Economics of Biodiversity
Marianne Kettunen
Senior Policy Analyst
Institute for European Environmental Policy (IEEP)

Publ...
We keep on loosing biodiversity !
Around 30% decline in global
biodiversity (1970-2005)
© Living Planet Index 2008
Content of the presentation
• Introduction: biodiversity – the basis for our wellbeing

• Economic evidence: the estimated...
Introduction:
Biodiversity – the basis for our wellbeing

© M. Kettunen
Biodiversity – what are we talking about?
•

Diversity of species

•

Genetic diversity

•

Diversity of habitats

•

Dive...
Why biodiversity & ecosystems matter to our wellbeing?
•

Ecosystems provide a variety of
ecosystem services

•

The diver...
The value of biodiversity – things we can & cannot measure !
Total value

Qualitative

Quantitative

Monetary
Value

Thing...
Why has biodiversity become an acute welfare issue?
Problem:
•

The total value of biodiversity (bd) & ecosystem services ...
Presentation overview
Nature has been supporting our wellbeing & economy for “free” !

© Seppo Leinonen (www.seppo.net)
Missing a big part of the picture leads to …
Economic evidence:
The estimated value of biodiversity

© M. Kettunen
Why try to estimate the economic value of biodiversity?
→ Money talks !
•

Advocacy: raise political, business & public aw...
TEEB initiative (2008-2010): assessing the value of
biodiversity & ecosystem services
•

Demonstrate biodiversity, ecosyst...
TEEB – reaching different end-users
TEEB D0: Ecological and
Economic Foundations
TEEB D1: TEEB for National and
Internatio...
2008

2009

2010
D1: Engagement / Feedback / Fine-tune

TEEB Phase I

May 08 Interim report
(CBD COP9, Bonn)

TEEB Phase I...
(preliminary) Estimates: global costs of loosing biodiversity
•

Cumulative loss of land-based ecosystem services (ES) dur...
(preliminary) Estimates: benefits of coral reefs

50 – 100% coral reefs threatened by climate change
→ related losses sign...
(preliminary) Estimates: benefits of tropical forests

Protection of tropical forests can be a ”win-win-win”
for biodivers...
(preliminary) Estimates: benefits of investing in natural capital

Investment in restoring natural
capital can be cost-eff...
Protected areas: safeguarding biodiversity & also
supporting human wellbeing
PA benefits (e.g.)
•

Clean water

•

Resourc...
In situ conservation of crop wild relatives provides fresh crop
breeding material & helps to maintain food security
© Map:...
Protected areas: safeguarding biodiversity & also
supporting human wellbeing
PA benefits (e.g.)

PA costs

•

Clean water
...
Long-term benefits of marine protected areas (MPAs)
• MPAs can help
fish stock
recovery
• Note: need to
address time
lag b...
Policy response:
Where is the valuation of biodiversity leading to?

© M. Kettunen
The right policy response?!?

***

© Seppo Leinonen (www.seppo.net), “censured” unofficially by M. Kettunen
REMEMBER: wise use of the economic estimates
•

Lesson No. 1: there always remains values that are difficult /
impossible ...
Examples of policy tools: rewards through payments & markets
•

Payments for environmental / ecosystem services (PES) → lo...
Examples of policy tools: abolishing harmful subsidies
•

Remove / reform harmful subsidies

•

Reform badly designed subs...
Examples of policy tools: investing in protected areas & natural capital
•

Investing in natural capital / protected areas...
Halting the loss of biodiversity & natural capital – a way forward?
Opportunities/benefits of ES
Past loss/
degradation

N...
(some) Conclusions
•

Economic valuation of biodiversity is not an end in itself – it is a tool to
support decision-making...
© M. Kettunen
Thank you
Marianne Kettunen
mkettunen@ieep.eu
Institute for European Environmental Policy (IEEP)

TEEB for Policy Makers r...
NOTE:
The content of this presentation should not be re-used without permission
from the author / TEEB team
The graphics b...
Economics of biodiversity_MKettunen
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Presentation at EP public hearing - How much for biodiversity? European Parliament, Brussels, 7 April 2010

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Economics of biodiversity_MKettunen

  1. 1. Economics of Biodiversity Marianne Kettunen Senior Policy Analyst Institute for European Environmental Policy (IEEP) Public hearing: How much for biodiversity? European Parliament 7 April 2010
  2. 2. We keep on loosing biodiversity ! Around 30% decline in global biodiversity (1970-2005) © Living Planet Index 2008
  3. 3. Content of the presentation • Introduction: biodiversity – the basis for our wellbeing • Economic evidence: the estimated value of biodiversity • Policy response: where should the valuation of biodiversity lead to?
  4. 4. Introduction: Biodiversity – the basis for our wellbeing © M. Kettunen
  5. 5. Biodiversity – what are we talking about? • Diversity of species • Genetic diversity • Diversity of habitats • Diversity of ecosystems • Diversity of ecosystem processes • Diversity of ecosystem’s responses • Also, diversity of biodiversity resources
  6. 6. Why biodiversity & ecosystems matter to our wellbeing? • Ecosystems provide a variety of ecosystem services • The diversity of genes, species, habitats, ecosystems & their processes underpins the provisioning of ecosystem services © Millennium Ecosystem Assessment 2005
  7. 7. The value of biodiversity – things we can & cannot measure ! Total value Qualitative Quantitative Monetary Value Things we cannot yet appreciate / knowledge gaps E.g. appreciation of nature as our cultural heritage & source for inspiration E.g. number people depending on the availability of biodiversity resources / enjoying recreation in nature E.g. revenues from fisheries, ecotourism, avoided costs of water purification Source: P. ten Brink, March 2008, revised
  8. 8. Why has biodiversity become an acute welfare issue? Problem: • The total value of biodiversity (bd) & ecosystem services (ES) has not been recognised by the society / integrated into the markets • Decision making is biased towards short-term economic benefits as the (long-term) value of bd & ES is poorly understood. Outcome: • We are missing the right signals → we are running down our natural capital • … and the costs of this have become increasingly apparent !
  9. 9. Presentation overview Nature has been supporting our wellbeing & economy for “free” ! © Seppo Leinonen (www.seppo.net)
  10. 10. Missing a big part of the picture leads to …
  11. 11. Economic evidence: The estimated value of biodiversity © M. Kettunen
  12. 12. Why try to estimate the economic value of biodiversity? → Money talks ! • Advocacy: raise political, business & public awareness • Decision-making: enable better consideration of biodiversity values in decision-making in practice • Policy response: appropriate & effective design of policy instruments • Policy synergies: help to demonstrate how there can be significant “winwins” between biodiversity, climate change & food security agendas → Towards more far-sighted & sustainable decision-making
  13. 13. TEEB initiative (2008-2010): assessing the value of biodiversity & ecosystem services • Demonstrate biodiversity, ecosystems & their services have multiple values – to economy, society, business & individuals • Underline the urgency of action – highlight the benefits (vs. costs) of action • Show how to assess the value of bd and ES – and how it can be used • Show how to integrate these values into everyday decision-making
  14. 14. TEEB – reaching different end-users TEEB D0: Ecological and Economic Foundations TEEB D1: TEEB for National and International Policy-Makers TEEB D2: TEEB for Local PolicyMakers and Administrators TEEB D3: TEEB for Business TEEB D4: TEEB for Citizens
  15. 15. 2008 2009 2010 D1: Engagement / Feedback / Fine-tune TEEB Phase I May 08 Interim report (CBD COP9, Bonn) TEEB Phase II Sep 09 TEEB Climate Issues Update (Strömstad) Nov 09 D1 for policy makers Spring/ Summer / Autumn 2010 D0, D2, D3 & D4 Final TEEB synthesis & publications CBD COP10 (Oct 2010, Nagoya, Japan)
  16. 16. (preliminary) Estimates: global costs of loosing biodiversity • Cumulative loss of land-based ecosystem services (ES) during 2000-2010: 500 billion $US (TEEB Interim report 2008) • Loss of land-based ES in 2050: ~275 billion $US / year (TEEB Interim report 2008) • Cumulative loss of land-based ecosystem services (at current rate) by 2050: 7% of GDP in 2050 (TEEB Interim report 2008) • Unsustainable fishing reduces potential fisheries output by an estimated $50 billion / year (TEEB for Policy Makers 2009)
  17. 17. (preliminary) Estimates: benefits of coral reefs 50 – 100% coral reefs threatened by climate change → related losses significant ! TEEB Climate Change Update 2009 & references within
  18. 18. (preliminary) Estimates: benefits of tropical forests Protection of tropical forests can be a ”win-win-win” for biodiversity, climate & wellbeing TEEB Climate Change Update 2009 & references within
  19. 19. (preliminary) Estimates: benefits of investing in natural capital Investment in restoring natural capital can be cost-effective TEEB Climate Change Update 2009 & references within
  20. 20. Protected areas: safeguarding biodiversity & also supporting human wellbeing PA benefits (e.g.) • Clean water • Resource productivity and sustainability • Nature based tourism • Climate change mitigation • Cultural and spiritual resources • Future values http://www.sacred-destinations.com
  21. 21. In situ conservation of crop wild relatives provides fresh crop breeding material & helps to maintain food security © Map: Conservation Magazine 2008 (9/4), Pics: www.buyorganic.com.au, www.preparednesspro.wordpress.com/2009/04/, http://upload.wikimedia.org
  22. 22. Protected areas: safeguarding biodiversity & also supporting human wellbeing PA benefits (e.g.) PA costs • Clean water • • Resource productivity and • Human-wildlife conflict sustainability Need to be co-analysed & balanced out! • Nature based tourism • Loss of access to natural resources • Climate change mitigation • Displacement • Cultural and spiritual resources • Foregone opportunities • Future values Protected area management
  23. 23. Long-term benefits of marine protected areas (MPAs) • MPAs can help fish stock recovery • Note: need to address time lag between recovery & new uptake of sustainable use
  24. 24. Policy response: Where is the valuation of biodiversity leading to? © M. Kettunen
  25. 25. The right policy response?!? *** © Seppo Leinonen (www.seppo.net), “censured” unofficially by M. Kettunen
  26. 26. REMEMBER: wise use of the economic estimates • Lesson No. 1: there always remains values that are difficult / impossible to assess in EUR ! • Lesson No. 2: consider different numbers for different purposes – “global” vs. “local” assessments • Lesson No. 3: know your numbers (i.e. what are the data, assumptions & methods behind an estimate)
  27. 27. Examples of policy tools: rewards through payments & markets • Payments for environmental / ecosystem services (PES) → local. regional. national … • Global PES, e.g. REDD+ • Access and benefits sharing (ABS) • Tax based mechanism and public compensation mechanisms • Green markets and fiscal incentives (Certification, GPP)
  28. 28. Examples of policy tools: abolishing harmful subsidies • Remove / reform harmful subsidies • Reform badly designed subsidies • Increase share of “good” subsidies Source: http://srforums.prosoundweb.com/
  29. 29. Examples of policy tools: investing in protected areas & natural capital • Investing in natural capital / protected areas / green infrastructure can be very cost-effective → Seek actively “win-wins” for biodiversity & wellbeing → Explore especially: ecosystem-based adaptation to climate change
  30. 30. Halting the loss of biodiversity & natural capital – a way forward? Opportunities/benefits of ES Past loss/ degradation No net loss from 2010 level Halting biodiversity loss Investment in natural capital +ve change Regulation Better governance Economic signals : PES, REDD, ABS (to reward benefits) Charges, taxes, fines (to avoid degradation/damage: Alternative natural capital Development path Subsidy reform (right signals for policy) Sustainable consumption (eg reduced meat) Markets, certification/logos & GPP Agricultural innovation Investment in natural capital: green infrastructure Predicted future loss of natural capital (schematic) – with no additional policy action © P. ten Brink 2010 Restoration PAs 2050 `
  31. 31. (some) Conclusions • Economic valuation of biodiversity is not an end in itself – it is a tool to support decision-making ! • Understand your economic estimates – use them wisely ! • Not all values can be measured in money ! • Do not miss synergies between biodiversity, climate change, food security, poverty reduction … !
  32. 32. © M. Kettunen
  33. 33. Thank you Marianne Kettunen mkettunen@ieep.eu Institute for European Environmental Policy (IEEP) TEEB for Policy Makers report http://www.teebweb.org/ TEEB Contributors include: Major funders: © Seppo Leinonen (www.seppo.net), “censured” unofficially by M. Kettunen
  34. 34. NOTE: The content of this presentation should not be re-used without permission from the author / TEEB team The graphics by © Seppo Leinonen should not be re-used without permission from the artist (www.seppo.net)

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