Money invested in protecting nature can bring huge financial returns, according to an expert in environmental and financial markets and investment.
Speaking to , Nick Hanley, Professor of Environmental Economics of the University of Stirling, Scotland said that there was now clear evidence to show that conserving ecosystems such as wetlands and forests was a sound economic investment.
Hanley, who recently visited Nicosia to give a lecture entitled `Is there an economic case for protecting nature`, explained that in order to understand why conserving the environment was guaranteed to bring financial benefits, we must first determine when economic resources have economic value.
“Resources are of economic importance when they are bought and sold in markets, when they contribute to the well-being of humans and when they are useful inputs to the production of other goods and services.”
He explained that because not all of these benefits are valued in markets they do not all have a market value.
“Nature, however, contains stocks of capital resources, such as forests and wetlands which yield a flow of valuable goods and services. For example, ecosystem services such as pollination and flood defences provided by ecosystems are of clear benefit to people.”
He added that some benefits from managing forests show up as market values, such as benefits from timber extraction and sale as well as charcoal.
But many, such as the values of protecting wildlife, values of avoided soil erosion, values of forests for recreaction and education, and values of forests in terms of landscape quality do not.
“There are limits to economic valuation and some ecosystem service benefits lend themselves more successfully to monetary valuation than others,” said Hanley.
He explained that the value of other ecosystem services have been well known for centuries. These include food, fibre and recreational opportunities which are clearly valued and already influence the way we use our land.
According to Hanley, what has been lacking for years is a systematic approach to identifiying and valuing the full range of nature`s services.
He noted that as our understanding of the scale and proximity of the dangers of climate change and loss of biodiversity grows the need to find effective solutions becomes more urgent.
“Since not all benefits from protecting nature are valued by markets, landowners often do not have enough of a financial incentive to decide to conserve nature, rather than develop it. Development can bring market valued benefits, for example when a wetland is drained to allow agricultural production but this means we lose the economic benefits of protecting the wetland.”
He added that the business logic for protecting nature has always been a harder sell than making the case for other initiatives but now governments all over the world are beginning to use new evidence to make economy based decisions.
“There is now enough evidence to prove that protecting nature produces undisputed economic benefits. In the UK this has been happening at an increasing rate for the last 15 years.”
One recent study id the TEEB report, an international initiative to draw attention to the global economic benefits of biodiversity, which provides many examples of the kinds of economic benefits protecting eco-systems can offer.
“Altough many of these ecosystem services are not valued by markets even the slightest changes in any or all of these would have economic costs and benefits and economists have been developing a range of methods for measuring the value in euro of changes in these ecosystem services.”
Concluding, Hanley said conserving nature was guaranteed to lead to real economic benefits.
“In many cases, these benefits seem big enough to make the case for conservation.
A healthy natural environment supplies us with a multitude of life supporting and life enhancing benefits,” said Hanley. “Changes in ecosystem management will produce changes in ecosystem services and we are now in a position to measure the economic values of such changes.
“For the benefits to become widespread conserving nature as well as management of natural resources should become a routine part of government planning.”
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