The Economics of Nature Pavan Sukhdev Study Leader

The Economics of Nature Pavan Sukhdev Study Leader – TEEB & Special Adviser & Head – Green Economy Initiative United Nations Environment Programme

“I believe that the great part of miseries of mankind are brought upon them by false estimates they have made of the value of things. ” Benjamin Franklin, 1706 -1790 © M. Kettunen

TEEB and its Five Reports … “Potsdam Initiative – Biological Diversity 2010” ……the economic significance of the global loss of biological diversity…. Science & Economics Foundations Policy Evaluation for National Policy-Makers Evaluation & Decision Support for Local and Regional Policy Business Risks & Opportunities Synthesis

TEEB’s Approach to Valuation … Norms, Regulations & Policies Regional Plans Legislations Recognizing value Economic Mechanisms Certification PA Evaluation Demonstrating value PES Markets Capturing value Ch. 5 Ch. 4 Ch. 3

P. A. Evaluation Example : Kampala, Uganda PA Evaluation (Nakivubo Swamp)

PES & Certification : ‘Satoyama’ Landscape, Japan PES Konotori no Mai / Flying Oriental White Stork 2003 - 2007: farmers paid 40, 000 JYen per 1, 000 m 2 of rice paddies. Currently granted 7, 000 JYen per 1, 000 m 2 by Toyo-oka City CERTIFICATION Rice sold at 23 % higher rate for reduced pesticide use, and 54 % more for organic farming q White Stork habitat increased from 0. 7 ha in 2003 to 212. 3 ha q Extinct in 1971, now has over 40 breeding pairs q 1 billion JPY annually in tourism, & municipal income raised by 1. 4 %

How “Green” are our Economies ? Meeting two goals of sustainability – High human development and low ecological impact Source: WWF Living Planet Report 2006 Source: United Nations Human Development Index UNEP – GREEN ECONOMY INITIATIVE

Green Economy : Related Agendas RIO + 20 Sustainable Development MDG’s Green Economy Kyoto+ TEEB UNEP – Green Economy Initiative

Are Conservation and Development Irreconcilable ? Mrs. Indira Gandhi “Are not poverty and need the greatest polluters? ” “It would be ironic if the fight against pollution were to be converted into another business, out of which a few companies, corporations or nations would make profits at the cost of the many”. “the inherent conflict is not between Maurice F. Strong, first Executive Director of the UNEP, welcomes conservation and development but Indian Prime Minister, Indira Gandhi at 1972 Stockholm conference. Courtesy: www. mauricestrong. net between environment and the reckless exploitation of man and earth in the name of efficiency. ” UNEP – Green Economy Initiative

Is Natural Capital a Development Asset ? Indonesia India Brazil Ecosystem services as a % of classical GDP Ecosystem services dependency 99 million 352 million 20 million Ecosystem services as a % of “GDP of the Poor” Source: Gundimeda and Sukhdev, D 1 TEEB Ecosystem services

Can Rebuilding Natural Capital Provide Jobs ? Eg : “NREGA” Income Support in India National Rural Employment Guarantee Act 2005 Aims Projects • Touches the lives of poor Water Conservation Projects (2006 -2008) • Promotes self-help & inclusion • In Jalaun, more than 3, 000 new soak pits/hand pumps constructed – conserve an estimated 5 mil litres of water • Contributes to the restoration and maintenance of ecological infrastructure • In Andra Pradesh, restored over 500 yearold water stroage tanks’ network – boosted crop and livestock production / contributed to groundwater replenishment UNEP – Green Economy Initiative Outcomes • Generated more than 3. 5 bn days of work reaching on average 30 mil families per year • Contributed to boosting the average wage for agricultural labourers by more than 25 per cent over its three-year history.

TEEB & “Discounting” 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 … too different to merit the same discounting treatment 3. Inter-generational Equity……following 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%

• BC Hydro: “long-term goal of no net incremental environmental impact. ” • Coca Cola: “Our goal is to safely return to communities and nature an amount of water equivalent to what we use in all of our beverages and their production. ” • Danone Group: “Attain carbon neutrality for the major Danone brands, including Evian, by the end of 2011. ” • Marks & Spencer: “Our goal is to become carbon neutral by 2012 in our UK and Republic of Ireland operations. ” • Rio Tinto: “Our goal is to have a ‘net positive impact’ on biodiversity by 2015. ” • Sony: “strive to achieve a zero environmental footprint throughout the lifecycle of our products and business activities : “Road to Zero” • Walmart: “Committed to permanently conserve at least one acre of priority wildlife habitat for every developed acre. ”

Natural Capital an & Hum So Ca cial pital Financial & Physical Capital

Thank You ! 16

Economy Definition What is Green good about the -GEI? “A Green Economy can be defined as one that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities. ” UNEP – GREEN ECONOMY INITIATIVE 3. GEI Analysis

Greenabout Growth Definition What is good the- GEI? UNESCAP, 2005 : “. . . a regional strategy for achieving sustainable development. . Green Growth advocates growth in GDP that maintains or restores environmental quality and ecological integrity, while meeting the needs of all people with the lowest possible environmental impacts. It is a strategy that seeks to maximize economic output while minimizing the ecological burdens. This new approach seeks to harmonize economic growth and environmental sustainability by promoting fundamental changes in the way societies produce and consume”

Green Growth - Definition UNESCAP, 2005 : “. . . a regional strategy for achieving sustainable development. . Green Growth advocates growth in GDP that maintains or restores environmental quality and ecological integrity, while meeting the needs of all people with the lowest possible environmental impacts. It is a strategy that seeks to maximize economic output while minimizing the ecological burdens. This new approach seeks to harmonize economic growth and environmental sustainability by promoting fundamental changes in the way societies produce and consume”

Green Economy, Green Growth… ‘Green Growth’ : Other Definitions • “Environmentally friendly GDP Growth” nearest to East Asian models • Growth in per-capita inclusive wealth ? Arrow, Dasgupta, Maler ‘Green Economy’… …. is not just about “investing more in green sectors” …. is focussed on policy & institutional reforms : Taxes, EHS, Environmental laws, trade, aid, markets …. is focussed on recognizing, valuing, conserving, and better using Natural Capital Dasgupta • Growth in Comprehensive wealth ? Stiglitz - Sen - Fitoussi Stiglitz UNEP – GREEN ECONOMY INITIATIVE ©Shutterstock