ISEE 2008 NAIROBI: APPLYING ECOLOGICAL ECONOMICS FOR SOCIAL AND ENVIRONMENTAL SUSTAINABILITY UNEP Special session on International Payment for Ecosystem Services: A Reality Check 8 August 2008 How Ecosystem Accounting can help design an international payment system Jean-Louis Weber European Environment Agency, Copenhagen, Denmark

Outline Ecosystem accounting Payment for specific ecosystem services vs. payment for maintaining/restoring ecosystem potential of delivering multiple services Contribution of ecosystem accounting to IPES

Ecosystem accounting Land & ecosystem accounts are present in SEEA2003 (the UN system of economic environmental accounts) but not fully developed Implementation of land and ecosystem accounts in Europe: Land accounts [2006], 24 countries; ongoing update for 2006 and 35 countrries; tests out of Europe [e.g. Burkina Faso ]; Ecosystem accounts: ongoing tests [e.g. for Mediterranean Wetlands in the context of TEEB] Land and ecosystem accounts planned to be developed in SEEA2012/2013 revision

Purpose of ecosystem accounting  macro-ecological closure of the SNA-SEEA [ecosystem impacts from pressures, non linear feedbacks to the economy...]  give responses to 4 basic issues: sustainable use of the ecosystem natural capital sustainable use of the ecosystem natural capital [stocks, integrity, resilience] => accounts in physical units, diagnosis, multicriteria rating amortization of the ecosystem natural capital amortization of the ecosystem natural capital: this capital consumption is not currently recorded in corporate as well as national accounts => accounts in monetary units, full cost of domestic products concealed ecosystem capital consumption in imports & exports concealed ecosystem capital consumption in imports & exports => accounts in monetary accounts, full cost of imports, full value of exports individual and collective final consumption of non market ecosystem services individual and collective final consumption of non market ecosystem services which should be included in order to reflect more correctly final consumption contribution to human well being => inclusive final consumption

Natural capital Natural capital stocks, health/resilience, distance to objective (physical units, by sectors) Ecosystem capital consumption/maintenance costs ( € ) Ecosystem capital consumption concealed in imports/exports ( € ) NPV or market value of selected assets, SNA rules ( € ) Ecosystem assets inclusive wealth ( € ) Supply & use of ecosystem services by sectors, I-O analysis, NAMEA Functional Ecosystem Services [Marketed & Non-market end use ES (physical units and € )] Ecosystem Accounts, SEEA2003 & SNA Sector accounts of ecosystem natural capital Sector accounts of flows of ecosystem services Ecosystem Rating & Aggregates by Ecosystem types Counts of ecosystem integrity/health (focus on vigor, robustness, resilience, dependance from inputs, healthy populations & stress) Core accounts of assets & flows systems [land systems, rivers, soil, sea, atmosphere... components: biomass, water, C, N, P, species... Material/energy flows [biomass, water, nutrients, residuals, physical units] SNA SNAsectorsflowsproductsassets Impacts to the ecosystem Feedbacks to the economy

Scale, governance, accounts and payments Embedded into Global monitoring programmes & International statistics IPES: global trade of ecosystem permits Simplified accounts Global scale : monitoring of International Conventions and framing & regulation of markets Clearing house on [1] ES prices & [2] ecosystem mitigation costs Prices & costs reference tables for legal compensation Beyond GDP Accounting SEEA 2012 Framework National & regional government: environmental agencies, ministries of economy, statistical offices, courts Corporate accounts, costs & benefits, trade of ES PES: specific markets Accounting guidelines, charts Action level : local scale, site level, management, projects, case studies, business

Rationale of global trade of ecosystem permits [1] Note: the following points owe to Graciela Chichilnisky [1995, 2000, ] and to the discussions initiated by the UNEP-IPES group. They are interpreted here in the context of accounting - “traduttore, tradittore” ? public good although its components [natural resource] can be private, the global ecosystem is a public good with a potential of delivering a bundle of services: beyond the economic resource, ecosystems reproduce the resource itself as well as present and future regulating and cultural ecosystem services [often not accounted] in absence of well defined private and public property rights regimes, ecosystems are facing “the tragedy of the commons” this is particularly at work in the imbalanced North-South trade, where de facto open access to natural ressources in the South have generated ecosystem degradation [in addition to climate change], poverty – as well as distorsions in production and consumption patterns in the North. property rights should be established on the usage of the public good [output side], not on the resource components [input side]

Rationale of global trade of ecosystem permits [2] the need to maintain [& restore] ecosystem functions is broadly aknowledged in international and national law: e.g. CBD, conventions for managing transboundary catchments, adaptability to CC, European Environmental Liability Directive [2004], mitigation banking schemes [US-wetlands, several countries in Europe...] - quantified targets can be established a “cap and trade” mechanism could be put in place for the ecosystems in general, in the same way as the global carbon permit mechanism in the case of atmosphere. “cap” can be fixed in reference to stated international objectives “trade” can be related to the gap between observed ecosysem state and officially stated objectives [distance to target] = related to ecosystem natural capital consumption

Objections & tentative responses... the ecosystems cannot be maintained identical for ever; human developement requires resource, space; the opportunity cost of maintaining an ecosystem may be much higher than the sum total of the services it delivers => the maintenance or restoration is that of a potential for delivering services; compensation, mitigation not at the same place; in some cases, no compensation is possible [e.g. unique ecosystems, nodes or major corridors in ecological networks...] => strong legal protection needed in addition to trading [same as for public health and protection of consumers]; what about equity? => rights to use a public good = “no rival consumption”, efficiency depends on equity [contrarily to private goods] ecosystem, biodiversity descriptors are too complex for organising a global market in the same way as for C/CO2 => Correct; exchanges need a simple, abstract common measurement scale, a numeraire [in the same way, C is the numeraire use for the usage of the atmosphere re-climate degradation]

Simplified ecosystem accounts to support IPES Markets need accounts, regulations [= control] Land ecosystems are spatially distributed => grid data [e.g. 1 km2] Globally, change matters [degradation or improvement of ecosystem functioning and attached cost], not the value of the stock Global multicriteria rating based on a small number of ecological potential [derived from ecosystem accounts]:  Landscape ecological potential [LEP]  HANPP  Biodiversity rarefaction  Exergy loss [river basins]  Dependance from external inputs [material/energy, footprint]  losses/gains of “points of ecological potential”  computation of restoration costs [needed for compensating losses // or accumulated by gains of points] Rating can be detailed as necessary for the policy [national, regional] and action scales [local, business]

Example of a first candidate: LEP Corine land cover map (derived from satellite images) Green Background Landscape Index (derived from CLC) Naturilis (derived from Natura2000 & CDDA) Effective Mesh Size (MEFF, derived from TeleAtlas and CLC) net Landscape Ecological Potential (nLEP) 2000, by 1km² grid cell nLEP 2000 by NUTS 2/3

1990 LEAC/ Landscape Ecological Potential , 1km² grid (Source: Ecosystem Accounting for Mediterranean Wetlands, an EEA feasibility study for TEEB) Change LEP, state and change by 1 km2 grid Natural Park of Camargue (France)

LEP connects at the local level: e.g. effect of land cover change

Perspectives SEEA revision 2012/2013 from GlobCover to GlobCorine: European Space Agency & EEA Source: ESA, 2008