‘Stern review’ of biodiversity calls for more ecosystem markets

London, 19 November: Policy-makers should expand payments for ecosystem services and harness the power of markets to help protect the planet’s biodiversity, according to a landmark study.

The report – from the Economics of Ecosystems and Biodiversity (Teeb) initiative – aims to emulate the success of the 2006 Stern Review on the Economics of Climate Change in applying economics to environmental policy-making.

“The lack of market prices for ecosystem services and biodiversity means that the benefits we derive from these goods … are usually neglected or undervalued in decision-making," the report notes. "This in turn leads to actions that not only result in biodiversity loss, but also impact on human wellbeing."

“Put simply, making the benefits of biodiversity and ecosystem services visible to economies and society is necessary to pave the way for more efficient policy responses,” it says.

The report, which describes itself as “a compendium of practice, a synthesis of insights and a source of ideas for ways forward”, cites a number of examples where investments in protecting ecosystems have generated substantial financial returns. For example, a $1 million investment in planting and protecting 12,000 hectares of mangroves in Vietnam saved $7 million/year in dyke maintenance.

Conversely, investments to convert natural habitats for human use often fail to factor in wider costs. While shrimp farms on cleared mangroves in south Thailand can generate $1,220 per hectare for five years, losses to local communities in terms of foregone forest products, fisheries and coastal protection can total $12,000/hectare, while rehabilitation costs an additional $9,000. 

The report is one of five due over the next 12 months from Teeb, which was launched at a G8+5 meeting in Germany in 2007. The initiative is led by Pavan Sukdhev of Deutsche Bank, hosted by the UN Environment Programme, and funded by the European Commission and several European governments.

This first report – aimed at policy-makers – provides a 10-point plan to encourage “more ecosystem-savvy economies”.  

These include “rewarding benefits through payments and markets”, and the report cites local markets, such as for water, or global markets, such as 'REDD-plus' proposals, for rewarding the reduction of emissions from deforestation and degradation.

It also calls for the removal of “environmentally harmful subsidies”, including “almost $1 trillion” across agriculture, fisheries, energy, transport and other sectors.

Subsequent reports, due mid-2010, will be aimed at local policy-makers, business and individuals, with the final findings of the complete Teeb study to be presented in October 2010 at the Convention on Biological Diversity in Nagoya, Japan.