What Price Nature? Bogs $6,000, Reefs $10,000

May 15, 2006 — By Alister Doyle, Reuters

OSLO — The figures read like a real estate agent's listings: 2.5 acres of marsh in Canada, $6,000 per year; a tropical forest in Cameroon, $3,500; a Caribbean coral reef, $10,000.

The estimates from United Nations-backed studies are part of a fledgling bid to put a price on nature's bounties, from the production of crops, fish or timber to clean water supplies or the prevention of erosion.

Skeptics say the estimates are little better than guesswork but proponents argue that "Eco-nomics" shows natural systems, such as rainforests or mangroves, are usually worth more intact than if chopped down and harvested.

"It's not rocket science ... but it's better than thinking that ecological systems have no value at all," said Robert Costanza, professor of ecological economics at the University of Vermont.

Some scientists say Eco-nomics could help safeguard the planet's ecosystems at a time of multiple threats, ranging from global warming, deforestation and pollution to the introduction of alien species to new habitats.

"There's a lot of suspicion (about ecosystem economics) because you can't easily value these things," said Partha Dasgupta, professor of economics at Cambridge University in England.

"But I hope it takes off because we have to find a way to end destruction of nature," he said.

FREE AND LIMITLESS?

Costanza led a landmark 1997 study, published in the journal Nature, that concluded the world's ecosystems were worth $33 trillion -- almost double world gross national product at the time. "The estimates we used were conservative," he said.

Since then economists have tried to fix price tags on swamps, deserts, glaciers, reefs or jungles to try to widen assessments of the economy away from yardsticks like housing starts or consumer spending.

"Current measures of economic wealth ... do not reflect the total economic value of ecosystems and mistakenly treat nature's goods and services as free to use and limitless in abundance," a U.N. report on biodiversity said in March.

It noted a country could boost conventional economic growth by felling all its forests for timber exports or by dynamiting its coral reefs to catch fish -- but added the gains would be short-lived.

Another U.N. report in January estimated that an intact coral reef was worth $1,000-$6,000 per 2.5 acres per year, perhaps $10,000 if located off a Caribbean beach resort.

Reefs provide nurseries for fish, act as protective barriers against coastal erosion from storms or tsunamis and draw tourists. Protecting a reef would cost just $8 per hectare if it was converted to a marine park.

An international study last year, the Millennium Ecosystem Assessment, valued a Canadian wetland at $6,000 per 2.5 acres per year against about $2,000 if converted for intensive farming.

It said 2.5 acres of tropical forest in Cameroon was worth about $4,000 if managed properly against $2,000 if felled for farming. Intact mangroves in Thailand were worth $1,000 a year against $200 a year if converted for shrimp farming.

Jeff McNeely, chief scientist of the World Conservation Union in Geneva, said coasts with intact mangrove swamps in Thailand suffered less damage during the 2004 tsunami.

"If you look at extreme natural events in the last couple of years -- Hurricane Katrina, the tsunami, the earthquake in Kashmir -- all were more disastrous than they would have been if ecosystems had been intact," he said.

THOUGHT EXPERIMENT?

But some scientists say Eco-nomics is unlikely to become part of mainstream economic thought.

"Putting a price on ecological assets is symbolically a useful thing. But I don't think it will be economic reality in the next decades," said Hans Joachim Schnellnhuber, director of the Potsdam Institute for Climate Impact Research in Germany.

"It's just a thought experiment," he said, arguing that scientists should focus on raising public awareness of the likely impacts of global warming, such as higher seas, floods or desertification.

McNeely said insurance companies often provided a more accurate gauge of nature's financial value than the new science.

Munich Re, a leading reinsurance company, has estimated economic losses from weather-related disasters in 2005 at a record $200 billion plus, with insured losses of more than $70 billion led by devastation from Katrina.

There are other examples of attempts to put a hard price on natural services, like the new European market in carbon dioxide emissions from industrial plants, widely blamed for stoking global warming.

The City of New York wants to preserve the Catskill watershed by buying land in order to ensure water supplies, calculating that this course of action makes more economic sense than paying billions of dollars for filtering plants.

Dasgupta said one problem for Eco-nomics was that nature is inherently priceless -- without it all life would die.

But the new science has pushed the boundaries of imagination by trying to cost what might seem unquantifiable.

In some studies, people are asked to place a value on forests or beaches near their homes while in others, economists try to work out what it would cost if humans had to pollinate flowers because bees had disappeared.

It's not as strange as it sounds: China has sometimes resorted to human pollinators, apparently after over-use of pesticides.

Source: Reuters