What exactly is the cost to society when one million hectares (8,861 sq. miles, an area roughly the size of Costa Rica) of Brazilian rainforest disappears?
The United Nations Environmental Program (UNEP) just released Mainstreaming the Economics of Nature, a report that aims to precisely answer that question.
The report highlights government and business development policies that consistently fails to value the true cost of natural resources depletion. The report makes an excellent case for biodiversity loss valuation in all governmental decision-making processes. The report also highlights the strong link that exists between ecological conservation and a society’s ability to meet the objectives of the Millennium Development Goals through poverty reduction. The principal reason being that in many countries the income of poor households is much more dependent on environmental resources through fishing, agriculture, or forestry, than in richer countries.
Following this week’s release, some groups have called for the establishment of a “green development mechanism” similar to the Kyoto Protocol’s “Clean Development Mechanism,” (CDM) as a tool that would effectively create a market for the environmental services provided by nature.
Read more news coverage in the Washington Post, Business Green, Environment News Services
View the full report: The Economics of Ecosystems and Biodiversity: Mainistreaming the Economics of Nature
For those interested in the valuation methodology put forward by The Economics of Ecosystems and Biodiversity (TEEB) study, make sure to check out an earlier report, entitled Ecological and Economic Foundation, where a chapter is dedicated to several accepted frameworks (i.e. market-price, cost-based, production-function approaches, etc).
Deforestation
An issue particularly near and dear to us here at the Charcoal Project is deforestation, and we were 
thrilled to see it form one of three large case studies demonstrating Ecosystem services approach to valuation put forward by TEEB. Over two thirds of the value of forests lies within “ecosystem services” and other non-marketed goods such as carbon storage, erosion prevention, pollution control, and water purification. However, common economic techniques currently only consider monetary gains via agricultural use or timber extraction, which ends up only containing a third of forest value. Important to note is that poorer segments of the population rely much more of the currently undervalued “ecosystem services,” and are also thus less able to deal with environmental losses.
Previous research has found that avoiding deforestation is an economically attractive option due to the fact that it is among the cheapest ways of reducing emissions, in terms of dollars per ton of carbon, and Mexico has run a program since 2003 that pays landowners for preserving forest land and forgo its usage for agriculture. In seven years of operation, over 3,000 land owners enrolled in the program, and the scheme is estimated to have halved the country’s deforestation rate, or saved 1,800 square km of forest and cutting CO2 emissions by 3.2 million tones.
The UN Framework Convention on Climate Change is currently developing a system, entitled Reduce Emissions from Deforestation and Forest Degradation (REDD-Plus) to help generate revenues for the conservation and sustainable use of forests. Studies suggest that REDD would compete favorably with other land uses, while at the same time potentially bringing much needed income to remote rural communities.
We understand that ecosystem valuation is an incredibly difficult, fluid, and politically problem-wrought, particularly because the private benefits of its absence go to the “haves,” while public losses are shouldered disproportionately by the “have-nots.” We’d love to hear you thoughts, which may be left in the comments section.
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