Economics of Ecosystems and Biodiversity

Pavan Sukhdev led research called The Economics of Ecosystems and Biodiversity (TEEB) from 2007 to 2011. It’s an international campaign to raise awareness of biodiversity’s global economic benefits. Its goal is to raise awareness of the rising costs of biodiversity loss and ecosystem degradation, as well as to bring together experts from science, economics, and politics to enable effective solutions. Through its five deliverables—D0: science and economic foundations, policy costs and costs of inaction, D1: policy opportunities for national and international policy-makers, D2: decision support for local administrators, D3: business risks, opportunities, and metrics, and D4: citizen and consumer ownership—TEEB aims to assess, communicate, and mainstream the urgency of actions.

One goal of the research was to establish a globally objective standard for natural capital accounting. According to estimates, biodiversity and ecological destruction will cost 18 percent of global economic production by 2050, with some estimations as high as US$6 trillion per year (for the largest 3000 enterprises, according to Trucost). The World Bank has been in the forefront of recent efforts to incorporate the cost of biodiversity and climate change into national accounts.

Agriculture & Food

The Economics of Ecosystems and Biodiversity for Agriculture and Food (TEEB Agri Food) programme was created to apply whole systems thinking to agricultural economics, which is concerned with complex and extensive eco-agri-food value chains – from supporting ecosystems to productive farms, to intermediaries such as aggregators, wholesalers, and retailers, to food and beverage manufacturers, distributors, and consumers.

Only by recognising and accounting for all relevant “externalities” along these value chains can the true economics of agriculture be understood. These externalities in our eco-agri-food systems include the enormous but hidden costs and benefits of agriculture and food systems, which must be unravelled, understood, and evaluated if the world is ever to figure out how to feed and nourish billions of people in a way that provides adequate nutrition to everyone in an equitable manner without jeopardising ecological security or environmental sustainability.

Natural Capital Accounting

GDP measures only one aspect of economic performance: income, but ignores the wealth and assets that support that income. When a country abuses its minerals, for example, it is actually reducing its wealth. The same may be said for overfishing and the degradation of water supplies. These diminishing assets are not measured since they are not evident in GDP.

To maintain growth, wealth accounting, including natural capital accounting (NCA), is required. Long-term development is the accumulation and prudent management of a portfolio of assets, including manufactured, natural, and human and social capital. A private corporation is appraised by both its income and balance sheet, as Nobel Laureate Joseph Stiglitz has pointed out, while most countries just produce an income statement (GDP) and have little knowledge of the national balance sheet.

The poor representation of natural capital is another key drawback of GDP. Natural capital such as forests, wetlands, and agricultural land do not make their full contribution. For example, in national accounts, wood resources are counted, but other forest services such as carbon sequestration and air filtration are excluded. As a result, GDP might provide false information regarding a country’s economic performance and well-being.

Study Leader of TEEB

Pavan Sukhdev is a thought leader on sustainability, a practised inventor, and a powerful voice among national environmental policymakers and institutions concerned with long-term development.

Pavan led the ground breaking TEEB report suite (‘The Economics of Ecosystems & Biodiversity’) and UNEP’s historic report ‘Towards a Green Economy’ as Special Adviser and Head of UNEP’s Green Economy Initiative and Study Leader of TEEB (2008-2011). As a Goodwill Ambassador and Special Adviser to its new research “TEEB for Agriculture and Food,” he now promotes UN Environment and TEEB.

Pavan received the McCluskey Fellowship (2011) from Yale University, where he taught a graduate course on TEEB and wrote “Corporation 2020,” a book and campaign (2012) on company transformation for the future. This campaign advocates tomorrow’s organisation as one with positive externalities rather than negative ones, and it outlines the four most essential corporate transformation drivers for a more inclusive green economy.

TEEB Water & Wetlands

This work focuses on the TEEB strategy to improve decision-making and business commitment for water and wetlands conservation, investment, and sensible usage by generating a better knowledge of their ecosystem service benefits. The report’s main goal is to assist in identifying important gaps and inconsistencies in current knowledge of water and wetlands economics so that agenda-setting for future research on these topics can be informed.

TEEB Country Study

A TEEB Country Study (TCS) identifies ecosystem services that are critical to accomplishing a country’s policy priorities and gives recommendations on how to incorporate these services into legislation. Policies for poverty alleviation, subsidy reform, land use management, protected area management, safeguarding livelihoods, investment in natural infrastructure restoration, and national accounting to include natural capital are among the recommendations, depending on the country context.

TEEB Country Study six-step approach:

STEP 1. Define the nation study’s objectives by identifying and agreeing on major policy concerns with stakeholders.
STEP2. Determine which ecological services are most important.
STEP3. Define your information requirements and techniques.
STEP4. Determine the value of ecosystem services.
STEP 5. Identify and summarise the benefits and drawbacks of various policy alternatives, including their distributional implications.
STEP 6. Examine, improve, and report

Conclusion

The Economics of Ecosystems and Biodiversity (TEEB) is a global programme aimed at “making the value of nature evident.” Its fundamental goal is to incorporate biodiversity and ecosystem services values at all levels of decision-making. It tries to achieve this goal by using a structured approach to valuation that assists decision-makers in recognising the wide range of benefits given by ecosystems and biodiversity, demonstrating their economic worth, and, when appropriate, capturing those values in decision-making.