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1 The Economics of Ecosystems and Biodiversity (TEEB) London, 5 th May Pavan Sukhdev Study Leader, TEEB, & Director, UNEP Green Economy Initiative.

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Presentation on theme: "1 The Economics of Ecosystems and Biodiversity (TEEB) London, 5 th May Pavan Sukhdev Study Leader, TEEB, & Director, UNEP Green Economy Initiative."— Presentation transcript:

1 1 The Economics of Ecosystems and Biodiversity (TEEB) London, 5 th May Pavan Sukhdev Study Leader, TEEB, & Director, UNEP Green Economy Initiative

2 2 How Serious is the Problem Globally ?

3 3 Level of Biodiversity in the World in 2000 (OECD baseline, Globio-3 model, “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.

4 4 Level of Biodiversity in the World in 2050 “Business as Usual” Scenario of the future Remaining MSA in %  MSA loss from 72% to 61%  Natural Areas decline by 7.5 Million Sq. Km.

5 5 What were our key conclusions from Phase I ?

6 6 TEEB – Interim Report Three Key Messages Economic Size & Welfare Impact of Losses is huge Strong link with Poverty & risk of MDG’s failure Discount rates are ethical choices

7 7 The problem $$$ Money : today‘s Yardstick Photo: C.Neßhöver, UFZ Nature‘s Interactions with Humanity

8 8 Losses in ‘Present Value’ terms… (COPI study, May 2008, TEEB) A : 50-year impact of inaction or ‘business as usual’ B : Natural Capital impact Welfare losses equivalent to 7 % of GDP, horizon 2050 Natural Capital Lost : Annually EUR 1.35 x to 3.10 x % 1% Discount Rate)

9 9 How Serious is the Problem Globally ? …in Economic & Human Terms ?

10 10 Source: Ben ten Brink (MNP) presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium. Original source: Pauly  Open Access & Perverse Subsidies are key drivers of the loss of fisheries  Half of wild marine fisheries are fully exploited, with a further quarter already over- exploited  at risk : $ billion income from the sector  at risk : est. 27 million jobs  but most important of all….. at risk : Health … over a billion rely on fish as their main or sole source of animal protein, especially in developing countries. TEEB : Global Loss of Fisheries… Human Welfare Impact We are fishing down the food web to ever smaller species…

11 11 Ecosystem Losses & Links to MDG’s Haiti Example : MDG # 1, 4, 5, 8… HAITI DOMINICAN REPUBLIC

12 12 The Discounting Issue… … A Question of Ethics ?

13 13 Three Hidden Stories of “Discounting” Revealed 1. Declining Growth Paths in per-capita flow of nature’s services …. imply that discount rates should be negative 2.Marginal Utility of $1 to the Rich vs Poor …. is too different to merit the same discounting treatment 3. Inter-generational Equity…….following current norms means valuing nature’s utility to your grandchild at one-seventh of your own Most of the 29 valuation studies in our meta-study of forest valuations use discount rates between 3%-5%

14 14 How does one capture the value of nature ? What can we do NOW ?

15 15 TEEB – Interim Report “From Economics to Policies” Rethink todays subsidies to meet tomorrow’s priorities Reward unrecognized benefits, penalize Uncaptured costs Share the benefits of conservation Measure what we Manage !

16 16 TEEB – Interim Report “From Economics to Policies” Rethink todays subsidies to meet tomorrow’s priorities Reward unrecognized benefits, penalize Uncaptured costs Share the benefits of conservation Measure what we Manage !

17 17 TEEB “Interim Report” Examples Rewarding Unrecognized Benefits  Costa Rican PES : Payments for Environmental Services are virtually a national strategy for forest and biodiversity conservation and sustainable development  Panama Canal : Insurance firms and shipping companies are financing a 25-year project to reforest the water catchment of the canal to restore freshwater flow to its locks… the fear of loss due to closures of the Canal had been making shipping insurance premiums mount  Guyana : A Private Equity firm recently bought the rights to environmental services from a 370,000 hectare rainforest reserve in Guyana anticipating that its services (water storage, biodiversity maintenance, rainfall regulation, etc) will gain value. Revenues will be shared 80% with the local community.

18 18 Q : What will TEEB Phase II be about ?

19 19 1-Word Summary of TEEB Phase II “Mainstreaming”

20 20 TEEB – Final Report Sep 2009, June 2010 Consumer Ownership Business Risks & Opportunities Decision Support for Administrators Policy Evaluation for Policy-Makers Science & Economics Foundations, Policy Costs, & Costs of Inaction

21 UNEP ETB 21 Can “PA Conservation” be an “Opportunity” ? Measures Sectors Revenues (USD Bio) Capital Employed (USD Bio) People Employed Automobiles 4 $ 1,882 Bio$2,217 Bio4.4 Mio Steel 4 $ 530 Bio$ 588 Bio4.5 Mio IT Services & Software 4 $ 942 Bio$ 179 Bio5.7 Mio Protected Area Conservation $ 4,500 Bio 1 $ 125,000 Bio Mio 3 1.Balmford et al, 2002, “Economic Reasons for Conserving Wild Nature”, Science 297, estimates Protected Areas could produce goods and services valued at between $ 4,400 billion - $ 5,200 billion per annum 2.Natural Capital : Present Value (PV) of a constant service annuity of $ 5,000 billion per annum, 4% per annum 3.Estimate of the number employed directly in the maintenance, protection, and oversight of Protected Areas globally 4.Global Business Sector estimates from Global Markets Centre (“GMC”), Deutsche Bank

22 22 Challenge : Evaluate ECUADOR’S Conservation Proposal ( Yasuni Preserved, Oil stays in ground) ? Yasuni National Park – the most biodiverse wilderness on Earth

23 23 TEEB D1 Challenge (cont’d) ECUADOR YASUNI National Park / ITT Oilfield Proposal Ecuador commits not to exploit 20% of it’s proven oil reserves (846 million barrels), (ITT oil fields, within the Yasuní National Park. Ecuador’s Opportunity Cost : US$ 75 WTI) is an NPV of US$11.6 billion. World’s CO 2 Storage : 407 million Mt CO 2 market (EU-ETS), US$28.85/ Mt, US$11.7 billion. Global benefit : Social Cost of CO 2 far exceeds market price … Ecuador’s benefit : National energy policy, social upliftment, Protected Area Network maintenance..now …. ECUADOR shows a way… Does the world have the will ?

24 24 The Process for TEEB Phase II Inputs from Science and Economics experts through the Call for Evidence, participation in Working Groups, etc D0 End-User Outreach Continuous involvement of End- User Groups D4 D3 D2 D1 Val‘n Framework, Methodologies, Cost Analyses TEEB for Policy-Makers TEEB for Consumers TEEB for Business TEEB for Administrators Carsten Neßhöver, Heidi Wittmer & Christoph Schröter-Schlaack, UFZ

25 25 Thank You !


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