1. Anil Markandya Bath University (UK) and BC3 (Spain) December 2012
Value of Biodiversity and Ecosystem Services in South Asia and India: Past, Present and Future
Anil Markandya
Bath University (UK) and BC3 (Spain)
December 2012

2. Biodiversity Is Important
Between 1981 and 2006, 47% of cancer drugs and 34 per cent of all `small molecule new chemical entities´ (NCE) for all disease categories were natural products or derived directly from them.
in Asia and Africa 80 per cent of the population relies on traditional medicine (including herbal medicine) for primary health care
But no one has estimated the overall value of the loss of biodiversity as such and even the concept of biodiversity is problematic.
Most work has focussed on valuing the services provided by natural ecosystems (MEA)

3. Ecosystems and Biodiversity
Ecosystem services are derived from the complex biophysical systems. The MEA defines ecosystem services under four headings: provisioning, regulating, cultural and supporting.
Ecosystem functioning depends on its biodiversity. More diverse ecosystems are more stable and less subject to malfunction.
We need a measure of system capability that includes its biodiversity.

5. Biodiversity and Ecosystem Habitats are Declining
Species are estimated to be going extinct at rates 100 to 1000 times faster than in geological times.
The planet has lost 50 per cent of its wetlands, 40 per cent of its forests and 35 per cent of its mangroves.
Around 60 per cent of global ecosystem services have been degraded in just 50 years

6. These Losses Matter in Economic and Welfare Terms
The services that ecosystems provide are of value, especially to poor people. Thus if they are lost the impacts are all the more a matter of concern.
In this paper we look at changes in the services from major ecosystems in South Asia over the last century and see where there have been major changes.
We then value the services India currently derives from its ecosystems and examine their composition and distribution.

7. The Methodology
The method adopted is to measure the size of an ecosystem taking account of its biodiversity. This is measured by an estimate of the Mean Species Abundance (MSA) of that system.
The MSA is used to adjust the area of an ecosystem, so that if the MSA is 50% of the potential abundance the area is adjusted downward by an amount that reflects the lower productivity of a system with 50% lower MSA.

8. Changes in MSA Areas Between1900 and 2000

9. Losses in MSA Between 1900 and 2000
Of all the world regions South Asia suffered the greatest loss in the last century (40 per cent).
In terms of biomes the losses were greatest in temperate forests (53 per cent) and least for boreal forests (34 per cent). The other biomes (grassland, savannah and tropical forests) all suffered losses of around per cent.
It is striking that all these figures represent higher losses for South Asia than for any other world region.
Note that although the numbers are given in hectares they are not real physical areas: the hectares are adjusted to reflect changes in mean species abundance.

10. Losses for India Between 1900 and 2000 (000 MSA Ha.)
% Change
Biome/ Year
1900
1950
2000
Ice and Tundra
53,967
47,455 0%
-12%
Grassland and steppe
148,028
143,599
73,444
-3%
-49%
Scrubland and savanna
1,438,857
1,272,787
824,630
-35%
Boreal forests
44,734
29,475
-34%
Temperate forests
261,079
250,105
115,709
-4%
-54%
Tropical forests
91,011
74,990
39,130
-18%
-48%
Desert
158,553
101,956
-36%
Total
2,198,130
2,000,685
1,233,799
-9%
-38%
Most of the losses have been since 1950

11. Losses in India

12. Valuing the Losses in S. Asia
The analysis of the economic impact is carried out for those biomes, for which economic data were available: grasslands and steppe, boreal, temperate and tropical forests.
The ecosystem services analysed in the forest biomes include wood and non-wood forests products, carbon and cultural services (recreational and passive use).
As regards grassland and steppe, the estimates consist of food provisioning, erosion prevention, conservation, recreation and amenity.
The choice of these ES is mainly based on the availability of physical data and monetary estimates.

13. Valuing Forest Losses Wood and non-wood forest products
Wood forests products (WFPs) are estimated taking into account seven economic sectors, including industrial roundwood, wood pulp, recovered paper, sawnwood, wood-based panels, paper and paper board, and wood fuel.
Valued based on stumpage price, net profit margin and Volumes. Price takes account of export and domestic.
Non-wood forest products (NWFPs) include goods and services of biological origin derived from the forest.
Estimated using information from FAO, which provide export values of the total removals of these products by country.

14. Valuing Carbon in Forest Stock
Based on the biome-average carbon capacity in different forest biomes (various studies).
The carbon capacity varies a lot by forest type and by region: for example it ranges from 17 tC/ha in Sub-Saharan Africa tropical dry forests to 250 tC/ha in Asian tropical equatorial forests.
Carbon values: the lower bound based on the marginal costs of abatement of carbon in 2009, to achieve target reduction consistent with stabilization of temperature increases at 2ºC. The upper bound is based on the social costs of carbon, as calculated across a range of studies.
A review of the literature, which was conducted as part of the TEEB study, puts the lower bound at around US$8/ton of CO2 equivalent (Rs.380/ton) and the upper bound at around US$20.5 (Rs. 974/ton) The corresponding values per ton of carbon are US$29 (Rs. 1,378/ton) and US$74.4 (Rs. 3,534/ton).

15. Non Wood Forest Products

16. Forest Cultural Services
Forest cultural services comprise recreational and passive-use values, which are estimated using meta-analysis, value-transfer and scaling-up techniques .
The value transfer function used:
Vs* is the average annual value across the world (based on the literature), Vp is the value we would like to estimate which refers to world regions for which no original value exists (policy sites), P is the population of the country, I the country GDP per capita (adjusted for the Purchasing Power Parity.

17. Grassland and Steppe
The values of ES in grassland are estimated using the database values and the coefficients of the meta-regression function as calculated in Hussain et al (2011).
The following ES categories are valued within this biome: food provisioning, recreation and amenity, erosion prevention and conservation.
The countries considered in the assessment include Northern Europe, United States, Asia and Africa.
The meta-regression function takes the following form:
V is the annual value provided by grasslands from the existing case studies, S is the grassland area within 50km radius of the study site, R is the length of roads within 50km radius of the study site, A is an accessibility index, I is the country GDP per capita.

18. Change in Stock Values 1900-2000
The highest losses in the period are registered in OECD region, Central and South America, and South Asia.
As far as South Asia is concerned we estimate that had the region maintained the same level of MSA in 2000 as it had in 1900, the stock value of ecosystems services would have been US$4 to US$5.6 trillion higher.

19. Change in Flow Values
Flow values are derived from the stocks assuming a 3% discount rate and sustainable use of the biomes in the future (to perpetuity)
At the same time we have to take account of the value derived from the land which has been converted from the biomes. We assume this is all converted to agricultural land and we value it as a percent of Agricultural Value Added.

20. Change in Flow Values
Results show an impact at the worldwide level ranging from a net loss of 0.16 per cent to a net loss of 1.0 per cent of 2000 GDP.
South Asia (SASIA) and China (CHN), however, report a small net benefit. South Asia shows a net gain of between 10 per cent and 11 per cent of GDP.

21. Conclusion on
We find significant gross losses in ecosystem services between both dates. The gross loss of natural capital between 1900 and 2000 is estimated at between US$22 trillion and US$33 trillion, which range from around 41 per cent and 61 per cent of world GDP of 2000 (this is a capital loss).
If one compares the losses in terms of flows, the total loss between 1900 and 2000 was between US$674 billion and US$980 billion, which is around 1.8 and 2.7 per cent of the GDP of However, against this loss we also have to account for the gain made by the conversion of forest and grassland to agriculture. This gain more or less cancels out the loss in the case of the lower bound figure and more than cancels it for South Asia.

22. Some Qualifications
Not all ecosystem services are covered. Data limitations only allow us to look at carbon, recreational and passive use, and wood and non-wood services derived from forests; and ecosystem services derived from grasslands.
While the links between biodiversity and ecosystem services are partly captured through the use of MSA, this measure has several limitations.
Comparison between the ecosystem services in 1900 and 2000 is based on the thought experiment that assumes the level of ecosystem services of 1900 to be available in 2000 at the prices for these services that actually prevailed in 2000.
The agricultural value of land converted from other biomes is equal to the average value of agricultural land in the region. This may overestimate the output of such land, especially if it is far from markets and its use is on an open access basis.

23. THE VALUE OF ECOSYSTEM SERVICES IN IINDIA TODAY

24. Services Considered Timber services of forests
Non-timber and fodder services of forests
Recreation and Ecotourism services of forests
Water recharge services of forests
Contributions of forests to prevention of soil erosion
Carbon sequestration of forests.
Non-use values associated with dense primary forests
Services derived from grasslands
Services derived from wetlands
Services derived from mangroves
Services derived from coral reefs.

25. Features of the Study
Valuations are based as much as possible on India studies
Valuations for non-forest services are based on a bottom up approach where the value of each “patch” in India is valued.
Forest service values (except for carbon sequestration and passive values) are taken from existing Indian study (“Green Accounting for Indian States and Union Territories Project (GAISP) ( )”

26. Forest Values $Mn. (Exc. Carbon)
Low
High
Direct
Timber
358
Non timber values
442
Fodder
1,979
3,979
Ecotourism
1,074
Total direct
3,874
5,853
Per hectare, US$.
136
187
Indirect
Soil erosion
337
Water recharge
126
Total indirect
463
Per hectare, US$
6.6

27. Forest Carbon Values $Mn.
Stock Values
Flow Values
Lower Bound
Upper Bound
World Trends
191
489
-0.9
-0.3
Past India Trends
197
504
1.1
2.7
GoI Proposed Trends
200
511
1.8
4.7
Average as % of GDP
19.9
51.0
0.1
0.2

28. Forest Values: Total
Direct use values range from Rs. 184 to 278 billion ($3.9 billion to $5.9 billion) and indirect use values amount to around Rs. 22 billion ($460 million)
Carbon stock values are very high: between Rs.9,072 billion (US$190 billion) and Rs.24,311 billion (US$510 billion). The annual increment to the stock depends on scenarios. Values could be negative if world trends prevail. But with the other two scenarios there is a gain of between Rs.51 billion (US$1.1 billion) and Rs.224 billion (US$4.7 billion) using the upper bound. As a per cent of 2009 GDP the additions to carbon amount to between 0.1 and 0.2 per cent.
Finally there are non-use values. These were valued using the international literature on such values. They amount to between Rs billion and Rs.17.1 billion ($300 and $360 million annually).

29. Services from grasslands, wetlands, mangroves and coral reefs
These have been valued using a meta analysis in which values are a function of site characteristics as well as economic variables. The analysis was carried out as part of the TEEB
Each patch is valued using these functions.
The number of patches in India that are individually assessed in the benefits transfer were:
Grasslands: 66,928
Wetlands: 3,768
Mangroves: 89;
Coral reefs: 281

30. Some Qualifications
Area of each patch are adjusted to account for MSA.
Separating “India” from South Asia was done manually in the database; in most cases it is clear but in some an approximation is made for patches close to the border.
It assumed that coral reefs or mangroves straight in front of the coast of India belonged to India and otherwise to the surrounding countries and vice versa.
It also assumed that coral reefs / mangroves around islands belonging to India also belong to India. As a consequence coral reefs / mangroves that cross national borders were split up in different parts on the location of the presumed border.

31. Grasslands in India: Ca. 67,000

32. Grassland Values Rs./Ha.
The total value of ecosystem services from grasslands in India is estimated to be Rs.95 ($2) billion per annum.
The average is Rs.1,805 ($38) per hectare, with 3 per cent having a value of less than Rs.480 ($10) per hectare and 31 per cent having a value of more than Rs.2,380 ($50) per hectare.

33. Wetlands in India: Ca. 192,000

34. Wetlands in India Rs. 000/Ha.
The total value of ecosystem services from wetlands in India is estimated to be Rs.665 billion ($14 billion) annually
The average is Rs.38,000 ($800) per hectare. Although many of the sites have a value per hectare greater than that, the largest sites have much lower values with the result that the average comes out as indicated.

35. Mangroves in India: Ca. 89

36. Mangroves in India Rs.000/Ha
The total value of ecosystem services from mangroves in India is estimated to be Rs.25.5 billion ($537 million).
The average is Rs.37,860 ($797) per hectare. The commonest group is Rs.9,500-19,000 ($ ) per hectare

37. Coral Reefs in India: 281 Sites

38. Coral Reef Values Rs 000/Ha
The average is Rs.711,455 ($14,978) per hectare.
The total value of ecosystem services from coral reefs in India is estimated to be Rs.299 billion ($6.3 billion).

39. Summary of Values: $Mn.

40. Summary of Values
The total value amounts to Rs.1.4 ($29) billion in 2009 as a central estimate, or about 3.0 per cent of the country’s GDP in that year.
The upper and lower bounds are Rs.746 ($16) billion and Rs.2,577 billion ($57) respectively or 1.6 to 5.5 per cent of GDP.
Of the total value, forests account for 22 per cent and within the forest service category fodder is the largest. Of the other services wetlands are the largest and coral reefs next.

41. Some Qualifications
The total value as a %of GDP may seem small but it is misleading to see it only in that light. Another way of looking at the role of environmental resources is in terms of the “GDP of the poor” (a share of Agriculture, forest and fishery they make up about 7%)
Lakes and rivers are not included.
A more accurate assessment of who benefits from these ecosystem services is warranted. More work to be done!