The economics of ecosystems and biodiversity for business - Joshua Bishop, WWF

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The economics of ecosystems and biodiversity for business - Joshua Bishop, WWF

  1. 1. The Economic and Business Case for Conserving Biodiversity Joshua Bishop WWF Australia
  2. 2. The Economic and Business Case for Conserving Biodiversity Joshua Bishop TEEB
  3. 3. Outline •  TEEB overview •  What is biodiversity worth? •  Why should business care? •  What can business do? •  Case study
  4. 4. Who asked for TEEB? Potsdam Initiative – Biological Diversity 2010 “In a global study we will initiate the process of analysing the global economic benefit of biological diversity, the costs of the loss of biodiversity and the failure to take protective measures versus the costs of effective conservation.” http://www.bmu.de/files/pdfs/allgemein/application/pdf/ potsdam_initiative_en.pdf
  5. 5. Who was involved in TEEB?•  Study Leader: Pavan Sukhdev (ex-MD Deutsche Bank)•  Advisory Board: 14 international scientific & policy leaders•  Administration: United Nations Environment Programme•  Scientific coordination: UFZ, Leipzig•  Over 500 individual editors, authors and reviewers•  Financial donors and other institutional partners:
  6. 6. What did TEEB deliver? Interim Report May 2008 Climate Issues Update September 2009 National & International Policy-Makers November 2009 Business July 2010 Local & Regional Policy- Makers September 2010 Ecological & Economic Foundations October 2010 Final Synthesis Report October 2010
  7. 7. Outline •  TEEB overview •  What is biodiversity worth? •  Why should business care? •  What can business do? •  Case study
  8. 8. UN Convention on Biological Diversitydefines “biodiversity” •  Variety of species !  plants, animals and microorganisms •  Genetic differences within each species !  e.g., varieties of crops and breeds of livestock •  Variety of ecosystems !  e.g., deserts, forests, wetlands, mountains, lakes, rivers, and agricultural landscapes
  9. 9. Millennium Ecosystem Assessmentfocused on ecosystem services
  10. 10. Example: Tropical forests and climate •  Tropical forests store about 1/4 of all terrestrial carbon –  547 gigatonnes (Gt) •  Tropical forest capture carbon continuously –  up to 4.8 Gt CO2 every year, compared to total emissions p.a. of ~33 Gt •  Slowing or halting deforestation is an excellent investment –  Reducing deforestation by 50% would deliver net benefits of US$ 3.7 trillion (NPV), just counting the avoided damage costs of climate change Sources: Trumper et al. (2009), Lewis & White (2009), Eliasch (2008) 10
  11. 11. Example: Shrimp farms versus mangrovesUS$/hain 1996 Private profits Private profits Public benefits (less subsidies) $12,392ha10000 $9,632ha $10,821ha Storm protection Subsidies - $8,412ha5000 $1220ha $987ha Fisheries $584ha $584ha $584ha Forest prod. 0All values in NPVover 9 yrs (1996-2004) Net public costs ofat 10% discount rate restoration after 5 years - $9,318ha Source: Barbier (2007)
  12. 12. Who is affected by biodiversity loss?Ecosystem services Indonesia India Brazildependency 99 million 352 million 20 million 21% 16% 10%Ecosystem services as 90% 79% 84%percent of classical GDP 47% 11% 25%Ecosystem services as 53% 75% 89%percent of “GDP of thePoor” Ecosystem servicesSource: Gundimeda and Sukhdev, D1 TEEB 18/04/2012 12
  13. 13. Outline •  TEEB overview •  What is biodiversity worth? •  Why should business care? •  What can business do? •  Case study
  14. 14. Business impacts on ecosystem services 110 100 Flooding damage in 1998 !  US$12.2 billion 90 Property loss from estimated ecological 80 flooding pre - 1998 cost of deforestationCost (US$/m3 1998) Loss of river transport 70 capacity in China (1950-88) Reservoir and lake 60 sedimentation !  60% of this cost is 50 Desertification attributed to logging 40 Reduced lumber output !  64% of logging was 30 for construction and Loss of plant nutrients 20 materials sectors Lost water runoff 10 !  External costs = - Reduced precipitation 178% of the market Market External price of timber (1998) Price of Cost Timber Source: TEEB for Business, 2010 (Annex 2.1).
  15. 15. Business dependence on ecosystemservices•  Value of insect pollination to food crops: €153 billion in 2005 = 10% of VA in the agriculture sector (Gallai et al. 2008)•  Example: Michigan USA blueberry crop worth US$ 124 million/year; totally reliant on pollination by bees at cost of about US $ 1.5 million/year (renting hives)•  Example: Wild pollinators increase coffee yields by 20% on farms within 1 km of forest in Costa Rica (Ricketts et al. 2004)•  Pollination services to agriculture are threatened by ‘colony collapse disorder’ mainly affecting domesticated bees Source: Syngenta for TEEB
  16. 16. Consumer demand for ‘green’products and services•  Global sales of organic food and drink = US$ 60 billion in 2009•  Sales of certified ‘sustainable’ forest products increased four-fold between 2005 and 2007•  The global market for eco-labeled fish products grew by over 50% from 2008 to 2009, to a retail value of US$ 1.5 billion
  17. 17. Result: growing business concern about biodiversitySource: McKinsey & Company (July 2010) “Global Survey results: The next environmental issue for business” Based on1,576 responses from executives representing the full range of regions, industries, tenures, and functional specialties.
  18. 18. Outline •  TEEB overview •  What is biodiversity worth? •  Why should business care? •  What can business do? •  Case study
  19. 19. What can business do? Some ideas from TEEB… 1.  Set ambitious biodiversity targets 2.  Measure, value and report your footprint 3.  Use and improve tools for biodiversity management 4.  Build biodiversity business 5.  Support market-friendly environmental policy
  20. 20. 1. Set ambitious targets!  BC Hydro: “long-term goal of no net incremental environmental impact.”!  Coca Cola: “Our goal is to safely return to communities and nature an amount of water equivalent to what we use in all of our beverages and their production.”!  Danone Group: “Attain carbon neutrality for the major Danone brands, including Evian, by the end of 2011.”!  Marks & Spencer: “Our goal is to become carbon neutral by 2012 in our UK and Republic of Ireland operations.”!  Rio Tinto: “Our goal is to have a ‘net positive impact’ on biodiversity.”!  Sony: “strives to achieve a zero environmental footprint throughout the lifecycle of our products and business activities.”!  Unilever: “Today we source 10% of our agricultural raw materials sustainably. By 2012 we will source 30%; by 2015 50%; and by 2020 100%.”!  Walmart: “Committed … to permanently conserve at least one acre of priority wildlife habitat for every developed acre.”
  21. 21. 2. Measure, value & report Top 100 companies Top 100 companies Annual reports Sustainability reports 4% 2% 9% 11% 12% 15% 42% 23% 82% Dont produce sustainability report No mention of biodiversity or ecosystems Passing mention of biodiversity or ecosystems Discuss approach to reduce impact on biodiversity Identify biodiversity as a key strategic issue Source: PwC input to TEEB Report for Business
  22. 22. 2 (continued) – How to measure? Climate change: CO2e Biodiversity and ecosystems:1 •  Living Planet Index (LPI) •  Coverage by PAs of important habitats •  Wild Bird / Waterbird indices •  Area of forest under sustainable mgmt. •  IUCN Red List Index (RLI) •  International IAS policy adoption •  Marine Trophic Index •  National IAS policy adoption •  Forest / Mangrove / Seagrass extent •  ODA in support of CBD •  Coral reef condition (cover) •  LPI for utilized vertebrates •  Water Quality Index •  RLI for food & medicinal species •  Ecological Footprint •  RLI for traded bird species •  Nitrogen deposition rate •  Number of Alien Species (in Europe) Business needs indicators for: •  Exploitation of fish stocks •  site, product, group level •  Climatic Impact Indicator (on birds) •  processes & performance •  Protected Area extent •  internal & external reporting1/ Adapted from: Butchart et al. (2010 ) “Global Biodiversity: Indicators of Recent Declines” Science Express (29 April)
  23. 23. 2 (continued) – How to value?WBCSD Guide to CorporateEcosystem Valuation – shows howto use valuation methods to:•  Save costs•  Reduce taxes•  Capture new revenue streams•  Assess liability & compensation•  and more… www.wbcsd.org/web/cev.htm
  24. 24. 2 (continued) – How to report? •  Water reporting by SAB Miller •  Target: increase water productivity by 25% by 2015 •  Potential savings: 20 billion litres of water/year
  25. 25. 3. Use & improve business tools•  Integrated Biodiversity Assessment Tool –  http://www.biodiversityinfo.org/ibat/ –  GIS database for site-level risk assessment –  Based on World Database of Protected Areas, World Biodiversity Database, IUCN Red List of Threatened Species•  Business and Biodiversity Offsets Program –  http://www.forest-trends.org/biodiversityoffsetprogram/ –  Guidance on designing and implementing biodiversity offsets to ensure “no net loss” –  Led by Forest Trends, Wildlife Conservation Society and Conservation International•  Certification and labelling –  http://www.isealalliance.org/ –  Global hub for social and environmental standards –  Members represent fair trade, forest stewardship, organic agriculture, fisheries, etc.
  26. 26. 4. Build “biodiversity business”Greening existing business•  Agriculture•  Biodiversity mgmt services•  Cosmetics•  Extractive industries•  Finance•  Fisheries•  Forestry•  Garments•  Handicrafts New products & markets•  Pharmaceuticals •  Bio-carbon & REDD-plus•  Retail •  Water quality trading•  Tourism •  Biodiversity banking
  27. 27. 5. Support business-friendly policy•  Reform of harmful subsidies•  Tax credits and other incentives•  Voluntary certification and eco-labelling•  Payments for Ecosystem Services•  Environmental responsibility and liability•  Environmental trading schemes•  Public access to information
  28. 28. Outline •  TEEB overview •  What is biodiversity worth? •  Why should business care? •  What can business do? •  Case study
  29. 29. Case study of Rio Tinto: mining,biodiversity offsets and “NPI”!  “Our goal is to have a ‘net positive impact’ on biodiversity” (Rio Tinto 2004)
  30. 30. Biodiversity offsets: A key tool forachieving net positive impact (NPI) “Biodiversity offsets are measurable conservation outcomes resulting from actions designed to compensate for significant residual adverse biodiversity impacts arising from project development after appropriate prevention and mitigation measures have been taken. The goal of biodiversity offsets is to achieve no net loss and preferably a net gain of biodiversity on the ground with respect to species composition, habitat structure, ecosystem function and people’s use and cultural values associated with biodiversity.”
  31. 31. Valuing biodiversity offsets in practice: NPI in Madagascar (Olsen et al. 2011)•  Madagascar: QMM mine environmental action includes the protection of 60,000 ha of lowland humid rainforest adjacent to the mining lease•  Case study assessed economic benefits and costs of continued deforestation (estimated 1-2% p.a.) versus conserving the Tsitongambarika forest (TGK) Source: Asity Madagascar, 2009
  32. 32. The case of Rio Tinto and the Tsitongambarika Forest in Madagascar 25 NPV of conservation: US$ 17.3 million 30,000,000 Present value US$/TGK Costs: Benefits: 26,839,291 25,000,000 20,000,000 15,000,000 9,763,951 10,000,000 5,000,000 2,939,205 2,511,463 707,325 270,642 198,842 0 In Re Fo Bi So W Ca od ve at re cu i rb lc er st go iv on rre on m er s ne up nt st se en sit or rv pl ag co tc y ag y at ric st os io e s ts in n c om e Costs and ecosystem benefits Note: Present values of costs and benefits associated with conservation of Source: Olsen TGK (at 5% discount rate, 30-yr horizon, assuming 1% p.a. deforestation) et al. (2011)
  33. 33. The case of Rio Tinto and the Tsitongambarika Forest in Madagascar 25 Payments for ecosystem services (PES) 30,000,000 Present value US$/TGK Costs: Benefits: 26,839,291 25,000,000 20,000,000 $ $ $ $ $ $ $ 15,000,000 $ 9,763,951 10,000,000 5,000,000 2,939,205 2,511,463 707,325 270,642 198,842 0 In Re Fo Bi So W Ca od ve at re cu il c rb e st go iv on rre rs on m er ne up nt st se en sit or rv pl ag co tc y ag y at ric st os io e s ts in n c om e Costs and ecosystem benefits Source: Olsen et al. (2011)
  34. 34. For more information… www.teebweb.org
  35. 35. Investing in HoB for a Green Economy HoB Investing in Nature for a Economic case for Green policy reform to Economy underpin HoB’s role in a Green Economy (REDD+ finance as transition mechanism for a GE) Engage private Political platform & sector to invest in Partners forum to nature and to support HoB3 green their operations Green Economy Vision for HoB
  36. 36. Thank Youwww.teebweb.orgwww.teeb4me.com

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