Saving What Remains


April 1, 2012

For most of the past century, governments and industry have failed to recognize that tropical rainforests are worth much more than the attractive hardwood timber they contain. They failed to take account of the intricate role rainforests play in hydrological, biological, geochemical, and climatological functioning on Earth. Because all the benefits provided by forests cannot be directly measured and captured, the market under-provides for, hence undervalues, rainforests. True economic analysis should take these indirect values and this economic distortion into account.

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The Problem with GDP as a Measure of Economic Health

New ways to measure the value of ecosystems

Millennium Ecosystem Assessment (United Nations)
In March 2004, the Millennium Ecosystem Assessment (MEA) was published by the United Nations, consisting of the first global survey of ecological services. The assessment involves more than 1,400 experts in various scientific fields from 95 countries around the world. What makes the report different from other global audits is the MEA's focus not on surveying biological diversity within any given region, but rather on the general stability of the services provided by world ecosystems. Up until recently, the exchange of natural habitat for cultivated land had been largely beneficial to humans. But things are beginning to change and about two-thirds of the ecosystems reviewed by the MEA are being degraded or used unsustainably.

Total Wealth (World Bank)
In 2005 the World Bank developed a new metric for measuring the wealth of a country—one that accounts for the actual value of natural resources, including resource depletion and population growth. Topping the list are eight European countries, the United States, and Japan, while the bottom of the list is dominated by sub-Saharan African nations.

[an error occurred while processing this directive] Companies that destroy the rainforest should be required to make bioeconomic and cost-benefit analysis a mandatory part of their land-survey routine. Genuine bioeconomic analysis will survey all relevant opportunity costs and determine the presence of species with value as pharmaceutical, food, and other products useful to humankind. In addition, bioeconomic analysis can predict the potential for eco-tourism and ideally, make some assessment for the services (like climate stabilization, recreation value, soil protection, and clean water) a forest area provides. By accounting for these benefits it will help guard against the uninformed destruction of species. Globally, ecosystems and the services they provide are estimated to be worth $33 trillion, according to research conducted by Robert Costanza in the 1990s. The biodiversity of tropical rainforests can provide material benefits beyond simple value as forest products. For example, in the late 1970s, Malaysia imported weevils from Cameroon to pollinate oil-palm plantations, in 1981 saving $120 million in labor costs from hand pollination. Finding this cost-saving species was straightforward: weevils are the natural pollinators of oil palm, which originated in the rainforests of Central Africa. Once a bioeconomic analysis is complete, the decision can be made on how to best use the forests; whether to protect them using their sustainable yield or to destroy them for immediate return and accept the long-term effects.

Some environmentalists say that putting a dollar value on the resource is not the proper way to approach conservation, since ecosystems have intrinsic and aesthetic values that transcend economic value. They worry that saying a square kilometer of Malaysian mangrove forest has a value of $300,000 in flood control alone will justify developers offering $310,000 for the land and turning it into a shopping complex. However, it is clear that money is a prime consideration in today's global economy, and putting monetary value on an ecosystem, even if it is undervalued, provides strong a strong and universally understood argument about the value of protecting biodiversity and the ecosystem.[an error occurred while processing this directive]

Economic Values

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Avoided deforestation

Perhaps the best hope for funding rainforest conservation in the short term lies in emerging markets for ecosystem services, the most advanced of which is carbon sequestered by forests.

At the December 2007 U.N. climate meeting in Bali, delegates agreed to include forest conservation in future discussions on a new global warming treaty. The decision could lead to the transfer of billions of dollars from industrialized countries to tropical nations for the purpose of slowing greenhouse gas emissions by reducing deforestation rates. Deforestation and associated forest degradation (including peatland degradation) presently accounts 10-12 percent of anthropogenic emissions worldwide.

Researchers say that forest protection through REDD+ ("Reducing Emissions From Deforestation and Degradation") could be one of the most cost-effective ways to address climate change, although concerns remain on how the mechanism will actually function.

News on REDD

Even cost-benefit analysis often underestimates the value of the species and ecosystem by failing to factor in the unknown benefits. Bioeconomic analysis may be able to valuate rainforest lands by eco-tourism potential, known, and even some unknown products, but it can hardly account for the services that the rainforest ecosystem performs or the value of unknown biodiversity. How much is a stable climate worth? What would a country pay for clean water or navigable waterways? At what cost should global warming and polar ice melt be avoided? How about functioning hydroelectric projects, working fisheries, and avoiding cycles of flood and drought? These are some items on a long list of services which rainforests provide humanity.

Dismantling rainforests for timber, pasture land, pulp for paper, and palm oil is not maximizing their potential yield: it is like smashing an ancient Roman vase to reach the quarter that fell inside. Razing rainforests for just these simple commodities is a colossal waste of their resources.

Sign warning that a tree is spiked with metal to discourage logging in West Kalimantan, Indonesian Borneo. Click image for more pictures of West Kalimantan. Photo by Rhett A. Butler

Review questions:

  • Why is economic analysis of ecosystems important?

Continued / Next: Funding and Organization for Rainforest Conservation