Environmental Economics

Think a tree is just a tree? Think again. A new United Nations study puts dollar signs on the services nature provides.

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By Daniel Stone | Newsweek Web Exclusive
Nov 13, 2009

Sum Total: Being Green Isn't New

Behind every statistic, there's a good story: facts and figures can add up to something greater than themselves.

With its legs buried underwater, the mangrove is a case study in evolutionary biology. Found mostly in coastal areas in the tropics, mangroves are essentially low-growing trees that blanket shallow waters with their roots. To small animals, the structures provide a haven and a food source. To the coastlines, they reduce the impact of raucous waves that could wash away beaches. Calculating what they do for humans, however, is a more dubious pursuit. They're nice to look at and cushion the impact of tsunamis, but if they disappeared, would there be a net loss?

From an economic standpoint, what mangroves or other local fauna contribute has long been considered about equal to what they take away: roughly, nothing. Rarely is there a calculus of wider ecosystem services, like water purification or, on a larger scale, carbon emissions that affect agriculture, medicinal research, and global fisheries. But a new report from the United Nations Environment Programme identifies the economic contribution of ecosystems and biodiversity as significant—and lucrative. Mangroves in Vietnam, it turns out, save annual expenditures on dike maintenance of more than $7 million. And in another example: it would cost $200 million to replicate the services provided by natural springs in New Zealand.

Commissioned by the G8 collection of environmental ministers, researchers on the project—labeled the Economics of Ecosystems and Biodiversity (TEEB)—set out to attach dollar values to the planet's omnipresent structures and systems, which had long been considered an impossibility due to the number of variables involved. But measuring ecological contributions is becoming more feasible. By examining past data from industries that rely, directly or indirectly, on natural resources or systems, the analysts estimated the monetary equivalent of those resources or systems being wiped away. In one example, the plight of island communities dependent on fish protein and ecotourism can be measured. How? Researchers found that every hectare of coral reef—a modest area of land equal to just under two and a half acres—is worth more than $1 million annually.

Focus was set primarily on regional systems, in which a healthy ecology can affect everything from food and air quality to tourist revenue. It's not a perfect science, of course. "The answer may not be precise, but we know that the answer is not zero," says Pavan Sukhdev, who led the TEEB research. But by looking more closely at regional scenarios, researchers can make more precise estimates of how a community would be affected if a resource it relies on for food or protection would be wiped out. Developing countries are the most affected by the disruption of ecosystems because their lower financial resources cause them to rely more on the limited natural ones their land provides.

One solution would be to rope off threatened areas and species to let them recover from the effects of human meddling, though critics of such an idea would likely argue that restricting use of degraded areas would result in even more economic loss. But what struck Sukhdev and fellow researchers were the high ratios of return when conservation projects were undertaken. With agriculture alone, addressing problems with soil consistency or water contamination would pay substantial dividends, they found—an average global rate of return of $60 for every $1 invested. "There's certainly a range in some of the larger estimates, but the net return from conservation is higher when you protect these resources than when you exploit them economically," says Jeff Wise, director the Alliance for Global Conservation, a consortium of U.S. conservation groups.

The report is aimed at global policymakers, many of whom have begun to address new questions about the natural world and how to steer clear of tipping points that would result in ecological and economic devastation. The first step domestically, says Wise, is for the U.S. government to lay out a comprehensive conservation strategy that includes an accounting of economic values and risks. That may be easier said than done, but highlighting the financial green windfall of going green can only help.