Economists fail to account for 'natural capital' - report

The best things in life are free, but we’ll have to pay to keep it that way.

Gland, Switzerland - Many economists are failing to assess the value of their countries’ natural resources, putting billion’s of people’s well-being at risk and contributing to catastrophic species loss, according to a new United Nations Environment Programme report.

The Economics of Ecosystems and Biodiversity for National and International Policy Makers 2009 (TEEB), released today, states that governments must adopt better accounting systems that measure the true value of natural resources, and integrate them in government decision-making.

WWF welcomed the report, urging governments to heed the call to reform their economic policies to halt the destruction of natural resources.

“Governments need to pay attention to this report and start looking at nature in a more holistic way”, said WWF Director of Global and Regional Policy Gordon Shepherd, “With smarter approaches to economics this can change but right now we are paying for their ignorance.”Investing in conservation, management and restoration of ecosystems will provide economic returns and services to society that outweigh the immediate monetary returns of unchecked use of natural resources, such as the clear-cutting of forests or overfishing, according to the report.

“We are running down our natural capital stock without understanding the value of what we are losing” the report states.

“Degradation of soils, air, water and biological resources can negatively impact on public health, food security, consumer choice and business opportunities. The rural poor, most dependent on the natural resource base, are often hardest hit,” according to the report.

“The problem is that economists do not give market prices for ecosystem services and biodiversity,” according to the study. “This means that the benefits we derive from these goods (often public in nature) are usually neglected or under-valued in decision-making.” “This in turn leads to actions that not only result in biodiversity loss, but also impact on human well-being.”

The report also makes several recommendations for policy-makers.

They include, for example, that policy must address reforming environmentally harmful subsidies - up to a third of which currently support fossil fuel use - and invest in ’ecological infrastructure’. The latter “can provide cost-effective opportunities to meet policy objectives, such as increased resilience to climate change, reduced risk from natural hazards, and improved food and water security as a contribution to poverty alleviation.”

In addition, Shepherd said businesses must likewise re-evaluate their use of the natural resources on which they depend to ensure their long-term profits. In doing so, they can be part of the solution to current environmental crises, such as species loss and deforestation.

“Ultimately, this must be a wide-ranging effort to re-evaluate natural resources and it must involve everyone, including private industry, governments, international agreements like the Convention on Biological Diversity, and indigenous and local people,” said Shepherd. “It will take a concerted effort to make our planet healthy again.”

TEEB’s study on The Economics of Ecosystems and Biodiversity was launched by Germany and the European Commission in response to an earlier G8+5 Environment Ministers proposal to develop a global study on economics of biodiversity loss

For More Information: WWF

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