And you thought the mortgage crisis was bad . . .
Even as people the world over perch on the edge of their chairs, chewing their fingernails in barely contained panic at the global financial meltdown, the BBC reports that the crisis in our natural capital is even worse.
According to a study commissioned by the European Union, called “The Economics of Ecosystems and Biodiversity“, the global economy is losing more money from loss of forests than through the current banking crisis. The annual cost of forest loss is estimated at between $2 trillion and $5 trillion. This estimate comes from adding the value of the various ecosystem services that forests perform, such as providing clean water and absorbing carbon dioxide. The team calculated that forest loss alone was equivalent to about 7% of total global gross domestic product.
Says the study’s lead author Pavan Sukhdev:
“It’s not only greater but it’s also continuous, it’s been happening every year, year after year . . . So whereas Wall Street by various calculations has to date lost, within the financial sector, $1-$1.5 trillion, the reality is that at today’s rate we are losing natural capital at least between $2-$5 trillion every year.”
The assumption underlying this type of accounting is that as forests (or other natural infrastructure) decline, nature stops providing the services that it has historically provided free of charge. In which case the human economy either has to provide them instead — for example through building reservoirs, facilities to sequester carbon dioxide, new farming methods — or we have to do without. Either way, there is a financial cost.
And that’s just forests alone. The TEEB team hasn’t got around yet to valuing ocean ecosystem services, fisheries, and so on. The figures mentioned here were already known since they were published in the Phase I report back in May. But the global financial meltdown puts some flesh on the bones, so to speak. That is, it’s hard to comprehend (at least for me) what 2 trillion dollars are (how many zeros is that anyway?) until you begin to glimpse it in terms of the major financial institutions of planet earth simultaneously tanking. Puts things in perspective. The forest crisis is more of a slow burn — no pun intended. But no less worrisome in the long term.
Is there any hope? Perhaps. Study leader Sukhdev says that governments and businesses are beginning to get the point:
“Times have changed. Almost three years ago, even two years ago, their eyes would glaze over . . . Today, when I say this, they listen. In fact I get questions asked – so how do you calculate this, how can we monetize it, what can we do about it, why don’t you speak with so and so politician or such and such business.”
Thank goodness it’s Friday. I think I’m ready for a drink . . .