The Economics of Ecosystems and Biodiversity initiative (TEEB) and Climate Change

Patrick ten BrinkTEEB for Policy Makers Co-ordinator

Head of Brussels Office, Institute for European Environmental Policy (IEEP)

Deltas in Times of Climate Change

Session DP FE 1.3 30 September 2010

13:00 – 14:45 Beurs Lounge

Rotterdam, the Netherlands

Presentation overview

1. Introduction

– TEEB ambitions and process and approach

– Biodiversity and Ecosystem Services

– The growing awareness of value

2. Biodiversity and climate change

– Need for climate action : coral reef emergency

– Need for BD action for climate: mitigation –Green Carbon and REDD+

– BD and adaptation – Ecosystem based adaption

– Investment in natural capital

– Other responses and instruments

3. Summary

TEEB origins

Source: Bishop (2010) Presentation at BIOECON

TEEB‟s Genesis and progress

“Potsdam Initiative – Biological Diversity 2010”

1) The economic significance of the global loss of

biological diversity

TEEB Interim Report @ CBD COP-9, Bonn, May 2008

Brussels

13 Nov 2009

Sweden

Sept. 2009

India, Brazil, Belgium,

Japan % South Africa

Sept. 2010

London

July 2009

CBD COP 10 Nagoya Japan

TEEB final reports for different audiences

TEEB for Citizens (D4)

TEEB for Business (D3)July 2010

TEEB for Local Policy (D2)September 2010

TEEB for Policy-Makers (D1)

www.teebweb.org

TEEB Ecological and

Economic Foundations (D0)www.teebweb.org

What is biodiversity?

“the variability among living organisms from all sources including, terrestrial, marine

and other aquatic ecosystems and the ecological complexes of which they are part;

this includes diversity within species, between species and of ecosystems”

(CBD 1992).

In other words, biodiversity includes:

Diversity within species populations - genetic variation;

• The number of species, and

• The diversity of ecosystems.

Both quantity and quality of biodiversity are important when considering the links between

nature, economic activity and human well being.

How does Biodiversity help economic activity and human wellbeing ? Ecosystem Services

Ecosystem services = flows of value to human societies as a result of the state and

quantity of natural capital.

• Provisioning services – e.g. wild foods, crops, fresh water and plant-derived medicines;

• Regulating services – e.g. filtration of pollutants by wetlands, climate regulation through

carbon storage and water cycling, pollination and protection from disasters;

• Cultural services – e.g. recreation, spiritual and aesthetic values, education;

• Supporting services – e.g. soil formation, photosynthesis and nutrient cycling.

(MA 2005)

From an economic point of view, the flows of ecosystem services can be seen as the

„dividend‟ that society receives from natural capital.

Maintaining stocks of natural capital allow the sustained provision of future flows of

ecosystem services, and thereby help to ensure enduring human well-being.

Biodiversity „Quality‟ „Quantity‟ Services (examples)

Ecosystems Variety Extent • Recreation

• Water regulation

• Carbon storage

Species Diversity Population • Food, fibre, fuel

• Design inspiration

• Pollination

Genes Variability Number • Medicinal discovery

• Disease resistance

• Adaptive capacity

Biodiversity and ecosystem services

Source: Bishop (2010) Presentation at BIOECON

Links from Drivers to ecosystem functions to impacts and wellbeing

Human

Wellbeing

&

Economic

Value

Policies

Nat. Reg.

Loc. Int.

e.g.

changes in

land use,

climate change,

pollution,

water use,

invasive alien

species (IAS)

(Human)

Drivers

Ecosystem

Services

Biodiversity

Ecosystem

functions

Natural

Drivers

Drivers Pressures State Impact

Response

Critical issues

The values of biodiversity and ecosystems are missing

• Many not known (but this is changing); widespread lack of awareness

• They are generally not integrated into the economic signals, into markets – the economy is therefore often not part of the solution

• Values are not taken systematically into account in assessments and decision making

• The value of nature is not reflected in national accounts nor in leading macro economic indicators

Inappropriate incentives; misinterpretation of right solutions, insufficient evidence base at policy makers‟ finger tips and weaker public support for action

There is not enough political will or conviction or awareness of benefits/cost to launch due policies

Biodiversity loss continues – eroding natural capital base without realising its value

2000The Global Loss of

Biodiversity

Source: L Braat presentation COP9 Bonn May 2008 on the COPI Study; building on MNP data

2050The Global Loss of

Biodiversity

Source: L Braat presentation COP9 Bonn May 2008 on the COPI Study; building on MNP data

TEEB for Policy Makers reportThe Global Biodiversity Crisis• Coral reef emergency• Deforestation • Loss of public goods…

Responding to the value of nature

Available Solutions

• PES water, PES – REDD+

• Markets, GPP

• Subsidy reform

• Legislation, liability, taxes & charges

• Protected Areas

• Investment in natural capital et al

Measuring what we manage

• BD & ecosystem service indicators

• Natural capital accounts

• Beyond GDP indicators et al

http://www.teebweb.org/

Part I: The Opportunity

Chapter 1: The Value of Nature for Local Development

Part II: The Tools

Chapter 2: Conceptual Frameworks for Considering the Benefits of Nature

Chapter 3: Tools for Valuation and Appraisal of Ecosystem Services in Policy Making

Part III: The Practice

Chapter 4: Ecosystem Services in Cities and Public Management

Chapter 5: Ecosystems Services in Rural Areas and Natural Resource Management

Chapter 6: Spatial Planning and Environmental Assessments

Chapter 7: Ecosystem Services and Protected Areas

Chapter 8: Payments for Ecosystem Services and Conservation Banking

Chapter 9: Certification and Labelling

Part IV: Conclusion

Chapter 10: Making Your Natural Capital Work for Local Development

Overview of tools and databases

“I believe that the great part of miseries of mankind are brought upon them

by false estimates they have made of the value of things.”Benjamin Franklin, 1706-1790

“There is a renaissance underway, in which people are waking up to

the tremendous values of natural capital and devising ingenious ways

of incorporating these values into major resource decisions.”Gretchen Daily, Stanford University

Provisioning services• Food, fibre and fuel• Water provision • Genetic resources

Regulating Services• Climate /climate change regulation• Water and waste purification • Air purification • Erosion control• Natural hazards mitigation• Pollination• Biological control

Cultural Services • Aesthetics, Landscape value, recreation and

tourism• Cultural values and inspirational services

Supporting Services• Soil formation

+ Resilience - eg to climate change

Many services from the same resource

Important to appreciate the whole set of

eco-system services

Multiple benefits from ecosystems

‘‘We never know the worth of water 'til the well is dry’.

English proverb

‘Men do not value a good deed unless it brings a reward’

Ovid, B.C. 43 – 18 A.D., Roman Poet

Ecosystem Services and awareness of values

Provisioning services• Food, fibre and fuel• Water provision • Genetic resources

Regulating Services• Climate /climate change regulation• Water and waste purification • Air purification • Erosion control• Natural hazards mitigation• Pollination• Biological control

Cultural Services • Aesthetics, Landscape value, recreation and

tourism• Cultural values and inspirational services

Supporting Services - e.g. soil formation

Habitat Services - e.g. nurseries

+ Resilience - e.g. to climate change

Market values – known and generally taken into account in decision making on land use decisions

Value long ignored, now being understood >> new instruments, markets, investments

Value often appreciated only after service gone >> Replacement/substitute costs

Values generally rarely calculated

Value often appreciated only after loss/damage felt

Value historically often overlooked; private sector exceptions

The benefits to our economies, livelihoods and wellbeing have

generally not been taken into account. There is, however, now a

new awareness of the value of ecosystem services and a growing

use of instruments to reward benefits.

Sometimes value explicit / implicit in markets (e.g. tourism spend / house prices)

Ecosystem

Valuation Benefits

Annual Value

(2005, CDN $)

Carbon Values 366 million

Air Protection Values 69 million

Watershed Values 409 million

Pollination Values 360 million

Biodiversity Value 98 million

Recreation Value 95 million

Agricultural Land

Value

329 million

Multiple Benefits: at the Urban level – City of Toronto

• Estimating the value of the Greenbelt for the City of Toronto

• The greenbelt around Toronto offers $ 2.7 billion worth of non-market ecological

services with an average value of $ 3, 571 / ha.

→ Implication re: future management of the greater city area ?

Source: Wilson, S. J. (2008)

Map: http://greenbeltalliance.ca/images/Greebelt_2_update.jpg

Shrimp Farm

private

profits

less

subsidies

Net of public

costs of

restoration

needed

after 5 years

private

profits

Mangroves

0

10000

US$

/ha/yr

private profits

5000

If public wealth is included, the “trade-off”

choice changes completely…..

>> fundamental rationale for public policy

$584/ha

$1220/ha

$9632/ha

$584/ha

-ve $11,172/ha

$12,392/ha

Source: Barbier et al, 2007

After

Adding

Public

Benefits

From

mangroves

Based only on private gain, the “trade-off”

choice favours conversion…..

Taking account of public goods

…can change what is the “right” decision on land/resource use

Fishery

nursery

Storm

protection

Presentation overview

1. Introduction

– TEEB ambitions and process and approach

– Biodiversity and Ecosystem Services

– The growing awareness of value

2. Biodiversity and climate change

– Need for climate action : coral reef emergency

– Need for BD action for climate: mitigation –Green Carbon and REDD+

– BD and adaptation – Ecosystem based adaption

– Investment in natural capital

– Other responses and instruments

3. Summary

TEEB Climate Issues Update

Coral reef emergency

Ecosystem investment for climate adaptation

National accounting for forest carbon

Forest carbon for climate mitigation

Coral Reefs

•Need as ambitious commitments as possible for GHG emissions reductions -450ppm and 2 degrees already accepting major losses

•Major coral reef loss already happening given temperature rise to date.

WHAT WE LIKE TO THINK ALL CORAL REEFS LOOK LIKE….

WHAT CORAL REEFS INCREASINGLY LOOK LIKE….

Coral Reef valuations thresholds…

• Coral Reef Services (per hectare) can have very high values

• global valuation studies place the value as high as US$ 172 billion per annum

• Over 500 million people a year dependent on the services from reefs

• however…. Coral Reefs are an ecosystem at the threshold of irreversibility

• ethical choice coming up : stabilization targets …– at 450 ppm CO2 for 2 degrees

– at 350 ppm CO2 for Coral Reef survival in the long term

“Playing the full hand” of carbon colours

• Brown Carbon

– CO2 emissions from human energy use and industry

• Green Carbon

– carbon stored in terrestrial ecosystems, e.g. plant biomass and soils in forests, agricultural lands, wetlands and pasture

• Blue Carbon

– 55% of all carbon in living organisms are stored in oceans, most of this in mangroves, marshes, see grasses, coral reefs and macro-algae

• Black Carbon

– soot emissions from incomplete combustion of fuels absorb heat in the atmosphere and reduce ability to reflect sunlight

By halting the loss of “green” and “blue” carbon, the world could mitigate as much as 25% of total GHG emissions, with co-benefits for biodiversity, food security and livelihoods (IPCC 2007, Nellemann et al. in press)

Tropical forests of the world:largest terrestrial carbon sinks

Areas of rapid land use cover change

The role of tropical forests in climate regulation

• tropical forests store a fourth of all terrestrial carbon– 547 gigatonnes (Gt) out 2,052 Gt (Trumper et al. 2009)

• tropical forest capturing– up to 4.8 Gt CO2 annually! (Lewis & White 2009)

• stopping deforestation holds an excellent cost-benefit ratio– halving deforestation generates net benefits of about

$ 3.7 trillion (NPV) including only the avoided damage costs of climate change (Eliasch Review 2008)

30

REDD-Plus: Reducing Emissions from Deforestation and Forest

Degradation-Plus

Major potential for this instrument to address Green carbon

• Curb deforestation/degradation - deforestation ~17% of global GHG emissions

• Could offer substantial biodiversity co-benefits: range of ecosystem services

• Eliasch (2008) estimated that REDD could lead to a halving of deforestation rates by 2030 and have an estimated long-term net benefit of US$3.7 trillion in present value terms

• One of the few areas given fairly solid support at the UNFCCC’s Copenhagen COP

• Many risks that need to be addressed: carbon leakage, additionality, permanence, biodiversity impacts (carbon only focus; plantations), competition for land

Needs:

Confidence: monitoring & verification; natural capital accounts

Experience: pilot projects, capacity building, monitoring solutions

Investment: money for the projects and payments.

Evolution: phasing from pilot, to funds, to market links….

Investment in ecological infrastructure

From local to national to EU efforts

Global responsibility / contribution

Ecological infrastructure key for adaptation to climate change

• Afforestation: carbon store+ reduced risk of soil erosion & landslides

• Wetlands and forests and reduced risk of flooding impacts

• Mangroves and coastal erosion and natural hazards

• Restore Forests, lakes and wetlands to address water scarcity

• Coral reefs as fish nurseries for fisheries productivity / food security

• PAs & connectivity to facilitate resilience of ecosystems and species

Mecklenburg-Vorpommern:

• pilot project between 2000-2008

• restoration of 30,000 ha (10%)

• emission savings of up to 300,000 t CO2-eq.

• avoidance cost of 8 to 12 € / t CO2

• if alternative land use options are realized

(extensive grazing, reed production or alder

forest) costs decrease to 0 to 4 € / t CO2

• where Maize can be grown restoration can not

compete

• drainage of 930,000 ha peatlands in Germany for agriculture cause emissions of 20 Mio. t of CO2-eq. per year

• total damage of these emissions amounts to 1.4 billion €

• peatland restoration: low cost and biodiversity friendly mitigation option

Nature-based climate change mitigation in Germany

Source: Federal Environmental Agency 2007; MLUV MV 2009; Schäfer 2009Restored peatland in Trebeltal 2007

Foto: D. Zak, http://www.fv-berlin.de

Investments in Ecological Infrastructure

• restoration can be cost effective way of

providing a service :

planting mangroves along coastline in Vietnam cost

$1.1 million but saved $ 7.3 million annually in

dyke maintenance (GRID-Arendal 2002; Reid and Huq

2005)

Protected Areas (PAs)

Finalisation of the networks (in EU – notably MPAs - & globally)

Address financing gap – new funding, new instruments (eg PES)

In EU: use of funding – better integration (EAFRG, LFA, EFRD etc)

New Biodiversity fund ?

• Better managed, better connected, better governed and better financed protected areas are recognised as key to both mitigation and adaptation responses to climate change.

• Climate change mitigation: 15% of global terrestrial carbon stock is contained in protected areas (Campbell et al.2008).

• Adaptation: help people adapt - maintaining ecosystem services that reduce natural disaster impacts (coastal and river protection, control of desertification), stabilise soils and enhance resilience to changing conditions.

Subsidy Reform : Win-win biodiversity & climate

Establish transparent and comprehensive subsidy inventories

Develop prioritised plans of action for subsidy removal or reform, for implementation in the medium term

1 trillion US$/year spent on subsidies – value for money ?

“Imaginary public goods of avoided public bads” - Biofuels

Early stated ambitions: helping avoid climate

change – avoiding a public bad.

Subsidies in many forms launched

US$ 11/yr („06: US+EU+Canada) (GSI 2007, OECD 2008)

Cost of reducing CO2 ~ US$ 960 to 1700/tCO2

equiv. (OECD 2008)

Not cost effective cf EU-ETS: ~ US $ 30-50 / t

Where biofuels fom converted forrest lands –

there may be net increase of emissions

Effect opposite to stated objective.

Urgent need to review biofuels policies / instruments

Natural resource management & spatial planning

• Flooding of River Elbe, Germany (2002)

• Damage over EUR 2 billion

• Assessment that flood damage (+ cost of dams) by far exceed costs of upstream flooding

arrangements with land holders

→ The value of upstream ecosystems in regulating floods was re-discovered !

→ Local authorities start changing spatial planning & seeking arrangements upstream

Step 1: Specify and agree on the problem

• August 2002 heavy floods of the river Elbe, direct economic damage of over 9 billion €

• occasion to revise system of flood protection

towards integrated flood risk management

Step 2: Which ecosystem service are relevant

• flood protection

• habitat for a multitude of species

• nutrient retention

Step 3: Define information needs and select methods

• CBA of different alternatives (relocate dykes, establish polder)

• replacement costs for assessment of the nutrient and pollutant filters

• contingent valuation for the willingness to pay for flood control

© DPA

River Elbe flooding, Germany

Step 4: Conduct the assessment

• relocation of the dykes creates a new flood retention area of just 35,000 ha of land

• establish polder includes the creation of a surface of 3,248 ha

• combination of both measures with dike relocations (3402 ha) and steered polders (4143 ha)

Step 5: Identify and appraise policy options

• all options have a positive benefit-cost-ratio if environmental benefits are included in the calculation

• BCR: - relocation of the dykes = 3.1

- establish polders = 9.9

- combination = 4.6

Step 6: Assess the distributional impacts of policy response

• Maps are being made that indicate economic losses and social impacts involved in flooding

© Grossmann, M.; Hartje, V.; Meyerhoff, J.Sources: Grossmann, M., Hartje, V., Meyerhoff, J. (2010) Ökonomische Bewertung

naturverträglicher Hochwasservorsorge an der Elbe. Naturschutz und Biologische

Vielfalt 89, Bundesamt für Naturschutz: Bonn.

TEEBcases – online accessible best practice examples

• final version will

contain more than

100 cases from

around the world

• showcasing the

incorporation of

economic valuation

into local decision-

making

• In cooperation with

EEA - accessible via

teebweb.org

http://www.eea.europa.eu/teeb/map

The Business Angle: Aspirations/objectivesFrom carbon neutral …

… to biodiversity positive

• Danone Group: “Attain carbon neutrality for the major Danone brands,

including Evian, by the end of 2011.”

• Marks & Spencer: “Our goal is to become carbon neutral by 2012 in our UK

and Republic of Ireland operations.”

• Coca Cola: “Our goal is to safely return to communities and nature an amount of

water equivalent to what we use in all of our beverages and their production.”

• BC Hydro: “long-term goal of no net incremental environmental impact.”

• Walmart: “Committed … to permanently conserve at least one acre of

priority wildlife habitat for every developed acre.”

• Rio Tinto: “Our goal is to have a „net positive impact‟ on biodiversity.”

Source: Bishop (2010) Presentation at BIOECON

Biodiversity and Climate

• Important synergies: win-wins for the two.

• Cannot address climate without biodiversity - mitigation & adaptation

• Or address biodiversity without addressing climate – e.g. corals, IAS

• Avoid partial solutions that focus only on part of the picture - eg wrong

REDD design/implementation; biofuels subsidies that encourage land conversion)

• Moving to a low-carbon economy critical

• This is only part of the solution – need to move to a resource efficient economy & work within natures resource and ecosystem limits

• With 9 billion people in 2050, a lot of resource boundaries and ecosystem thresholds risk being crossed.

• Need systematic use of windows of opportunity at global to local levels, and realise policy synergies and avoid policy disconnect

• Taking account of the services from, and values of, nature in decisions will be essential and cost effective.

Thank you

`

Where do you see particular needs and opportunities for working with

nature for Delta cities in Times of Climate Change?

TEEB Reports available on http://www.teebweb.org/

& TEEB in Policy Making will come out as an Earthscan book in March 2011

Patrick ten Brink, ptenbrink@ieep.eu

IEEP is an independent, not-for-profit institute dedicated to the analysis, understanding and promotion of policies for a sustainable environment in Europe www.ieep.eu

Manual of EU Environmental Policy: http://www.earthscan.co.uk/JournalsHome/MEEP/tabid/102319/Default.aspx