[Music] [Music] [Applause] I'm here to talk to you about the economic invisibility of nature uh the bad news is that Mother Nature's back office isn't quite working yet so those invoices don't get issued but we need to do something about this problem I um began my life as as a markets professional and continued to take an interest but most of my recent effort has been looking at the value of what comes to human beings from nature and which doesn't get priced by markets a project called T was started in 2007 and it was launched by
a group of environment Ministers of the G8 plus 5 and their basic inspiration was a Stern review of Lord Stern they asked themselves the question if economics could make such a convincing case for early action on climate change well why can't the same be done for conservation why can't an equivalent case be made for nature and the answer is yeah it can but it's not that straightforward biodiversity the living fabric of this planet is not a gas it exists in many layers ecosystems species and genes across many scales international national local community and doing for
nature what Lord Stern and his team did for climate is not that easy and yet we began we began the project with an interim report which quickly pulled together a lot of information that had been collected on the subject by many many researchers and amongst our compiled results was the startling Revelation that in fact we were losing natural Capital the benefits that flow from nature to us we were losing it at an extraordinary rate in fact of the order of $2 to4 trillion worth of natural Capital uh this came out in 2008 which was of
course around the time that the banking crisis had shown that we had lost Financial capital of the order of $2.5 trillion doar so this was comparable in size to that kind of loss we then have gone on since to present for International Community for governments for local governments and for businesses and for people for you and me a whole slew of reports which were presented at the UN last year which addressed the economic invisibility of Nature and describe what can be done to solve it what is this about a picture that you're familiar with the
Amazon rainforest it's a massive store of carbon it's an amazing store of biodiversity but what people don't really know is it's also it's a Rain Factory because the northeastern Trade Winds as they go over the amazonas effectively gather the water vapor something like 20 billion tons per day of water vapor is sucked up by the northeastern trade winds and eventually precipitates in the form of rain across the La Plata Basin this rainfall cycle this rainfall Factory effectively feeds the agricultural economy of the order of $240 billion worth in Latin America but the question arises okay
so how much do uguay Paraguay Argentina and indeed the state of Mato in Brazil pay for that vital input to that economy to the state of Amazon us which produces that rainfall and the answer is zil exactly zero that's the economic invisibility of nature that can't keep going on because economic incentives and disincentives are very powerful economics has become the currency of policy and unless we address this invisibility we are going to get the results that we are seeing which is a gradual degradation and loss of this valuable natural asset it's not just about the
Amazon us or indeed about rainforest no matter what level you look at whether it's at the ecosystem level or at the species level or at the genetic level we see the same problem again and again so rainfall cycle and water regulation by rainforest at an ecosystem level at the species level it's been estimated that insect based pollination bees pollinating fruit and so on is something like 190 billion dollars worth that's something like an 8% of the total agricultural output globally completely passes below the radar screen and when did a be actually ever give you an
invoice or for that matter if you look at the genetic level 60% of medicines were prospected were found first as molecules in a rainforest or a reef once again most of that doesn't get paid and that brings me to another aspect of this which is to whom should this get paid that genetic material probably belonged if it could belong to anyone to a local community of poor people who parted with the knowledge that helped the researchers to find the molecule which then became the medicine they were the ones that didn't get paid and if you
look at the species level you saw about fish today the depletion of ocean fisheries is so significant that effectively it is affecting the ability of the poor the artisanal Fisher folk and those who fish for their own livelihoods to feed their families something like a billion people depend on fish the quantity of fish in the oceans a billion people depend on fish for their main source for animal protein and at this rate at which we are losing fish it is a human problem of enormous dimensions a health problem of a kind that we haven't seen
before and finally at the ecosystem level whether it's flood prevention or drought control provided by the for or whether it is the ability of poor Farmers to go out and gather Leaf litter for their cattle and goats or whether it's the ability of their wives to go in and collect fuel wood from the forest it is actually the poor who depend most on these ecosystem Services we did estimates in our in our study that for countries like Brazil India and Indonesia even though ecosystem Services these benefits that flow from Nature's to humanity for free they're
not very big in percentage terms of GDP 2 4 8 10 15% but in these countries if we measure how much they're worth to the poor the answers are more like 45% 75% 90% that's the difference because these are important benefits to the for the poor and you can't really have a proper model for development if at the same time you're destroying or allowing the degradation of the very asset the most important asset which is your development asset that is ecological infrastructure how bad can things get well here's a picture of something called the mean
species abundance it's basically a measure of how many tigers toads scks or whatever on average of biomass of various species around the green represents the percentage if it's dark green it's like 80 to 100% if it's yellow it's 40 to 60% and these are percentages versus the original state so to speak the pre-industrial area 1750 now I'm going to show you how business as usual will affect this and just watch the change in colors in India China Europe subsaharan Africa as we move on and consume Global biomass at a rate which is actually not going
to be able to sustain us see that again the only places that remain green and that's not good news is in fact places like the GOI desert like the tundra and like Sahara but that doesn't help because there were very few species and volume of biomass there in the first place this is the challenge the reason this is happening boils down in my mind to one basic problem which is our inability to perceive the difference between public benefits and private profits we tend to constantly ignore public wealth simply because it is in the common wealth
it's it's common goods and here's an example from Thailand where we found that because the value of a mangrove is not that much it's about $600 over the life of 9 years that this has been measured compared to its value as a shrimp farm which is more like $9,600 there has been a gradual Trend to deplete the mangroves and convert them to shrimp Farms but of course if you look at what exactly those profits are almost $8,000 of those dollars are in fact subsidies so you compare the two sides of the coin and you find
that it's more like 1,200 versus 600 that's not that hot but on the other hand if you start measuring how much would it actually cost to restore the land of the shrimp farm back to productive use once salt deposition and chemical deposition has actually had its effects that answer is more like $112,000 of cost and if you see the benefits of the angrove in terms of the storm protection and Cyclone protection that you get and in terms of the Fisheries the nurse fish nurseries that provide fish for the poor that answer is more like $111,000
so now look at the different lens if you look at the lens of public wealth as against the lens of private profits you get a completely different answer which is clearly conservation makes more sense and not destruction so is this just a story from South Highland sorry this is a global story and here's what the same calculation looks like which was done recently well I say recently over the last 10 years by a group called true cost and they calculated for the top 3,000 corporations what are the externalities in other words what are the costs
of doing business as usual this is not illegal stuff this is basically business as usual which causes climate changing emissions which have an economic cost it causes pollutants being issued which have an economic cost health cost and so on use of fresh water if you drill water to make Coke near a village Farm that's not illegal but yes it costs the community can we stop this and how I think the first first point to make is that we need to recognize natural Capital basically the stuff of life is natural capital and we need to recognize
that and build that into our systems when we measure GDP as a measure of economic performance at the national level we don't include our biggest asset at the country level when we measure corporate performances we don't include our impacts on nature and on what our business cost society that has to stop in fact this was what really inspired my interest in this space I began a project way back called the green accounting project I was in the in early 2000 when India was going gungo about GDP growth as the means forward looking at China with
its Stellar growths of 8 9 10% and wondering why can't we do the same and a few friends of mine and I decided this doesn't make sense this is going to create more costs to society and more losses so we decided to do a massive set of calculations and started producing green accounts for India and its states that's how my interest began and went to the te project calculating this at the national level is one thing and it has begun and the World Bank has acknowledged this and they've started a project called waves wealth accounting
and valuation of ecosystem services but calculating this at the next level that means at the SEC at the business sector level is important and actually we've done this with the T project we've done this for a very difficult case which was for deforestation in China this is important because in China in 1997 the Yellow River actually went dry for 9 months causing severe loss of agricultural output and pain and loss to society just a year later the Yi flooded causing something like 5,500 debts so clearly there was a problem with deforestation it was Associated largely
with the construction industry and the Chinese government responded sensibly and placed a ban on felling a retrospective on 40 years shows that if we had accounted for these costs the cost of loss of top soil the cost of loss of waterways the loss productivity the loss to local communities as a result of all these factors desertification and so on those costs are almost twice as much as the market price of Timber so in fact the price of Timber in the Beijing Marketplace ought to have been three times what it was had it reflected the true
pain and the cost to the society within China of course after the event one can be wise the way to do this is to do it on a company basis to take leadership forward and to do it for as many important sectors which have a cost and to disclose these answers someone once asked me who is better or worse is it uni or is it PNG when it comes to their impact on rainforests in Indonesia and I could couldn't answer because neither of these companies good though they are and professional though they are do not
calculate or disclose their externalities but if we look at companies like Puma Yen sites their CEO and chairman once challenged me at a function saying that he's going to implement my project before I finish it well I think we kind of did it at the same time but he's done it he's basically worked out the cost to Puma Puma has $2.7 billion of turnover $300 million of profits $200 million after tax $94 million of externalities cost to business now that's not a happy situation for them but they have the confidence and the courage to come
forward and say here's what we are measuring we are measuring it because we know that you cannot manage what you do not measure that's an example I think for us to look at and for us to draw comfort from if more companies did this and if more sectors engaged this as sectors you could have analysts business analysts and you could have people like us and consumers and NOS actually look and compare the social performance of companies today we can't yet do that but I think the path is later out this can be done and I'm
delighted that the Institute of Chartered Accountants in the UK has already set up a coalition to do this an International Coalition the other favorite if you like solution for me is the creation of green carbon markets and by the way these are my favorites externalities calculation and green carbon markets T has more than a dozen separate groups of solutions including protected area valuation and payments for ecosystem services and Eco certification and you name it but these are the favorites what's green carbon today what we we have is basically a brown carbon Marketplace it's about energy
emissions the European Union ETS is the main marketplace it's not doing too well we've over ISU a bit like inflation you over isue currency you get what you see declining prices but that's all about energy and industry but what we are missing out is also some other emissions like black carbon that is soot what we are also missing is blue carbon which by the way is the largest store of carbon more than 55% thankfully the flux in other words the flow of emissions from the ocean to the atmosphere envir vice versa is more or less
balanced in fact what's being absorbed is something like 25 or% of our emissions which then leads to acidification or lower alkalinity in oceans more of that in a minute and finally there's deforestation and there's emission of methane from agriculture green carbon which is the deforestation and agricultural emissions and blue carbon together comprise 25% of our emissions we have the means already in our hands through a structure through a mechanism called red plus a scheme for the reduced emissions from deforestation and Forest degradation and already Norway has contributed a billion dollars each towards Indonesia and Brazil
to implement this red plus scheme so we actually have some movement forward but the thing is to do a lot more of that will this solve the problem will economics solve everything well I'm afraid not there is an area that is the oceans coral reefs as you can see they cut across the entire Globe all the way from micron IIA across Indonesia Malaysia India Madagascar and to the west of the Caribbean these red dots these red areas basically provide the food and livelihood for more than half a billion people so that's almost an eighth of
society and the sad thing is that as these colal reefs are lost and scientists tell us that any level of carbon dioxide in the atmosphere above 350 parts per million is too dangerous for the survival of these reefs we are not only risking the extinction of the entire Coral species the warm water Coral we're not only risking a fourth of all fish species which are in the oceans but we are risking the very lives and livelihoods of more than 500 million people who live in the developing World in poor countries so in selecting targets of
450 parts per million and selecting two degrees at the climate negotiations what we have done is we've made an ethical Choice we've actually kind of made an ethical choice in society to not have coral reefs well what I will say to you in parting is that we may have done that let's think about it and what it means but please let's not do more of that because Mother Nature only has that much in ecological infrastructure and that much natural capital I don't think we can afford too much of such ethical choices thank you
