1 The Economics of Ecosystems and Biodiversity (TEEB) London, 5 th May Pavan Sukhdev Study Leader, TEEB, & Director, UNEP Green Economy Initiative
Dec 16, 2015
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The Economics of Ecosystems and Biodiversity
(TEEB)London, 5th May
Pavan SukhdevStudy Leader, TEEB, &
Director, UNEP Green Economy Initiative
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How Serious is the Problem Globally ?
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Level of Biodiversity in the World in 2000(OECD baseline, Globio-3 model, “MSA’ indicator)
Remaining MSA in %
Source: Ben ten Brink (MNP) presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium.
4Source: Ben ten Brink (MNP) presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium.
Level of Biodiversity in the World in 2050“Business as Usual” Scenario of the future
Remaining MSA in %
MSA loss from 72% to 61% Natural Areas decline by 7.5 Million Sq. Km.
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What were our key conclusions from Phase I ?
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TEEB – Interim ReportThree Key Messages
Economic Size & Welfare Impact of Losses is huge
Strong link withPoverty & risk ofMDG’s failure
Discount ratesare ethical choices
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The problem
$$$Money : today‘s Yardstick
Photo: C.Neßhöver, UFZ
Nature‘s Interactions with Humanity
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Losses in ‘Present Value’ terms… (COPI study, May 2008, TEEB)
A : 50-year impact of inaction or ‘business as usual’
B : Natural Capital impact
Welfare losses equivalent to 7 % of GDP, horizon 2050
Natural Capital Lost : AnnuallyEUR 1.35 x 1012 to 3.10 x 1012
(@ 4% (@ 1%
Discount Rate) Discount Rate)
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How Serious is the Problem Globally ?
…in Economic & Human Terms ?
10Source: Ben ten Brink (MNP) presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium. Original source: Pauly
Open Access & Perverse Subsidies are key drivers of the loss of fisheries
Half of wild marine fisheries are fully exploited, with a further quarter already over-exploited
at risk : $ 80-100 billion income from the sector
at risk : est. 27 million jobs
but most important of all…..
at risk : Health … over a billion rely on fish as their main or sole source of animal protein, especially in developing countries.
TEEB : Global Loss of Fisheries… Human Welfare Impact
We are fishing down the food web to ever smaller species…
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Ecosystem Losses & Links to MDG’sHaiti Example : MDG # 1, 4, 5, 8…
HAITI
DOMINICANREPUBLIC
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The Discounting Issue…
… A Question of Ethics ?
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Three Hidden Stories of “Discounting” Revealed
Cash flow 50 years in the
future
Annual discount
rate
Present value of the future cash
flow
1,000,000 4% 140,713
1,000,000 2% 371,528
1,000,000 1% 608,039
1,000,000 0% 1,000,000
1. Declining Growth Paths in per-capita flow of nature’s services …. imply that discount rates should be negative
2. Marginal Utility of $1 to the Rich vs Poor …. is too different to merit the same discounting treatment
3. Inter-generational Equity…….following current norms means valuing nature’s utility to your grandchild at one-seventh of your own
Most of the 29 valuation studies in our meta-study of forest valuationsuse discount rates between 3%-5%
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How does one capture the value of nature ?
What can we do NOW ?
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TEEB – Interim Report“From Economics to Policies”
Rethink todays subsidies to meet tomorrow’s priorities
Reward unrecognized benefits, penalize Uncaptured costs
Share the benefits ofconservation
Measure what we Manage !
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TEEB – Interim Report“From Economics to Policies”
Rethink todays subsidies to meet tomorrow’s priorities
Reward unrecognized benefits, penalize Uncaptured costs
Share the benefits ofconservation
Measure what we Manage !
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TEEB “Interim Report” ExamplesRewarding Unrecognized Benefits
Costa Rican PES : Payments for Environmental Services are virtually a national strategy for forest and biodiversity conservation and sustainable development Panama Canal : Insurance firms and shipping companies are financing a 25-year project to reforest the water catchment of the canal to restore freshwater flow to its locks… the fear of loss due to closures of the Canal had been making shipping insurance premiums mount
Guyana : A Private Equity firm recently bought the rights to environmental services from a 370,000 hectare rainforest reserve in Guyana anticipating that its services (water storage, biodiversity maintenance, rainfall regulation, etc) will gain value. Revenues will be shared 80% with the local community.
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Q : What will TEEB Phase II be about ?
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1-Word Summary of TEEB Phase II
“Mainstreaming”
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TEEB – Final ReportSep 2009, June 2010
ConsumerOwnership
Business Risks & Opportunities
Decision Supportfor Administrators
Policy Evaluation for Policy-Makers
Science & EconomicsFoundations, Policy Costs, & Costs of Inaction
18.04.23 UNEP ETB21
Can “PA Conservation” be an “Opportunity” ?
Measures
Sectors
Revenues (USD Bio)
Capital Employed (USD Bio)
People Employed
Automobiles4 $ 1,882 Bio $2,217 Bio 4.4 Mio
Steel4 $ 530 Bio $ 588 Bio 4.5 Mio
IT Services & Software4
$ 942 Bio $ 179 Bio 5.7 Mio
Protected Area Conservation
$ 4,500 Bio1 $ 125,000 Bio2 1.5 Mio3
1. Balmford et al, 2002, “Economic Reasons for Conserving Wild Nature”, Science 297, estimates Protected Areas could produce goods and services valued at between $ 4,400 billion - $ 5,200 billion per annum
2. Natural Capital : Present Value (PV) of a constant service annuity of $ 5,000 billion per annum, discounted @ 4% per annum3. Estimate of the number employed directly in the maintenance, protection, and oversight of Protected Areas globally 4. Global Business Sector estimates from Global Markets Centre (“GMC”), Deutsche Bank
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Challenge : Evaluate ECUADOR’S Conservation Proposal ( Yasuni Preserved, Oil stays in ground) ?
Yasuni National Park –the most biodiversewilderness on Earth
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TEEB D1 Challenge (cont’d) ECUADORYASUNI National Park / ITT Oilfield Proposal
• Ecuador commits not to exploit 20% of it’s proven oil reserves (846 million barrels), (ITT oil fields, within the Yasuní National Park.
• Ecuador’s Opportunity Cost : ( @ US$ 75 WTI) is an NPV of US$11.6 billion.
• World’s CO2 Storage : 407 million Mt CO2; @ market (EU-ETS), US$28.85/ Mt, US$11.7 billion.
• Global benefit : Social Cost of CO2 far exceeds market price …
• Ecuador’s benefit : National energy policy, social upliftment, Protected Area Network maintenance ..now ….
• ECUADOR shows a way… Does the world have the will ?
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The Process for TEEB Phase II
Inputs from Science and Economics experts through the Call for Evidence,
participation in Working Groups, etc
D0
En
d-U
ser
Ou
trea
ch
2008 2009
2010
Continuous involvement of End-User Groups
D4
D3
D2
D1
Val‘n Framework, Methodologies, Cost Analyses
TEEB for Policy-Makers
TEEB for Consumers
TEEB for Business
TEEB for Administrators
Carsten Neßhöver, Heidi Wittmer & Christoph Schröter-Schlaack, UFZ
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Thank You !