So unless some kind of real trading mechanism is created, with which to trade these 'virtual' values (a bit like carbon-trading, you get cash for not doing something), I think the exercise is pointless. Governments will succumb to the primitive drive to "cash in" now, instead of keeping the value locked up in the Public Good's bank.
I understand countries like Papua New Guinea who try to get real cash for not cutting their forests. But who's going to pay them? Nobody. Unless a real market is created for this kind of thing. A market where cashing in is still possible.
Posted by Lorenzo | December 4, 2005 8:21 AM
Posted on December 4, 2005 08:21