I was in a meeting recently with a mix of government and NGO representatives. The meeting was organized by WWF to share some economic analysis they had conducted of Fiji’s Great Sea Reef. As the conversation turned to why the economic information was useful and how it would be used, Sele Tagivuni, an older gentleman who had been with the Fiji Ministry of Environment for many years recounted an interaction he had with a senior planning officer. “Birds. Why are you always telling me about birds?” he said to Sele. “Are you planning to have a Christmas lovo [feast]?”
Conservation advocacy that is focused upon endangered species and biodiversity will only resonate with individuals who value those things. National planning and development departments, which influence many of the decisions that impact natural resources, are focused upon improving the wellbeing of people, not plants and animals. And well they should be. Democratic societies choose individuals whom they believe will improve their lives. Even in non-democratic systems, run by the most selfish despots, there is a general belief that leaders want to improve the condition of their country. And often this condition is measured by financial wealth or productivity – GDP.
Gross Domestic Product is a measure of the productive activities occurring within a country. National accountants calculate GDP by summing up every new good or service that is produced or provided, and sold, exported, or consumed. Planners and leaders use this measure as a barometer of the status of the country, how it compares to other countries, and how it compares to last year. For national leaders or decision makers it is compelling to have a simple metric of success: GDP going up? Things are getting better. Aside from socio-economic critiques that GDP does not measure the distribution of production and consumption, and spiritual and philosophical critiques that GDP is not a great indicator of health or happiness, natural resource economists point out that GDP calculations have another fatal flaw: they do not account for depreciation of natural capital.
Globally, efforts to quantify and account for nature’s contribution to economies and human wellbeing have been increasing for the past 25 years. The first edition of Natural Capitalism (Hawken, Lovins, & Lovins) published in1999 formalized the concept that the natural functions of ecosystems underpin many human activities and that their contribution to human activities should be accounted for even if they are provided “for free”. Techniques to quantify and value the ways in which nature supports market and non-market human activities continue to become more sophisticated and more accurate. Meanwhile, economic development marches on. We laud China’s ability to lift 200 million people out of poverty in the past decade, meeting and exceeding the millennium development goal of halving the number of people living in poverty by 2015. In contrast to this achievement stands the fact that, despite decades of nature conservation efforts, environmental degradation, the extinction of species and destruction of valuable natural resources, persists.
Why, we must ask ourselves, despite decades of conservation efforts, does nature continue to be unsustainably exploited?
Take for example stocks of tuna in the Western Pacific Ocean. Countries of this region have, until recently, been allowing and encouraging fishing fleets to harvest more and more tuna each year. In the short term, this makes sense. Small Pacific Island countries have few opportunities to compete in the global economy. They struggle to increase household incomes and generate revenue for national services. Selling their tuna is a natural effort of leaders trying to improve conditions for their population. But this resource is not limitless. Stocks of some tuna species, bigeye tuna in particular, are collapsing. That collapse does not appear on national balance sheets.
Although selling more fishing licenses means more revenue this year, depleting tuna stocks eventually leads to less revenue down the road. Fortunately, countries are beginning to recognize that although harvesting tuna means more revenue this year, leaving tuna in the ocean means opportunities for more revenue next year. The stock of tuna is their capital, and if it is managed conservatively, it can continue to yield a return year-after-year.
Countries are responding to this realization by banning together to limit the number of total licenses sold in the Western Pacific. They have signed on to a cooperation accord called the Parties of the Nauru Agreement (PNA), to create scarcity in the system and protect the tuna stocks. This simultaneously ensures sustainability of the stock of tuna, their asset, and increases the value of each license, their return. Few investments could so easily guarantee a dividend year-in, year-out, forever.
Inger Anderson, director general of IUCN, contends that “the world desperately needs a new financial system, one that recognizes nature’s enormous contribution to global economic growth and incorporates the full cost of generating wealth” (The Guardian, January 2015).
That new financial system accounts for the depreciation of natural capital. It does not fight against development, it simply internalizes the externalities, the un-priced costs of development, so that the impacts and trade-offs of development decisions are recognized from the onset. A number of initiatives have sprung up, such as The Economics of Ecosystems and Biodiversity (TEEB), the System of Environmental-Economic Accounting (SEEA), Wealth Accounting and the Value of Ecosystem Services (WAVES), aimed at encouraging valuation of ecosystem services and a shift towards recognition of nature as natural capital. Aichi Biodiversity target 2 from the UN Convention on Biological Diversity (CBD) is for countries to incorporate biodiversity values into national accounting by 2020.
Recently, sustainable development researchers have critisized these initiatives for coming up short. Laurans et al. 2013 argue that few ecosystem service valuations have been directly associated with policy change; Billé et al. 2012 contend that it has not been shown how valuation can and should be used.
This is where conservation organizations need to step up to the plate. Ecosystem service valuation and natural capital accounting are still mostly locked in the ivory tower, academically mature but not yet mainstreamed into national planning and policy making. Conservation organizations need to partner with national planners and even private sector developers and entrepreneurs to bring the natural capital initiatives into practice.
Of course limitations of this approach should be acknowledged. Not every ecosystem or species has quantifiable benefits, and if ecosystem services cannot be quantified, then it is difficult to integrate them into the national accounting framework. Conservation organizations should not rely on natural capital alone to save the environment. Furthermore, arguments for ecological connectivity, using the precautionary principle when ecosystem services are unknown, and even bio-centric intrinsic value arguments have had successes in designating protected areas and changing policy, despite no clear link to human well-being. To address the full breadth of environmental harms that threaten global sustainability, a range of approaches will be necessary. Natural capital accounting is just one approach, but it is one that has transformative potential.
Conservation organizations should recognize that countries will continue to work to improve the livelihoods of their residents and grow GDP. Conservation organizations should be willing to treat nature as natural capital because it transforms this paradigm and institutionalizes sustainability. Natural capital accounting alone cannot save every species, but it is a powerful tool that conservation organizations need to embrace.
By Jacob Salcone, Natural Resource Economist