Applying the lessons of the carbon market to biodiversity protection is a recipe for disaster, says Anna Roggenbuck
"So, we hand over $20 million, and the fluffy animals get it in Siberia – but we get some monkey credits from Gabon, right?"
Picture such a scene, not in the next Quentin Tarantino film, but taking place on a trading floor a few years hence should a 'biodiversity market' get up and running.
As reported recently in Environmental Finance, such a market is becoming the subject of public discussion and debate among senior EU officials.
The article quoted comments from Peter Carter, head of the sustainable development unit at the European Investment Bank (EIB), positing the adoption by the EU of ‘biodiversity credits’ – and for Carter this would involve “building on the lessons from the carbon market.” Notably, however, Carter went on to opine that “We should not wait until the problems facing the carbon market are all resolved.”
For environmental NGOs such as CEE Bankwatch Network, this is precisely the elelphant in the room when it comes to the carbon market: its problematic aspects are of an essential nature, and to consider applying it as a model for a biodiversity market is not so much barking up the wrong tree, but more plain barking mad.
Carbon trading – worth $144 billion globally in 2009 – has done nothing to halt climate change. In addition to privatising the right to pollute and turning the air we breathe into a tradable commodity, the carbon market has been a striking failure as a market, costing (more) billions in public subsidies with the potential to bring about another catastrophic speculative bubble like the one seen in mortgages. It has also had negative impacts on communities all over the world locked into dubious contracts, furthered corruption and increased inequality between North and South.
The EIB is clearly aware of these failings, and it cannot have failed to notice that one of the most high profile beneficiaries of its recent crisis-lending – steel giant ArcelorMittal – has been widely reported to be making a killing on the EU Emissions Trading Scheme due to its excessive allocation of carbon credits.
To consider applying carbon as a model for a biodiversity market is not so much barking up the wrong tree, but more plain barking mad
What else marks out biodiversity for different treatment if it is to be valued and to fall under environmental accounting? On a fundamental level, while carbon emissions are a global problem, and it does not strictly matter where emissions take place, biodiversity clearly has a strong local orientation. The destruction of habitat to permit a road project in Bulgaria, for example, cannot be simply offset by a project in Jamaica.
Perhaps the nub of the issue is, as recognised by the EIB's Carter, that business just does not like certain legislation that covers biodiversity, such as the European Commission’s Habitats Directive. Yet even if natural capital is to be calculated alongside other 'capitals' (social, human and manufactured), nature protection regulations should be recognised as a no-go area – they must not be watered down. Latvia's sustainable development strategy for 2010-30 for instance captures the value of nature in monetary terms, but it also aims to motivate landowners to protect biodiversity.
The last couple of years have seen unprecedented market failures, requiring billions in public bailouts that are about to blight European public services for a generation. What we see in these albeit initial noises from a senior EIB environment official about biodiversity markets is that, in spite of considerable evidence of market failure, the EIB is still besotted with the ‘market knows best’ approach.
EIB advertising of its climate change credentials has previously featured in Environmental Finance – including some peculiar imagery of a penguin basking in sunshine on a receding piece of Antarctic ice-shelf.
Debate about biodiversity issues is clearly needed, yet on this occasion the EIB’s framing of the issue conjures up some rather frightening images if traders are ever permitted to frogmarch the natural world to market.
Anna Roggenbuck is Bankwatch's EIB Campaign Coordinator, based in Szczecin, Poland. E-mail annar@bankwatch.org
Thanks for your interest in the article. We should start thinking of biodiversity as a service that we must invest in as much as we do in other sectors. Biodiversity provides specific ecosystem services which can be presented in monetary terms, and if is depleted this will have negative effects on EU economies. As a minimum, the EU biodiversity system of Natura 2000 should finally start to be fully operational across the EU. Natura 2000 should be further protected and enhanced by significant improvement of the quality of its protection, starting from protection programs for individual sites, through to the application of biodiversity regulations to ensure the sustainability of the whole network. Biodiversity protection needs to investigate the complicated relations between ecosystems and take advantage of the synergies effect of several economy's sectors. For example one important factor driving biodiversity loss is climate change. By investing in climate change prevention, we are also investing in biodiverity protection.
I like the article, but it is unsatisfying in that doesn't go beyond the assertion that there is a real issue that a "market knows best" model for biodiversity conservation (and restoration?) can be predicted to fail to achieve those objectives. How about an lluminating lead or reference as to what you would consider is the sane model to follow, to assure local, regional, national and international conservation of biodiversity?
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