Some Perspective

“The global economy is losing more money from the disappearance of forests than through the current banking crisis, according to an EU-commissioned study.”

So reports the BBC, citing the newly released “Teeb” report, that estimates the annual cost of forest loss is between $2 and $5 trillion, or about 7% of global GDP. Those are staggering numbers, though I’m not sure “dwarfs” is right word to describe how it compares to the current world economic crisis: last week $2.4 trillion of share value was lost in the U.S. stock markets, and didn’t I hear something about $700 billion and then another $250 billion in bailouts by the U.S. government alone?

Wonky nitpicking aside, the Teeb report delivers a massively important message.  It puts the value of natural capital in the only terms that our economic system is capable of acknowledging:  dollars.  Lots and lots of them.  So there is hope that the Teeb report may have an impact similar to that which the Stern Review had on the business community regarding climate change, particularly in Europe. 

Now please keep in mind, I’m just the messenger, but speaking of biodiversity, Scientific American just published a story entitled “One Quarter of World’s Mammals Face Extinction.”  How much is that worth?

4 Responses to “Some Perspective”

  1. Andrew

    I think it’s probably undervaluing the forests, especially old-growth ones.

    First, from a replacement cost stand-point, since there is no replacement for old-growth forests, they are invaluable from a replacement cost standpoint.

    Second, we don’t even know all the services the forests perform, so basing it only on clean air and clean water, etc. we’re discounting the information we haven’t yet discovered know. Similarly, there are uses the forests have that can only be partially measured in dollars: ecotourism, movie sets, whatever. All I mean is that we can’t quanitfy all their uses.

    Finally, it can’t take into account all the costs of destroying the forests. Floods, biodiversity lose, etc. can’t be easily measured.

    I $2 trillion is a big number, but I’m not sure it’s big enough!

  2. Matt the Engineer

    On that invaluable note: A recent Sightline post had me considering my mass impact on the planet – how much of me there is compared to wild animals (answer: 8 pounds of me for every 1 pound of wild land vertebrate). I asked the question how would one help build up the wild number, and I think the only answer is to actively build open space (bury roads? bulldoze buildings?). Try calculating costs with that in mind.

  3. Dan Staley

    Speaking of natural capital, Costanza recently wrote an essay at The Oil Drum, writing about this topic. The key, in my mind:

    Our current market allocation system excludes most non-marketed natural and social capital assets and services that are huge contributors to human well-being. The current economic model ignores this and therefore does not achieve real economic efficiency. A new, sustainable ecological economic model would measure and include the contributions of natural and social capital and could better approximate real economic efficiency.

    Also,

    Farley, J and Daly H 2001. The Failure of the Free-Market on a Full Planet. IN: Fifth International Conference of the International Society for Ecological Economics (ISEE) Moscow, Russia, September 26-29, 2001.

  4. Ovais Gola

    Spot on with this article, I really think this website needs much more attention. Ill most likely be again to read more, thanks for the info.

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