Underpricing 'nature's bounty' costs trillions
People often talk about "nature's bounty," especially during this harvest month. But how much is it really worth?
Vancouver Sun
10/20/2010
Well, humanity's failure to figure out and charge a fair price for Earth's natural assets costs trillions in the long run, according to a new UN report released today. And Canada's share of that loss is substantial.
It's much more than just the obvious forest products, fish catches and that sort of thing. In addition to these -- the report calls them provisioning services -- it identifies:
- Regulating services such as filtration of pollutants by wetlands, climate regulation through carbon storage, water cycling, pollination and protection from disasters.
- Cultural services such as recreation areas and spiritual and esthetic retreats.
- Supporting services such as soil formation, photosynthesis and nutrient cycling.
A number of factors make it difficult to put a value on these things, let along to collect an appropriate payment from those who use up such resources or who monopolize the benefits. But the numbers at stake are huge.
The report estimates, for example, that 3,000 large companies in the world are responsible for "externalities" -- that is, net costs foisted onto the public -- of $2 trillion.
These companies got this astounding benefit -- seven per cent of their combined revenues, or as much as a third of their profits -- by not paying for greenhouse-gas emissions, overuse or pollution of water, air emissions, waste and unsustainable use of fish or timber.
How do they get away with it, year after year and in jurisdiction after jurisdiction?
Part of the explanation is the usual dynamics that come into play when property is held in common. The benefits in any specific case are sharply concentrated for the lucky few who lobby like mad to hold onto them; the costs are broadly dispersed among the many, who tend not to notice or to be preoccupied with other priorities.
Also, the report notes, the losers are most frequently the poor, who have little voice, and future generations, who have none at all. And citizens don't value every benefit equally, as we see in the dozens of different preservation-vs.-jobs debates that go on pretty well endlessly in B.C.
In Canada and other rich nations, public policy does tackle some of these problems. We routinely require developers to preserve and enhance some recreational amenities; forest harvesters to replant; miners to mitigate the damage they do and rehabilitate sites when the ore runs out.
But even though our governing and regulating agencies may do a better job now than in years gone by, they still tend to merely scratch the surface.
Take the global loss of forest land as just one example.
The net loss of forest -- mainly in the tropics, as loggers in temperate zones tend to replant after cutting -- has slowed from about 83,000 square kilometres a year in the 1990s to about 50,000 today. If this were cut in half by 2030, it would save 1.5-2.7 gigatons of CO2 emissions, a benefit it estimates to be worth $3.7 trillion.
"By far the greatest use of deforested land is for agriculture, a sector that generates substantial income which shows up clearly in national accounts and trade balances," the report notes. "By contrast, the multiple flows of value generated by standing forests tend to be in the form of public goods that in the past have not been valued in monetary terms or priced in markets."
Specifically, nature's "regulating services" -- moderating water flow, absorbing greenhouse gas and that sort of thing -- generally account for about two-thirds of a forest's value.
Politically, I think the report strikes a good balance. It does not attempt to vindicate the BANANA (Build Absolutely Nothing Anywhere Near Anyone) crowd who've never seen a tree they don't want to hug. Yet nor does it buy into the argument of many on the right who maintain every resource should be privatized in order to ensure it has a true market price.
But, it says, "better accounting of business impacts and dependence on biodiversity and eco-system services -- direct and indirect, positive and negative -- is essential to spur needed change in business investment and operations. . . .
"Companies do not clear-cut forests out of wanton destructiveness or stupidity. On the whole, they do so because market signals -- influenced by price, subsidies and state regulation, as well as land tenure and use rights -- make it a logical and profitable thing to do."
So the trick is to put a price on all the externalities that are now taken for granted, and put policies in place to ensure those who benefit pick up the tab.
