Who can put a Price on the Environment?

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EcoEconomics in a Nutshell

Our free market economy is nothing more than a huge auction called ‘Supply and Demand’, which – very efficiently – puts a price on on everything.

The problem is that it allows us to sell everything – the last drop of oil, the last tree, the last fish, the last of everything. It’s called growth – but it is, obviously, growth into oblivion – the exact opposite of EcoEconomics. It is a fatal flaw of our present economic system.

Or, as Greenpeace puts it: “When the last tree is cut, the last river poisoned, and the last fish dead, we will discover that we can’t eat money…”


The eco-economic price for a natural resource is, therefore, the price you would have to pay if our planet were to release that resource only at a sustainable level.

Who can put a Price on the Environment?  … We all should.

Afterall if we end up decimating the planet’s EcoSystems —  trying to sell off their once abundant natural resources — We can’t eat the money … or gold either, can we?

EcoSystems are living systems that one way or another have to be used in a sustainable way …  if we are to survive as a species, as a society, as a pinnacle of life.

The costs of NOT doing so, will be phenomenal.  Indeed those costs are already mounting.  Too bad these hidden Eco-costs are not “costs”, in the “classic sense”.  They should be.

Rare Frogs & Endangered Species – Planet Earth – BBC Wildlife

http://www.youtube.com/v/_lWQL…  [Click link to watch clip]

“Whole frog communities are crashing. On a global scale, out of something like 6000 Frog species altogether — now nearly one-third are classified as endangered.”

NATURE – Frogs: The Thin Green Line – Preview – PBS


“Around the world frog are vanishing.  ‘You could walk any trail and you would hear frogs calling. There’s just nothing here now.’ “

If we somehow learned to priced the Environment, and the wonderous things in them, the way we price our Retirement funds, or Tax strategies, we actually might reach those golden years, with a Planet still worth exploring.  

Unlike that “Golden Toad” of Costa Rica, who unfortunately, will have no such future.  No thanks to human enterprise.

Well, some Environmental Economic thinkers have been doing just that — figuring out how to put a Price on the Environment, and all those “intangible services” it performs for us — usually for free.  If we humans don’t interfere, too much, and just let Nature do its nature thing.

Ecological economics

From Wikipedia

Environmental services

The whole idea of treating ecosystems as goods and services to be valued in monetary terms remains controversial to some. A common objection is that life is precious or priceless, but this demonstrably degrades to it being worthless under the assumptions of any branch of economics. Reducing human bodies to financial values is a necessary part of every branch of economics and not always in the direct terms of insurance or wages.

Economics, in principle, assumes that conflict is reduced by agreeing on voluntary contractual relations and prices instead of simply fighting or coercing or tricking others into providing goods or services. In doing so, a provider agrees to surrender time and take bodily risks and other (reputation, financial) risks. Ecosystems are no different than other bodies economically except insofar as they are far less replaceable than typical labour or commodities.

Despite these issues, many ecologists and conservation biologists are pursuing ecosystem valuation. Biodiversity measures in particular appear to be the most promising way to reconcile financial and ecological values, and there are many active efforts in this regard. The growing field of biodiversity finance[42] began to emerge in 2008 in response to many specific proposals such as the Ecuadoran Yasuni proposal […]

Commodification of other ecological relations as in carbon credit and direct payments to farmers to preserve ecosystem services are likewise examples that permit private parties to play more direct roles protecting biodiversity.

If preserving the Land can be made more valuable, than mining it, or harvesting it, or farming it — well maybe it will end up being preserved.

Intact Ecosystems do have genuine benefits for the wider societies, especially those in proximity to those systems.  Who can put a price of Clean Water, Carbon-free Air, Healthy Food, and pristine scenic beauty — we Humans can, and we should.  

There are costs — to NOT doing so.  Ask the Frogs.  Ask the Polar Bears.

UN specialist: Nature profiteers must pay for damage done

March 08, 2010

A United Nations initiative is making massive calculations in an attempt to put a price on nature services such as soils, forest or fresh water in a drive to convince policymakers to implement the ‘polluter pays’ principle to protect nature, said Pavan Sukhdev, who leads the initiative.

[ie. The Economics of Ecosystems and Biodiversity (TEEB) initiative hosted by the United Nations Environment Programme (UNEP). He is also project leader for UNEP’s Green Economy Initiative.]

Going Green is an investment in our collective futures.

The Green Economy Initiative

The Green Economy Initiative (GEI) is designed to assist governments in “greening” their economies by reshaping and refocusing policies, investments and spending towards a range of sectors, such as clean technologies, renewable energies, water services, green transportation, waste management, green buildings and sustainable agriculture and forests.

Greening the economy refers to the process of reconfiguring businesses and infrastructure to deliver better returns on natural, human and economic capital investments, while at the same time reducing greenhouse gas emissions, extracting and using less natural resources, creating less waste and reducing social disparities.

The UN does seem to have some Eco-momentum going here … and a large dose of common sense, too.

Official video of the International Year of Biodiversity 2010


SO what is the result of their 3 year Initiative, to figure out how to best put an Economic Price on Nature’s priceless processes?

The Economics of Ecosystems and Biodiversity (TEEB)

The Economics of Ecosystems and Biodiversity (TEEB) study is a major international initiative to draw attention to the global economic benefits of biodiversity, to highlight the growing costs of biodiversity loss and ecosystem degradation, and to draw together expertise from the fields of science, economics and policy to enable practical actions moving forward.


[The TEEB site has a brief video explaining the Ecosystem Services concepts.]

Here are some bullet points from their just released Biodiversity Valuation report:

Mainstreaming the Economics of Nature:

a synthesis of the approach, conclusions and recommendations of TEEB

Final TEEB release — October 20, 2010


Provisioning Services are ecosystem services that describe the material outputs from ecosystems.  They include food, water and other resources.

Food: Ecosystems provide the conditions for growing food – in wild habitats and in managed agro-ecosystems.

Raw materials: Ecosystems provide a great diversity of materials for construction and fuel.

Fresh water: Ecosystems provide surface and groundwater.

Medicinal resources: Many plants are used as traditional medicines and as input for the pharmaceutical industry.

Regulating Services are the services that ecosystems provide by acting as regulators eg. regulating the quality of air and soil or by providing flood and disease control.

Local climate and air quality regulation: Trees provide shade and remove pollutants from the atmosphere. Forests influence rainfall.

Carbon sequestration and storage: As trees and plants grow, they remove carbon dioxide from the atmosphere and effectively lock it away in their tissues.

Moderation of extreme events: Ecosystems and living organisms create buffers against natural hazards such as floods, storms, and landslides.

Waste-water treatment: Micro-organisms in soil and in wetlands decompose human and animal waste, as well as many pollutants.

Erosion prevention and maintenance of soil fertility: Soil erosion is a key factor in the process of land degradation and desertification.

Pollination: Some 87 out of the 115 leading global food crops depend upon animal pollination including important cash crops such as cocoa and coffee.

Biological control: Ecosystems are important for regulating pests and vector borne diseases.

Habitat or Supporting Services underpin almost all other services. Ecosystems provide living spaces for plants or animals; they also maintain a diversity of different breeds of plants and animals.

Habitats for species: Habitats provide everything that an individual plant or animal needs to survive. Migratory species need habitats along their migrating routes.

Maintenance of genetic diversity: Genetic diversity distinguishes different breeds or races, providing the basis for locally well-adapted cultivars and a gene pool for further developing commercial crops and livestock.

Cultural Services include the non-material benefits people obtain from contact with ecosystems. They include aesthetic, spiritual and psychological benefits.

Recreation and mental and physical health: The role of natural landscapes and urban green space for maintaining mental and physical health is increasingly being recognized.

Tourism: Nature tourism provides considerable economic benefits and is a vital source of income for many countries.

Aesthetic appreciation and inspiration for culture, art and design: Language, knowledge and appreciation of the natural environment have been intimately related throughout human history.

Spiritual experience and sense of place: Nature is a common element of all major religions; natural landscapes also form local identity and sense of belonging.

Those are all fine and noble goals and targets for maintaining a stable, sustainable Planet — BUT where are the $$$ signs — that will actually put these nuevo “valuation metrics” into serious action?

Well, there is Green to be made [or saved], when the Planet is kept Green; when we help it stay Green;  to stay Eco-healthy.

[Continuing …]

The Economics of Ecosystem Services:

— Conserving forests avoids greenhouse gas emissions worth US$ 3.7 trillion.

Halving deforestation rates by 2030 would reduce global greenhouse gas emissions by 1.5 to 2.7 GT CO2 per year, thereby avoiding damages from climate change estimated at more than US$ 3.7 trillion in NPV terms. This figure does not include the many co-benefits of forest ecosystems (Eliasch 2008).

— Global fisheries underperform by US$ 50 billion annually

Competition between highly subsidized industrial fishing fleets coupled with poor regulation and weak enforcement of existing rules has led to over-exploitation of most commercially valuable fish stocks, reducing the income from global marine fisheries by US$ 50 billion annually, compared to a more sustainable fishing scenario (World Bank and FAO 2009).


— Green products and services represent a new market opportunity

Global sales of organic food and drink have recently been increasing by over US$ 5 billion a year, reaching US $46 billion in 2007 (Organic Monitor 2009); the global market for eco-labelled fish products grew by over 50% between 2008 and 2009 (MSC 2009); and ecotourism is the fastest-growing area of the tourism industry with an estimated increase of global spending of 20% annually (TIES 2006).

The key to EcoEconomics is find the REAL long-term Costs of depleting a Natural Resource, until it’s gone.  The Fisheries depletion problem illustrates this Opportunity-Lost problem well.  Once the fish stocks are gone, they are gone.  Better take up knitting, Fisherfolks.  Or perhaps seaweed farming?

Once the CO2 levels tips the Climate systems into an unstable and shifting state, we likely will NOT be able to “Tip it back”.  Or at least not easily, or cheaply.  

The smart investment — is to NOT let those Eco-problems happen in the first place.  

(But, who said we were smart, eh?)

Economic value of nature ‘still invisible’, says UN

March 08, 2010

A United Nations initiative is making massive calculations in an attempt to put a price on nature services such as soil, forest or fresh water in a drive to convince policymakers to implement the ‘polluter pays’ principle to protect nature, said Pavan Sukhdev, who leads the initiative.

Unfortunately our current economic systems are not geared to defending or preserving anything that does not carry economic value,” Pavan deplored.

As a result, he says, “society destroys nature,” adding that it does not necessarily have to be that way.

For example, when forests are cut down, the cost downstream may amount to billions of euros as deforestation leads to flooding.  Biodiversity loss thus leads to losses in the economy, which then raises the interest of policymakers.

There’s that whole “interwoven web” concept.  Break something over there, and the fallout ends up over here.  Funny how that always happens in Nature.  And too often happens in Human Economies too.  

Perhaps there is the Reverse effect too. Take care of the Planet and its systems — and it will take care of us too?  We can hope.  It’s call the Good Earth, for a reason, isn’t it.

Jackpot: how international community could raise $141 billion for Biodiversity

Jeremy Hance, mongabay.com — Oct 20, 2010

Leaders from around the world meeting in Nagoya, Japan for the Convention on Biological Diversity (CBD) to discuss solutions to stem the current mass extinction crisis may be in need of a little book: The Little Biodiversity Finance Book.

While a recent report by The Economics of Ecosystems and Biodiversity (TEEB) found that degradation of ecosystems — including biodiversity loss — was costing the global economy $2-5 trillion annually, one of the primary threats to wildlife around the world is simply a lack of funds to enact program.

But The Little Biodiversity Finance Book says that with the right policy initiatives the burgeoning ecosystem market could be worth $141 billion by 2020.

Some countries know a good, long-term investment when they see one. Even if the USA is slow to catch onto the bigger planetary issues, sometimes.

India and Brazil head move to ‘green’ economic future

By Richard Black, Environment correspondent, BBC News, Nagoya — Oct 20, 2010

Governments are increasingly taking the economic value of nature into account in policy-making, with growing interest in results from a UN-backed analysis.

The Brazilian and Indian governments are among those keen to use findings from The Economics of Ecosystems and Biodiversity (TEEB) project.

Final results from the three-year study were unveiled here at the UN Convention on Biological Diversity meeting.

Nature’s services must be counted if they are to be valued, its leader said.

[…] TEEB calculated that the economic value of services being lost — including water purification, pollination of crops and climate regulation — amounts to $2-5 trillion dollars per year, with the poor hardest hit.

Afterall without clean plentiful water, pollinated crops, and stable climates — where would we be.  And Where will we be, say by 2030, 2050, if we keep pricing the things in the Environment, for their Shortest, Maximum gain?  In world of hurt, no doubt.

The long-term Eco-pricing concept works.  By putting a Fair Price on the Environment — and its many Services — we can preserve it, and improve it.   We can continue to live within it.

And improve the lives and livelihoods of the billions of human creatures, who still are part of the Environment, whether we take the time to appreciate our key dependencies there, or not.

Here are some recent Environmental Services success stories. Respect the Planet; it will respect us.  Nice.

Payments For Environmental Services (PES)

Costa Rica National PES programme

A financial mechanism for the recuperation and conservation of forest cover in Costa Rica ” has contributed to reverse forest loss by paying forest owners for four bundled environmental services (watershed protection, carbon sequestration, landscape beauty and biodiversity protection) their forests provide. While the scheme relies heavily on state funds derived from a fuel tax, it also counts with contributions from the private sector (hydropower producers and water bottling companies).

In nine years, it covered over 500,000ha of forest, mainly under protection, corresponding to over 6,000 contracts with landowners and invested over US$110 million into the protection of the country’s forests and its environmental services.


Mexico National PES programme

Mexico began a national PES programme in 2003, focusing on forest and watershed protection (the PSAH- National Programme for Hydrological Environmental Services, later joined by the PSA-CABSA- Program to Develop Environmental Services Markets for Carbon Capture and Biodiversity and to Establish and Improve Agroforestry Systems).

By 2005 it covered an area of over 500,000ha (surpassing Costa Rica’s 9-year programme at that time) and had invested US$ 88 million, of which about US$ 20 million a year, are channelled from water use fees charged to domestic and industrial water users.

The programme provides incentives for landowners to protect their forests, especially cloud forests, reforest or adopt agroforestry. It builds on previously ongoing individual watershed management PES projects and aims to supports their replication to other municipalities. It also supports carbon sequestration or avoided deforestation, and biodiversity conservation projects though its CABSA programme.



A state-wide programme the State Riparian Forest Restoration Project (PRMC) in São Paulo supports farmers in the restore and protect the vegetation in riparian strips in order to reduce erosion and improve water quality downstream.


SO … Who can put a Price on the Environment?  We all should.

If we did learn how to value a Natural Resource for more than just what’s its immediate removal will fetch on the open market —

Well maybe Planet Earth will have more capacity to maintain its many inhabitants for the long-run, in comfort and happiness … and productivity.

And maybe we all might be able to avoid the painful loss of so many other species, now slated to have one bumpy ride — a ride into oblivion.  If humanity maintains the Status Quo.

Without a fair value placed on Nature’s many diverse resources — most likely we won’t discover their true worth, until much, much too late.  Until after they’re gone.

That Environmental Clock is ticking — it’s always counting down .. to those eco-tipping points, whether those long run Economic costs are tallied or not.  Just ask the Frogs, ask the Polars Bears.

Who can put a Price on the Environment?    We all should.  Our Governments should too.

“When the last tree is cut, the last river poisoned, and the last fish dead, we will discover that we can’t eat money…”


Skip to comment form

    • jamess on October 24, 2010 at 17:33

    should transcend politics.

    saddly they don’t — usually.

    Too many human beings have become

    fond of political footballs.

    And far too many have decided to tune in,

    maybe sometime in the 4th quarter.


  1. I did a huge essay on this a few months ago.

      The real problem is an economic system designed to reward greed, including greed at everyone else’s expense.

    • jamess on October 24, 2010 at 20:42


    and theme song of the

    International Year of Biodiversity 2010

  2. The obvious solution is…

    Edible money!

    We could print it with food-dye on soy paper!

    And it’s also true that we can’t eat trees, so why pick on money?

    We can’t eat the ocean!

    We can’t eat air!

    We can’t eat blogs!

    I can’t eat my computer, but I don’t go around saying…

    “Oooh oooh oooh, watch out, I can’t eat my computer!

    • melvin on October 24, 2010 at 22:10

    they have been upheld by the courts a number of times as legitimate cause for action. See Dugong v Gates, for instance.

    • melvin on October 24, 2010 at 22:54

    in the US – and it probably won’t – be on the lookout for “biodiversity offsets”. This idea is already on the table in Nagoya. It is the bastard child of the Clean Development Mechanism and the failed mitigation efforts worldwide – see the USACE’s salmon “mitigation” work. Biodiversity offsets will be wildly successful, but only for market manipulators.

    • melvin on October 24, 2010 at 23:14

    There have been calls lately for a global bioversity body along the lines of the IPCC.

    This is an idea that might as well be killed in its cradle before any more resources are wasted on it. All one has to do is take a good look at the Consultative Process Towards an International Mechanism of Scientific Expertise on Biodiversity (IMoSEB) – just rolls off the tongue, doesn’t it? Fortunately it foundered in its own bureaucratic dithering over mechanisms etc before it ever got around to a contemplation of funding, which just isn’t going to happen. One is tempted to say this was a typically European proposal, long on theory and short on any chance in hell of accomplishing anything.

    Even if Americans don’t want to look at them, climate change has simple global indicators like mean temperature, marine ph, etc. Biodiversity does not and that makes all the difference. All biodiversity is local, so to speak.

    The only things that such a body could conceivably accomplish are already being done by the IUCN.

    /Andy Rooney

    • halef on October 24, 2010 at 23:30


    If those three conditions are fulfilled, the market works.

    If they’re not, economic theory typically cites “market failure”.

    But it’s not “market failure”.  “Market” is a mechanism; it doesn’t fail.  It merely reflects inputs.  The street price of illegal drugs reflects supply, demand and enforcement efforts.  It is a market price.  Vary any of the inputs, and the price changes.

    Legal markets are the product of hard social work.  Any reading of history will show that.  In other words, they are the product of regulation.  The better the regulation, the more efficient the market.

    The probably most archetypical market is the stock exchange.   Stock exchanges are also the most heavily and strictly regulated places around.  They are regulated in terms of tradable asset, market participants, disclosure requirements, settlement and so on.  Asymmetry of information (aka “insider trading”) is a crime.  Flea markets and antique auctions would die if the same level of disclosure were required.

    One solution: Privatise fresh water and clean air.  Sometimes, privatising a rare resource works.  Maybe the UN should be given ownership of all fresh water and clean air.  Just a thought…

    • Edger on October 25, 2010 at 17:48

    It’s MY f’in backyard and I’m tired of people poisoning it and crapping all over it.

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