Conservationists and corporations often do not see eye to eye
An environmentalist may argue that a rainforest should be protected for its inherent beauty, while a logging company executive might claim that its real worth lies in its cut timber.
With such a wide range of opinion, is it ever possible to reach a consensus on the economic value of a rainforest?
Yes, say 17 ecologists and economists in a new article published in the journal Science.
"We must make conservation profitable," says biologist Gretchen C. Daily, lead author of the July 21 Science report.
She maintains that time is running out for the planet, and those who want to save it must create economic incentives to do so.
"Some might say this is an act of desperation that is doomed to fail," she concedes -- an attempt to align almighty market forces with environmental conservation.
"But we'll never save the environment on the basis of charity alone," she adds. "We have decades of experience showing this. We need to create ways of rewarding people financially for protecting environmental assets."
Daily is director of the Tropical Research Program at Stanford's Center for Conservation Biology. Her Science co-authors from Stanford are Nobel laureate Kenneth J. Arrow, professor emeritus of economics; Paul R. Ehrlich, professor of biological sciences; and David Starrett, former chair of the Economics Department.
The authors also are affiliated with the Beijer Institute of the Royal Swedish Academy of Sciences.
"The world's ecosystems are capital assets," write the authors. "If properly managed, they yield a flow of vital services, including the production of goods (such as seafood and timber), life support processes (such as pollination and water purification) and life-fulfilling conditions (such as beauty and serenity).
"Unfortunately, relative to other forms of capital, ecosystems are poorly understood, scarcely monitored, and (in many cases) undergoing rapid degradation and depletion. Often the importance of ecosystem services is widely appreciated only upon their loss."
This is beginning to change, note the authors, particularly in Australia and Costa Rica.
The firm Earth Sanctuaries, Ltd. now is listed on the Australian Stock Exchange, making it one of the world's first conservation companies to go public.
The corporation, valued at $25 million, buys up land and restores native vegetation and wildlife, earning income from tourism, consulting and wildlife sales, according to the Science article.
"The firm lobbied for and won a change in accounting law so as to include rare native animals as assets," add the authors.
Meanwhile, they write, the Sydney Futures Exchange is positioning itself to be a global leader in the trading of ecosystem services such as "carbon credits."
For example, if a company agrees to purchase and protect an Australian forest, the Sydney Futures Exchange will calculate how much carbon dioxide gas the forest soaks up from the atmosphere, then give the company a UN-sanctioned carbon credit, which allows its factories to emit an equal amount of CO2 gas into the air.
"Costa Rica's leadership in these areas is also remarkable," says Daily, who has done extensive research in that Central American country.
Since 1997, the Costa Rican government has been paying local landowners for protection of watersheds, biodiversity and even scenic beauty.
"The payments, about $20 an acre per year, are financed in part by a tax on fossil fuels and are resulting in significant forest conservation and restoration," she writes.
"Worldwide," she adds, "ecosystems are being protected or restored to control floods, filter water, enhance soil fertility, stabilize climate, to offer human enjoyment and even to recycle orange peels. Such efforts are being rewarded with innovative financial mechanisms, whose scope and variety are expected to grow."
Daily points to New York City's 1996 decision to improve its drinking water by investing $1.5 billion to restore the Catskill mountains watershed, instead of spending more than $6 billion on new water treatment facilities.
"New York was able to put a price tag on the Catskill watershed -- part of its 'natural or ecosystem capital' that it needs to survive," she comments.
"Individuals and societies already assess the value of nature implicitly in their collective decision-making, too often treating ecosystem services as 'free,' " write Daily and her Science co-authors.
"Until recently, this was generally safe to do; relatively speaking, ecosystem capital was abundant, and the impacts of economic activity were minimal," they point out.
But now, warns Daily, "ecosystem capital is becoming scarce. We're running out, so ecologists are becoming more practical. We're teaming up with economists to create a new field that allows us to put an economic value on nature, and to integrate that value into our decision-making. There's more and more demand for this kind of information, as people realize the values that are being lost through the destruction of ecosystems. But there are a lot of things people value that can't readily be expressed in dollar terms. We need to use other metrics, and to move cautiously."
Daily and her fellow authors concede that coming up with a universally acceptable method for evaluating nature will be a challenge.
"Ecosystems are idiosyncratic," they write. "What holds true in one region may not apply well elsewhere."
Daily suggests four basic steps for calculating the economic value of an ecosystem. First, make a list of the goods and services from nature that we depend on to survive. Next, determine which goods and services are most threatened. Third, figure out how their loss will affect society -- not just in dollars but also in terms of human welfare. Finally, once the risks are determined, people at all levels of society should work together to create incentives for protecting critical elements of ecosystem capital.
"In a way, it's writing off certain species. If it benefits humanity directly, we'll save it. But what happens to the condors and the pandas?" asks Daily. "We're faced with hideous tradeoffs no matter how you look at it. What we're offering is a framework for thinking about these tradeoffs.
"As the population approaches 10 billion people, we'll continue to fight over smaller and smaller scraps of land and fewer resources," she notes. "Never before has society been faced with these kinds of challenges."
Daily can be contacted by e-mail at gdaily@leland.stanford.edu
-By Mark Shwartz-
Journal
Science