Saturday, 11 August 2012

Nature Services - a Cool $33 Trillion Worth!


The 1997 study of the value of services that Nature or the Ecosystem provides us was estimated to be worth a minimum of $33,000 billion!  Global GNP was $18,000 billion then. 
The estimates only included renewable ecosystem services, excluding non-renewable fuels & minerals, and the atmosphere.

What are we talking about? 

One way to think about it is to calculate what it would cost to replace the goods and services that nature provides us.  In fact, zero natural capital implies zero human welfare - it is not possible to totally substitute ecosystem services.  Their value is infinite.   

Again, what are we talking about?  Let me give some examples:

Pollination of crops by bees is required for 15-30% of US food production. 

In the drainage basin of Yangtze River, the annual economic benefits of maintaining forests for flood control and power services are estimated to be 3 times than harvesting them once for timber.  China now pays loggers not to cut trees but plant new ones.

Nature provides, we think free of charge, sea food, crops, fresh water, energy (hydro, biomass fuels), climate regulation, waste decomposition, pest and disease control, purification of water and air, nutrient dispersion and cycling... etc.  The list goes on and on.

So, what is the problem?  Why are we talking about it now?

The problem is that most of our decision making does not take into account the effect of our decisions on the health of the ecosystem services.  It seems to have mattered little in the past when the population and pressures on the ecosystem were small, but now the stresses created by humans are such that unless we start to give proper consideration to restoring the health and wellbeing of the ecosystem in our decision making processes then future human welfare may suffer in a big way.

In a proper market, ecosystem services must be valued and paid for.  The price of goods that use ecosystem services directly or indirectly would then be much greater.  For example, the true cost of burning oil, including repair to the environment, is calculated to be about $15 per gallon but in USA they pay $4 per gallon.  Cheap Energy has caused serious damage to the ecosystem.

Some parts of the ecosystem have already passed critical thresholds or tipping points and others may do so in future.  This will impact adversely on human welfare - already it is reckoned that since 1970, even though global GNP has gone up, human welfare index has not.

We shall look at the ecosystem stresses annd what we can do about it in the next blog.
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