CBD Biodiversity and Changes in the Ecosystems: Consequences to Sustainable Development Hamdallh Zedan Conference on Environmental Economics and Sustainable.

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Biodiversity and Changes in the Biodiversity and Changes in the Ecosystems: Consequences to Ecosystems: Consequences to

Sustainable DevelopmentSustainable Development

Hamdallh ZedanHamdallh Zedan

Conference on Environmental Economics and Sustainable Conference on Environmental Economics and Sustainable DevelopmentDevelopment

Alexandria, 25 October 2007Alexandria, 25 October 2007

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Today’s presentationToday’s presentation

•Biological diversity underpins ecosystem services needed for human well-being

•Achieving the MDGs requires awareness of the importance of biological diversity for food security and nutrition, human health and ecosystem resilience

• Economic analysis of biodiversity

•Strategies for making valuation relevant for decision-making

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Global Global Environmental ChangesEnvironmental Changes

Climate change

Loss of biological diversity

Land degradation and desertification

Deforestation and forest degradation

Depletion of stratospheric ozone

Pollution of fresh and marine waters

Accumulation of persistent organic pollutants

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Global Changes

Atmospheric Change

Halocarbons

Ozone

UV radiation

- Acid rain

-N2 deposition

- Temperature

- Precipitation

- Productivity

- Biodiversity

N2 CO2

Land use

Ocean use

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Responsibility and Impacts Responsibility and Impacts of Global Changesof Global Changes

Differ among countries and peopleDiffer among countries and people

The rich contribute disproportionatelyThe rich contribute disproportionately

The poor and disadvantaged are the most vulnerableThe poor and disadvantaged are the most vulnerable

Poverty and inequity exacerbate global changesPoverty and inequity exacerbate global changes

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Biodiversity loss and changes in theBiodiversity loss and changes in the

ecosystems are the most seriousecosystems are the most serious

but the less felt or appreciatedbut the less felt or appreciated

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What is ‘biodiversity’?What is ‘biodiversity’?

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Biodiversity is the Biodiversity is the variety of all life formsvariety of all life forms: the: thedifferent plants, animals and microorganisms, their different plants, animals and microorganisms, their genes and the ecosystems of which they are a part. genes and the ecosystems of which they are a part.

It covers the It covers the terrestrialterrestrial, , marinemarine and other and other aquaticaquaticenvironments. environments.

It is It is not staticnot static, but constantly changing. A concept , but constantly changing. A concept that emphasizes the interrelatedness of the biologicalthat emphasizes the interrelatedness of the biologicalworld. world.

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This variability can be considered at fourThis variability can be considered at four

levels:levels:

• GeneticGenetic (i.e. genes, nucleotides, (i.e. genes, nucleotides, chromosomes, individuals); chromosomes, individuals);

• SpeciesSpecies (i.e. kingdom, phyla, families, (i.e. kingdom, phyla, families, subspecies, species, populations); subspecies, species, populations);

• EcosystemEcosystem (i.e. bioregions, landscapes, (i.e. bioregions, landscapes, habitats); and, habitats); and,

• FunctionalFunctional (i.e. ecosystem robustness, (i.e. ecosystem robustness, resilience, goods and services). resilience, goods and services).

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Direct Causes/Drivers of Change Direct Causes/Drivers of Change

(Human Induced Actions)(Human Induced Actions)

Land-use changes (degradation and Land-use changes (degradation and fragmentation of ecosystems)fragmentation of ecosystems)

Introductions/removal of species (e.g. invasive Introductions/removal of species (e.g. invasive alien species)alien species)

External inputs (e.g. fertilizer use, pest control, External inputs (e.g. fertilizer use, pest control, pollution, irrigation)pollution, irrigation)

Harvest and resource consumption (over Harvest and resource consumption (over exploitation, unsustainable production and exploitation, unsustainable production and consumption)consumption)

Technology adaptation Technology adaptation Climate change (additional stress)Climate change (additional stress)Natural causes (e.g. floods, droughts, Natural causes (e.g. floods, droughts,

volcanoes, evolution)volcanoes, evolution)

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Indirect Drivers of Biodiversity LossIndirect Drivers of Biodiversity Loss

• Economic (e.g. globalization, trade, market and Economic (e.g. globalization, trade, market and policy frameworks)policy frameworks)

• Demographic (e.g. population growth and Demographic (e.g. population growth and density)density)

• Socio-political (e.g. governance, institutional Socio-political (e.g. governance, institutional and legal frameworks)and legal frameworks)

• Cultural and religious (e.g. choices about what Cultural and religious (e.g. choices about what and how much to consume)and how much to consume)

• Science and technologyScience and technology

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What economics has to say about What economics has to say about biodiversitybiodiversity

The overriding goal of economics is to deliverThe overriding goal of economics is to deliverchoice solutions that make society better off. Aschoice solutions that make society better off. Asthe creation of value makes society better off,the creation of value makes society better off,three questions ought to be addressed:three questions ought to be addressed:

• Why is biodiversity valuable? Why is biodiversity valuable? • How can the value of biodiversity be estimated? How can the value of biodiversity be estimated?

and, and, • How can the value of biodiversity be delivered to How can the value of biodiversity be delivered to

society? society?

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Importance of biodiversity: Ecosystem Goods and Importance of biodiversity: Ecosystem Goods and ServicesServices

RegulatingRegulating

Benefits obtained Benefits obtained from regulation of from regulation of

ecosystem ecosystem processesprocesses

climate controlclimate control disease controldisease control flood controlflood control waste waste

detoxification and detoxification and decompositiondecomposition

drought drought moderationmoderation

ProvisioningProvisioningGoods produced or Goods produced or

provided by provided by ecosystemsecosystems

food food fresh waterfresh water fuel woodfuel wood fiberfiber bio-chemicals bio-chemicals genetic resourcesgenetic resources

CulturalCulturalNon-material benefits Non-material benefits

obtained from obtained from ecosystemsecosystems

spiritual spiritual recreational recreational aestheticaesthetic inspirationalinspirational educational educational communalcommunal symbolicsymbolic

SupportingSupportingServices that maintain the conditions for life on earth.Services that maintain the conditions for life on earth.

Soil formationSoil formation Nutrient cyclingNutrient cycling Pollination and seed dispersalPollination and seed dispersal

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Biodiversity Contribution to Biodiversity Contribution to World EconomyWorld Economy

• 40% of the world economy is derived 40% of the world economy is derived directly from biodiversity.directly from biodiversity.

• aggregated annual value of aggregated annual value of ecosystem services worldwide: US$ 18 ecosystem services worldwide: US$ 18 trillion to US$ 61 trillion ( similar to trillion to US$ 61 trillion ( similar to figures resulting from all goods and figures resulting from all goods and services produced by people).services produced by people).

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• Diverse Diverse ecosystems are more productive than are more productive than non-diverse ones, because any group of non-diverse ones, because any group of species can never fully exploit all potential species can never fully exploit all potential niches. Since human economic productivity is . Since human economic productivity is largely reliant on Earth's ecosystems, largely reliant on Earth's ecosystems, adequate bioproductivity needs to be adequate bioproductivity needs to be maintained.maintained.

• Natural innovation found in biological Natural innovation found in biological organisms rivals all known technologies organisms rivals all known technologies derived through synthetic means.derived through synthetic means.

• A single A single human genome has some three has some three billion billion bits of information but the human of information but the human species also has many variations. species also has many variations.

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• There are many There are many millions of speciesmillions of species of life of life on the planet each with valuable on the planet each with valuable information. information. Many chemical formulae and Many chemical formulae and forty-five percent of all drugs have bio-forty-five percent of all drugs have bio-originorigin..

• Services and economic commodities that Services and economic commodities that biodiversity supplies to humankind are biodiversity supplies to humankind are essential for essential for sustainable developmentsustainable development and and achievement of the Millennium Development achievement of the Millennium Development Goals (Goals (MDGsMDGs).).

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The Millennium Development GoalsThe Millennium Development Goals

Goal 1 - Eradicate extreme poverty and hunger

Goal 2 - Achieve universal primary educationGoal 2 - Achieve universal primary education

Goal 3 - Promote gender equality and empower womenGoal 3 - Promote gender equality and empower women

Goal 4 - Reduce child mortalityGoal 4 - Reduce child mortality

Goal 5 - Improve maternal healthGoal 5 - Improve maternal health

Goal 6 - Combat HIV/AIDS, malaria, and other diseasesGoal 6 - Combat HIV/AIDS, malaria, and other diseases

Goal 7 - Ensure environmental sustainabilityGoal 7 - Ensure environmental sustainability

Goal 8 - Develop a global partnership for developmentGoal 8 - Develop a global partnership for development

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Ecosystem Services and the MDGsEcosystem Services and the MDGs

Goal 1 - Eradicate extreme poverty and hunger

Goal 2 - Achieve universal primary Goal 2 - Achieve universal primary educationeducation

Goal 3 - Promote gender equality and Goal 3 - Promote gender equality and empower womenempower women

Goal 4 - Reduce child mortalityGoal 4 - Reduce child mortality

Goal 5 - Improve maternal healthGoal 5 - Improve maternal health

Goal 6 - Combat HIV/AIDS, malaria, Goal 6 - Combat HIV/AIDS, malaria, and other diseasesand other diseases

Goal 7 - Ensure environmental Goal 7 - Ensure environmental sustainabilitysustainability

Goal 8 - Develop a global partnership Goal 8 - Develop a global partnership for developmentfor development

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Millennium Development Goal 1Millennium Development Goal 1

Goal 1: Eradicate Goal 1: Eradicate extreme poverty extreme poverty and hungerand hunger

Target 2 : Target 2 : Halve, between 1990 Halve, between 1990 and 2015, and 2015, the proportions of the proportions of people who suffer from people who suffer from hungerhunger

Achieving this target has important Achieving this target has important consequences for the drivers of biodiversity consequences for the drivers of biodiversity

lossloss

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•800 Million are hungry

• Deaths from cardiovascular diseases - 17 million

• 171 million suffer from diabetes globally

• 300 million people clinically obese worldwide

Increased food production will mean a larger ecological footprint.

Dietary trends can produce health problems

Conservation and sustainable use of biodiversity will reduce the ecological footprint from increased food production and provide access to diversity of food stuffs

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Contribution of Biodiversity Contribution of Biodiversity to nutrition and resilienceto nutrition and resilience

Genetic DiversityGenetic Diversity Species DiversitySpecies Diversity Ecosystem DiversityEcosystem Diversity

• Ensures resilienceEnsures resilience

• Basis for nutritional Basis for nutritional diversitydiversity

• Important for Important for nutritional diversitynutritional diversity

• Biodiversity provides Biodiversity provides range of foodsrange of foods

• Important for sound Important for sound agricultural agricultural managementmanagement

• Maintains soil fertilityMaintains soil fertility

• Helps increase Helps increase agricultural agricultural productivityproductivity

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• Biodiversity provides high variety of food: Biodiversity provides high variety of food: crops, , livestock, , forestry, and , and fish are important food are important food source of human species. However, the number of source of human species. However, the number of species have been domesticated and cultivated are species have been domesticated and cultivated are small if comparing with the number of species existing.small if comparing with the number of species existing.

• Food supply: 30,000 species are edible. Of these, 7,000 Food supply: 30,000 species are edible. Of these, 7,000 are cultivated or collected for food are cultivated or collected for food

• Wild species and varieties can supply genes for Wild species and varieties can supply genes for improving domesticated species by improving their improving domesticated species by improving their yield, disease resistance, tolerance and vigor; this can yield, disease resistance, tolerance and vigor; this can increase the profit of farming.increase the profit of farming.

• Genetic traits from wild crop varieties introduced into Genetic traits from wild crop varieties introduced into domestic agricultural crops (in USA): US$8 billion per domestic agricultural crops (in USA): US$8 billion per yearyear

• Total seed-sector activities worldwide: US$45 billion per Total seed-sector activities worldwide: US$45 billion per yearyear

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Ecosystem Services Ecosystem Services and Human Healthand Human Health

• Fresh waterFresh water• Medicinal plants/ resourcesMedicinal plants/ resources• Control of infectious diseaseControl of infectious disease• Food Food • Timber, fuel and fiberTimber, fuel and fiber• Waste managementWaste management

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Millennium Development Goals 4, 5 Millennium Development Goals 4, 5 and 6and 6

Goal 4 - Reduce child mortalityGoal 4 - Reduce child mortality

Goal 5 - Improve maternal Goal 5 - Improve maternal healthhealth

Goal 6 - Combat HIV/AIDS, Goal 6 - Combat HIV/AIDS, malaria, and other malaria, and other diseasesdiseases

Biodiversity supports the ecosystem services Biodiversity supports the ecosystem services which enable these goals to be metwhich enable these goals to be met

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The Importance of Biodiversity for The Importance of Biodiversity for MedicineMedicine

• 60% of world population relies on plants for 60% of world population relies on plants for primary healthcareprimary healthcare

• 80% of population in developing countries 80% of population in developing countries

rely on traditional medicinesrely on traditional medicines

• 25% of prescriptions in United States contain plant 25% of prescriptions in United States contain plant extracts or active principles from plantsextracts or active principles from plants

• More than 50% of the top prescription drugs in the More than 50% of the top prescription drugs in the U.S. are compounds derived from, or are based on U.S. are compounds derived from, or are based on compounds derived from, natural sourcescompounds derived from, natural sources

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• A wide variety of plants, animals and fungi are A wide variety of plants, animals and fungi are used as medicine. Wild plant species have used as medicine. Wild plant species have been used for medicinal purposes since before been used for medicinal purposes since before the beginning of recorded history. the beginning of recorded history.

• Source of medicine (health care): 20,000 Source of medicine (health care): 20,000 species are used in traditional medicine for species are used in traditional medicine for about 2.5 billion people; about 2.5 billion people; 5,000 species are 5,000 species are potential source of commercial drugspotential source of commercial drugs

• Over 60% of world population depends on plant Over 60% of world population depends on plant medicines for their primary health care. For medicines for their primary health care. For example, example, quinine from the from the cinchona tree has tree has been used to treat been used to treat malaria, , digitalis from the from the foxglove plant treats chronic heart trouble, and plant treats chronic heart trouble, and morphine from the from the poppy plant gives pain plant gives pain relief.relief.

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• Global market for herbal drugs:Global market for herbal drugs: US$47 US$47 billion in 2000billion in 2000

• Sales of prescription drugs containing Sales of prescription drugs containing ingredients from wild plants (in USA): US$15 ingredients from wild plants (in USA): US$15 billion in 1990 billion in 1990

• According to the National Cancer Institute, over According to the National Cancer Institute, over 70 % of the promising anti-cancer drugs come 70 % of the promising anti-cancer drugs come from plants in the tropical rainforests. It is from plants in the tropical rainforests. It is estimated that of the 250,000 known plant estimated that of the 250,000 known plant species, only 5,000 have been researched for species, only 5,000 have been researched for possible medical applications. Ethno-pharmacy possible medical applications. Ethno-pharmacy is the branch of science that investigates is the branch of science that investigates traditional medicines.traditional medicines.

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• Animals may also play a role, in Animals may also play a role, in particular in research. In traditional particular in research. In traditional remedies, animals are extenively remedies, animals are extenively used as drugs. Many animals also used as drugs. Many animals also medicate medicate themselvesthemselves. . Zoopharmacognosy is the study of Zoopharmacognosy is the study of how animals use plants, insects how animals use plants, insects and other inorganic materials in and other inorganic materials in self-medicatation. self-medicatation.

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Drugs derived from plants and Drugs derived from plants and microbesmicrobes

• 119 chemical compounds, 119 chemical compounds, derived from 90 plant species derived from 90 plant species are important drugs currently are important drugs currently in usein use

– QuinineQuinine– ArtemisininArtemisinin– MorphineMorphine– Paclitaxel (Taxol©)Paclitaxel (Taxol©)– Salicin (Aspirin)Salicin (Aspirin)

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• Microbially derived agents are also importantMicrobially derived agents are also important– Penicillins and other Penicillins and other ββ-lactam antibiotics-lactam antibiotics– AminoglycosidesAminoglycosides– TetracyclinesTetracyclines– AnthracyclinesAnthracyclines

• There is no question that the There is no question that the templates for most drugs are in the templates for most drugs are in the natural world.natural world.

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Biodiversity and Control Biodiversity and Control of Infectious Diseasesof Infectious Diseases

• Change to diversity of habitat elements, Change to diversity of habitat elements, such as degradation, deforestation may such as degradation, deforestation may change epidemiologychange epidemiology

– Yellow fever, malariaYellow fever, malaria

• Reduction of overall species diversity can Reduction of overall species diversity can lead to an increase in vector-based disease lead to an increase in vector-based disease (dilution effect is reduced)(dilution effect is reduced)

– West Nile encephalitis, Lyme diseaseWest Nile encephalitis, Lyme disease

• Climate change may expand the range of Climate change may expand the range of vector-based diseasesvector-based diseases

– Malaria, dengueMalaria, dengue

• Pollution, including nitrogen loadingPollution, including nitrogen loading– Eutrophication may lead to River blindnessEutrophication may lead to River blindness

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• Using control species is often more Using control species is often more environmentally friendly compared with using environmentally friendly compared with using pesticides. The control species can be used to pesticides. The control species can be used to protect the crops against pests and weeds. The protect the crops against pests and weeds. The economic loss due to the loss of crops/food can economic loss due to the loss of crops/food can be reduced with the use of the control species.be reduced with the use of the control species.

• Also, the population of disease vectors (for Also, the population of disease vectors (for example, mosquitoes) and the invasive species example, mosquitoes) and the invasive species can be controlled; thus, the economic loss led can be controlled; thus, the economic loss led by the invasive species and vectors can be by the invasive species and vectors can be reduced. reduced. Damages worldwide from invasive species Damages worldwide from invasive species was estimated at more than US$ 1.4 trillion per yearwas estimated at more than US$ 1.4 trillion per year..

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Millennium Development Goal 8Millennium Development Goal 8 Biodiversity and environmental sustainabilityBiodiversity and environmental sustainability

Benefits obtained from Benefits obtained from regulation of ecosystem regulation of ecosystem processes:processes:

> > Climate controlClimate control > Disease control> Disease control > Flood control> Flood control > Waste detoxification> Waste detoxification and decompositionand decomposition > Drought moderation> Drought moderation

Services that maintain the Services that maintain the conditions for life on conditions for life on earth:earth:

> Soil formation> Soil formation > Nutrient cycling> Nutrient cycling > Pollination and> Pollination and seed dispersalseed dispersal

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Ecosystem Products and ServicesEcosystem Products and Services Estimated Value (US Dollars)Estimated Value (US Dollars)

Economic activity generated by the 350 Economic activity generated by the 350 million visitors to U.S. national parks, wildlife million visitors to U.S. national parks, wildlife refuges and other public lands through refuges and other public lands through expenditures on fishing, hiking, hunting, expenditures on fishing, hiking, hunting, whale watching and wildlife photographywhale watching and wildlife photography

More than 400,000 jobs andMore than 400,000 jobs and

28 billion per year28 billion per year

Commercial and sport fishing revenue lost Commercial and sport fishing revenue lost because of destruction of U.S. estuaries because of destruction of U.S. estuaries between 1954 and 1978between 1954 and 1978

More than $200 millionMore than $200 million

Value of flood control services provided by Value of flood control services provided by marsh-lands near the Charles River in marsh-lands near the Charles River in Boston, MassachusettsBoston, Massachusetts

$72,000 per acre of marshland$72,000 per acre of marshland

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Why measuring biodiversity in monetary Why measuring biodiversity in monetary terms?terms?

>Many of the goods and services provided by>Many of the goods and services provided by biodiversity and ecosystems are crucial, but not alwaysbiodiversity and ecosystems are crucial, but not always measurable in monetary terms.measurable in monetary terms. >Many of these goods and services are not traded in>Many of these goods and services are not traded in the market place and so do not have an obvious price the market place and so do not have an obvious price or commercial value.or commercial value. >If unpriced values are not included in the decision->If unpriced values are not included in the decision- making process, the final decision may favor outcomesmaking process, the final decision may favor outcomes which do have a commercial value. which do have a commercial value.

>Hence decision makers may not have full awareness>Hence decision makers may not have full awareness of the consequences for biodiversity conservation.of the consequences for biodiversity conservation.

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Despite these facts, biodiversity is lost at Despite these facts, biodiversity is lost at unprecedented rateunprecedented rate

Some 100 to 150 species become extinct everydaySome 100 to 150 species become extinct everyday Some 20,000 to 100,000 species become extinct Some 20,000 to 100,000 species become extinct

every year (natural extinction rate 2-10 species/year) every year (natural extinction rate 2-10 species/year) One breed of livestock dies out every weekOne breed of livestock dies out every weekMore than 31,000 plant animal species are More than 31,000 plant animal species are

threatened with extinctionthreatened with extinction

Some 75 % of the genetic diversity found in Some 75 % of the genetic diversity found in agricultural crops have been lost over the last agricultural crops have been lost over the last centurycentury

Of 6300 animal breeds, 1350 are endangered or Of 6300 animal breeds, 1350 are endangered or already extinctalready extinct

Forests and ecosystems are being destroyed at the Forests and ecosystems are being destroyed at the rate of over 10 million hectares every yearrate of over 10 million hectares every year

If current destruction rate in forests and coral reefs is If current destruction rate in forests and coral reefs is maintained, 50% of plant and animal species will be maintained, 50% of plant and animal species will be gone by the end of the 21st centurygone by the end of the 21st century

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• Current extinction rates are as much as 1,000 times background rates

• 20% of worlds coral reefs were lost in last several decades

• 35% of mangrove area has been lost

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We don’t know what is lost: number of We don’t know what is lost: number of species on Earthspecies on Earth

Recent estimate: 7 to 20 millionRecent estimate: 7 to 20 million

Good working estimate: 13 to 14 millionGood working estimate: 13 to 14 million

Scientifically described species: 1.8 to 2.1 millionScientifically described species: 1.8 to 2.1 million

Less well-studied groups: bacteria, fungi, arthropods Less well-studied groups: bacteria, fungi, arthropods and nematodesand nematodes

Poorly known groups: species living in marine Poorly known groups: species living in marine ecosystems and beneath the groundecosystems and beneath the ground

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Reasons for ConcernReasons for Concern

• Decline in ecosystem servicesDecline in ecosystem services– Required for human-well-beingRequired for human-well-being

• Impact on the poorestImpact on the poorest– May prevent attaining the MDGsMay prevent attaining the MDGs

• Loss of resilienceLoss of resilience– Can exacerbate shocks & produce Can exacerbate shocks & produce

surprisessurprises

• Loss of unique species & habitatsLoss of unique species & habitats

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Impact of Global WarmingImpact of Global Warming

• It was estimated that one third of the earth’s It was estimated that one third of the earth’s species could disappear by 2050 if the species could disappear by 2050 if the current rate of global warming continues.current rate of global warming continues.

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Maintaining BiodiversityMaintaining Biodiversity

• Maintaining biodiversity requires Maintaining biodiversity requires more than just more than just protecting wildlife and their habitatsprotecting wildlife and their habitats in nature in nature conservation reserves. It is also about the conservation reserves. It is also about the sustainable use and managementsustainable use and management of all natural of all natural resources and safeguarding the life-support resources and safeguarding the life-support systems on earth. systems on earth.

• Society needs mechanisms for determining the Society needs mechanisms for determining the appropriate appropriate trade-off trade-off between biodiversity between biodiversity protectionprotection and the human activities that create and the human activities that create value for people but result in biodiversity value for people but result in biodiversity lossloss..

• Economics offers some Economics offers some techniques to help in this techniques to help in this decision-makingdecision-making process. However, the full process. However, the full potential of these techniques is yet to be potential of these techniques is yet to be realized.realized.

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Economic Analysis of BiodiversityEconomic Analysis of Biodiversity

• Economic analysis of biodiversity Economic analysis of biodiversity requires an understanding of the requires an understanding of the connections between the connections between the choiceschoices people people make, the make, the resultant changesresultant changes and the and the subsequent changes in the subsequent changes in the wellbeing of wellbeing of peoplepeople. .

• At the core of the interrelationships At the core of the interrelationships between people and biodiversity is the between people and biodiversity is the ecological system in which the state and ecological system in which the state and scale of biological resources are scale of biological resources are intrinsically linked to biodiversity. intrinsically linked to biodiversity.

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Human/Biodiversity interrelationshipsHuman/Biodiversity interrelationships

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• This is particularly evident in a dynamic This is particularly evident in a dynamic analysis of the interrelationship through the analysis of the interrelationship through the notion of resilience. This is because, in notion of resilience. This is because, in general, the greater the biodiversity, general, the greater the biodiversity, the the greater is the resilience of the ecological greater is the resilience of the ecological systemsystem. Hence, with greater biodiversity, . Hence, with greater biodiversity, society has better ‘society has better ‘insurance’insurance’ against the against the impacts of a future adverse event.impacts of a future adverse event.

• Valuation methods have mostly concentrated Valuation methods have mostly concentrated on species and habitat protection. There is on species and habitat protection. There is little recognition of the complex relationship little recognition of the complex relationship between biodiversity and the scale of the between biodiversity and the scale of the biological resourcebiological resource

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• Hence, the values reported are not estimates Hence, the values reported are not estimates of biodiversity of biodiversity per seper se, but rather of the , but rather of the species/ ecosystem being studied. Very few species/ ecosystem being studied. Very few studies have targeted the value of ecosystem studies have targeted the value of ecosystem resilience as the specific result of biodiversity resilience as the specific result of biodiversity protection activities. protection activities.

• Unless the ecological system is understood, Unless the ecological system is understood, the role of economics is very limited. For the role of economics is very limited. For instance, to use the production function instance, to use the production function approach to assess the value of soil biota we approach to assess the value of soil biota we need to understand the links between farm need to understand the links between farm management practices, soil biota and the management practices, soil biota and the productivity of the soil. productivity of the soil.

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When markets failWhen markets fail

Decisions about biodiversity management areDecisions about biodiversity management arecomplicated by the fact that various types of complicated by the fact that various types of marketmarketfailurefailure are associated with natural resources and the are associated with natural resources and the environment.environment.

Market failures occur when markets do not reflectMarket failures occur when markets do not reflectthe full social costs or benefits of a good.the full social costs or benefits of a good. Factors Factorsthat cause market failures related to biodiversitythat cause market failures related to biodiversityprotection include:protection include:

• many ecosystems provide services that are many ecosystems provide services that are public public goodsgoods; they may be enjoyed by any number of people ; they may be enjoyed by any number of people without affecting other peoples’ enjoyment. without affecting other peoples’ enjoyment.

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• many ecosystem services are affected many ecosystem services are affected by by externalitiesexternalities (the side effects of (the side effects of human actions; for example, if a stream human actions; for example, if a stream is polluted by runoff from agricultural is polluted by runoff from agricultural land, the people downstream experience land, the people downstream experience a negative externality. Externalities can a negative externality. Externalities can also be positive, e.g. the crop pollination also be positive, e.g. the crop pollination services performed by wild bees). services performed by wild bees).

• property rightsproperty rights related to ecosystems related to ecosystems and their services are often not clearly and their services are often not clearly defined. defined.

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• An example of an externality is the cost An example of an externality is the cost of of salinitysalinity arising from arising from vegetation vegetation clearanceclearance. The repair bill for salinity and . The repair bill for salinity and water logging due to removal of the water logging due to removal of the vegetation that regulated groundwater vegetation that regulated groundwater flow (another ecosystem service) is one flow (another ecosystem service) is one of the most expensive ones facing of the most expensive ones facing AustraliaAustralia at the moment. Estimates of at the moment. Estimates of the size of the the size of the repair bill vary from $20 - repair bill vary from $20 - $65 billion over 10 years$65 billion over 10 years, depending on , depending on what aspects of salinity are included. If what aspects of salinity are included. If these externalities had been factored these externalities had been factored into the original decisions to clear into the original decisions to clear vegetation, a costly repair bill may have vegetation, a costly repair bill may have been avoided.been avoided.

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• Proper ecosystem valuation can Proper ecosystem valuation can help resource managers deal with help resource managers deal with the effects of market failures by the effects of market failures by measuring their costs to society in measuring their costs to society in terms of lost benefits.  The costs to terms of lost benefits.  The costs to society can then be imposed, in society can then be imposed, in various ways, on those who are various ways, on those who are responsible, or can be used to responsible, or can be used to determine the viability of actions to determine the viability of actions to reduce or eliminate environmental reduce or eliminate environmental impacts.impacts.

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key strategies for making valuation studies key strategies for making valuation studies more relevant and timely for decision more relevant and timely for decision

makersmakers

• Greater policy application:Greater policy application: Decision-makers Decision-makers can increase their understanding of the range can increase their understanding of the range of values that biodiversity offers and the of values that biodiversity offers and the techniques used to estimate them through techniques used to estimate them through greater exposure to the use of valuation greater exposure to the use of valuation techniquestechniques

• Better science:Better science: We need to improve our We need to improve our scientific understanding of the impacts of scientific understanding of the impacts of human activities on biodiversity. human activities on biodiversity.

• Better communication:Better communication: Improved general Improved general awareness of what biodiversity and awareness of what biodiversity and biodiversity valuation can offer society. biodiversity valuation can offer society.

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Role of developed countriesRole of developed countries

Take the lead in adopting positive policy approaches towards Take the lead in adopting positive policy approaches towards sustainable consumption and production.sustainable consumption and production.

Take a fresh look at their policies on foreign aid, trade and debt relief.Take a fresh look at their policies on foreign aid, trade and debt relief.

Make available additional financial resources and technologies Make available additional financial resources and technologies essential for developing countries to break the vicious cycle of poverty essential for developing countries to break the vicious cycle of poverty and environmental degradation.and environmental degradation.

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Role of developing countriesRole of developing countries

Create conditions whereby stakeholders, in particular, Create conditions whereby stakeholders, in particular, local communities, assume greater responsibility over local communities, assume greater responsibility over the management of biological resources and benefit the management of biological resources and benefit from their utilization.from their utilization.

Give serious consideration to the effects of misuse of Give serious consideration to the effects of misuse of resources in defeating the purpose of well-intended resources in defeating the purpose of well-intended sustainable development policiessustainable development policies..

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Thank youThank you

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Whilst biodiversity value estimation has Whilst biodiversity value estimation has struggled to achieve a higher policy struggled to achieve a higher policy profile, the economic analysis of profile, the economic analysis of delivering biodiversity values to society delivering biodiversity values to society has progressed rapidly in the last has progressed rapidly in the last decade. This has been achieved through decade. This has been achieved through the development of policy tools that the development of policy tools that provide incentives for people to provide provide incentives for people to provide biodiversity values.biodiversity values.

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• The predominant mechanism for delivering The predominant mechanism for delivering public goods – including biodiversity – has been public goods – including biodiversity – has been government provision. In the case of government provision. In the case of biodiversity this was achieved through the biodiversity this was achieved through the creation of a network of parks and nature creation of a network of parks and nature reserves. However, in recognition that such a reserves. However, in recognition that such a ‘patchwork’ approach would not provide ‘patchwork’ approach would not provide functional biodiversity protection (resilience), functional biodiversity protection (resilience), more policy emphasis has been put on more policy emphasis has been put on biodiversity protection on privately owned land. biodiversity protection on privately owned land. Economists have provided assistance in this Economists have provided assistance in this endeavour by bringing to the fore a suite of endeavour by bringing to the fore a suite of policy measures broadly known as ‘market policy measures broadly known as ‘market based instruments’. based instruments’.

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• These measures involve the use of financial These measures involve the use of financial incentives to promote biodiversity protection. incentives to promote biodiversity protection. They include the payment of targeted They include the payment of targeted subsidies, the levying of taxes on biodiversity subsidies, the levying of taxes on biodiversity destructive practices and the introduction of destructive practices and the introduction of trading and banking schemes in which property trading and banking schemes in which property rights to biodiversity are created and then rights to biodiversity are created and then bought and sold amongst people who can bought and sold amongst people who can supply biodiversity (for example, land owners) supply biodiversity (for example, land owners) and those who want biodiversity (for example, and those who want biodiversity (for example, society, as represented by their government, society, as represented by their government, conservation clubs, and developers who want conservation clubs, and developers who want to use biodiversity in their development to use biodiversity in their development activities).activities).

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• The implication of market failure is that there is a The implication of market failure is that there is a potential role for government in filling the gap left by potential role for government in filling the gap left by market forces. However, governments should only step market forces. However, governments should only step in if it can be demonstrated that the benefits of in if it can be demonstrated that the benefits of intervention exceed the costs. In other words, the intervention exceed the costs. In other words, the actions of government must be justified with reference actions of government must be justified with reference to an improvement in human wellbeing. This is because to an improvement in human wellbeing. This is because a net benefit from government action cannot be a net benefit from government action cannot be presumed simply because of market failure. There is presumed simply because of market failure. There is always the prospect of ‘government failure’ arising always the prospect of ‘government failure’ arising because of inadequacies in the bureaucratic/political because of inadequacies in the bureaucratic/political processes involved in designing and implementing such processes involved in designing and implementing such action.action.

• What this means is that without government What this means is that without government intervention to protect biodiversity, insufficient intervention to protect biodiversity, insufficient protection can be expected. protection can be expected.

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• Valuation techniquesValuation techniques

• Market based techniques Market based techniques

• Revealed preference techniques Revealed preference techniques

• Stated preference techniques Stated preference techniques

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ExamplesExamplesImpacts of Alien Invasive SpeciesImpacts of Alien Invasive Species

The invasive sea lamprey collapsed lake trout and other native The invasive sea lamprey collapsed lake trout and other native great Lake fisheries.great Lake fisheries.

Introduction of the Nile perch to lake Victoria, as a prey for local Introduction of the Nile perch to lake Victoria, as a prey for local fishermen, ate up all other fish they used to catch.fishermen, ate up all other fish they used to catch.

Invasive brown tree snakes have wiped out native forest birds, Invasive brown tree snakes have wiped out native forest birds, bats and reptiles to extinction in Guam.bats and reptiles to extinction in Guam.

Damages worldwide from invasive species was estimated at Damages worldwide from invasive species was estimated at more than US$ 1.4 trillion per year.more than US$ 1.4 trillion per year.

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EcotourismEcotourism

• Biodiversity is a source of economical wealth Biodiversity is a source of economical wealth for many regions of the world, such as many for many regions of the world, such as many nature reserves, parks and forests, where nature reserves, parks and forests, where wildlife and plants are sources of beauty and wildlife and plants are sources of beauty and joy for many people. joy for many people.

• Ecotourism, in particular, is a growing outdoor Ecotourism, in particular, is a growing outdoor recreational activity. In 1988, it is estimated recreational activity. In 1988, it is estimated that 157-236 million people took part in that 157-236 million people took part in ecotourism. The majority of species have yet ecotourism. The majority of species have yet to be evaluated for their current or future to be evaluated for their current or future economic importanceeconomic importance