business

How Much Is Nature Worth?

By figuring the value of ecosystems, biologist Gretchen C. Daily spurs others to see the greater economic impact of conservation

For Gretchen C. Daily, a pristine forest isn't just a pretty place. It's also a provider of valuable services, from flood control to climate stabilization. A Stanford University biologist and author of The New Economy of Nature: The Quest to Make Conservation Profitable, Daily is a pioneer in a new kind of economics, identifying and placing quantifiable values on ecosystem services -- the benefits that nature provides to people.

In a new paper, for instance, Daily and colleagues show that tropical rain forests are of considerable value to coffee growers because pollination by bees coming from nearby forests boosts coffee yields and quality. She recently spoke with BusinessWeek Senior Correspondent John Carey about her economic approach to conservation and examples of economic value to be found in ecosystems. Following are edited excerpts:

Q: As I recall, the idea of putting economic values on ecosystems has been controversial. Why?

A:

People in the conservation community have been very nervous of taking this route of trying to value nature, fearing that would lead down a slippery slope because a shopping mall would always out-value the wetlands it replaced. I got the argument that I was jumping in bed with the devil. But I thought we were only getting so far with the ethical argument [for preserving natural places].

Now the conservation community is making a shift. They're seeing that the economic values of ecosystem services are high enough to make a difference.

The other expectation was that we had to get a precise value. People in the conservation community objected to that, saying that it's absurd to capture the full value of a pristine forest. But what we're seeing now is that even if we get a partial value of an ecosystem, it can be very useful.

Q: What's a good example?

A:

The New York City Catskills [mountains] case. New York has some of the cleanest water in the world, but it was going down in quality because of development [around the reservoirs and water sources]. The city faced a choice of a $6 billion to $8 billion filtration plant or investing $1 billion to $1.5 billion in ecosystem capital. They chose investing in ecosystem capital.

Q: Which means what, exactly?

A:

They're buying land close to open water and restoring it, putting in wetlands, which filter the water. They're paying to upgrade septic systems and change forestry practices, and to put in development compatible with water quality.

Q: And the result?

A:

There are three wins: New York City is getting clean water at the lowest possible cost, people upstate are being rewarded for good stewardship, and the Catskills are being protected.

Q: What are some of the other valuable services that ecosystems provide?

A:

The main ones are water purification -- a huge one -- flood control, climate stabilization, pollination (because two-thirds of the world's crops require an animal pollinator), and pest control. Another big set of things is the production of goods, like seafood, timber, and drugs. One hundred eighteen of the 150 most important drugs owe their origins to plants.

Q: How different would economic and political decisions be if the value of these services were included?

A:

 I think it would make an absolutely stunning difference in the way we thought about the world. Right now a lot of people see nature as just vacant land, and conservation largely as a thing to do on a charitable basis. But in fact, all that vacant open space is working all the time for human benefit. Recognizing that would bring really dramatic changes in the way we do things. We could suddenly see we're liquidating one of our most valuable assets.

Q: Have any countries started to take this approach?

A:

There are two places, Costa Rica and Australia, which have gone a long way in incorporating ecosystem capital in making decisions. Since 1997, Costa Rica has been paying individual landowners for the conservation and restoration of tropical rain forest, investing in four different classes of ecosystem services: climate stabilization through uptake of CO2, hydrological services (improving drinking water quality, controlling sediments and water purity for hydropower and irrigation, and reducing runoff), preserving biodiversity for agriculture and potential pharmaceuticals, and preserving scenic beauty.

Since they implemented this policy, deforestation rates have gone from one of the highest to one of the lowest. And there's a net increase in forest cover. It's absolutely stunning how they've turned things around.

In Australia, the one massive environmental problem that has captured everyone's attention is salinity. The native eucalyptus tress were deeply rooted and kept the water table low, keeping the salts in the soil deep down in the soil and out of the reach of most plants. When the trees were cleared, their pumping action stopped, allowing the salts to rise and causing $600 million to $1 billion (Australian dollars) damage to farmland.

Now there's a whole new vision of what a farm business looks like. Farmers would make half their income from selling products like wheat and wool. The other half will come from selling new types of ecosystem services, such as replanting native vegetation for salinity control or carbon sequestration.

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