by Caroline Rennie
Late last year the US Department of Agriculture announced they were forming a new high level office of “EcoSystem Services and Markets” to determine the cost of depleting and the value of protecting, nature’s services. What exactly does that mean?
A few years ago the UN assessed the value of the stuff nature gives us for free (clean air, humidity, water, resources, fertile soil, etc.), and it dwarfed all the economic activity at the time (and that was before the economy lost tens of trillions of dollars of value…). In the assessment was the notion that as we deplete resources, and degrade air, water and land, we will have to develop systems that clean up the environment, or that replicate its services. So the value of what nature gives us is described in terms of the cost of generating it (either by restoring nature or by replacing the function).
Nature does it cheaper
It was quickly clear that nature does it more cheaply. Much more cheaply. So much so that enlightened planners in companies and cities have figured out who to pay how much in order to get the service from nature rather than industry.
A case:
New York City’s water had historically come from the Catskill mountains to the North. Due to suburbanisation, changes in forestry and farming practices, and other generalised environmental impacts, the water quality was degrading. The City looked into the cost of building a filtration plant: roughly $6 billion to build the plant plus another $250 million per year for maintenance. (in 2003 dollars). Instead, the City worked out an arrangement with farmers whereby the farmers were paid to farm in such a way that their land served as a filter for water, and the water that arrived in New York was clean (dubbed the “champagne” of water). This cost the city $167 million/year – a fraction of the maintenance and depreciation costs of a filtration plant.
Now governments are wondering how to ensure you pay for your impact on the ecosystem and its servises.
The example above is of a stakeholder (the City of New York) seeking to conserve the quality of a particular ‘product’ (clean water). Similar programmes have been established by bottled water companies to guarantee the quality of the water they bottle. However now, governments are seeking to find ways to get a range of services/depletions to be paid for, including the following:
- Taxes and user fees for externalities – such as overfertilising leading to nutrients leaching into lakes and rivers, and fostering so much growth that effectively there is no oxygen and most animals and many plants die off.
- Creating markets like the EU cap & trade system For example, limit the amount of nutrients that can be “released” through fertilization to encourage more judicious use of fertilisers and cleverer means of application that did not result in run-off.
- Payment for ecosystem services A government could set a price for each service – and you pay according to the degree of your impact.
- Certification schemes: Today current certification schemes for sustainable fisheries (e.g. Marine Stewardship Council) and forest practices (e.g. Forest Stewardship Council) provide people, retailers amd branded goods companies, with the opportunity to promote sustainability through their consumption choices.
A working system is already in place in Costa Rica and, for cap & trade and offsets, in the EU.
In 1996 Costa Rica established a nationwide system of conservation payments as inducement to landowners to provide ecosystem services. Costa Rica brokers contracts between buyers and sellers of sequestered carbon, biodiversity, watershed services, and scenic beauty. There is also talk of “biodiversity offsets,” whereby developers would pay for conservation activities as compensation for the harm that their projects cause to biodiversity.
With a new President, a new attitude and even greater pressures, the likelihood that some of these elements will be put into practice is increased. The question for you is, how can you estimate today the extent of your impacts, and how to reduce them so that those kinds of fees just wouldn’t apply to you? After all, it will be cheaper for you to drive your agenda on your own scale today, then wait for the rules to fall and herd with your competitors to the payment lines.
ren-new can help you determine the scale of your impacts, and work through scenarios on the implications to your business. We can also take a look at how you could use those resources to your advantage instead – meeting future requirements in a way that brings benefits today.
Resources of interest:
- http://ecosystemmarketplace.com
- http://speciesbanking.com/
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