Putting a value on nature

All over the world, humans are altering the natural environment: clearing forests, ploughing fields, draining wetlands and building cities and roads. For the individuals involved, such activities and investments can generate valuable returns. But they also impose costs — many spread across society — by reducing the ability of ecosystems to provide services that sustain our lives and economies.

'Biodiversity loss has an impact on everything from food, water and energy production, to life-saving drug sources, to cultural and aesthetic benefits. We can no longer take these benefits for granted', says Professor Jacqueline McGlade, Executive Director of the EEA. 'Understanding the full value of what we are losing is a precondition for halting biodiversity loss'.

Many economists believe that the core problem is that no markets or property rights regimes exist for many of the services that nature provides. Since we don’t pay for the services, their value isn’t reflected in our decision-making. Judgments about whether to alter the environment focus only on the private benefits, not the more broadly dispersed costs.

Fortunately, the economists also offer a response to the problem, which involves determining the monetary value of ecosystem services. If we know the value then it can be reflected in decision-making and guide our stewardship of the natural world. ‘The Economics of Ecosystems and Biodiversity’ (TEEB) study was launched with these considerations in mind. The latest TEEB report ‘TEEB for Local and Regional Policy Makers’ was presented today at an international biodiversity conference ‘Biodiversity in a Changing World’, organised by the Belgian Presidency of the European Union.

To coincide with the publication of the new TEEB report, the EEA presented on a map viewing platform 35 sustainable development initiatives where the value of ecosystem services was taken into account during the decision phases of the initiatives.

Background information on the economics of ecosystems and biodiversity

The importance of ecosystem services for human well-being was highlighted in the Millennium Ecosystem Assessment (MA) in 2005, which reported that at global scales, 60 % of the services examined in the study (15 out of 24) are being degraded or used unsustainably. Human activity has been responsible for most of the damage — largely through the effects it has had on biodiversity and the integrity of ecological systems.

These findings were at the heart of the policy discussions during the G8+5 Summit in May 2007, in Potsdam, Germany, where Heads of States asked for a comprehensive evaluation of the costs of biodiversity loss. Progress on this complex evaluation was first presented in May 2008 by the first TEEB report on 'The economics of ecosystems and biodiversity: An Interim Report'.