Businesses & Consumers Just Beginning to Recognize Economic Cost of Biodiversity Loss

The latest report from the UN-supported The Economics of Ecosystems and Biodiversity project has been released, this time examining how businesses need to start addressing biodiversity loss and better appreciate the value of ecosystem services--those natural planetary functions, such as pollinating insects, that would otherwise have to be paid for directly.

Key to framing the report is showing positive examples of companies already starting to better value ecosystems, and the potential opportunities for growth in these markets.

Market Prices Don't Fully Reflect Ecosystem Costs
But let's back up a step. In the report's forward, TEEB study leader Pavan Sukhdev lays out what is, essentially, the central problem of the intersection of economics and environment:

Modern society's predominant focus on market-delivered components of well-being, and our almost total dependence on market prices to indicate value, means that we generally do not measure or manage economic values exchanged other than through markets. This is especially true of the public goods and services that comprise a large part of the benefits that nature provides humanity.

Society generally ignores third-party effects of private exchanges (so-called 'externalities') unless they are actually declared illegal. [...] This in turn leads to serious human and economic costs which are being felt now, have been felt for much of that last half-century, and will be felt at an accelerating pace if we continue 'business as usual'.

You want to get to root causes of environmental degradation, framed in economic language? That's it right there.

Ecosystem Services Worth Trillions Globally
The report gives some examples of the economic impact of biodiversity loss: Those pollinating insects that nature provides for free which I mentioned above are worth an estimated $189 billion a year; worldwide deforestation costs us all $2-5 trillion annually. Beyond the monetary value, some of these ecosystem services can never be effectively provided in another way.

Going on, the report hopefully points out that public and business awareness of the impacts of biodiversity loss is growing--as represented by changes in consumer preferences and resultant changes in business' purchasing decisions.

A consumer example: Global sales of organic foods and beverages increasing 300% from 1999-2007 to $46 billion (still under 3% of total market though...), that's expected to grow to $210 billion by 2020 and $900 billion by 2050.

And a business one: A PriceWaterhouseCoopers report from 2009 is cited found that 27% of global CEOs expressed concern about biodiversity loss hurting the ability of their company to continuing growing.

More concretely, the report singles out efforts by mining giant (and environmental bugbear) Rio Tinto to include biodiversity reporting in assessing its mining sites and committing to achieve 'Net Positive Impact' on biodiversity, as well as efforts by Starbucks, Walmart, and other multinational firms, as genuine progress.

Which is all fine--policy professionals, business leaders and those keen amateur followers of this all will want to read the full report for all the details--but for the average person, the bigger conceptual issue is what you should remember.

Society Must Set Limits on Corporate Behavior
Beyond remembering the opening blockquote above framing the issue, Sudkhev made an equally important point: Quoted by the Guardian and reprinted by The Hindu,

We have created a soulless corporation that does not have any innate reason to be ethical about anything.The purpose of the corporation is the be selfish. That's the law. So it's up to society and its leaders and thinkers to design the checks and balances that are needed to ensure that the corporation simply does not become destructive.

Corporations may have disembodied legal personhood in the US, but its up to the biological people to determine the boundaries within which they operate. It up to all of us to define the ethics that properly guide business behavior.

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More on Biodiversity & Ecosystem Services:
Biodiversity: The Cinderella of the Environmental Agenda?
World Governments Failing Their Biodiversity Commitments - Pressure on Species Just Increasing
Wealthy Countries Should Pay 'Rainforest Utility Bills' for Ecosystems Services Rendered
Restoring Ecosystems Biggest Untapped Ally in Fighting Climate Change

Tags: Biodiversity | Ecology | Economics

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