Conserving nature is like money in the bank

August 30, 2002 - Ask folks what they value about nature and most would probably be quick to mention aesthetic and spiritual properties like beauty, serenity and peace. We hold these values dear to our hearts because they resonate with strong emotional ties. But there are other, even more pragmatic, reasons to value nature - reasons even a hard-headed economist can't deny.

As I discussed in my last column, we've lost touch with the fact that everything we have depends on nature. Without the rest of nature propping us up, we could not survive - a fact so obvious that it seems silly to point it out. The problem is, we don't behave as though this were obvious. We behave as though the economy is completely separate from the world in which we live. Industrialized society is geared entirely towards output - how many Playstations, SUVs and cans of Pepsi we can create, sell and consume. What aren't factored into the equation are the natural services needed to support this output. Why? Because nature's services are considered free.

And in a standard economic sense, they are free. Nature is the source of clean air, water and fertile soil with no strings attached. However, with six billion of us now shuffling up to nature's buffet, the "all you can eat" sign will have to come down soon or those at the back of the line - the next generation - will be left with nothing but Jell-O salad.

Efforts to quantify the value of nature's services have been met with suspicion by some economists. A few years ago, one group came up with an estimated annual average of about $38 trillion U.S. - roughly the size of the annual GNPs of all the countries in the world. But this didn't answer the question of what effect human activities are having on nature's "net worth."

Recently, a group of researchers attempted to tackle this question and their results are shocking. Their analysis, presented in the journal Science, shows that simply in terms of dollar value, conserving natural areas is actually 100 times more profitable than exploiting them.

The researchers looked at five real examples - logging in Malaysia, small-scale agriculture in Cameroon, mangrove swamp conversion for shrimp farming in Thailand, drainage of marshlands for agriculture in Canada and the destruction of coral reefs for dynamite fishing in the Philippines. In each case, the economic value of the conversion activity - the sales of the end product, jobs created etc. - was far less than the value of the services provided by intact natural habitats nearby (things like sustainable, low-impact logging, flood protection, sustainable hunting and fishing, and provision of clean water). In total, worldwide loss of natural habitat costs humanity some $250 billion U.S. every year. And because the conversion is permanent, those losses continue every year into the future, in addition to the new year's losses.

Such outrageous costs immediately raise the question: If these practices are so uneconomical, why hasn't someone stopped them? The answer is because the savings associated with conserving nature are spread throughout society, whereas the profits earned from exploiting natural resources are immediate and benefit a narrow group of individuals. Many current government subsidies and tax incentives also support such practices. In fact, researchers estimate that these subsidies add up to between $950 billion and $1,950 billion U.S. every year.

Our global economic system has been constructed under the premise that natural services are free. We can't afford that luxury any more. We have created a deeply flawed system, but we can still change it. Right now, officials are meeting at the World Summit on Sustainable Development in Johannesburg, South Africa. With new knowledge of the extent to which we are mortgaging humanity's future by subsidizing narrow economic interests, conventional views on economic development must be reconsidered and reconstructed to make ecological conservation a priority. We must put the economy in synch with the natural world that made it possible.

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