It Takes an Economist: Tallying Natural Capital

From the Archives: This post was originally published on July 5, 2011, on a platform called webdoc, which is no longer in operation. 

A little advice for governments, NGO’s social entrepreneurs and anyone else hoping to help the “bottom billion” live better lives: Unless and until ecosystems services are taken into account, all efforts at poverty reduction will fail.

That’s the blunt, sobering message banker Pavan Sukhdev delivered in an address to the London School of Economics last April:

"Half to 90% of the livelihood incomes of the poor…are actually coming to them from nature. So if you are careless about managing these resources, or indeed the access of the poor to those resources, then you are, in fact, cutting at the very root of the livelihoods of the poor."

Protecting what has been called natural capital—the services nature provides—can be as direct as safeguarding a watershed, or as abstract as defending a rainforest. The value of the forest extends far beyond its trees and atomospheric carbon-absorbing capabilities. Above the forest, an “aerial river” forms that cycles freshwater critical to the survival of subtropical grain belt farms downwind. 

Over a billion people in the developing world rely on fish as their main source of animal protein, so ailing oceans and faililng fisheries are at once a natural tragedy and a human calamity. Decades of industrial-scale ocean trawler-fishing, clear-cutting mangroves for shrimp farms and the loss of coral reefs from pollution, disease, a warming climate and acidifying oceans have left millions of people hungry and out of work.

Their options are limited. They cannot survive where they are and often have nowhere else to go. 

The  economic gains of such rapacious fishing and shrimp farming tend to be short-lived and, once government subsidies are figured in, a financial wash, or worse, for local and regional economies. 

GDP as a measure of economic health is simply too narrow and flawed a tool, says Sukhdev. A full accounting—one that includes ecosystems services in the mix—tells a very different story.

In other words, the books are as cooked as the climate.

Assigning a value to what has always been free is not easy, so the G8+5 commissioned TEEB, The Economics of Ecosystems and Biodiversity project, naming Sukdev, a Deutsch Bank veteran, as its Study Leader. Its mission: to describe, quantify and propose mechanisms for capturing the worth of nature’s largesse.

Over the last four years, TEEB, which is hosted by the United Nations Environmental Program, has produced a series of reports aimed at a key players: national and local policymakers, the business sector and private citizens through its Bank of Natural Capital website.

Connecting the dots between environmental and economic health is about shifting incentives—the “enabling conditions—into better balance.”The sheer waste from wrong-headed development schemes and business-as-usual practices is staggering,” notes Sukdev. 

Each year, the top 3,000 global companies use an estimated $2.2 trillion worth of ecosystems services. Add in private and public sector consumption and “…you end up with something like upwards of $6 trillion per annum in social costs imposed by business-as-usual. That’s like 1/10 of the global economy,” says Sukdhev.

Atlhough the economist strongly believes in policy-driven solutions, changing course quickly will require a strong buy-in from the private sector, which accounts for 70% of the global economy and nearly 80% of employment. It would be in their best interests. The “free” stuff is running out.

Ecosystems & Epidemiology

TEEB’s list of ecosystems services is a long one, from double-duty mangroves that serve as fish nurseries and storm protection and double-duty rainforests that soak up carbon and regulate local climate, to plant compounds with medical potential, waste water-filtering swamps and soil microorganisms essential for crops health

Pathogen containment is another, often overlooked, benefit.

According to a study published in the Journal of Emerging Infectious Diseases,deforestation in the Amazon rainforest has triggered an increase in malaria cases. Presented with acres upon acres of puddle-prone habitat in which to lay eggs, the malarial mosquito population did just that and their blood-sucking numbers exploded. The economy took a hit as well from people who were either too sick to work, or preoccupied with taking care of family members.

A warmer climate has also provied a boon for all sorts of insect vectors, including ticks. More survive through the winter and ranges have expanded. 

If you happen to be a moose in North America, this is potentially fatal news. In the old days, a single animal could easily pick up 30,000 “winter” ticks in the fall. But istead of falling off and dying in the snow come spring, ticks are landing on bare ground and surviving. Earlier thaws have also meant a longer tick breeding season. Now, some moose have been found with as many as 160,000 ticks. They literally are having the blood sucked right out them.

Back on the human medical beat, the tick that carries Lyme Disease also carriesbabesia and the Powassan virus and the incidence of all three diseases is on the rise. 

Babesia, a parasite causing an illness similar to malaria, is particularly worrisome because asymptomatic blood donors can contaminate the blood supply.

If that were not enough bad news, a single tick can deliver multiple pathogens, causing simultaneous illnesses, making diagnosis and treatment tricky.

Other strains of babesia affect cattle. In fact, babesiosis is among the most serious diseases threatening livestock all over the world and there is no vaccine.

Babesia was eradicated in the US during the 1940s, but veterinarians say it could easily stage a comeback. Ticks are starts to show resistance to the chemicals used to protect cows.The cost for managing for the first year of an outbreak is estimated $1.3 billion.

Just add it to the natural captial tally…

— J A. Ginsburg / @TrackerNews

RELATED: 

• Pavan Suhkdev’s website

• Global Climate Change and Infectious Diseases / NEJM, Emily K. Shuman, M.D.

• Deforestation and Malaria in Mâncio Lima County, Brazil / CDC, Sarah H. Olson, Ronald Gangnon, Guilherme Abbad Silveira, and Jonathan A. Patz

• Riders of the River / Texas Tick Riders (video)