Success in the Amazon

Paying to leave oil in the ground.  It seemed like a crazy idea and as recently as November it looked like Ecuador’s proposed plan to save nearly 10,000 square kilometers of Amazon rainforest — previously described here — would remain a pipe dream.  With less than two months until the deadline at end of the year, only $2 million of the required $100 million necessary to protect the land had been collected.

That was until Germany committed to a $47 million contribution and the fund collected enough in donations to close out the year with $116 million in the fund.  Now the fund has sufficient money and momentum for Ecuador to keep the project going and keep nearly 900 barrels of oil in the ground.  The next two years will still be challenging – Ecuador has set a new goal of raising $500 million over the next two years – but by reaching its first goal of $100 million, it now has the money necessary to launch a truly global campaign to reach its new goals.

Helping this effort is the increasing profile of payments for ecosystem services.  In a recent interview with Yale e360, Pavan Sukhdev highlights several critical areas in which the natural world provides essential services to humans, from pollination to sewage treatment.

One of the original – and most controversial – estimates that the true economic value of these services is be over $50 trillion dollars.  Compare this to the size of the global GDP of $63 trillion dollars and it rapidly becomes obvious that ecosystem services are a significant contributor to human well-being.  Perhaps even more important, it would be extremely costly, if not impossible, for humans to replicate all of these services.

Yet, if the global economy continues with business as usual – that is, harvesting profit at the cost of the natural environment — someday it will be necessary to replicate these services as ecosystems around the world disappear.  There is some evidence that this process is already happening.  Using the pollination example from above, it is clear that bee populations around the world have been contracting in the last few years, a fact that some attribute to the increased use of industrial pesticides.  Pollination is critical to agriculture, an industry that represents 1.2 percent of GDP in the U.S. alone.  Additionally, rapid urban sprawl costs the U.S. over 100,000 acres of wetlands every year, leaving less and less land to provide critical water purification services.

Losing these wetlands is a severe enough problem that the EPA has implemented a wetland banking system to reward developers who conserve wetlands and punish those who do not.  Developers who create or conserve wetlands are allowed to sell these acres to a bank.  For each acre ‘banked,’ they are issued credits that they can then sell to developers who destroy too many wetlands.  In this way, conservation minded developers profit from both the aesthetic contributions that wetlands make to their properties, as well as the monetary compensation for leaving their wetlands in place.

In an attempt to generate greater participation from the business community in biodiversity preservation, The Economics of Ecosystems and Biodiversity (TEEB), a UNEP study run by Pavan Sukhdev, released a new report in December discussing how companies must incorporate measures of their use of natural capital into their business accounting.  Not doing so threatens a company’s sustainability from both business and environmental standpoints.

Notably, the report offers concrete means of implementing this “triple bottom line” accounting.  For those companies who don’t believe that the natural environment can be important to business, the report provides the example of PUMA’s recent finding that their non-market use of natural capital is valued at over $150 million in 2010.

By reaching its goal of $100 million, Ecuador has succeeded in the first phase of its protection of Yasuni National Park, demonstrating to the world that the natural world is important for more than just resource extraction.  PUMA’s use of TEEB’s new accounting system incorporates that same idea into a sound business model, contributing to ongoing attempts to promote the concepts of ecosystem services and natural capital.  The operative word for both of these efforts is ongoing. PUMA must start the challenging process of lowering its $150 million bill, and Ecuador must begin fundraising around the world to meet its new goal of $500 million.  Acknowledging that Yasuni needed protection and that PUMA used ecosystem services was the easy part; now comes the difficult part: doing something about it.

Image Credit: Geoff Gallice


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