It was noted earlier that ecosystems provide many services to us, for free.
Although some dislike the thought of trying to put an economic value on biodiversity (some things are just priceless), there have been attempts to do so in order for people to understand the magnitude of the issue: how important the environment is to humanity and what costs and benefits there can be in doing (or not doing) something.
The Economics of Ecosystems and Biodiversity (TEEB) is an organization — backed by the UN and various European governments — attempting to compile, build and make a compelling economics case for the conservation of ecosystems and biodiversity.
In a recent report, The Economics of Ecosystems and Biodiversity for National and International Policy Makers 2009, TEEB provided the following example of sectors dependent on genetic resources:
|Sector||Size of Market||Comment|
|Pharmaceutical||US$ 640 bn. (2006)||25-50% derived from genetic resources|
|Biotechnology||US$ 70 bn. (2006) from public companies alone||Many products derived from genetic resources (enzymes, microorganisms)|
|Agricultural seeds||US$ 30 bn. (2006)||All derived from genetic resources|
|Personal care, Botanical and food & Beverage industries||US$ 22 bn. (2006) for herbal supplements |
US$ 12 bn. (2006) for personal care
US$ 31 bn. (2006) for food products
|Some products derived from genetic resources. represents ‘natural’ component of the market.|
In addition, it is estimated that implementing REDD (Reducing Emissions from Deforestation and Forest Degradation) could help
- Halve deforestation by 2030, and
- Cut emissions by 1.5 Gt of CO2 per year.
From a cost perspective (p.18), it is estimated that
- It would cost from US$ 17.2 – 33 billion per year
- The estimated benefit in reduced climate change is US$ 3.2 trillion
- The above would be a good return on the initial investment. By contrast, waiting 10 more years could reduce the net benefit of halving deforestation by US$ 500 billion.
The BBC notes that biodiversity is fundamental to economics. For example,
- The G8 nations, together with 5 major emerging economies — China, India, South Africa, Brazil, Mexico — use almost three-quarters of the Earth’s biocapacity
- An estimated 40% of world trade is based on biological products or processes.
Despite these free benefits, it has long been recognized that we tend to ignore or underestimate the value of those services. So much so that economic measures such as GDP often ignores environmental costs.
The economic benefits of protecting the environment are well-understood, even if seemingly rarely practiced:
It has perhaps taken about a decade or so — and a severe enough global financial crisis that has hit the heart of this way of thinking — to change this mentality (in which time, more greenhouse gases have been emitted — inefficiently).
Economists talk of the price signal that is fundamental to capitalism; the ability for prices to indicate when a resource is becoming scarcer. At such a time, markets mobilize automatically to address this by looking for ways to bring down costs. As a result, resources are supposedly infinite. For example, if energy costs go up, businesses will look for a way to minimize such costs for themselves, and it is in such a time that alternatives come about and/or existing resources last longer because they are used more efficiently. should therefore be averted.
However, it has long been argued that prices don’t truly reflect the full cost of things, so either the signal is incorrect, or comes too late. The price signal also implies the poorest often pay the heaviest costs. For example, commercially over-fishing a region may mean fish from that area becomes harder to catch and more expensive, possibly allowing that ecosystem time to recover (though that is not guaranteed, either). However, while commercial entities can exploit resources elsewhere, local fishermen will go out of business and the poorer will likely go hungry (as also detailed on this site’s section on biodiversity). This then has an impact on various local social, political and economic issues.
In addition to that, other related measurements, such as GNP are therefore flawed, and even reward unproductive or inefficient behavior (e.g. producing unhealthy food — and the unhealthy consumer culture to go with it — may profit the food industry and a private health sector that has to deal with it, all of which require more use of resources. More examples are discussed on this site’s section on consumption and consumerism).
Our continued inefficient pumping of greenhouse gases into the environment without factoring the enormous cost as the climate already begins to change is perhaps an example where price signals may come too late, or at a time when there is already significant impact to many people. Resources that could be available more indefinitely, become finite because of our inability or unwillingness to change.
In effect, as TEEB, and many others before have argued, a key challenge will be adapting our economic systems to integrate sustainability and human well-being as well as other environmental factors to give us truer costs (after all, market systems are supposed to work when there is full availability of information).
Think of some of the effects this could have:
- Some industrial meat production, which is very harmful for the environment, may become more expensive
- For example, as mentioned in the previous link, if water used by the meat industry in the United States were not subsidized by taxpayers, common hamburger meat would cost $35 a pound.
- Instead of regulation to change people’s habits, markets would automatically reflect these true costs; consumers can then make better informed choices about what to consume, e.g. by reducing their meat consumption or demand more ecologically sustainable alternatives at reasonable cost.
- A reduction in meat production could protect forests or help reduce clearance of forests for cattle ranches, which would have a knock-on benefit for climate change concerns.
- Appropriate investment in renewable energy could threaten the fossil fuel industry though they are trying to adapt to that (perhaps slowly, and after initial resistance). But at the same time, governments that are able to use renewable sources are less likely to find themselves spending so many resources in geopolitical areas (e.g. politics, military, terrorist response to Western presence in Middle East, etc) to protect or secure access to fossil fuels.
- type of design — where products are designed to be produced and recycled or disposed of more sustainably — could considerably reduce costs for producers and consumers alike, and possibly reduce stress on associated ecosystems.
- Land that is used to produce unhealthy or marginally nutritious items (e.g. tobacco, sugar, possibly tea and coffee) could be used for more useful or healthier alternatives, possibly even helping address obesity and other issues. (For example, while factoring in environmental costs could make healthy produce more expensive too, expanding production of healthier foods could help contain costs rises to some extent.)
How much would such accounting save? It is hard to know, but there is a lot of waste in the existing system. In the mid-1990s, the Institute for Economic Democracy calculated that as much as half the American economy constituted of wasted labor, wealth and resources (book: World’s Wasted Wealth, II — see sample chapter).
Naturally, those who benefit from the current system may be hostile to such changes, especially if it may mean they might lose out.
This is a clear case of inter-related issues: the health of the environment is strongly tried to our economic choices (i.e. how we use resources), but addressing core short-comings in our economic systems is a crucial political challenge.
A biosphere designed for the 1967 World Expedition on St Helen's Island in Montreal, QuebecWIKIMEDIA, RENE EHRHARDTRecall the biosphere experiments from the 1990s, the most famous of which was perhaps Biosphere II. Philanthropist Ed Bass provided $200 million to construct the largest completely enclosed ecosystem ever created. Biologists and engineers spent 4 years designing and landscaping Biosphere II to have all of the systems needed to sustain life: agriculture for food production, rainforests to regulate the artificial atmosphere, even a mini-ocean to control temperature. On September 26th, 1991, eight researchers were locked inside the airtight, closed environment. Almost immediately after, levels of CO2 inside Biosphere II began to skyrocket and fluctuate wildly. Levels of oxygen began a precipitous decline from 21 percent to a dangerously low 14 percent. Most of the vertebrate species and all of the pollinating insects died within a year, and pests like cockroaches and ants boomed. The “mission” was ultimately terminated after just 24 months when it became clear that human health and welfare could no longer be guaranteed.
Whether one views Biosphere II as a monumental failure or magnificent learning experience, it was a sobering reminder that we still don’t have even a basic understanding of how to design a biological system that can sustain human life. Obviously, this means we’re not yet in a position to put a human colony on Mars. More importantly, it means we don’t yet understand how to live sustainably on our own planet. Earth, like Biosphere II, is a materially closed ecosystem. Nothing is lost, and nothing is gained. And nearly everything that is required to sustain human life is made available by other living organisms. Without photosynthetic bacteria and plants, there would be no breathable atmosphere. Without microbes, fungi, and animals, there would be no soil to grow crops, and nothing to pollinate those crops if they did exist. Without these essential players in our planet’s global ecosystem, the oceans would have no fish, and forests would have no wood. There would be no fossil fuel, no renewable biofuel, and even if we had fuel to burn, there would be nothing to clean the pollutants from combustion out of the water we drink or the air we breathe.
Nature has provided the goods and services needed to sustain human life for so long that most people take them for granted. But growing evidence suggests that Earth’s natural capital, and the biological diversity that underpins these goods and services, are being eroded. Some even claim that Earth is in the midst of a 6th mass extinction. Though this claim is a bit misleading—over the past 400 years, we’ve lost 1-13 percent of known species, compared with 75 percent or more lost during the five prior mass extinctions—the concern is not about the total number of species that have already gone extinct. Rather, the concern is how quickly species are being lost—and we are losing species faster than ever. In the fossil record, we normally see one species per thousand go extinct every millennia. Rates of extinction in the past century have increased to 100 to 1,000 times faster than normal. Add to this the abnormally high number of threatened and endangered species, and projections suggest we could truly reach the point of a mass extinction in 240-540 years.
So what? Beyond conserving species for the sake of biodiversity, does it matter if a large fraction of Earth’s life forms cease to exist in the next few centuries? Biologists have spent much of the past 20 years addressing this very question, and they have now run more than 500 experiments in which they have simulated the extinction of species in nearly every major biome on Earth. Results have been surprisingly consistent. Whenever ecosystems lose species, they generally become less efficient and less stable. Less diverse communities are not as good at capturing biologically essential resources like sunlight, water, and nutrients. In turn, the growth of plants slows, as does the animals that eat the plants. Less diverse systems are also less efficient at decomposing waste products and recycling essential nutrients; thus, they become more “leaky.” Less diverse ecosystems tend to be more variable through time, which causes them to exhibit greater fluctuations and higher levels of unpredictability. Collectively, these things cause ecosystems with fewer species to be less efficient and reliable at providing society with many fundamentally important goods and services, like the provision of crops and fisheries, control of many types of pest and disease, production of wood, and the ability to remove carbon from the atmosphere, to name a few.
On the other hand, it’s important to acknowledge that biodiversity is not always “good” for society. Biodiversity is, after all, the very reason we have antibiotic resistance. There is also no evidence to suggest we must conserve all species to maintain ecosystem services. Species have come and gone throughout Earth’s history, and yet, higher life continues to exist. Furthermore, humans have shown a unique ability to develop low diversity systems through domestication and bioengineering that can provide select products and services quite well.
Even so, it is naive and dangerous to ignore our fundamental dependence on other life forms. It is clear that the loss of certain key species can have strong impacts on biological processes, and while it is sometimes obvious which species play the biggest roles, other times we don’t realize their importance until they are gone. It is also naive and dangerous to think we can bioengineer a planet that will be able sustain the growing human population. If we were unable to build a life-support system that could support 8 people in Biosphere II, who believes we can engineer a planet able to support 9 billion?
We are taking the very genes and species that have made Earth an inhabitable and biologically productive planet over the past 3.8 billion years, and we are lining them up on the edge of a cliff from which there is no return. If the ever growing human population is to continue to prosper, we must better appreciate how our own well-being is directly linked to the great variety of life that is the most striking feature of our planet.
Bradley J. Cardinale is an associate professor in the School of Natural Resources & Environment atthe University of Michigan, where he is director of the school's Conservation Ecology Program and teaches courses in conservation, restoration ecology, and ecosystem services. He is also an elected member of the International Council for Science's research program DIVERSITAS.