The committee meant that the trees felled for an infrastructure project could be far more in value than the project itself. The idea that nature must be valued in economic terms for its better conservation and use has been around for a while and has become a contentious issue.
What is the total dollar value of nature?
If you add up all the benefits that we draw from natural resources, the total value of these benefits would be at least $125 trillion every year. That’s what a World Wildlife Fund (WWF) study, Living Planet Index 2018, had found. For this assessment, the WWF used a framework developed by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) called Nature’s Contribution to People or NCP. According to Sir Robert Watson, the Chair of IPBES, the framework demonstrated that besides providing essential goods and services, nature also has rich social, cultural, spiritual and religious significance – which needs to be valued in policymaking.
The WWF study found that the economic value of natural land-based assets in the Americas stood at more than $24 trillion per year, which is roughly equivalent to the region’s annual GDP. It also found that the Great Barrier Reef made a contribution of $ 5.7 billion a year to the Australian economy and supported 69,000 jobs.
The WWF says we need to look at the value of nature in economic and social terms to help us better understand the full implications of the choices we make. “Because nature is free, we often take it for granted and overexploit it. We clear forests, overfish oceans, pollute rivers and build over wetlands without taking account of the impact this will have. By not taking into account the benefits we get from nature, we create huge social and economic costs for ourselves,” it says.
Why the price tag?
All economic activity, from agriculture to manufacturing to construction, happens at the expense of nature. Since nature is generally believed to provide its services for free, we tend to underestimate the benefits we draw from nature for economic growth. While all other economic activity is quantified, the natural resources the economic activity draws on are never quantified. which means we do not know precisely how much benefit we draw from nature and the exact loss of biodiversity as a result of our economic activity. We account for matters only when they figure in national accounting or on balance sheets. Whatever goes without exact monetary value does not figure into our accounting in any meaningful way. It is believed that putting an exact price tag on services that we derive from nature will result in governments as well as businesses becoming more careful in the use of environmental resources and taking more precise action to save the environment.
The problem with the price tag
However, the idea of “nature positive economy”, which involves valuing natural resources monetarily, has generated a lot of debate. Many think putting a price tag on nature may not be as beneficial as it seems.
As countries met in Montreal for the Cop15 talks on biological diversity last year, 119 scientists and other experts published an open letter, warning that the monetary valuation of nature’s ecological functions could give a dangerous and misleading illusion of substitutability between critical ecosystemic functions, where one assumes incorrectly that as long as the total monetary value remains stable, nature is in good shape.
“In reality, most valuation models only value a few main ecological functions and ignore the rest as well as their interdependences,” the experts wrote in the open letter. “Comprehensive modelling would require a complete scientific knowledge that we do not possess and would be too complicated and too costly. It has also been documented that the monetary valuation methodologies being used are weak and vulnerable to many biases, and provide at best lower bounds of monetary values8 . As a result, the monetary values being produced do not represent the value of nature’s ecological functions, not even a proxy. Yet misleading figures are not better than nothing but worse than nothing, as they can lead to wrong policy decisions with irreversible consequences.”
The experts said that the “nature positive” agenda promotes biodiversity offsetting which is based on the assumption that markets can be a force for good.
“Behind its cheerful and vague name, the nature positive economy agenda promotes in our view the financialization of nature’s destruction, via a monetary valuation of ecosystems, biodiversity offsetting and diverting the conversation away from the need to curb biodiversity destruction and towards “sustainable” finance regulation,” the experts said.