We pose three questions to Nathalie Olsen, resource economist at IUCN, about ecosystem evaluation and the recent publication she co-authored on Ecosystem evaluation in the mining sector .
Questions for Nathalie Olsen:
How can ecosystem valuation contribute towards biodiversity conservation?
The key drivers of biodiversity loss, including habitat loss, overexploitation, and pollution, are associated with economic activity that fails to recognize its impacts on biodiversity and ecosystem services. This is common as often biodiversity and ecosystem services are public goods and are used as if they were free –the costs and benefits of damage do not enter into decision-making. Ecosystem valuation is a tool which allows us to quantify in bio-physical terms and then in monetary terms all significant impacts. Valuation can provide estimates of the economic value associated with changes to ecosystem services, e.g. hydrological regulation functions of watersheds being deforested, which can be integrated into the quantitative analysis on which most decisions are based. In short, ecosystem valuation can help to estimate and internalize the costs of environmental damage, to make transparent the causes and effects, to identify who is responsible, and to thereby reduce the amount of damage through improved accountability, management and accounting.
How much attention has ecosystem valuation as a concept gained within the private sector/What do you see as the future for ecosystem valuation?
Businesses are faced with significant risks and opportunities due to their dependence and impacts on biodiversity and ecosystem services. Moreover, they are under increasing pressure to demonstrate environmental responsibility. Businesses need guidance and methods to improve measurement and reporting on their impacts on biodiversity and ecosystem services and here are an increasing number of tools and methodologies available to measure and value ecosystem impacts. IUCN was involved in TEEB and the WBCSD development of a Guide for Corporate Ecosystem Valuation, which shows how businesses can apply ecosystem valuation to better manage risks, to assess liability and compensation demands, and to seize opportunities, such as saving costs or capturing new revenue streams. Our valuation work with Rio Tinto and Holcim has helped these companies to better identify and quantify their ecosystem impacts, to inform decisions about ecosystem restoration and investments in conservation, and to demonstrate the values associated with corporate investments in ecosystems to consumers, stakeholders and board members alike. Sector leaders seeking sustainability will be increasingly adopting this type of tool to include the costs and benefits to nature and to society in their business decisions, as businesses are part of both.
What were the main issues in exploring the ecosystem valuation of the Rio Tinto operation QIT Madagascar Minerals (QMM)?
Some of IUCN’s work with Rio Tinto has focused on demonstrating the economic value of ecosystem services. Economic values are a subset of a large number of different types of values that exist for ecosystems. Our ability to quantify and monetize values associated with ecosystems differs however, and it is those ecosystem services that are most easily measured, e.g. carbon, that may appear to be the most valuable. This is often not the case, as wildlife habitat and hydrological regulation are extremely important, but methodologies and empirical data are less developed and or low income levels locally limit the ability to pay for certain services. Our work with Rio Tinto in Madagascar suggested that carbon values are the largest and the most easy to capture via some sort of financial mechanism, e.g. REDD+. However, perhaps more importantly, this work indicates the need to make progress on quantifying and monetizing changes to biodiversity that result from businesses’ actions, in order to inform decisions about whether to allow land use conversion and, if so, what is fair and effective compensation.
More about Nathalie Olsen
Nathalie is a resource economist at IUCN. Since joining IUCN three years ago the focus of her work has been to encourage the use of ecosystem valuation to better inform decision-making in the private and public sectors. She also works more broadly on using economic analysis and tools, including market-based instruments, to make incentives more supportive of conservation and sustainable use. Nathalie manages the IUCN Carbon Fund and has some experience in environmental finance issues, particularly related to the voluntary carbon market and forest carbon projects with biodiversity benefits.