Natur Cymru

A full version of this article appears in the magazine.

In a world which knows the price of everything and the value of nothing, it’s not surprising that many naturalists and ecologists have a suspicion of economics. But although we may have resisted the idea of giving a financial value to a species or habitat (because it makes them easier to buy and sell), the emerging field of ecosystem service valuation may be our best response to our current economic model which attaches no value to nature.

Ecosystem function emerged as a science in the 1960s, and by the 1990s the idea of giving an economic value to the services that ecosystems provide was becoming a focus of academic research. Nutrient cycling, climate regulation, pest and disease control, pollination, biological and genetic diversity and water purification are all ecosystem services, as are aesthetic, recreational and spiritual resources. The value of these services is not recognised by commercial markets, or quantified like industrial outputs, and so doesn’t contribute to official measures of economic progress. But because our global economy is entirely dependent on these life-support systems, their total value to the economy is in one sense infinite. Neglecting this knowledge may ultimately compromise the sustainability of humans on the planet.

A new report, Economics of Ecosystems and Biodiversity, recognises the economic value of biodiversity to the millions of people directly dependent on natural resources for their livelihoods. It also shows how the loss of biodiversity is now affecting regional economies in many ways, from the depletion of fish stocks to agricultural pollution of river basins. The author, Pavan Sukhdev, a senior figure in Deutsche Bank, said "we are trying to navigate uncharted and turbulent waters with an old and defective economic compass and this is affecting our ability to forge a sustainable economy in harmony with nature." The next phase of the work will examine how to improve our economic models and policies to ensure the flow of ecosystem services, protect biodiversity and improve the well-being of present and future generations.

So what are the lessons for Wales? Research suggests that our woodlands are worth hundred of pounds per hectare per annum just as carbon sinks, and our wetlands a similar amount as watershed protection. Other research suggests that every £1 invested in enhancing and conserving these ecosystem services produces £100 of economic benefits. The future of agriculture, as the 2020 Report for the Welsh Assembly Government concluded, looks very different if we factor in the value of ecosystems: we must move towards a proper valuation of environmental goods and services.

We face a number of big infrastructure projects here in Wales, which current valuation methods judge to be of ‘overriding public interest’. Take the case of the Severn barrage, which many politicians and business people want to see built to stimulate economic development and contribute to renewable energy targets. The Government has begun a Feasibility Study into the tidal power options, including a Strategic Environmental Assessment (SEA), and will look at the economics of carbon abatement, the relative costs and benefits of the alternative technologies and the cost of providing compensatory habitat. But these assessments currently don’t look at the present or future economic value of the environmental resource that will be lost. It will look in great detail at the impact of the development on the environment, but however great that impact, it will be traded for what is seen as a greater economic good unless we can demonstrate an even greater economic loss.

The Severn estuary and its tributaries are a spawning ground for eels and salmonid fish which are critical components of ecosystems many thousands of miles out in the Atlantic ocean. The consensus amongst fisheries biologists is that the barrage would cause the local extinction of these populations. Loss of these keynote species would be significant, but by creating a highly modified and impoverished habitat, the barrage would also prevent other species emerging to take their place as key species in the system. Ensuring ecosystem resilience (particularly of those systems that are major carbon sinks) is every bit as important as reducing carbon emissions. It is perhaps ironic that in the whole debate about climate change, an inanimate element, carbon, now has a price – but no living thing does.

As the threats to our natural world become ever greater, so conservationists are obliged to seek more innovative and far-reaching approaches. Addressing the root causes of biodiversity loss, rather than the symptoms, can offer solutions to seemingly intractable problems. We are learning to think beyond protected areas, and to plan on bigger scales, across whole landscapes and eco-regions. Similarly, addressing the root cause of climate change by understanding our relationship with ecosystems will be more effective than simply fixing the symptoms. For both of these, economic valuation is an important new shield in the battle to defend the natural world and our own survival in it.

Morgan Parry is Director, WWF Cymru.