Investing in ecosystem services Pays

Investing in ecosystem services Pays

Investing in ecosystem services Pays Nature as the basis Symposium at Opening of Academic Year, 6 Sept 2010 Dolf de Groot Environmental Systems Analysis Group (ESA) SELS Research Program on Ecosystem & Landscape Services (ism Leon Braat (Alterra) + Huib Silvis (LEI)

Biol. control Nature as the basis. Recreation Habitat & nursery C-seq Pollination Air quality Timber Inspiration Medicins & models Food Water

How measure economic (monetary) value? 1. Market Price 2. Shadow price Eco tourism Amenity value Air purification Mitigation Cost: 2$/minute?? 3. Questionnaire based Oxygen Bar Tokyo city WTP for protecting Humpback Whales: 57 $/pp/year (1993) Coastal Protection Avoided damage Cost: 36 million $ (Maledives-2004). Replacement cost 10 million $/km

Total (Economic) Value of Ecosystems Only about 20% in the market (some provisioning & recreation services) -> live at expense of livelihood & health of poor people and future generations Costanza, d Arge, de Groot, Farber, Grasso, Hannon, Limburg, Naeem, O`Neil, Raskin, Sutton and Van den Belt, Nature (1997) Total: 33 trillion? (Coast.)Wetlands 10.000 30.000 $/ha/y Forests (tropical) 1.000 4.000 $/ha/y Drylands 200 300 $/ha/y (Costanza et al, 1997, WWF, 2002, etc) Total Value of the World s Ecosystem Services and Natural Capital

Priceless but Valuable..?? Water pollution cost Flooding cost Lively- Hood loss Cost of ecosystem loss >> 250 billion US$ per year (Science, 2002) (damage-costs, replacement & restoration costs, etc )[2-5% GDP] Air pollution cost Crop loss > 14% of GDP 2050 (COPI) + 1-2 trillion US$ Perverse Subsidies.. Erosion cost

The Economics of Ecosystems and Biodiversity (TEEB) 2008-2010 Society must urgently replace its defective economic compass so that it does not jeopardize human well-being and planetary health through the under-valuation and consequent loss of ecosystems and biodiversity. Pavan Sukhdev, TEEB Study Leader 29.5.2008, CBD COP9 www.teebweb.org Managing Dir. & Head Global Market, Deutsche Bank, India

TEEB Phase 2 Final Reports Sep. 2009 - June 2010 www.teebweb.org CBD COP 10, October 2010 D0 D1 D2 D3 D4 Science & Economics Foundations, Policy Costs & Costs of Inaction Policy Evaluation for Policy-Makers Decision Support for Administrators Business Risks & Opportunities Consumer Ownership

Why don t we invest (more)? * Value of most benefits of ecosystem services is underestimated because they are not captured in conventional market economics ( free services) * Lack of data -> trade-off decisions are based on incomplete information * Wrong (perverse) taxes *Market failures: & subsidies externalities are stimulate ecosystem loss not accounted for (eg. costs of pollution, deforestation) (eg. fishery, shrimp farms,etc )

Be honest about trade-offs between conservation/sust. use & conversion Light-brown = sustainably managed Dark-brown = converted 3,6x 3,8 x The total economic value of managing ecosystems more sustainably is often higher than the value associated with conversion Wetland Mangroves NPV/ha farming Shrimp farm Trad.Forest use logging Balmford et al (2002, Science Vol 297) Economic reasons for conserving wild nature

Benefit Cost Analysis of Nature Cons. (& EHS) Veerman erkent economische waarde natuur (Natuurnieuws 10 dec. 2004) Natuur en Landschap op Waarde Geschat Min. LNV Task Force Economie (2006) *) Investeren in het Nederlandse Landschap: opbrengst geluk en euro s (LNV, 2007) Verbeteren landschap is winstgevend Van onze verslaggeefster Map Oberndorff DEN HAAG - Een investering van acht miljard euro in het landschap levert de maatschappij een verbetering van de leefkwaliteit en 25 miljard euro op. Dat blijkt uit een onderzoek(* in opdracht van het ministerie van Landbouw, dat dinsdag is aangeboden aan landbouwminister Gerda Verburg.

Hoeksche Waard: Investering: 25-113 miljoen / baten 51-219 milioen [1 : 2] Natural pest control by green infrastructure (VROM, 2007) Hoeksche Waard (Geertsema et al 2006)

Nature is priceless Every dollar invested... saves anywhere between 7,5 and 200 US$ in damage & repair costs TheEconomist (23 April 2005) But investing in conservation (& restoration) pays! But How??

How turn value into real money? - Reward/Pay providers of free services - Punish environmental damage 1. Government run finance mechanisms (public incentives: subsidies/taxes) - Agri-environmental schemes [ farming for nature ] - Conservation payments (e.g. watershed-prot. [NYC] / REDD (forest) - Etc. (eg. tax-incentives for green investments) 2. Government supported market creation - Carbon offset / credits [145 billion$ 2009 / 800 US$/ha/y Ecosystem Market Place] - Other eco-assets (eg. salinity credits, wetland banking) 3. Self organ. Private market arrangements [PES payment for use of ES] - Direct: (a) user fees (eg. resources (water), eco-tourism, bioprospecting) (b) biorights (compensate local people for not damaging ES, i.e cons.easem.) - Ecolabelling: CAP (40 billion US$ 2008/2,5% of total market) FSC: 5 billion, Fair Trade, etc) 4. Voluntary private, non-market funding mechanisms - Donations, adoption & friend-schemes, lotteries, corporate SR-payments, etc)

Emerging Markets (TEEB for Business, 2010) Certified Agricultural Products (organic etc.) [ wild foods ] Certified forest products (eg. FSC, MSC, PEFC) Bio-carbon/forest offsets (eg. CDM, VCS, REDD+ Payments for water-related ES (gov. & private) [+ air purif/fine dust] Biodiv. Offsets [mitigation banking] Bio-prospecting contracts [pharma] Private land trusts/cons. easements [ landschapsveilingen ] 5 billion 8 billion 2008 40 billion (2,5% of global food market) 5 billion model for improving scotch tape and post-its 21 million (2006) 3,5 billion 30 million (in USA alone) In US$/year Estimated 2020 210 billion 15 billion 10 billion (500x) 8 billion 110 billion 100 million 20 billion Other: Bionics /pest control/etc.????????? (eco-tourism)

Wageningen Expertise on Ecosystem Services hard to tell. WUR Mission: Exploring the potential of nature to improve quality of life Hundreds of projects & researchers related to ES Opvang Fijnstof Natuurgebied bij Kinderdijk bron natuurlijke vijanden van de tomaten-mineermot WUR-Glastuinbouw (WUR-news, 4 augustus 2010) Global value natural pestcontrol: 400 miljard * (van Lenteren, Resource 24 juni 2010) * = replacement value van pesticiden Groen bespaart ook geld (Alterra, juli 2010) (kees.hendriks@wur.nl) et al. Natuur voor Iedereen: participeren, investeren en profiteren Wat natuur de mens biedt [tussenrapportage Natuurverkenning 2011] (Oostenbrugge/Melman) Bestellen: reports@pbl.nl

Waterpark het Lankheet: how to pay for ecosystem services? 2) Who are the users / beneficiaries? Recreational use Energy companies Biomass 1) What services? Water storage Waterboard Water purification 3) How (make them) pay?

Nationaal landschap Groene Woud Natuur How combine / optimise Landscape services? wonen Recreatie opvang fijnstof Lokale Producten Waterretentie

Speerpunt Ecosystem & landscape Services (SELS) SELS Approach and Themes Vragen vanuit beleid en maatschappij (5) Financing Mechanisms Management instruments Ecosystem & Landscape Properties (1) Ecosystem /Landscap Functions (+ Goods & Services) (4) Plan-alternatives & Design -Scenario development -Spatial analysis (& mapping) (2) Values (ecological, cultural, & economic) (3) Trade-off analysis (optimisation & costbenefit analysis) 1. Quantification & mapping of E&L services 2. Valuation of E&L services 3. Trade-offs analysis & DSS 4. Integrated planning, management &design 5. Development of innovative financing instruments 2006-2010 On average 10-15 projects (co)funded/year Budget approx 600.000 /y SELS: www.ecosystemservices.nl

(inter)national context & network(s) (+further information) Science government business ngo s public awareness Nat. SELS/WUR (IvM, Nijmegen, etc) DHV, Triple E, KLM, etc WNF, IUCN-Nl, ECNC Natuurmonumenten Natuurverkenning 2011 (PBL/WUR) Task Force Biodiversiteit (www.taskforcebiodiversiteit.nl) Betalen voor Biodiversiteit /werkgroep Econ. Instrumenten European Business & Biodiv. Platform (//ec.europa.eu/environment/biodiversity/business) Internat OECD-Handbook (markets for Biodiv) IUCN Int. (Report July 2010) Trucost (business dialogue/advice) Millennium Ecosystem Assessment www.maweb.org (2001 2005) TEEB (www.teebweb.org) 2008-2010 -ESA (WUR) -Portland (USA) www.es-partnership.org //ipbes.net SELS: www.ecosystemservices.nl

Questions / Suggestions? How to change public payments for biodiversity and ecosystem services in Europe into market driven payments? Herbert Diemont TEEB for Business - recommendations The accounting profession and financial reporting bodies.. provide standards and metrics for audit of B&ES impacts [i.e. take externalities into account] Governments are essential in providing a fiscal (enabling) environment (removing harmful subsidies, tax credits for conservation investments, trading schemes, etc)

TEEB for Business Recommendations (2010) 1. Identify impacts and dependencies of business of biodiv & ecosystem services (BES) 2. Assess business risks & opportunities [-> economic valuation of BES] 3. Develop BES information systems [-> performance indicators & reporting*] 4. Avoid, minimize & mitigate BES risks [no-net-loss / offsets [eg. C-credit market] 5. Grasp emerging BES business opportunities [ Green Markets -> PP-partnerships] 6. Integrate BES in wider Corporate Social Responsibility Initiatives [incl poverty allev.] 7. Improve BES guidance and policy [voluntary guidelines [LfN-letter]# * The accounting profession and financial reporting bodies.. provide standards and metrics for audit of B&ES impacts [i.e. take externalities into account] # Governments are essential in providing a fiscal (enabling) environment (removing harmful subsidies, tax credits for conservation investments, trading schemes, etc) -> adjust SEEA / Green GDP => Increase awareness.

How achieve this? 1. Need more and better data [invest in research (SELS) & collaboration (eg SENSE) 2. Need for sharing data and make it accessible networks (ESP) and Databases (TEEB) 3. Increase outreach/visibility and awareness -On Ecosystem Services [the question!?] -On Value of ES [conservation still seen as a cost ] SELS/ESP congres 2011

What are ecosystem services?? Probably an organisation that provides good shelter/protection for every form of organism Life support system Our living space (house) Is it the garbage man? Controlling & managing of ecosystems & landscapes New term for forest ranger The functions of nature meaningful to people

Problem: conservation is still seen as a cost. Functioning network of Protected Areas (15% land, 30% sea) would cost 45-50 billion US$/year (Balmford et al., 2002) 35 billion $ on fisheries subsidies, >50 billion $ on cigarettes However, the benefits of conservation far outweigh the cost: Globally at least 4,5 trillion (= 100x the costs) -direct use (eg. recreation, resources, etc), -indirect use (mainly regulating services) -non-use (money spend / donated for conservation). Tropical forests Management costs :less than 5$/ha/y, Benefits at least 2.500 US$/ha/y (= 500x) Thus: money spend on conservation ( ecological infrastructure ) should be seen as investment (just like roads, etc)