From Crisis to Opportunity: The Economics of Ecosystems & Biodiversity

In resilience thinking, crisis is not a word that instils fear but one that signals opportunity, an opportunity to navigate a transformation towards sustainability and new and better ways of doing things. In 2005  the UN’s Millennium Ecosystem Assessment spelled out in no uncertain terms that an epic and unparralleled crisis was rapidly approaching:

  1. Over the past 50 years, humans have changed ecosystems more rapidly and extensively than in any comparable period of time in human history, largely to meet rapidly growing demands for food, fresh water, timber, fiber and fuel. This has resulted in a substantial and largely irreversible loss in the diversity of life on Earth.
  2. The changes that have been made to ecosystems have contributed to substantial net gains in human well-being and economic development, but these gains have been achieved at growing costs in the form of the degradation of many ecosystem services, increased risks of nonlinear changes, and the exacerbation of poverty for some groups of people. These problems, unless addressed, will substantially diminish the benefits that future generations obtain from ecosystems.
  3. The degradation of ecosystem services could grow significantly worse during the first half of this century and is a barrier to achieving the Millennium Development Goals.
  4. The challenge of reversing the degradation of ecosystem while meeting increasing demands for services can be partially met under some scenarios considered by the MA, but will involve significant changes in policies, institutions and practices that are not currently under way. Many options exist to conserve or enhance specific ecosystem services in ways that reduce negative trade-offs or that provide positive synergies with other ecosystem services.

Since the MA was published the news around biodiversity and ecosystem services has mainly gotten worse (please see the graph).

A graph showing the precipitous decline of global biodiversity

In 2010, it is the UN International Year for Biodiversity and the crisis is here. We cannot wait any longer to act. For many companies and policy makers, the scale of such challenges can seem overwhelming. However, there are ways to not only avert the crisis of biodiversity and ecosystem services but to turn it into a new opportunity.

On July the 13th 2010, the TEEB (The Economics of Ecosystems and Biodiversity) for Business report was released. This report is a rallying cry for those who refuse to accept that humanity is doomed to continue to destroy the natural life support system and degrade the natural capital that makes our remarkable civilisation possible.The TEEB report is to ecosystems and Biodiversity what the Stern Report is to climate. It is a wake-up call but a it is a call that motivates action and puts solving the crisis in the hands of innovators and visionaries everywhere.

The TEEB report takes an integrated approach and provides guidance on how business can build biodiversity and ecosystem services into their business models. Future value creation of business is becoming more inextricably tied to the relationship between biodiversity in general, specific ecosystem goods and services and the directly attributable economic value of those service. Perhaps the clearest example of the relationship between business economic value creation and biodiversity is in the pharmaceutical industry. As the TEEB for Business Report points out: “25-50% of the US$ 640 billion pharmaceuticalmarket is derived from genetic resources.” The pharmaceutical industry should be at the forefront of protecting valuable and threatened rainforest and related ecosystems. Their economic future is on the line and this is only one of many examples.

The TEEB report clearly lays out the challenges and opportunities associated with Biodiversity and Ecosystem services and demonstrates that companies can create a clear and achievable strategy around these issues. Business can no longer claim that these issues are not their concern and that they are irrelevant to their day-to-day business. Some of the new markets and revenue streams that are developing around ecosystem services and biodiversity are intriguing. Examples from TEEB are:

  • Certified forest and agricultural products
  • Payments for water-related ecosystem services
  • Bio-Carbon/Forest Offsets (i.e. REDD+)
  • Mandatory and Voluntary biodiversity offsets

At the heart of  the TEEB report are the following actionable objectives for the private sector that will enable business to move forward on Biodiversity and Ecosystem Services and take advantage of a global crisis  to drive business value by becoming a leading player in the fledgling ‘Biosphere Economy.’

The actionable objectives identified in the TEEB report are:

1. Identify the impacts and dependencies of your business on biodiversity and ecosystem services (BES)

2. Assess the business risks and opportunities associated with these impacts and dependencies

3. Develop BES information systems, set SMART targets, measure and value performance, andreport your results

4. Take action to avoid, minimize and mitigate BES risks, including in-kind compensation (‘offsets’)where appropriate

5. Grasp emerging BES business opportunities, such as cost-efficiencies, new products and newmarkets

6. Integrate business strategy and actions on BES with wider corporate social responsibility initiatives

7. Engage with business peers and stakeholders in government, NGOs and civil society to improve BES guidance and policy

Please head over to TEEB and download the Summary for Business now so that you can prepare for Globe Forum Dublin where we will be addressing our shared global challenge of biodiversity degradation and the continuing loss of ecosystem goods and services.

Keep on innovating…

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