So it is fitting that, as Environmental Finance Personality of the Year 2010, we recognise Pavan Sukhdev, leader of The Economics of Ecosystems and Biodiversity (Teeb) study.

The Teeb project is intended to do for biodiversity protection what the Stern Review on the Economics of Climate Change did for that issue – build the economic case and move the debate beyond ethics or environmentalism and into the mainstream of policy-making and business practice.

Sukhdev spoke to Environmental Finance the week before the release of the third report from the Teeb study, which makes the case for the business community to protect biodiversity and ecosystem services.

“I think the bandwagon has rolled forward ... There’s an increasing number of business people who are showing interest ... asking us, is there something for our industry?” he says.

“We’ve had a request for a Teeb for agriculture, we’ve had a request for a Teeb for finance … My team are just stressed-out beyond belief, trying to respond to the number of queries we’re getting.”

One of the more surprising findings to emerge from the Teeb for business study is that European and US chief executives lag behind those in Latin America, Africa and the Asia-Pacific in terms of considering biodiversity a risk to their business. Part of the reason is that more emerging market corporations are involved in natural resource extraction than their western peers, but Sukhdev suggests that this is also because the assumption in the West is that governments are responsible for protecting the natural environment and, as evidenced by programmes such as Natura 2000, which protects habitats all over Europe, are reasonably successful.

But he adds that it also has its roots in “the Anglo-Saxon model of the universe”, where “nature is just a mere input into a process, rather than part of a whole of which we are also part.”

Sukhdev, a career investment banker, latterly with Deutsche Bank, was invited to lead the Teeb project by the European Commission and the UN Environment Programme, following his work in India applying environmental economics to GDP calculations.

 

“If we want to stop the loss of

ecosystems and biodiversity then

we had better start recognising

their economic value

If we want to stop the loss of ecosystems and biodiversity then we had better start recognising their economic value

 

The Teeb project – initiated by the G8+5 grouping – is designed to feed into a major conference, to take place in Nagoya, Japan, this October, under the auspices of the Convention on Biological Diversity. In terms of the conference’s outputs, Sukhdev says: “The most important thing for me is that it should result in a greater recognition that the economic invisibility of nature and its services is a big part of the ecological insecurity that we are facing, and the environmental risks that we are opening ourselves to.”

“If we want to stop the loss of ecosystems and biodiversity then we had better start recognising their economic value in ... government policies, or in the form of mechanisms for reward like REDD+ [reducing emissions from deforestation and degradation], or in the form of actual markets, which are coming, water markets, and so on,” he says.

He is hopeful that Nagoya will see agreement on the need for a commonly agreed set of indicators of biodiversity. “There are indicators and indicators, literally hundreds ... There’s no consistency in this space, and that is a problem because it creates complexity and challenges in trying to actually measure what you’re trying to manage.”

Such indicators would be an ideal project for the new Intergovernmental Platform for Biodiversity Ecosystem Services – an independent body, not unlike the Intergovernmental Panel on Climate Change, to bring together relevant scientific expertise to produce assessments on the state of biodiversity and ecosystems to help in the formation of policy.

But Sukhdev does not believe biodiversity loss is amenable to the same kind of global agreement that, despite the disappointments of Copenhagen, most advocates of action to tackle climate change still favour. While climate change is at root a global problem, in that the effects of emissions of greenhouse gas are felt at the global rather than the local level, biodiversity loss also has local and regional effects, he explains.

However, while an overarching international biodiversity treaty may prove elusive, progress is being made tackling elements of the problem, he says, citing developments at and since Copenhagen towards some sort of agreement on incentivising REDD+. “With REDD+ there is a common understanding. Everyone agrees that countries that have forests and maintain them should be rewarded and countries who benefit from it should pay for it. There’s no disagreement on this,” he says. Furthermore, “there’s actual money on the table. $4.5 billion is not small change” he adds, referring to the money pledged via the intergovernmental Paris–Oslo process.

The Teeb project, at least in its current iteration, is drawing to an end – although Sukhdev suggests that it may evolve into an institute, or another body to help implement its recommendations. Of his hopes for its long-term impact, one is that it might encourage accounting bodies to “take upon themselves the mantel” and develop “a standard framework and methodology for assessing these externalities, whether they relate to ecosystems, or freshwater use, or the impact on forests and so on.”

Such standards could then be applied to companies “ascribing a value to their externalities, and start disclosing them ... I would think that on the corporate side, that would be probably the number one outcome that I would judge our success by.”