Green Path to Growth


It is time businesses and governments placed an economic value on natural resources

Nitin Desai
Nitin Desai, Economist
Illustration: Sudeep Chaudhuri

OVER THE past two weeks in Hyderabad, people have met to discuss and agree on ways of implementing obligations under the UN Convention on Biodiversity. Is this something that should interest only nature lovers? Or should it also concern those whose primary interest lies in money-making and mainstream economics? The protection of biodiversity and, more broadly, ecosystem conservation, is central not just for long-term development but for survival. But it will not happen unless those who decide how investment, production and consumption decisions are made to recognise this and reflect it in the metrics that shape their choices.

At the turn of the millennium, the UN set up a major exercise involving more than 1,300 scientists to assess the state of the world’s ecosystems. The answer was alarming. Out of the 24 ecosystem services assessed by them, 15 are in decline. These include many that are central to human well-being and the functioning of the economy such as the provision of fresh water, marine fishery production, the number and quality of places of spiritual and religious value, the ability of the atmosphere to cleanse itself of pollutants, natural hazard regulation, pollination and the capacity of agricultural ecosystems to provide pest control.

This concept of ecosystem services is the key to the challenge of integrating biodiversity and ecosystem concerns into economic and commercial calculations. Scientists recognise four types of such services. The first is the provisioning of goods such as food, fibre and fuel that we directly consume. The second is regulating services such as hazard protection, water run-off modulation, seed dispersal and pollination and similar services that would otherwise cost a lot to provide through artificial means. The third is support services that are a bit like regulating services but which operate over a long period of time and include processes such as soil formation and the production of oxygen. The fourth is a cultural service reflected in the role that natural phenomena play in our literature, religion and perception of what constitutes a healthy and pleasant environment. In India, for instance, we have 19,000 sacred groves that are a religious expression of our respect for nature.

Every act of investment, production and consumption is an intervention in these natural processes. As long as the scale of intervention was modest, the tendency to neglect this connection may not have mattered. But our interventions are no longer marginal. The water impounded in reservoirs is 3-6 times more than in river courses. Human activities spew out more nitrogen than all natural processes. We are introducing alien species into ecosystems with unexpected effects. With genetically-modified organisms, the scale of our intervention is changing. We are now in the midst of the greatest species extinction since the disappearance of dinosaurs 65 million years ago. The WWF and Global Footprint Network estimate that we now consume 50 percent more than the planet’s biological capacity.

We now face the risks of non-linear change. Scientists who have been looking at planetary boundaries that we should not cross, believe we have already breached three of the nine they have defined. We run the risk of reaching tipping points beyond which one will have a sudden phase change with catastrophic impact (like the collapse of the monsoon system). Yet, our economic calculus is based on the assumption that our interventions are marginal. And even then they do not really take into account the cost of the impact on ecosystem services. What may appear to a builder to be a worthless swamp or river course that he should drain and build over, provides valuable services as a pollution filter and flood regulator during heavy rains.

If ecosystem services are taken into account and paid for or compensated if lost (for instance, the compensation for deforestation enforced by the Supreme Court) then many activities would be seen as unprofitable. Thus the Millennium Ecosystem Assessment calculates that a mangrove swamp left intact has four times the value of a shrimp farm in the same space. A similar comparison for sustainable forestry and small-scale farming shows a ratio of value of nearly two.

Ecosystem services are not just about land, water and air. They are intimately linked with the abundance and variety of species. When broad-leaved oak trees in the Himalayas were replaced by narrow-leaved pine trees, water run-off and soil erosion proved disastrous. Variety matters for the agricultural economy in India where the 100 varieties of mangoes and 50,000 varieties of rice provide cultivators with livelihood options. Public concern about conservation recognises the importance of tiger and elephant protection, but fails to recognise the consequences of the loss of any of the 300 wild ancestors and relatives of plant species that we cultivate.

The UN Convention on Biodiversity is the principal instrument for global action. It has a strategic plan that connects measures to halt the loss of biodiversity, manage natural resources sustainably, protect the ecosystem, and mobilise the financial resources required to fund these actions. The danger is that the developed countries will run away from their responsibilities to provide finance, and instead persuade developing countries to undertake conservation actions that go beyond their current needs, capacities and means. The purpose of these events is to slow down this slide. As one of the 17 mega diverse countries where people live close to the edge of ecological fragility, India can and should take the lead in placing this issue at the centre of the development discourse not just at the UN but also in economic fora such as the Development Committee and the G-20.


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