Global Policy Forum

Pricing the priceless – Economic valuation of nature

Nature_capital
Image: UN Photo/Martine Perret

The economic valuation of nature has now been debated for several years, having already been implicit in the Kyoto Protocol that set targets for greenhouse gas emissions and provided the framework for trading CO2 equivalents. The role of nature in models to measure prosperity and of market-based instruments in nature conservation was discussed at a conference organised by the Heinrich Böll Foundation, Global Policy Forum and terre des hommes in Bonn, Germany, in November. Presentations and discussions at the conference focused on conceptual origins of the concept, on methodological problems in establishing the true value of ecosystem capital and services and also on whether a valuation of nature need inevitably result in trade and markets. While participants in the meeting generally agreed that an assessment of nature and establishing it in national accounting could supply additional useful information for political decision-making, some also maintained that an economic valuation of nature could not counter further harm to the environment.





December 15, 2014 | Rural21

Pricing the priceless – Economic valuation of nature

by Michael Gardner

NGOs and ministry representatives were among the participants in a meeting on the economic valuation of nature in Bonn, Germany, in late November that was sponsored by the German Ministry for Economic Cooperation and Development and North Rhine-Westphalia’s Environment and Development Foundation.

This article first appeared on Rural 21 - The International Journal for Rural Development.

The economic valuation of nature has now been debated for several years, having already been implicit in the Kyoto Protocol that set targets for greenhouse gas emissions and provided the framework for trading CO2 equivalents. The role of nature in models to measure prosperity and of market-based instruments in nature conservation was discussed at a conference organised by the Heinrich Böll Foundation, Global Policy Forum and terre des hommes in Bonn, Germany, in November.

Introducing the topic of measuring prosperity and national accounting, Roland Zieschank of the Environmental Policy Research Centre at Freie Universität Berlin pointed out that unlike human and social resources, natural resources were considered as free of charge in the economy, with the costs of overexploitation and environmental pollution being externalised. Zieschank explained that a key issue in this context was whether natural capital accounting would counter this approach or reinforce it. He called for a clear distinction between the assessment of natural capital for society and natural capital accounting at national level and warned against establishing the price of natural goods and services, as opposed to their value, since this would represent the beginning of a potential commercialisation of nature. Zieschank advocated a pluralistic of natural capital that would also address its intrinsic value as well as cultural factors.

Wolfgang Obenland of Global Policy Forum described how the concept of natural capital was addressed in the United Nations Sustainable Development Goals (SDGs) and its Post-2015 Agenda. While the SDGs approve of using nature to promote sustainable development, they seek to prevent the destruction of nature. However, there is no clear new interpretation of nature as natural capital. The UN’s Intergovernmental Committee of Experts on Sustainable Development (ICESDF) does not refer to an economic valuation of nature. It recommends taxes to finance nature conservation as well as a new measuring system in the context of promoting sustainable development.

Jürgen Maier, representing the Berlin-based NGO Forum Environment and Development, referred to the debate on alternative models of prosperity mentioned e.g. in the context of the Post-2015 Agenda. While such models were helpful in reassessing faith in the growth of the Gross Domestic Product, civil society campaigns were needed to really influence politics. Decisions on destroying natural capital were often taken despite people being fully aware of what they were doing. Maier held that approaches centred on viewing nature as nature capital merely aimed at bypassing the planetary boundaries while basically still ignoring them.
So far, market instruments attempting to reflect nature in economic terms and promote climate protection with economic instruments, such as CO2 emissions trading or the Reducing Emissions from Deforestation and Forest Degradation (REDD) initiative, had failed.  However, Maier welcomed the ICESDF report’s stressing the need for an internalisation of external costs, since, particularly in developing countries, NGOs could refer to such international agreements when making demands on governments.

Activist and author Jutta Kill demonstrated that the “economisation of nature” was already having an impact on the environment. Since the introduction of the biodiversity market in Brazil, deforestation had increased by 250 per cent compared to 2013, while government monitoring had been simultaneously reduced. The European Union’s Nature Capital Financing Facility, providing credits via public funding for private compensation projects, was draining funds from classical conservation. Kill also explained that making ecosystems and ecoservices exchangeable and thus enabling compensating for a loss of nature in one location with nature conservation elsewhere was frequently rendering citizens’ action groups powerless. Finally, market-based instruments like PES were giving those with sufficient means the opportunity to violate environmental legislation and get off scot-free.

The final discussion focused on methodological problems in establishing the true value of ecosystem capital and services and also on whether a valuation of nature need inevitably result in trade and markets. While participants in the meeting generally agreed that an assessment of nature and establishing it in national accounting could supply additional useful information for political decision-making, some also maintained that an economic valuation of nature could not counter further harm to the environment. Rather, it represented a new instrument and new legitimisation for more environmental destruction.

A full account of the meeting is being prepared and will be available towards the end of 2014.

This article first appeared on Rural 21 - The International Journal for Rural Development.



 

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