Interim Report - TEEB

Figure 3.1: The link between biodiversity and the output of ecosystem services
Maintenance and
restoration costs
Economic and social
values (sometimes
market values)
Biological structure
or process
(e.g. woodland
habitat or net
primary productivity)
Link pressures
via policy action?
Pressures
Function
(e.g. slow passage
of water, or biomass)
Service
(e.g. food protection,
or harvestable
products)
Benefit (value)
(e.g. willingness to
pay for woodland
protection or for
more woodland,
or for harvestable
products)
Intermediate products
Final products
Source: Roy Haines-Young, presented by J-L Weber, the Global Loss of Biological Diversity, 5-6 March 2008, Brussels
and drought losses. It could be ethically difficult to justify
destroying such a forest watershed in order to release
economic value which has utility for the agents of destruction
(e.g. profits from minerals and timber, related employment,
etc.), whilst on the other hand, the costs of replacing
ecosystem benefits forgone may be the same or less in
monetary terms, but impossible to bear in human terms as
they fall on poor subsistence farming communities (see Box
3.4). We see such situations as outcomes of bad economic
targeting – economics is mere weaponry, its targets are
ethical choices.
DISCOUNTING BIODIVERSITY LOSSES
We do not suggest that there are always defensible “tradeoffs”
for ecosystems and biodiversity, especially if significant
ecosystems cease to function altogether as providers of
provisioning or regulating services, or if biodiversity suffers
significant extinctions. The evaluation of trade-offs using
cost-benefit analysis and discounting works best for
marginal choices involving small perturbations about a
common growth path. However, the reality is that there are
trade-offs, explicit or implicit, in any human choice. Even
trying to set a boundary where trade-offs should not apply
is itself a trade-off!
Trade-offs involve a choice between alternatives, and in
the case of biodiversity losses, there are not always comparable
alternatives. For development to be considered
sustainable, a boundary condition called “weak sustainability”
is defined, being a situation in which overall
capital – natural, human and physical – is not diminished.
But this also suggests that one form of capital can be
substituted for another, which is not true: more physical
wealth cannot always be a substitute for a healthy
environment, nor vice versa. However, it is important for all
aspects of the “natural capital” side of a trade-off at least
to be appropriately recognized, valued and reflected in
cost-benefit analysis, and even this is not yet being done in
most trade-off decisions. There is a different boundary
condition called “strong sustainability” which requires no
net diminution of natural capital: this is more difficult to
achieve, although compensatory afforestation schemes
are examples of instruments designed to achieve strong
sustainability. Finally, any trade-off has to be ethically
defensible, and not just economically sound.
With biodiversity, we are not only considering long-term
horizons as we are with climate change. Ecosystem degradation
is already extensive and observable, and some of
its effects are dramatic – such as the loss of freshwater
causing international tension. Significant biodiversity losses
and extinctions are happening right now, and flagship
species such as the Royal Bengal tiger in India are under
threat. A higher or lower discount rate can change the
quantification of the social cost of imminent losses, but it
would not alter the nature of the outcomes – loss of vital
ecosystem services and valuable biodiversity.
32 The economics of ecosystems and biodiversity