The Economics of Ecosystems and Biodiversity (TEEB) The value of ecosystem services and the importance of natural capital.

Patrick ten Brink TEEB for Policy Makers Co-ordinator

Head of Brussels Office, Head of Environmental Economics Programme

Institute for European Environmental Policy (IEEP)

Hungry for Change II Conference and Exhibition, 11th April 2013, Brussels

Biodiversity session - programme Ensuring healthy biodiversity and sustainable productive agriculture can coexist in Europe

Provisioning services

Food

Fibre

Fuel

Water provision

Ornamental resources

Genetic resources

Medicinal resources

Some are private goods (eg food provisioning), others public goods that can become (part) private (eg tourism, pollination), others are pure public goods (eg health, identify)

Ecosystems provide multiple ecosystem services

Regulating Services

Climate regulation

Water and waste purification

Air purification

Natural hazards management

Erosion control

Pollination

Biological control

Cultural Services

Aesthetics

Landscape value,

Recreation & Tourism

Cultural values

Inspirational services

Education

Scientific Knowledge

Supporting Services: Soil formation & fertility, photosynthesis, nutrient cycle

Habitat services such as nursery service, gene pool protection.

TEEB’s Genesis, Aims and progress

“Potsdam Initiative – Biological Diversity 2010”

1) The economic significance of the global loss of biological diversity

Importance of recognising, demonstrating & responding to values of nature

Engagement: ~500 authors, reviewers & cases from across the globe

Interim

Report

India, Brazil, Belgium,

Japan & South Africa

Sept. 2010

TEEB

Synthesis

Climate

Issues Update

Ecol./Env. Economics literature

G8+5

Potsdam

TEEB End User

Reports Brussels

2009, London 2010

CBD COP 9

Bonn 2008 Input to

UNFCCC 2009

BD COP 10

Nagoya, Oct 2010

TEEB

Books

TEEB W&W

Nature & GE

TEEB Oceans

TEEB studies

The Netherlands,

Germany, Nordics,

Norway, India, Brazil

NATURAL CAPITAL

Supporting: nutrient cycling, soil formation, crop pollination

HUMAN WELLBEING AND LIVELIHOODS

Direct livelihood support Food and materials, water…

Security and resilience Food security, mitigation of natural disasters, climate change adaptation and mitigation

Health Access to clean air and water, disease control, medication, traditional medicine

Social relations

ECOSYSTEM SERVICES

Cultural: aesthetic, spiritual, recreational, knowledge…

Provisioning: food, timber, raw materials, water…

Regulating: water purification and retention, climate control, pest and disease control…

Human capital

Man-made capital

Social capital

Contribution of Natural Capital to Human Wellbeing & livelihood

Source: Own Representation adapted from Laure Ledoux in ten Brink et al 2012, building on MA (2005) and TEEB (2011a)

A range of factors can help lead to ecosystem service provision A complex site specific production function

INSTITUTIONS Government & public institutions, companies, communities, NGOs & citizens

Mainly local

benefit

Additional national benefit

Mainly global benefit

Action locally leads to local, to national & to global benefits.

Source: Own Representation Patrick ten Brink.

• Over 75 % of the world’s crop plants rely on pollination by animals

• The production of 87 of 115 leading global crops (~= 35 % of the global

food supply) were increased by animal pollination. (Klein et al. 2007)

• 30 % of fruits, 7 % of vegetables and 48 % of nuts produced in the EU

depend on pollinators

• The annual economic value of insect-pollinated crops in the EU is

about EUR 15 billion (Gallai et al 2009)

• UK: economic value of biotic pollination as a contribution to crop

market value in 2007 at EUR 629 million (UK NEA, 2011)

• Pollination benefits linked to proximity: forest-based pollination in Costa

Rica increased coffee yields by 20 % within 1 km of forest. (Ricketts et al. 2004)

• Loss of pollinators (domesticated & wild) reduces crop yield through

reduced and unreliable pollination

Domesticated pollinator (honey bee)

Wild pollinator (hover fly)

Building on presentation by Dr Anne Franklin (2010), various references in “EU 2010 Biodiversity Baseline” (EEA, 2010) + UK NEA, 2011, Ricketts et al, 2004)

Economic importance of pollination

Agricultural pests cause significant economic losses worldwide -

biological control can reduce losses, costs and increase output

Globally, >40 % of food production is lost to insect pests, plant pathogens & weeds,

despite the application of more than 3 billion kilograms of pesticides to crops, plus other

means of control (Pimentel 2008).

In the US, ~ US$18 billion lost due to insect damage (including more than US$ 3 billion

spent in insecticides), of which about 40 % attributed to native species and the

remaining to exotic pests (Losey & Vaughan 2006).

These values, however, would be much higher without biological control

~ 65 per cent of potential pest species are being suppressed in the US. Total value

of pest control by native ecosystems around US$ 13.60 billion. (Losey & Vaughan, 2006)

The presence of natural enemies increased barley yields 303 kg/ha, preventing 52

per cent of yield loss due to aphids. (Estimated via a predator removal experiment in Östman et al. 2003)

Source: Balmford 2008

Protected areas have a significant role in:

• Harbouring wild pollinators,

• Controlling the spread of pests and pathogens,

• Regulating and filtrating water

• Supporting soil fertility through erosion control

• A gene bank for our crops, fruits and vegetables

• + Recreation, tourism, landscape value

• + HNV & organic farming: provisioning service

Organic agriculture represents a promising agricultural management option for Natura 2000 sites and protected areas under agricultural land-use (Scialabba, 2003) Organic farming host 30% more species than non-

organic farming (Kukreja, 2010).

But most issues of Agriculture-Biodiversity outside PAs

Natura 2000

HNV farming

Source: Paracchini et al. (2008)

Land-uses and trade offs for ecosystem services

Source: Ben ten Brink (MNP) presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium.

Potential of rural land to deliver ecosystem services

• Rural land plays an essential role in delivering a wide range of

ecosystem services

• More extensive forms of agricultural and forestry management

generally support the highest levels of biodiversity and the

greatest diversity and quality of ecosystem services.

• With appropriate management more intensive systems can also

reduce current pressures on the environment.

• Very little fertile land remains that is managed extensively - most

areas have either been taken up by urban sprawl or by intensive

agriculture.

• It is these areas - where the potential for the production of food,

feed and timber is the greatest - where the competition and

tensions between the provision of environmental services and

commodity production are most keenly felt. © Ben Allen

© Ben Allen

© Ben Allen

Source: Building on presentation by Kaley Hart, IEEP on Land as an Environmental Resource

Meeting future demands sustainably

The future balance of commodities and environmental services will depend on individual

decisions taken by millions of farmers and foresters in the EU.

Decisions will be heavily influenced by the future trajectories of market prices and

production costs as well as by public policies.

Three aspects need close attention:

• current forms of land management which are depleting essential natural resources must be modified to ensure that production methods are sustainable;

• growth in agricultural and forest productivity must be accompanied by an increase in the production of environmental services – sustainable intensification;

• land that has a high environmental value currently should be maintained and valued for the benefits already provided and measures taken to prevent abandonment, urbanisation or intensification of agricultural or forest management.

Source: Building on presentation by Kaley Hart, IEEP on Land as an Environmental Resource

• There continues to be some potential to increase crop yields sustainably , especially in

the EU-12 – but far less than assumed in many land use models

• There is significant potential to improve the environmental performance of farms -

recent research suggests this need not have a significant impact on output per

hectare, with appropriate crop types and management

• There may also be opportunities

to bring back some areas of land

that have been recently

abandoned. Often such areas will

be appropriate only for extensive

grazing because of the negative

impact of cultivation on

environmental services

The food – environment production possibilities frontier

Source: Building on presentation by Kaley Hart, IEEP on Land as an Environmental Resource

Meeting future demands – agriculture

Increasing rewards for ecosystem services provision through PES

(Paid) Benefit to

land user -

provisioning

services (eg farm

or forest products)

Intensive land use

Cost to population

of pollution

To date ‘unpaid’

ecosystem

services PS

RS CS

Cultural

Services

(eg tourism)

Biodiversity ‘friendly’ land use

Regulating

services (eg

water quality)

Potential new

income from

different

payments for

ecosystem

services -

public &

private

Additional PS (other products,

pollination)

CO

ST

S

BE

NE

FIT

S

Opportunity cost - Income foregone

to landowner

(in absence of PES)

Income from

original

products in

existing

markets

Income

from

provisioning

Services (PS)

Social Benefit = Private benefit + public good (ESS) – pollution costs

Eg Private optimum Eg social optimum

Summary

• Ecosystem services an increasingly appreciated concept, but awareness still needs to grow and integration of the concept in agricultural economy is in early stages

• There are important synergies between agriculture and biodiversity conservation

• Also important trade-offs. Food provision and food security a public good, but impacts on biodiversity also create losses of other public goods (e.g. via eutrophication, water quality loss

impacts) & losses of other private goods (e.g. via lower levels of wild pollinators or natural pest control)

• Some public goods can be sustainable managed, via PES – important tool (private and public), good potential, but not the only tool and many complicating factors (eg state aid issues and issues about the additionality of actions with regard to the environmental baseline)

• All public goods need to be underpinned by effective baseline regulation

• Decision making needs to factor in private and public goods

• Major effort needed to reform of support/pricing to ensure optimal use of natural capital

• Cannot do without public policy for public goods – fundamental rationale for role of government. Focus on private optimum alone will not lead to social optimum.

Thank you for your attention !

Patrick ten Brink

ptenbrink@ieep.eu

IEEP is an independent not for profit institute dedicated to advancing an environmentally sustainable Europe through policy analysis, development and dissemination.

For further information see: http://www.ieep.eu Follow us on twitter: IEEP_EU

For more information about IEEP’s work on Nature and the Green Economy visit

www.ieep.eu and for TEEB also www.teebweb.org

Additional information sources

The Economics of Ecosystems and Biodiversity (TEEB) in National and International Policy Making (ed. Patrick ten Brink) www.teebweb.org or via www.ieep.eu

TEEB Water and Wetlands (Russi et al 2013; ten Brink et al 2013) http://www.ieep.eu/publications/2013/02/the-economics-of-ecosystems-and-biodiversity-for-water-and-wetlands

Recognising the value of protected areas (Kettunen et al 2011) www.cbd.int/database/attachment/?id=1408

Estimating the Overall Economic Value of the Benefits provided by the Natura 2000 Network (ten Brink et al 2011) http://www.ieep.eu/publications/2012/06/estimating-the-overall-economic-value-of-the-benefits-provided-by-the-natura-2000-network

Costs and Socio-Economic Benefits associated with the Natura 2000 Network (Gantioler et al 2010) http://ec.europa.eu/environment/nature/natura2000/financing/docs/natura2000_costs_benefits.pdf

Green Infrastructure options (Mazza et al, 2010)) http://www.ieep.eu/assets/898/Green_Infrastructure_Implementation_and_Efficiency.pdf

Nature in the Transition to a Green Economy (ten Brink et al 2012)

http://www.ieep.eu/newsletter/summer-2012/nature-in-the-transition-to-a-green-economy/

The Social and Economic Benefits of Protected Areas: an Assessment Guide (Kettunen and ten Brink eds 2013 forthcoming) http://www.routledge.com/books/details/9780415632843/

Land as an Environmental Resource (Hart et al, 2013)

Sustainable management of natural resources with a focus on water and agriculture (Poláková et al, forthcoming): http://www.europarl.europa.eu/stoa/