Valuing our eco-systems: A case for blue carbon and beyond
Despite rising awareness regarding environmental issues, we seem to be unable to truly grasp the long-term services that eco-systems provide to the planet. This is particularly true for our largest eco-system, the oceans. Our failure to do so does not lie in Nature’s presumed low value, but rather in our ineptitude to assess its value properly. Lacking data and economic tools, we fail to value the importance of preserving nature as our most important resource and lack an understanding of the costs in rebuilding damaged eco-systems. As a consequence, biodiversity is indeed on the verge of breaking down in many parts of the world, with permanent disastrous consequences for our habitat. What is, more short-term benefits from destroying our biosphere and long-term costs are unequally distributed, not only over time but geographically, preventing a successful coordination of mitigating actions. Unless costs and benefits are not properly aligned, this situation is unlikely to be remedied. Time is pressing, however, as by some accounts we are on the brink of experience significant reversals of living standards.
Tackling this problem involves broadening our perspective on the economic value of eco-systems, an arduous task for which some researchers and experts have started to develop new concepts and tools. Economists started to integrate nature’s value into their financial calculations in an attempt to reach a more sustainable society. These new concepts — highlighting externalities as well as opportunity costs — make it ever more likely to attract investments to help maintaining or restoring ecosystems rather than destroying them. Importantly, such calculations provide relevant prices to properly assess nature services. Indeed, our current market system prevents us from grasping the true value of ecosystems and their benefits and blocks real, effective, and collaborative actions needed before the damages we have caused can no longer be repaired. Key to the understanding of the value of eco-systems is to gain insights into the services they offer and the possibility to benefit from them.
The first contribution to be evaluated is also the best-known both by the general public and scientists: the capacity of ecosystems to capture carbon emissions. Several (marine) species provide significant benefits in this regard, not least the Great Whales among many others in the oceans and on the shores. Estimates established by Chami and co-authors in 2020 regarding the value of this blue carbon amount to roughly USD 2 million of the lifetime of an individual whale, or close to 14 per cent of US GDP in 2021 for the total global whale population of almost 1.5 million animals. Such estimates are highly dependent on the average price obtained on trading platforms such as the European Carbon Emission trading platform. In 2020, the price per ton stood at USD 24.7 but has since increased to more than USD 60 in autumn 2021, bringing the value of a single Great Whale closer to USD 5 million over its 60-year lifespan or the equivalent of 34 per cent of US GDP for the entire stock of whales.
True, these numbers represent the contribution of Great Whales over their entire life but even when calculated as an annuity at a conservative rate of return of 1 per cent, the annual economic contribution of these animals amounts to the GDP of countries between Bulgaria and Greece, depending on the ongoing carbon emission price. And that is just for Great Whales! Additional benefits for carbon capture arise from these animals in the role they play for phytoplankton growth. Many other species have similar benefits to offer. For instance, the amount of carbon sequestered by current and future elephant populations trough biomass has been estimated to reach 720 kg for the average elephant’s body and result in 2.64 tons of carbon dioxide. Other ecosystems such as Thailand Mangroves and Malaysia tropical forests would also contribute to reduce our carbon footprint if preserved properly along with afforestation, improved forest management, soil carbon sequestration via plant biomass growth and decomposition and restoration of coastal wetlands through blue carbon.
A key challenge for preserving our biosphere remains with the fact that most of the benefits described so far are not (immediately) tangible. No market for blue carbon exists, no property title on ecological services can be enforced and incentives to compel with legal protection provided by national regulation or international treaties are weak. Declaring nature a global public good would be a step in the right direction to establish a binding legal framework but whether international agreements can be reached quickly enough is unclear. Experiences, for instance, with respect to bans of whale hunting are not promising in this respect.
A roundabout way of addressing this issue is to make use of nature’s other services that are more closely linked to marketable incomes of (local) communities. For example, great whales provide three more contributions to our economies and the planet: ecotourism via whale watching; fisheries enhancement, and transporting nutrients trough their migration behaviors. Equally, African forest elephants are known to generate significant ecoutourism revenues from tourists traveling to Africa. As large herbivores, they also help by contributing to reduce the density of small trees trough migrating and searching for food, resulting in a remarkable increase of the late-succession trees proportion, known among scientists to live longer and require less resources to thrive than usual trees. Mangroves in Thailand also bring social benefits thanks to the original mangrove cover: timber, charcoal, non-timber forest products (NTFP), offshore fisheries, a better storm, coastal flooding and water quality protection by removing pollutants from stormwater runoff before they reach seagrass habitats and coral reefs. They also contribute to the local diversity of seafood by providing shelter to a large range of wildlife species, especially birds which use it as a nesting area for migration. Maintaining such biodiversity might also help in expanding food resources for humans such as shrimp farming. Finally, Malaysia’s tropical rainforests typically help through flood protection and prevention, carbon stocks, NTFPs, sedimentation control and endangered species protection by ensuring them a natural habitat. They also inhabit unique genetic resources and play a major role in global climate regulation, pollination and disease control. Educating local communities in the value of preserving such eco-systems can go some way of restoring incentives for preservation over exploitation.
However, the reliability and effectiveness of such a process is still raising many questions and issues because a few elements could easily get into the way of a proper nature’s valuation. A key obstacle to our calculations concerns the cost of ecosystems conservation. Maintaining and restoring eco-systems in order to make the most of their services to society comes with a price regardless of whether our current undervaluation of nature is already priced in. Moreover, whatever conservation effort there is, of the roughly USD 6.5 billion that is spent annually in order to allow the existing reserve to continue to thrive, half of this is spent in the United States alone. Recent calculations have been modified to get a clearer idea of the amount of money lacking in order to make a real change: Globally USD 20 to 28 billion are needed to help ecosystems cover around 15% of land area, equally distributed across world regions. Such sums pale, however, in comparison to the benefits that eco-system conservation can achieve.
Estimating benefits reliably also reaches its limits as some economic tools such as Natural Capital Accounting become difficult to apply as more and more diverse benefits of biodiversity and eco-systems are being included. The concept itself might be too abstract for local governments or communities to apply such concepts. In this regard, willingness to pay (WTP) which refers to how much an individual is willing to pay in order to enjoy a service also “tend to have lower credibility than market-based valuations” and depends on the value we first identified and attributed to the resource. It is also difficult to consider goods and services flows which come shortly after or right before the conversion of ecosystems.
A more successful approach and one that is currently explored by initiatives launched by Geneva Macro Labs and by Rebalance Earth might consist in tokenizing natural assets such as Great Whales or Elephants and ensuring that the value of these digital tokens are being used to support local communities or initiatives in helping maintaining the eco-systems in which these animals can thrive. Digitalization of assets and tokenization are direct applications of recent innovations around the blockchain technology. Suitably identified assets — for instance the number, location and health of Great Whales or elephants — are being identified and traced on a blockchain application. Investors in such tokens would receive in return carbon emission rights as currently traded on various platforms. The investment would be used — and its use audited — to help local communities in their efforts for eco-system conservation that will contribute to the safeguard and ideally growth of the underlying natural capital, i.e. Great Whales or elephants in these examples. The attractiveness of this solution is that it relies on a newly established, digital infrastructure that does not require strong legal protection or investment in administrative capacity by national governments. Rather, it can and should rely — as much as possible — on local initiatives and communities, who would directly benefit from their eco-system conservation efforts, contributing towards wider UN sustainability goals.
In addition, these solutions can be scaled up easily as they rely on a cheap and easily accessible digital technology. In the ideal case when specific natural assets can be identified as belonging to the national wealth of a particular country, local efforts could be amplified through special purpose vehicles set up the specific purpose of maintaining eco-systems. Such Sovereign Wealth Funds (SWF) are asset management vehicles well-known from oil-exporting countries. However, nothing prevents national governments to expand the realm of such institutions and to identify and mange their natural wealth through such mechanisms. In the event of successfully setting up a nature-based SWF, additional benefits beyond eco-system conservation would arise, for instance in the form of a more stable source of fiscal revenues, lower interest rates and better access to finance for local enterprises. In particular in low- and middle-income countries such wealth could constitute a significant contribution to their economic development and well-being.
