Published on June 10, 2008
The Economics of Ecosystems and Biodiversity (TEEB) The Cost of Policy Inaction (COPI) Insights into the Sukhdev Report Patrick ten Brink Senior Fellow and Head of Brussels Office TEEB Core Team Member COPI Deputy project lead responsible for monetary estimate Building on the Pavan Sukhdev led TEEB, the Alterra and IEEP led COPI. & building on the work of TEEB Core team (Pavan Sukhdev, EC, German BMU, EEA, UFZ, IEEP, UoL, IIT) 9 June 2008 EEB Seminar email@example.com www.ieep.eu
Presentation Structure 1. Objective, ambitions and process of TEEB and inputs (COPI, Scoping the Science, Workshop) 2. The Urgency of Action 3. Ecosystems and Ecosystem services 4. The Valuation Challenge 5. First phase numbers 6. Next steps / the implications of the Sukhdev report Note some slides for information / documentation / completeness. Not all will be shown! ec.europa.eu/environment/nature/biodiversity/economics/pdf/teeb_report.pdf
Objectives Potsdam 2007: meeting of the environment ministers of the G8 countries and the five major newly industrialising countries “Potsdam Initiative – Biological Diversity 2010” 1) The economic significance of the global loss of biological diversity In a global study we will initiate the process of analysing the global economic benefit of biological diversity, the costs of the loss of biodiversity and the failure to take protective measures versus the costs of effective conservation.
Objectives (TEEB) The Economics of Ecosystems and Biodiversity - TEEB’s goals are • To mainstream the economics of ecosystems and biodiversity • To address the needs of the “end-users” of these economics : policy- makers, local administrators, corporations and citizens • To review extensively the current state of the science and economics of ecosystems and biodiversity, and recommend a valuation framework and methodology Source: Pavan Sukhdev, Bonn 2008 Phase 1 was some preliminary scoping work, ground work, some first analysis, clarification as to how to address the wider goals, preliminary identification of experts and organisations who could contribute to the wider work. Now that Phase 1 was a success the process (already intense) is intensifying. Involvement from different organisations will be invaluable for the success.
Inputs into the process leading to the TEEB Report Pavan Sukhdev Expert contribution TEEB Core Team & international participants wider contributions
The TEEB “Phase 1” – inputs / outputs COPI Report ( “The Cost of Policy Inaction : The case of not meeting the 2010 biodiversity target” – Alterra & IEEP, Braat ten Brink et al ) Synthesis of Evidence (Synthesis of submitted evidence : over 100 papers from the ‘call for evidence’, Markandya et al, FEEM) and the workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium Scoping Science Study (“Review of the Economics of Biodiversity loss : Scoping the Science”, A. Balmford et al, Cambridge) Forest Biodiversity Valuation (“Study on the Economics of Conserving Forest Biodiversity” – Cambridge, Kontoleon et al) European Wetlands Study (“Ecosystem Accounting for the Cost of Biodiversity Losses : Framework and Case Study for Coastal Mediterranean Wetlands” – EEA, Weber et al ) COP-9 Report ( “Interim Report : The Economics of Ecosystems & Biodiversity”, Sukhdev et al ) TEEB Core Group & contributions from wide range of experts / steering group http://ec.europa.eu/environment/nature/biodiversity/economics/index_en.htm
The TEEB “Phase 1”: Interim Report
The Urgency for Action The Ecological Case
Past Losses Global Forest Area has shrunk by approximately 40% since 1700. Forests have completely disappeared in 25 countries . Since 1900, the world has lost about 50%of its wetlands. . Some 20% of the world’s coral reefs - have been effectively destroyed by fishing, pollution, disease and coral bleaching approximately 24% of the remaining reefs in the world are under imminent risk of collapse through human pressures. In the past two decades, 35% of mangroves have disappeared. Some countries have lost up to 80% through conversion for aquaculture, overexploitation and storms. rate of species extinction is estimated to be 100 to 1,000 times more rapid than the “natural” extinction rate (MA 2005).  United Nations Forest and Agriculture Organisation, 2001.Global Forest Resources Assessment 2000; United Nations Forest and Agriculture Organisation, 2006 Global Forest Resources Assessment 2005.  http://www.ramsar.org/about/about_wetland_loss.htm  Wilkinson C., 2004: Status of Coral Reefs of the World: 2004 report  Millennium Ecosystem Assessment, 2005: Global Assessment Report 1: Current State & Trends Assessment. Island Press, Washington DC. Detail: Chapter 19 Coastal Systems. Coordinating lead authors: Tundi Agardy and Jacqueline Alder. Original reference: 35%: Valiela et al. 2001; 80% reference: Spalding et al. 1997
Running down our natural capital THE DEMISE OF GLOBAL FISHERIES 40 % 40 % 20 % 2010 Source: Sea Around Us project
Substitution? We are fishing down the foodweb – D. Pauly (UBC, Canada) CBD indicator: Marine Trophic Index Source: L Braat presentation COP9 Bonn May 2008
Biodiversity loss from 1700 to 2050 accelerates Richer Ecosystems Poorer Ecosystems Source: building on Ben ten Brink (MNP) presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium.
Rate of Biodiversity Loss CBD global 2010 target: significantly reducing the rate of biodiversity loss European Union 2010 target: halting the loss of biodiversity Source: L Braat presentation COP9 Bonn May 2008
Changes in Ecosystem Services due to loss of Biodiversity Pristine Original forest species Extensive use Extensive use Plantation Subsistence agriculture Fossil fuel Degraded subsidized land Source: L Braat presentation COP9 Bonn May 2008
Level of Biodiversity in the World in 2000 Using Mean Species Abundance (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.
Level of Biodiversity in the World in 2050 One Scenario of the future : OECD/Globio Remaining MSA in % MSA loss from 71% to 60% Natural Areas decline by 7.5 Million Sq. Km. Source: Ben ten Brink (MNP) presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium.
The Global Loss of Biodiversity 2000 Source: L Braat presentation COP9 Bonn May 2008
The Global Loss of Biodiversity 2050 Source: L Braat presentation COP9 Bonn May 2008
Ecosystems and Ecosystem services The Ecosystems in which we live and in which our economies operate provide a range of services that benefits individuals, society, firms, the economy
Ecosystem Services - The Millennium Ecosystem framework Source: MEA
Different Biomes, different (level) of services Provisioning services: Food & fibre, Water, Fuel (biofuel)… Regulating services: Air quality maintenance; Forests • Boreal forest Climate regulation (local, regional, global) – carbon storage; • Temperate forests Water regulation (e.g. flood prevention, runoff …); • Mountain forests Erosion control • Etc. Natural hazards control (e.g. Fire resistance, storm & avalanche protection Cultural & Supporting services – ALL (recreation, tourism et al) Grasslands & Provisioning services: Food & fibre, Water, Natural medicines, Fuel (biofuel) scrublands Regulating services: • Natural & semi-natural grasslands; Water regulation (e.g. flood prevention, runoff); • Agricultural land; Erosion control; • Steppe; Natural hazards control (e.g fire resistance) … • Mediterranean scrubland; • Mountain grasslands. Cultural & Supporting services – ALL Provisioning services: Food & fibre, Water, Fuel … Wetlands Regulating services: Climate regulation (local, regional, global); • Coastal wetlands Water regulation (e.g. flood prevention, runoff …); • Floodplains • Swaps, bogs, moors … Water purification and waste management; • Etc. Erosion control; Natural hazards control … Cultural & Supporting services – ALL By MK based on MA 2005 classification
The link between biodiversity, ecosystems, their services, and benefits to mankind… Maintenance and restoration costs Biophysical Structure of Economic and process social values (& market values) (eg woodland Function habitat or net (eg slow passage primary of water, or Service productivity) biomass) (eg flood prevention, harvestable Benefit (value) products) (eg willingness to pay for woodland protection or for more woodland, or harvestable products) Source: Building on presentation by Jean-Louis Weber (EEA) presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium
The logic behind current status & trends - ES use, enhancement & trade offs Enhancement / investment Use Trade offs Source: L Braat in COPI study - Braat, ten Brink et al. 2008
Land-uses and trade offs for ecosystem services 1natural Climate regulation 2 extensive Climate regulation Food Energy Food Energy Soil Soil protection protection Freshwater Freshwater Climate regulation Food Energy - Soil protection Freshwater 3 intensive Source: Ben ten Brink (MNP) presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium.
ESS service provision and spatial relation Example: carbon storage t C/ha Production rates, flows and values all vary spatially – so simple benefits transfer misleading Services produced and enjoyed in different places – so spatial understanding essential for interventions to be effective Costs and benefits of conserving services accrue in different places – so spatial understanding essential for interventions to be equitable Source: Andrew Balmford & Ana Rodrigues 2008 Presentation within the Scoping the Science work
“Net” ecosystem services • As land is degraded more artificial inputs are needed to get the same provisioning service (eg crops) … with due costs • Share of ecosystem service drops as soil is degraded. “production function” changes over time Challenge to estimate clearly the value of biodiversity. Important as part of an analysis of conversion from one land use to another What appear as positive gains from a conversion may well not be. Decision making should be based on the right evidence….. Climate Food Climate regulation regulation Food Energy Energy Value – first estimate - - Upon closer analysis Net value less Soil Freshwater Soil Freshwater protection protection
The Evaluation Challenge What should we measure to understand and communicate the problem? How can we go about doing this?
Measuring Benefits of Ecosystem services: The Benefits Pyramid What can be said in what terms and what was explored? Non-Specified Monetary: eg avoided water Benefits purification costs, tourist value Increasing up the benefits Monetary Value pyramid Quantitative: eg number people benefiting from wood from forests Quantitative Review of Effects Type of benefits; health, social, income, wellbeing Qualitative Review Knowledge gaps Full range of ecosystem services from biodiversity The “known- unknowns” and “unknown-unknowns”
Interest and evidence Level of information Level of press/interest Quantitative / qualitative Monetary There are different audiences, and different messages are needed for each. Different types of messages have different power and different reach. The overall aim is to get the message across to the (range of) key audiences – in a manner that is representative of the facts and that engages interest. Hence, we need to work out how best to combine monetary and non-monetary information.
Different Measures to represent the monetary and non- monetary benefits. The single global number Politicians, media, Non specified Ranges general public benefits. Local / national numbers Increasing Partial aggregations Economists; up the 1 locality, 1 service numbers benefits Mon- local politicians pyramid etary Indexes (eg living planet index) Indices (eg species richness) People/population (share) affected Species at risk, endangered Scientists Quantitative Risk assessments Policy analysts Loss of forest cover (ha) Aggregates and cases Surveys Qualitative Story lines, uniqueness, indispensible Hotspots All Maps Critical trends and thresholds All Stakeholder perceptions Key Objectives: understanding, representativeness and getting the message across Source: Patrick ten Brink (IEEP) presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium
Ecosystems, land-use and human well-being : the extent of this relationship Services 1.1 1.2 1.3 1.4 1.5 2.1 2.2 2.3 3.1 3.2 3.3 3.4 3.5 Plant-related Forest trees- Prevention Refugium Materials Breeding Physical Amenity Didactic support Cycling Identity related Food Sink Land cover types Artificial surfaces/ Urban Arable land & permanent crops Grassland & mixed farmland Forests & woodland shrub Heathland, sclerophylous veg. Open space with little/ no vegetation Wetlands Water bodies Source: Jean-Louis Weber (EEA) presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium
Biodiversity values: Techniques and confidence to calculate the total economic value (TEV) Use values Non-use values Direct Indirect Option Existence Bequest Confidence? Market Production Function Value? Revealed Preference Stated Preference Value? Confidence? Source: Alistair McVittie & Dominic Moran presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium
Relation of Habitat Area, its loss & Ecosystem Service Illustration of realities & evaluation challenge Initially insensitive (eg loss of part of large forest and tourism or recreation) or due to slow draw down of stock (eg fish) or due to initial substitution possibilities 100% Threshold – eg change of recreation desitination, of fish Linear - eg food or fuel stock collapse for region provision from land, carbon storage EV Exponential decline – eg for low resilance / fragile ecosystem or area near a threshold such as minimum 0% habitat area for a species. Pristine Area loss Full area loss
Elements of the Evaluation challenge Data Gaps – how can we work with the gaps before we fill them? Substitutability (or lack of) and irreversibility Linear vs non-linear changes / threshold issues Risks and Scientific Uncertainty Spatial perspective – provision of service and benefit from service not always in the same location Some costs only have an effect in future generations Inherent biases in the economic valuation system? eg greater focus & ease of analysis for commodity prices related valuations Biases in the application of valuation - certain priorities and not others? eg global issues focus rather than local? Biases in use of discount rate ? Ethical issues – anthropocentric approach; equity, fairness.
COPI Results Based on the Report to the European Commission, May 29, 2008 The Cost of Policy Inaction L. Braat & P. ten Brink (eds.) with J. Bakkes, K. Bolt, I. Braeuer, B. ten Brink, A. Chiabai, H. Ding, H. Gerdes, M. Jeuken, M. Kettunen, U. Kirchholtes, C. Klok, A. Markandya, P. Nunes, M. van Oorschot, N. Peralta- Bezerra, M. Rayment, C. Travisi, M. Walpole. Wageningen / Brussels, May 2008
Mapping changes : from Biodiversity & Ecosystems to Economic Values OECD Baseline scenario Change Change in in Change Economic Land use, in Change Value Climate, Biodiversity Pollution, In Water use Ecosystem International Services Policies Change in Ecosystem functions Source: L. Braat & P. ten Brink (eds.)
Biodiversity loss from 1700 to 2050 accelerates 73% 62% The total biodiversity loss 2000-2050: All biodiversity of 1,300 million ha converted to asphalt. (about 1.5 times the United States) Source: building on Ben ten Brink (MNP) presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium.
COPI Figure 4.4a : Contribution of different pressures to the global biodiversity loss between 2000 and 2050 in the OECD baseline Main drivers of 11% Biodiversity Loss over the 50 years to 2050 Source: L. Braat & P. ten Brink (eds.) 2008 COPI
Change of Landuse – across all biomes Actual 2000 2050 Difference million million Area km2 km2 2000 to 2050 Natural areas 65.5 58.0 -11% Bare natural 3.3 3.0 -9% Forest managed 4.2 7.0 70% Extensive agriculture 5.0 3.0 -39% Intensive agriculture 11.0 15.8 44% Woody biofuels 0.1 0.5 626% Cultivated grazing 19.1 20.8 9% Artificial surfaces 0.2 0.2 0% World Total * 108.4 108.4 0% Source: L. Braat & P. ten Brink (eds.) 2008 COPI
Valuation and Ecosystem service losses COPI calculation: A Relative to 2000 Annual Loss of economic value of ecosystem services that would have been available had biodiversity remained at 2000 levels. Estimate for 2050. Services that would have been there, had biodiversity been A Ecosystem halted. service level Losses continue into the future 2000 2010 2030 2050
COPI - Some key results • The loss of natural areas over the period 2000 to 2050 is 7.5million km2 - broadly equivalent to the total area of the Australia. • When looking at the combined loss of natural and bare natural areas and extensive agriculture the area is equivalent to that of the entire United States of America. • The loss of welfare in 2050 from the cumulative loss of ecosystem services between now and then amounts to $14 trillion (10^12) Euros under the fuller estimation scenario • This is equivalent in scale to 7% of projected global GDP for 2050. • The loss grows with each year of biodiversity and ecosystem loss Source: L. Braat & P. ten Brink (eds.) 2008 COPI
COPI - Some key results (cont.) • In the early years (e.g. period 2000 to 2010) less biodiversity has been lost (than in later years), less land-conversion has taken place, and less damage has occurred due to fragmentation, climate change or pollution. The loss over the period 2000 to 2010 is, however, still substantial. • For the fuller estimate the welfare losses from the loss of ecosystem services amount to 545 billion EUR in 2010 or just under 1% of world GDP by 2010. •This amounts to around 50 billion Euros extra loss per year, every year – in the early years. •The value of the amount lost every year rises, until it is around 275bn EUR/yr in 2050.
Global COPI - Loss of Ecosystem services from land based ecosystems – all biomes Relative to Relative to 2000 2000 Equivalent to % of GDP in Area Billion EUR 2050 Natural areas -155678 -7.97% Forest managed 1852 0.95% Extensive Agriculture -1109 -0.57% Intensive Agriculture 1303 0.67% Woody biofuels 381 0.19% Cultivated grazing -786 -0.40% World Total -13938 -7.1% Land based ecosystems only The loss grows with each year of biodiversity and ecosystem loss. Source: L. Braat & P. ten Brink (eds.)
Global COPI - Loss of Ecosystem services Forestry biomes Partial Forest biomes Estimation Fuller Estimation Boreal forest -163 -1999 Tropical forest -536 -3362 Warm mixed forest -249 -2332 Temperate mixed forest -190 -1372 Cool coniferous forest -47 -701 Temperate deciduous forest -133 -1025 Forest Total -1317 -10791 Natural areas -1552 -12310 World GDP in 2050 (trillion (10^12) EUR)* 195.5 Losses of ESS from forests as share of % GDP -0.7% -5.5% Losses of ESS from natural areas in forest biomes as share of % GDP -0.8% -6.3%
What ESS could already be included (forests)? Included - (8 services) Not included - (10 services) Provisioning services Provisioning services Food, fiber, fuel Biochemicals, natural medicines, Regulating services pharmaceuticals Air quality maintenance Ornamental resources Soil quality maintenance Fresh water Climate regulation (i.e. carbon storage) Regulating services Water regulation (i.e. flood prevention,, Temperature regulation, precipitation aquifer recharge etc.) Erosion control Water purification and waste Technology development from nature management Regulation of human diseases Cultural services Biological control and pollination Cultural diversity, spiritual and religious Natural hazards control / mitigation values, educational values, aesthetic and cultural Cultural services Recreation and ecotourism • Living comfort due to environmental amenities
COPI – Forestry Biome Different ways of calculating the loss A : 50-year impact of inaction B : Natural Capital Loss every year Lost Welfare equivalent Natural Capital Lost from to 5.5 % of GDP (from forest USD 1.35 x 10 12 to 3.10 x 10 12 (@ 4% Discount Rate) (@ 1% Discount Rate) biomes overall) … or… Source: L. Braat & P. ten Brink (eds.)
Three Hidden Stories of “Discounting” Inter-generational Equity… Marginal Utility of $1 to the Rich vs Poor …. Declining Growth Paths … Present Cash flow 50 Annual value of the years in the discount future cash future rate flow 1,000,000 4% 140,713 1,000,000 2% 371,528 1,000,000 1% 608,039 1,000,000 0% 1,000,000 Source: Pavan Sukhdev, Bonn 2008
Valuation and Ecosystem service losses Relative to 2000 GDP, with feedback on GDP (OECD Scenarios) economic losses from 2.8%/year biodiversity losses integrated - illustrative GDP: 41.4$ trillion (PPP) (10^12) Population GDP/capita: 680$ (PPP) 9100 million Population: 6092 million GDP adjusted for impact of biodiversity loss - illustrative Services that would have been there, had biodiversity been halted Ecosystem service level 2000 2050 Source: Patrick ten Brink (IEEP), Leon Braat (Alterra), Mark van Ooorshot (MNP), Matt Rayment (GHK)
Navigation Challenge Ahead Should we set sail on a complex 3-D growth voyage … l ita ap C an Natural Capital um H Physical Capital … with a simple economic compass ? Source: Pavan Sukhdev, Bonn 2008
Next Steps TEEB Phase 1 Launch at Bonn. Phase 2 up to June 2009. Final report COP-10 Launch led to high level commitment to Phase 2. A range of interest from wide set of organisations High level Advisory Board Core team and wider expert team - being developed Contributions from far and wide A wide range of tasks expected to be addressed in the work Estimation of loss of value from ecosystem & biodiversity losses (global & local) Estimation of costs and benefits of action Guidance/Toolkit of instruments / policies where benefits valuation may help improve practice – for range of stakeholders (policy makers, to local authorities, to corporations to individuals).
Issues needing exploration (own view) • Fine-tuning of valuation framework and development of recommended valuation framework • More valuation of the benefits of ecosystems/biodiversity and the COPI & analysis of the costs and benefits of action • Risk assessment of different action/inaction strategies/scenarios • Sectoral analysis: Sector role in drawing down natural capital, sectors benefitting from natural capital, and which sectors have the most potential to improve things?
Issues needing exploration Broad messages (and areas to explore), Rethink today’s subsidies to reflect tomorrow’s priorities; eg Fisheries subsidies Reward unrecognized benefits, penalise uncaptured costs eg PES, liability, PPP Share the benefits of conservation; eg Benefits sharing Measure what you manage. Valuation for local decision making to national accounts Valuation and role for individuals and corporations. TEEB can contribute to processes behind each of the above.
Summary – Implications of the Report • The beginning of an important process leading to improved appreciation of biodiversity and ecosystems. • Better understanding of value, and uncosted value • Engagement by wide group of experts started and more en route / beneficial. • Opportunity to contribute – integrated into the process, coordinated / communicated and in parallel. • Foresee significant advance in benefits and cost of biodiversity valuation • Need complementary tools and indicators • Better information for better evidenced based decision making (contribution to Beyond GDP related efforts) • Improving tools and decisions (eg local, regional, national) • More difficult to make the wrong decisions / inappropriate tradeoffs • Contribute to thinking, understanding, commitment and tools to help slow/stop biodiversity loss.
Questions ? Thank You Patrick ten Brink firstname.lastname@example.org not-for- IEEP is an independent, not-for-profit institute dedicated to the analysis, understanding and promotion of policies for a sustainable environment in Europe Brussels Office London Office 55 Quai au Foin/Hooikaai 28 Queen Anne's Gate B-1000 Brussels London SW1H 9AB Belgium UK Tel: +44 (0)207 799 2244 Tel: +32 (0) 2738 7482 Fax: +44 (0)207 799 2600 Fax: +32 (0) 2732 4004 www.ieep.eu
TEEB ACKNOWLEDGEMENTS for information Source: The Economics of Ecosystems & Biodiversity: Interim Report. Sukhdev et al
Study Authors and Contributors
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