Preventive maintenance. It seems like a simple concept: put in a little effort now to (hopefully) save yourself a lot of stress and frustration in the future. It’s why we visit the doctor for a checkup every two years or take our cars to the mechanic every 30,000 miles. It makes sense to do little things that are in our control so that we feel like we are doing our part to prevent an out-of-control disaster.
Preventive maintenance can help save money, too. Eating a low-sodium diet now costs less than paying for high blood pressure medication later, and a monthly gym membership is cheaper than a tummy tuck or lipo.
There is a decided cost savings linked to early action, and this also applies to the environment. One example involves the “killer algae” that took over the Mediterranean in 1984 and hammered the native algal species as well as tourism, fishing and diving. Early identification of the same algae off the coast of California in 2000 enabled eradication efforts to begin 17 days after its detection. It was successfully removed at a cost of roughly $2.5 million — much less than the continuing expenses incurred by its Mediterranean hosts.
So why not take proactive steps to take care of the Earth — plant more trees or protect more coral reefs — in addition to reducing fossil fuel emissions? Why not give people incentives to do preventive maintenance now so that we won’t have to pay to fix a disastrous mess later?
That’s the tone of a new report from The Economics of Ecosystems and Biodiversity initiative (hosted by the U.N. Environmental Programme). It argues that countries incorporating ecosystem services into their national and international investment strategies are likely to see higher rates of return and stronger economies.
Weighing Costs and Benefits
The report cites Venezuela’s national protected area system, which prevents sedimentation that could reduce farm earnings by about $3.5 million per year, and the planting and protecting of 12,000 hectares of mangroves in Vietnam, which cost $1 million but saved dyke maintenance costing more than $7 million a year, as examples of such high-return investments.
TEEB calls on policymakers to make ecosystem investments a priority and develop a more sophisticated way of evaluating the costs and benefits. More than 100 science, economics and policy experts from around the world worked to produce this report, which comes in advance of the United Nations’ Copenhagen climate change conference on Dec. 7.
The study seeks to examine the costs associated with biodiversity decline and the costs and benefits of fighting it. It also hopes to develop “toolkits” for policymakers to foster conservation and sustainable development, facilitate access to important information about improving biodiversity for the business community, and raise public awareness of the individual’s impact on the environment — and how it can be positive.
The official goal of the Copenhagen conference is to stabilize greenhouse gas emissions in the atmosphere to prevent dangerous manmade climate changes without endangering food security or preventing sustainable social and economic development.
It’s not likely to be easy. In one of the more optimistic estimates, the Stern Review of the Economics of Climate Change found that 1 percent of global GDP, which is the amount currently spent on global subsidies, would be sufficient to prevent future climate change damage — damage that is expected to cost between 5 and 20 percent of global GDP. TEEB suggests reforming environmentally harmful subsidies, like those that promote the production and consumption of fossil fuels, to free up funding for resource-efficient, equitable growth.
The TEEB report calls for preventive maintenance that includes creating a valuation system for ecosystem services, investing in conservation efforts, increasing protected areas on land and at sea, providing incentives for people to act as “exceptional national stewards,” and making the polluter pay.
Putting a monetary value on ecosystem services is not a new idea: A Miller-McCune article by Matt Jenkins, “Mother Nature’s Sum,” discusses the implications of assigning a dollar value to natural capital, since traditional economic models frequently undervalue or overlook the value of our planet’s natural resources.
It is an early economics lesson that in society, there are certain goods and services that benefit many, but it’s in no single person’s immediate self-interest to develop or maintain them. In modern society, it is frequently the role of the government to maintain these goods and services: Public schools, parks and highways are uncontroversial examples.
Ecosystem services are the resources and processes provided by natural ecosystems. They are not usually accounted for in markets because they fall into this category of public goods; they are accessible to many and do not compete for consumption. Many people benefit from ecosystems services, most notably the world’s poor, but these services are consistently undervalued or ignored because they are not an obvious part of most financial equations.
Too often, decisions that affect biodiversity, such as logging in the rainforest, do not take into account the ecological costs. These decisions are usually based on the potential profit to be made by a private firm or individual or their effect on the local economy, but the potential environmental costs of these actions are rarely factored into the equation and usually aren’t even calculated.
One example TEEB highlights is commercial shrimp farming. Subsidized commercial shrimp farms can post profits of around $1,220 per hectare when they clear mangrove forests. But these profits do not account for the losses to local communities of about $12,000 per hectare. These losses include the wood and non-wood products produced by the forests, the protection the forests provide from storms and tsunamis, and the potential income that could be generated by local fisheries without degrading these same areas. Profits also do not take into account the costs of rehabilitating the sites, which, after five years of exploitation, is about $9,000 per hectare.
The Te Papanui Conservation Park in New Zealand is another example. The park provides the Otago region with free water because its 22,000 hectares of tussock grass act as a natural catchment. This saves the people who live there an estimated NZ$136 million: NZ$31 million in hydroelectricity, NZ$93 million for urban water supply and NZ$12 million for irrigating farmland. The benefit of conserving this land, then, is equal to the potential cost of bringing in the (currently free) water from elsewhere. But if a private firm were to purchase the land, it would likely weigh the potential profits to be made off its various future uses and would not be responsible for the additional water costs incurred by the region’s residents.
Many cities around the world rely on protected areas to provide their residents with drinking water: Rio de Janeiro, Tokyo, Melbourne, New York and Jakarta are a few. The water that these forests, wetlands and protected areas provide often costs much less than a manmade solution. There is an economic benefit, then, to maintaining these protected areas — a benefit that, under our current system, would only be quantified after the water they provide is no longer available.
The consequences of dismissing the benefits of these protected areas are evident in the case of New Orleans, as “The Grass Floodwall: Gustav Highlights the Need for Wetlands” illustrates. Approximately 217 miles of coastal wetlands were lost in hurricanes Katrina and Gustav alone, and Louisiana is losing about a football field of wetlands every 38 minutes.
These wetlands provide an estimated $23 billion of storm-protection services for its residents. Infrastructure improvements like levees and floodgates cannot protect New Orleans on their own; they must be paired with ecosystem restoration on the coast.
More than 1 billion people are dependent on protected areas for a significant portion of their livelihoods, according to the 2005 U.N. Millennium Project. The TEEB report argues that the preservation of these ecosystems and others is essential to the survival of the rural poor.
But in addition to maintaining existing protected areas, it is important to increase their numbers. Protecting more ocean and forest areas can preserve our stores of green and blue carbon (for more on the different types of carbon, see “Your Guide to the Carbon Rainbow” and reduce emissions of greenhouse gases.
Rewards for Going Green
“Payments for ecosystem services” programs are another way of increasing green carbon stores. These reward people who take on the task of exceptional environmental stewardship. One of the largest such projects is the Grain-to-Greens Program in China. Designed to combat soil erosion, it pays participating households the equivalent of $450 per hectare for converting cropland with steep slopes to forest and keeping it that way. By the end of 2006, it had contributed to the conversion of 9 million hectares (22.3 million acres) of cropland.
Other payment efforts include the Reduced Emissions from Deforestation and Forest Degradation program. REDD seeks to tip “the economic balance in favor of sustainable management of forests so that their formidable economic, environmental and social goods and services benefit countries, communities and forest users while also contributing to important reductions in greenhouse gas emissions. The aim is to generate the requisite transfer flow of resources to significantly reduce global emissions from deforestation and forest degradation.”
In short, REDD would have developed countries pay their less-developed counterparts to follow a more sustainable path to development than they themselves traveled.
The Economics of Ecosystems and Biodiversity report proposes a newer model, to be called REDD-plus. Close to 20 percent of current greenhouse gas emissions are linked to deforestation, and the idea behind these programs is that preventing the deforestation and degradation of rainforests can reduce emissions and create a cash flow from wealthy countries in the global “north” to their southern neighbors.
The report argues that reaching an international agreement on REDD would reward global carbon sequestration and storage services, and also maintain forest ecosystem services. As it stands, REDD would halt further degradation but would not provide incentives for reforestation. Expanding to a REDD-plus variant, TEEB believes, would further incorporate conservation, sustainable management of forests and enhancement of carbon stocks.
The cost of this REDD-plus instrument has been estimated at between $17 billion and $33 billion per year. It could lead to an estimated halving of deforestation rates by 2030, with a long-term net benefit estimated at $3.7 trillion. However, there is a huge benefit to implementing it now. These potential benefits could decrease to $500 billion if implementation is put off 10 years.
Providing incentives for preventive ecosystem maintenance is a different approach to mitigating climate change than the much-discussed carbon taxes or cap-and-trade, although it would need to be implemented in conjunction with emissions-reduction legislation. At Copenhagen, governments are expected to approve funding that protects and increases the world’s green carbon stores, but it is important that they develop a framework for cutting down greenhouse gas emissions as well.
Ultimately, TEEB recognizes the necessity of effective policy in solving the problem in climate change and suggests that preserving our natural resources now is more economically efficient in the long run than paying for alternatives in the future.
And even though this suggestion is hardly a revolutionary idea, a little preventive maintenance is just what the doctor ordered.
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