Valuing Nature: Priceless

Valuing nature: not the same thing as pricing it, as TEEB’s Pavan Sukhdev said repeatedly last week.

Our invisible ' tropical rainforest factory'.

Tropical rainforest, or rainfall factory?

He was giving his keynote speech at Wellington’s “Valuing Nature” conference, convened by the government’s Natural Resources sector, Victoria University, and the Sustainable Business Council.

Price is what you pay, or are willing to pay, he said. Value is what you receive – which may take many forms, and a “valuing nature”methodology should encompass all of them. Nobody can put a price on a butterfly or a bee, or tell the cloud where to rain – although, you may be able to work out what bees’ pollination services are worth.

Sukhdev’s “The Economics of Ecosystems and Biodiversity” (TEEB) work is about making the economically invisible values of ecosystems explicit, through green and natural capital accounting.

For example, the value of the world’s tropical rainforest as a rainfall factory for agriculture isn’t a number that you’ll see on any economic spreadsheet or balance sheet, but nor is it one that NZ could live without.

The NOAA satellite map Sukhdev showed, with its tropical rainfall systems curling out and down over NZ, ought to give our water-hungry dairy farmers pause in importing PKE, for example – grown on cleared tropical rainforest land.

It doesn’t stop at valuing dependencies (what is nature giving?). Businesses must also value their impacts (what are you costing nature?). This may reveal that a business isn’t profitable at all, if it’s eating into its own environmental bottom line – which may be a prompt for change. As Sukhdev put it: companies disclose their directors’ bonuses of perhaps a few million, and contingent liabilities such as court cases (perhaps in the tens of millions).

Why not environmental externalities, costing us many hundreds of millions? One answer is: because they currently aren’t priced. (Another one is that of course, it doesn’t cost the business directly – it’s social responsibility vs responsibility to shareholders – hence, the need to regulate).

It allows better resource management debate and decisions. Examples from Sukhdev’s talk included the Kampala wetland (valuable ecologically, and as a food source, and cheap by comparison with the sewage treatment plant that would have been needed, were the wetland drained and developed); and White Stork rice (able to command premium values for restoring white stork habitat).

The other keynote speaker, the UK’s Sir Robert Watson (formerly DEFRA’s chief scientific adviser) had co-chaired the UK National Ecosystem Assessment: a massive and detailed piece of work, which mapped the country in a grid 2 x 2 km square, and modelled outcomes using eight different models, eg, ‘world markets’ (a globalisation scenario), or ‘nature at work’ (integrating production with biodiversity – like our ‘Land for Wildlife’).

It considered climate and other future scenarios, and offered recommendations for land use change, including cropping, agriculture, and tree species (eg, planting oak not spruce). It showed that of all the models, ‘nature at work’ offered the best results, across all types of value – better economic outcomes than the status quo, dramatically better environmental ones, along with cultural values.

Picked up by the government in a White Paper, it will be implemented. (Although Ministers’ first questions were about short-term impacts on growth and jobs.) Like Pavan Sukhdev, Watson’s key messages were that:

The natural world, its biodiversity and its ecosystems are critically important, but consistently undervalued.
To rethink our relationship with nature, we must value it, and the route to that is demonstrating economic benefit – making nature part of our system.
It’s not a reductive approach: the formula is $ value plus non-monetised value (eg, spiritual and mental well-being, culture expressed in forms such as the meaning of place, and wild species diversity).
It’s not a choice or a tradeoff: environment is the route to optimal economic, social and cultural outcomes.

These are all ‘goods’ for Forest & Bird. We support a green economy, in our strategic plan – of which, accounting for nature is one part. Z A clear message coming out of the conference was that anyone who feels a little bit philosophically niggly, should basically just get over it! – you can’t have or run a modern green economy in a vague, warm fuzzy way.

In that same spirit, nor should it be uncritically received. Already in our Treasury, Chief Economist Dr Girol Karacaoglu is working on Higher Living Standards – a dashboard accounting system, building in social and environmental measures – “fighting to get it through” as Lincoln’s Caroline Saunders commented.

This is progressive and will be a better thing than total reliance on GDP as Treasury’s sole measure of success. And after a motion moved by rapporteur Al Morrison that MFE’s James Palmer should lead an NZ National Ecosystem Assessment, and report back to the conference to be reconvened in a year’s time, we may expect to see an NZ equivalent to the UK work. So in takeaway messages for Forest & Bird, I offer the following thoughts:

It was agreed that efforts to value nature are part of our cultural context, and can’t be divorced from it. In part that means: framing nature in a language that our culture understands.
But what about challenging the culture – articulating and pushing back against its assumptions – having the debate, in different voices, who don’t all speak the same language? What about values we either don’t comprehend, or that exist for species and ecosystems other than us? This is a role that – as the voice for nature – Forest & Bird can play, and must.
At the conference I think DOC’s Lyn Roberts put it well: making ecosystems play by the rules of neoclassical economics is like women fighting for equality in a man’s world, on men’s terms. You may win, but you still lose.
If, as proposed, the NZ-equivalent exercise is MFE-led, it won’t be equivalent at all. In the UK, the work was independently and prestigiously done. Government responded. That is how it should be. MFE should not be allowed to lead the work. The question is: who would?
Regardless of who leads it, F&B will want to participate. We need to be part of designing and building the framework, understanding what is going on – understanding its limits, which is almost like a metaphor for the whole argument. There are environmental bottom lines. Geoff Bertram explains why designing the system around these sorts of limits is economically efficient, and orthodox.
We need to understand what are valid methods, and what are not. Pavan Sukhdev had some thoughts.
Valuing nature won’t ever resolve the need to work through clashes of competing values, in the hard cases. It offers some good things, but not all of the answers.
The absence of NGO voices at the conference was missed. Scientists and academics were there; their independence is welcome, because otherwise, it risks capture by vested interests – who were there too.
The law- and decision-makers who were there could start valuing nature now, if they chose. I would have loved to see this played, to the several hundreds collected – many of them local and central government officials. You can nickel and dime everything, usually to death.

“Humanity owes Pavan and his TEEB team an enormous debt”, Jonathan Boston said at the conference, and I agree. But as he also said, “Beware of knowing the price of everything, and the value of nothing.”