Cooking the books by ignoring Mother Nature

Mankind has made a major bookkeeping error of billions of dollars by not counting the dollar value of nature.

provided by University of Maryland, College Park

"e've been cooking the books for a long time by leaving out the worth of nature,” says Robert Costanza, an ecological economist at the University of Maryland and an author of a study in the journal Science that says we've made a bookkeeping error of billions of dollars by not counting the dollar value of nature.

    In a study of 300 projects around the world, Costanza and a team of economists, biologists and ecologists concluded that by continuing to convert wild habitat into commercial enterprise areas, the human race is going to end up in the red, not just in the amount of available natural habitat, but in terms of net economic benefits.

    The bottom line, the study says, is that conservation is a “strikingly good investment,” with a social benefit/cost ratio of at least 100 to one.

    The researchers created a model that assigned dollar figures to beneficial services performed by nature – climate regulation, soil formation, nutrient cycling, harvest of wild species for food, fuel, fiber and pharmaceuticals and aesthetics. They compared those figures, which Costanza calls “ecosystem services,” to the market value of such things as crops grown on cleared land or timber harvested from natural forest.

    Costanza is one of the first scientists to draw attention to the concept of estimating dollar values for natural habitat. He and a team of researchers estimated in 1997 that the average global value of wild nature was $33 trillion a year. He said even he was surprised by the results of this new study.

    “We concluded that there is at least a hundred-to-one global benefit cost ratio to maintaining wild nature instead of developing it. None of us guessed it would be that high. Every year we continue to convert habitat, it's costing us $250 billion over any profit that comes from development.”

    The study cites a project in Canada, which converted freshwater marshes into one of the country's most productive agricultural areas. According to the study, the area would actually be worth about 60 percent more if the wetlands were maintained for the social benefits of hunting, trapping and fishing.

    Another example mentioned in the study is a logging operation in a tropical forest in Malaysia. According to the model, the value of sustainable management of the forest's flood protection, carbon stocks and endangered species assets was worth 14 percent more than the benefits of high intensity timber harvesting.

    “Economics has traditionally focused on the market,” said Costanza. “But we're finding that a lot of what is valuable to humans takes place outside of the market. Our model looks at how the larger world works, and how humans benefit from the functioning of natural systems.

    “Natural capital is going to be more valuable as it becomes more scarce. In many cases, we've passed the point where development is worth more to us than conservation.”

    The study estimates that by spending about $45 billion a year to conserve natural habitat on land and in the oceans, the net return on the services produced by nature would be between $4,400 and $5,200 billion ($440 and $520 trillion). Currently, about $6.5 billion is spent globally to sustain natural areas. Half of that is shelled out by the United States.

    “We have to keep track of our natural capital. We've been liquidating it and not including the costs in our calculations,” Costanza said. “The environment and the economy are tightly interdependent.

    “These economic models can have real value in mediating land use issues,” he said. “It is not the economy versus the environment. Rather, the environment is a major contributor to our economic welfare. We can use the values we have estimated to help find sustainable solutions to complex environmental questions.”

    Costanza's model for figuring the costs and benefits of human needs and natural systems in the Florida Everglades is being used by the South Florida Water Management District to help restore the threatened Everglades.