Transcript REBEL – Review of Economics of Biodiversity Loss

The Economics of Ecosystems and Biodiversity
(TEEB)
London, 5th May
Pavan Sukhdev
Study Leader, TEEB, &
Director, UNEP Green Economy Initiative
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How Serious is the Problem Globally ?
2
Level of Biodiversity in the World in 2000
(OECD baseline, Globio-3 model, “MSA’ indicator)
Remaining MSA in %
Source: Ben ten Brink (MNP) presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium.
3
Level of Biodiversity in the World in 2050
“Business as Usual” Scenario of the future
Remaining MSA in %
 MSA loss from 72% to 61%
 Natural Areas decline by 7.5 Million Sq. Km.
Source: Ben ten Brink (MNP) presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium.
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What were our key conclusions from Phase I ?
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TEEB – Interim Report
Three Key Messages
Economic Size &
Welfare Impact of
Losses is huge
Strong link with
Poverty & risk of
MDG’s failure
Discount rates
are ethical choices
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The problem
Nature‘s
Interactions with Humanity
Money : today‘s Yardstick
Photo: C.Neßhöver, UFZ
$$$
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Losses in ‘Present Value’ terms…
(COPI study, May 2008, TEEB)
A : 50-year impact of inaction
or ‘business as usual’
Welfare losses equivalent
to 7 % of GDP, horizon 2050
B : Natural Capital impact
Natural Capital Lost : Annually
EUR 1.35 x 1012 to 3.10 x 1012
(@ 4%
Discount Rate)
(@ 1%
Discount Rate)
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How Serious is the Problem Globally ?
…in Economic & Human Terms ?
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TEEB : Global Loss of Fisheries…
Human Welfare Impact
 Open Access & Perverse
Subsidies are key drivers of
the loss of fisheries
 Half of wild marine fisheries
are fully exploited, with a
further quarter already overexploited
 at risk : $ 80-100 billion
income from the sector
 at risk : est. 27 million jobs
We are fishing down the food web
to ever smaller species…
 but most important of all…..
at risk : Health … over a billion rely on fish as their main or sole
source of animal protein, especially in developing countries.
Source: Ben ten Brink (MNP) presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6
March 2008, Brussels, Belgium. Original source: Pauly
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Ecosystem Losses & Links to MDG’s
Haiti Example : MDG # 1, 4, 5, 8…
HAITI
DOMINICAN
REPUBLIC
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The Discounting Issue…
… A Question of Ethics ?
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Three Hidden Stories of “Discounting”
Revealed
1. Declining Growth Paths in per-capita flow of nature’s services …. imply
that discount rates should be negative
2. Marginal Utility of $1 to the Rich vs Poor …. is too different to merit the
same discounting treatment
3. Inter-generational Equity…….following current norms means
valuing nature’s utility to your grandchild at one-seventh of your own
Most of the 29 valuation studies
in our meta-study of forest valuations
use discount rates between 3%-5%
Present
Cash flow 50 Annual
value of the
years in the discount
future cash
future
rate
flow
1,000,000
4%
140,713
1,000,000
2%
371,528
1,000,000
1%
608,039
1,000,000
0%
1,000,000
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How does one capture the value of nature ?
What can we do NOW ?
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TEEB – Interim Report
“From Economics to Policies”
Rethink todays
subsidies to meet
tomorrow’s priorities
Reward unrecognized
benefits, penalize
Uncaptured costs
Share the benefits of
conservation
Measure what
we Manage !
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TEEB – Interim Report
“From Economics to Policies”
Rethink todays
subsidies to meet
tomorrow’s priorities
Reward unrecognized
benefits, penalize
Uncaptured costs
Share the benefits of
conservation
Measure what
we Manage !
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TEEB “Interim Report” Examples
Rewarding Unrecognized Benefits
Costa Rican PES : Payments for Environmental Services are virtually a
national strategy for forest and biodiversity conservation and sustainable
development
 Panama Canal : Insurance firms and shipping companies are financing
a 25-year project to reforest the water catchment of the canal to restore
freshwater flow to its locks… the fear of loss due to closures of the Canal had
been making shipping insurance premiums mount
 Guyana : A Private Equity firm recently bought the rights to environmental
services from a 370,000 hectare rainforest reserve in Guyana anticipating that its
services (water storage, biodiversity maintenance, rainfall regulation, etc) will
gain value. Revenues will be shared 80% with the local community.
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Q : What will TEEB Phase II be about ?
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1-Word Summary
of TEEB Phase II
“Mainstreaming”
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TEEB – Final Report
Sep 2009, June 2010
Science & Economics
Foundations, Policy
Costs, & Costs of Inaction
Policy Evaluation
for Policy-Makers
Decision Support
for Administrators
Business Risks
& Opportunities
Consumer
Ownership
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Can “PA Conservation” be an “Opportunity” ?
Measures
Revenues
(USD Bio)
Capital
Employed
(USD Bio)
People
Employed
Automobiles4
$ 1,882 Bio
$2,217 Bio
4.4 Mio
Steel4
$ 530 Bio
$ 588 Bio
4.5 Mio
IT Services &
4
Software
$ 942 Bio
$ 179 Bio
5.7 Mio
Protected Area
Conservation
$ 4,500 Bio
Sectors
1.
2.
3.
4.
1
$ 125,000 Bio
2
1.5 Mio
3
Balmford et al, 2002, “Economic Reasons for Conserving Wild Nature”, Science 297, estimates Protected Areas could
produce goods and services valued at between $ 4,400 billion - $ 5,200 billion per annum
Natural Capital : Present Value (PV) of a constant service annuity of $ 5,000 billion per annum, discounted @ 4% per annum
Estimate of the number employed directly in the maintenance, protection, and oversight of Protected Areas globally
Global Business Sector estimates from Global Markets Centre (“GMC”), Deutsche Bank
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Challenge : Evaluate ECUADOR’S Conservation
Proposal ( Yasuni Preserved, Oil stays in ground) ?
Yasuni National Park –
the most biodiverse
wilderness on Earth
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TEEB D1 Challenge (cont’d) ECUADOR
YASUNI National Park / ITT Oilfield Proposal
•
•
•
•
•
•
Ecuador commits not to exploit 20% of it’s proven oil
reserves (846 million barrels), (ITT oil fields, within the
Yasuní National Park.
Ecuador’s Opportunity Cost : ( @ US$ 75 WTI) is an
NPV of US$11.6 billion.
World’s CO2 Storage : 407 million Mt CO2; @ market
(EU-ETS), US$28.85/ Mt, US$11.7 billion.
Global benefit : Social Cost of CO2 far exceeds market
price …
Ecuador’s benefit : National energy policy, social
upliftment, Protected Area Network maintenance ..now ….
ECUADOR shows a way… Does the world have the will ?
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The Process for TEEB Phase II
2008
2009
Inputs from Science and Economics
experts through the Call for Evidence,
participation in Working Groups, etc
2010
Val‘n Framework, Methodologies, Cost Analyses
End-User
Outreach
TEEB for Policy-Makers
D0
D1
TEEB for Administrators
TEEB for Business
TEEB for Consumers
D2
D3
D4
Continuous involvement of EndUser Groups
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Thank You !
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