Pricing up nature

Too often we take our plants, animals and ecosystems for granted. Claire Browning looks at how we might better account for the value of the natural world.

Nobody can put a price on a butterfly or a bee, or tell the cloud where to rain – though you may be able to work out what bees’ pollination services are worth.

That was the message from TEEB’s Pavan Sukhdev, in New Zealand to deliver his keynote speech to the Valuing Nature conference held in Wellington in July. Sukhdev’s The Economics of Ecosystems and Biodiversity (TEEB) work is about making ecosystems’ economically invisible values count – accounting for them as natural capital.

For example, the value of the world’s tropical rainforest as a rainfall factory for agriculture isn’t a number that you’ll see on any economic spreadsheet or balance sheet, but nor is it one that New Zealand could live without.

The National Oceanic and Atmospheric Administration satellite map Sukhdev showed, with its tropical rainfall systems curling out and down over New Zealand, ought to give our water hungry dairy farmers pause in importing PKE, for example – that’s palm kernel, a cattle feed and by-product of the palm oil industry, grown on cleared tropical rainforest land.

As Sukhdev put it: companies disclose their directors bonuses of perhaps a few million and contingent liabilities such as court cases, perhaps in the tens of millions. Why not environmental externalities, costing us many hundreds of millions?

Sukhdev’s methodology doesn’t stop at valuing dependencies (what is nature giving?). He also works to help businesses value their impacts (what are you costing nature?). This may reveal that a business isn’t profitable at all if it’s eating into its own environmental bottom line.

In turn, this may be a prompt for change, either as a matter of good business conscience or, eventually, through withdrawal of the social licence to operate.

Examples of good resource management decision-making from Sukhdev’s talk included Uganda’s Kampala wetland: valuable ecologically and as a food source, and cheap by comparison with the sewage treatment plant that would have … the natural world, its biodiversity and its ecosystems are critically important but consistently undervalued, and to rethink our relationship with nature, we must value it. 

In another example, from Japan, White Stork rice was able to command premium values for restoring habitat and reintroducing this rare oriental bird – also proving that in this instance what would be best for the birds was also the best outcome for people.

Sukhdev’s fellow keynote speaker at the conference, the UK’s Sir Robert Watson (formerly the Department for Environment, Food and Rural Affairs’ chief scientific adviser), had co-chaired the UK National Ecosystem Assessment, a massive and detailed piece of work that mapped the country in a two square kilometre grid and modelled outcomes using eight different models, including one called ”nature at work”, which integrates production with biodiversity, much like Forest & Bird’s Land for Wildlife work.

The assessment considered climate and other future scenarios, and offered recommendations for land use change to get the best outcomes, including cropping, agriculture and tree species. And it revealed that of all the models, “nature at work” offered the best results across all types of value – better economic outcomes than the status quo, dramatically better environmental outcomes, along with historical, cultural and recreational gains.

Picked up by the UK government in a white paper called The Natural Choice, it will be implemented – though ministers’ first questions were about short-term impacts on growth and jobs.

Like Pavan Sukhdev, Watson’s key messages were that the natural world, its biodiversity and its ecosystems are critically important but consistently undervalued, and to rethink our relationship with nature we must value it. The route to that, he argues, is demonstrating economic benefit – making nature part of our system.

And though putting a price on something is usually the first step to selling it off or compensating for its loss, both men argue that value is what you receive, rather than what you are willing to pay. This may take many forms, and a "valuing nature” methodology should encompass all of them.

Watson’s formula separately recognised dollar value plus non-monetised value (for instance, spiritual and mental wellbeing, culture expressed in forms such as the meaning of place, and wild species diversity).

It’s not a choice or a trade-off, he argued. Environment is the route to optimal economic, social and cultural outcomes but we can’t get there if we don’t make it part of the currency.

For Forest & Bird, an ecologically sustainable economy is one of our strategic plan priorities.

Already, in the government department of New Zealand’s Treasury, chief economist Dr Girol Karacaoglu is working on a dashboard accounting system called

Higher Living Standards – according to Lincoln University’s Caroline Saunders, “fighting to get it through”. It incorporates social and environmental measures alongside GDP – a progressive step, preferable to total reliance on GDP as Treasury’s sole measure of success.

The New Zealand Institute of Economic Research (NZIER), though, wants to go further, saying that “laundry lists” of environmental performance are a limited way of accounting for nature. In May the NZIER, supported by a Department of Conservation grant, published a discussion document which says immediately in its title that Valuing natural assets [is] essential for decision-making.

The NZIER’s John Stephenson, champion of the approach, also neatly sums up its philosophical debates and dilemmas. Assets, he says, depreciate without investment – a fact that, for natural assets, we tend to fail to recognise. And yet, he went on, “every investment – every investment – implies foregone consumption”.

Integration is Stephenson’s goal: integration of the environment into the economy. But commodification is its risk – demonstrated on the front page, in the framing of the NZIER’s “natural assets” title. They’re “natural assets” now, not nature and ecosystems and living things, seeming to imply that nature is only worth something when it does something dollar-related for us, and can only be properly (and quite literally) “taken into account” when we can sum up and negotiate about the relative values.

A clear message coming out of the Valuing Nature conference was that anyone who feels a little bit philosophically niggly should basically just get over it because you can’t have or run a modern, ecologically sustainable economy in a vague, warm, fuzzy way.

After a motion moved by rapporteur Al Morrison, that the Ministry for the Environment’s James Palmer should lead a New Zealand national ecosystem assessment and report back to another conference to be reconvened in a year, we may expect to see a New Zealand equivalent to the UK work.

If, as proposed, the New Zealand exercise is led by the Ministry for the Environment (MFE), it won’t be equivalent at all. In the UK the work was independently and prestigiously done. Government responded. That is how it should be. MFE should not be allowed to lead the work.

The question is: who, in New Zealand, would? Non-governmental organisation voices were missed at the Valuing Nature conference, convened and largely populated by the government’s natural resources sector, Victoria University and the Sustainable Business Council. Scientists and academics were there, and their independence is welcome because otherwise it risks capture by vested interests.

Forest & Bird will want to be part of this work. We need to be part of designing and building the framework, understanding what is going on, understanding what are valid methods and what are not, and challenging the culture, too. Articulating and pushing back against its assumptions: having the debate, with different voices that don’t all speak the same language. Asking: what about values we either don’t comprehend or that exist for species and ecosystems other than ourselves? Where are they in this new world?

At the Valuing Nature conference, DOC’s Lyn Roberts put it well. Making ecosystems play by the rules of neoclassical economics is like women fighting for equality in a man’s world, on men’s terms, she said. You may win, but you still lose.

Claire Browning is Forest & Bird's Conservation Advocate