Scientists shrink from the economics of ecosystems

The Rio Principles on Environment and Development, laid down with such optimism in 1992, are damaged goods, urgently seeking restoration in the 2012 replay.

Possibly the most troublesome of all is Principle 16:

National authorities should endeavour to promote the internalization of environmental costs and the use of economic instruments

I’m not convinced that the science community is straining every sinew to crack this particular puzzle, judging by the programme for the Planet Under Pressure 2012 conference starting in London on Monday.

Of course there are sessions on the failings of GDP, and a policy brief discussing the green economy, but I don’t sense that we’re going to be celebrating a technical breakthrough on national accounting.

That’s a shame because science is often presented as the missing link in attempts to identify financial mechanisms relevant to the 21st century.

Remember the Stiglitz Commission? In 2008, President Sarkozy of France became frustrated that the acknowledged shortcomings of GDP calculations distorted the relative performance of the French and US economies in favour of the latter. He summoned the great and the good, led by Joseph Stiglitz, Nobel laureate in economics.

Sarkozy wanted a total solution, blending social and environmental indicators with familiar monetary measures of output. In failing, the Commissioners made a rather feeble protestation in their 2009 report:

The environmental aspects of sustainability deserve a separate follow up based on a well-chosen set of physical indicators (which) can only be identified with the help of the scientific community

Another controversial dimension of the economics of sustainable development – the promised transfer of finance from rich to poor countries in recognition of the principle of “common but differentiated responsibilities” – is troublesome partly for the same reason.

The lack of political will to meet this obligation out of public finances has driven developing countries on to the rocks of “market mechanisms”, the creation of carbon markets through credits awarded for preserving environmental assets.

In the example of forest assets, pilot exercises are well advanced through the vehicle known as REDD (reducing emissions from forest degradation and deforestation). These programmes are having a hard time, not least because scientists are struggling to calculate how much carbon is stored in a forest, to the degree of accuracy required.

One of the most promising ideas for the internalization of environmental costs is the labelling of consumer goods. Quantifying carbon and water footprints would be a stepping stone towards accurate pricing, with the option of rationing the use of environmental capital through personal allowances.

Here again, science has failed to overcome the hurdle of analysing the composite production chains of modern goods. In consequence, the emission obligations of the Kyoto Protocol have been fatally undermined – countries such as the UK claim to have met their 1990-2012 targets, turning a blind eye to the vast production outsourced to China.

These are all key obstacles which must be overcome if traditional economics and sustainable development are to cease pulling in opposite directions.

Much valuable earth science has however contributed to the UNEP-sponsored series of reports known as The Economics of Ecosystems and Biodiversity (TEEB). About 30 ecosystems have been assessed, including air and water quality, pollination, flood control and carbon sequestration.

By attributing monetary values to these “ecosystem services”, the reports demonstrate a range of economic tools for governments to improve the quality of their decision-making and the relevance of their national accounts.

Unfortunately, as with the overall concept of the green economy, the dissemination of TEEB into the real world has stumbled over the politics of sustainable development. TEEB is perceived not as a valuable product of research but as a handbook for the biodiversity equivalent of carbon trading, the unacceptable “commoditisation of nature”. And nowhere is this perception stronger than in the continent of the Rio+20 summit.

The TEEB community is holding its own conference this week in Leipzig with the intention of bringing ideas to its bigger cousin in London. It remains to be seen whether the Planet Under Pressure 2012 agenda provides the space necessary to give TEEB a much-needed helping hand.

Without progress on the internalisation of environmental costs, we’re left with too many quasi-economic straws blowing in the Rio+20 wind – indicators for well-being and sustainability, finance for poor countries, the green economy, consumer labelling, the Sustainable Development Goals – they all seem to be clutching at the same dream, creating enormous confusion in the process.

Visionary science might be able to pull together these wayward strands into a more compact template which all could understand and support. As Greenpeace International said in its submission to the Rio+20 negotiators: “in a truly green economy, the economy will be a mechanism to deliver societal goals, and economic growth as an end goal in and of itself will be abandoned.”


this article was first published by OneWorld UK