Economics of Ecosystems and Biodiversity

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= "TEEB – is a set of accounting tools that puts a price on the ecosystem services provided by nature and used by industry". [1]



* Report: The Economics of Ecosystems and Biodiversity. By Pavan Sukhdev et al. United Nations Environment Programme, 2011.

1. Assigning value to the environment's eco-services?

"The groundbreaking TEEB report (formally “The Economics of Ecosystems and Biodiversity”) report counts the global economic benefits of biodiversity. It encourages countries to develop and publish "Natural capital accounts" tracking the value of plants, animal, water and other "natural wealth" alongside traditional financial measures -- in the hope of changing how decisions are made to take into account damage or preservation of biodiversity." (

2. John Thackara:

"The thinking behind TEEB is that knowing the price of ecosystems will cause companies to look after them, and many governments and companies are signing up to its framework.

There is troubling evidence, however, that this well-intentioned project will backfire. TEEB’s numbers, acting like blood in the water, have attracted the attention of predatory investors bent on ‘financializing’ environmental assets – converting natural resources such as land, ecosystems, and riversheds into abstract commodities that can be ‘securitized’ – and then traded. What’s especially deadly about this process is that these financial products contain powerful incentives to accelerate the rate of exploitation of the world’s soils, water and biodiversity. For EKO Asset Management, an early mover in this nature grab, “sustainability means running the global environment like a corporation”." (


1. John Thackara:

"Two years after the Stern Review of Climate Change Economics, a report called The Economics of Ecosystems and Biodiversity (TEEB), by Pavan Sukhdev, was published by Deutschebank and the European Commission.

Setting out a “comprehensive and compelling economic case for the conservation of biodiversity”, TEEB promotes a better understanding of the true economic value of the benefits we receive from nature.

“Nature provides human society with a vast diversity of benefits such as food, fibres fuel, clean water, healthy soil, protection from floods, protection from soil erosion, medicines, storing carbon (important in the fight against climate change) and many more” begins the TEEB report.

Though our wellbeing is totally dependent upon these ecosystem services, they are predominantly ‘public goods’ with no markets and no prices, “they often are not detected by our current economic compass”.

TEEB comes just in time. The world is witnessing an unprecedented loss of biodiversity in ecosystems. Some 10-30% of all mammal, bird, and amphibian species are threatened with extinction.

A major cause of this loss is the destruction of natural habitats by economic ‘development’ based on the expansion of the agriculture, forestry, oil and gas, mining, transport, and construction sectors.

According to TEEB, the global economy is losing more money from the disappearance of forests than through the banking crisis. The report puts the cost of forest loss at between $2 trillion and $5 trillion per year. The figure comes from adding the value of the various services that forests perform, such as providing clean water and absorbing carbon dioxide.

As forests decline, nature stops providing services which it used to provide essentially for free. So the human economy either has to provide them instead, perhaps through building reservoirs, building facilities to sequester carbon dioxide, or farming foods that were once naturally available.

Or we have to do without them. Either way, there is a financial cost.

This terrifying rate of loss is due to pressures from population growth, changing diets, urbanisation and also climate change. Biodiversity is declining, our ecosystems are being continuously degraded and we, in turn, are suffering the consequences.

As Sukhdev explains it, “we are trying to navigate uncharted and turbulent waters with an old and defective economic compass and that this was affecting our ability to forge a sustainable economy in harmony with nature.”

TEEB has the potential to be the trigger that transforms how business measures, and therefore looks after, these life-critical assets. After all, the drinks industry depends on ecosystems to supply fresh water; agribusiness relies on grasslands for insect pollinators, nutrient cycling, and erosion control; the insurance industry benefits from the fact that coastal marshes reduce the damage caused by hurricanes and that wetlands absorb water from floods." (

2. By Vasanthi Hariprakash:

"Here is a concept that is gaining currency among governments. Called ‘The Economics of Ecosystems and Biodiversity’ (TEEB). It is a study commissioned by the United Nations Environment Programme (UNEP), based on the principle that ‘Natural resources are economic assets, whether or not they enter the marketplace.’ The 500-plus TEEB team that has economists, ecologists and researchers, has been on the project that puts a money-value to the ‘services’ that forests and ecosystems offer us, if we had to pay for them everytime we use them.

While an agency as credible as TEEB has put out the actual price of resources considered invaluable, there is no market or ‘buyer’ who can pay for these services. The countries and governments who mostly ‘own’ these forests therefore have no ‘profit’ to show against their forest cover on their balancesheet. Which is why, most often, they have no incentive to let forests stay as forests.

On the other hand, changing the land use pattern, that is converting forest land into, say, agriculture land or real estate, gives them far more tangible wealth. And therein lies the story of why across the world, forests have been simply disappearing." (