Biodiversity Offsets Blog

For your consideration:

The recently started Biodiversity Offsets Blog aims to provide an interdisciplinary platform for the information and exchange on Biodiversity Offsets and the Mitigation Hierarchy.

The goal is to mainstream and facilitate the discussion on Biodiversity Offsets. The focus lies on biodiversity offsets as such (not market based instruments or other more general topics). The formerly widespread information shall be brought together to make it easily accessible for a maximum of people and thereby to unite the societal debate with academic findings and practical insights. This includes joining different perspectives (biodiversity offsets are not restricted to the interest of business).
The Biodiversity Offsets Blog combines general information (including an updated list of experts, literature, websites etc.) with frequent blog posts on new articles, scientific papers, political news, offset examples on the ground and so on.
As the platform shall bring people and their expertise together, all those who are interested are encouraged to share their knowledge, views, questions or concerns and help to build a broad information base. Find out more on www.biodiversityoffsets.net.

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Get your 4 a day

No I don’t mean 5 a day. Not even 7 a day if you live in Australia. I mean 4 a day.  4 power outages a day. This is what people in Lebanon (and no doubt other countries which I haven’t been to in the last 2 weeks) have been experiencing over the last two months or so. During my stay, I counted a total of 31 power outages in the span of 8 days which equates to an average of around 4 power outages a day.
Having 4 power outages a day makes you obsessed with – wait for it – power outages: When did the power go out? When is it coming back? How long has it been since it went out? Shall we turn the generator on? The big one or the small one? How many A/Cs can we turn on?
Besides becoming positively obsessed with power outages, the whole situation makes you appreciate things that you almost certainly always take for granted. ‘Power’ in most countries is contingent upon the provision of oil and gas – a component of natural capital. There are other components of natural capital, from many different habitats, providing things we need which are much more undervalued or not valued at all such as climate regulation, water regulation and biodiversity (among others). The troubling thing is that there are many alternative sources to generate power or electricity but alternatives to ensure the preservation of climate regulation, water regulation and biodiversity are much more difficult if not arguably impossible to conceive of in this context. Just a thought I had in trying to make the most out of power outage number 12.

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Rhino horn sell-off

The South African government is considering the sell-off of 20 tonnes of stock piled Rhino horn. The destination for any sale of the horn would be markets in Asia, where horn has been seen as a cure for cancer and as traditional alternative to Viagra. Lets be clear, Rhino horn does absolutely nothing, aside from any potential placebo effects. Rhino horn is made from Keratin, so unless biting your nails, or chewing your hair banishes your cancer, it is worthless as a drug.  In fact Rhino horn has been found soaking in liquid Viagra to give it its purported impotence busting properties.  So a valid trade which cures people, it is not.

The economic rationale for selling off stock piles of Rhino horn is simple. The legal trade of stockpiles of Rhino horn would depress the market price resulting in reduced incentives to poach therefore protecting Rhinos in the wild. This chain of logic is based on a number of assumptions:

1)      The demand for horn is limited and static, therefore an increase in supply will satiate consumers.

2)      The demand curve for Rhino is such that the stockpiled quantities would reduce price by the desired extent

3)      Insufficient profit margins exist in poaching Rhinos, to allow illegal traders to compete with legal supplies at the new reduced price

Many of these assumptions are pretty shaky. Selling off Rhino horn through legal channels is likely only to legitimise the market, resulting in more people demanding more horn.  What happens when the legal supply runs out, then we are back to square one, legal harvesting (costly, ignoring the odious moral connotations) or poaching with greater demand.

Legal sell offs have been tried with elephant ivory , which were initially supported by Traffic and WWF. But prices rose after the sell offs, with the supply proving insufficient to depress prices and poaching increasing.  In 2010 legal sell offs of ivory were banned for at least three years.

A stretched government agency sitting on a stock pile of Rhino horn, must be sorely  tempted to sell it. There is huge demand attracting high prices.  As economists we often weigh up the costs and benefits, we are supposed to be clinical observers of markets.  Do the ends justify the means? If a sell off supported conservation, unlikely but let’s suppose, should I hold my nose and support it. No. Supporting the trade in Rhino horn would be supporting quack medicine of the highest order. Just in this case the ingredients are not water and a sugar pill, but one of the most endangered species in the world.

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Intergovernmental Platform for Biodiversity & Ecosystem Services

A meeting in Nairobi this week will develop the formation and working principles of The Intergovernmental Platform for Biodiversity & Ecosystem Services (IPBES). The IPBES follows the recent report on The Economics of Ecosystems and Biodiversity (TEEB) which demonstrated the vast economic value of the services that ecosystems provide and the Millennium Ecosystem Assessment (MEA) which found that large degradation and loss of ecosystems has happened in the last 50 years and could grow significantly worse. Its aim is to strengthen the interface between science and policy to help ensure that ecosystems and therefore their value to society are not significantly reduced as society continues to develop.

We in the pasture have always maintained that environmental economics plays a very large part in the bridge between environmental science and policy so it is good to hear that the IPBES will be placing a large emphasis on economics in their work. We also hope that IPBES follows Bob Watson’s suggestion to avoid blaming developing countries: “If they think this is just the white world, the developed world, telling them what to do, that’ll be the end of it … The climate debate has been, ‘you rich countries got rich by using cheap fossil fuels, and now you’re telling us not to use them.’ We must not get into that”.

If you are interested in learning more, here is a nice article by Michael McCarthy of the Independent with a slightly different take on the story.

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Links:

IPBES

TEEB

MEA

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Viva La Mexico!

Today is the 200^th anniversary of Mexico’s independence. I spent 2 weeks there recently, partly for work and partly for holiday. It was the low season on the Caribbean coast which meant very quiet beaches there and lots of (mostly warm) rain wherever in the country I went. But this is not a blog for holidays…

Work there was very interesting too. I spoke at a workshop on economic valuation organised by the National Institute of Ecology (Instituto Nacional Ecologica). The workshop was attended by a large group of well informed and highly enthusiastic people from the public sector, NGOs and academia. Some research funders were also there.

Mexico is a bit of a paradise for an environmental economist – and I repeat not just because of the tourist attractions, even though they include the Museum of Economics in Mexico City! Rather it is because they have used the methodologies and instruments of the profession rather more extensively than one might expect. For example

• The Mexican system of Payments for Hydrological Environmental Services (PSAH), which is one of the first Payments of Ecosystem Services. Mexico faces both high deforestation rates and severe water scarcity problems. The PSAH was designed by the federal government to pay participating forest owners for the benefits of watershed protection and aquifer recharge in those areas where commercial forestry is not currently competitive. It seeks to complement an array of forest policies that include development of community forestry firms and prohibitions of land use changes. Funding comes from a fee charged to federal water users. Applicants are selected according to several criteria that include indicators of the value of water scarcity in the region. For a paper that describes the process of policy design, main actors and rules, and provides a preliminary evaluation please click here.
• The fisheries buyback scheme (buying back excess fishing gear) to protect endangered marine mammals, and
• A pilot project to reduce energy subsidies and make sure that they are not indexed to production to protect overexploited aquifers.

Amongst the future projects, there is the possibility of a TEEB application for Mexico which came up in the discussions at the workshop but hopefully will become reality. TEEB is an international project that quantified and where possible monetised the services provided by the ecosystems and biodiversity worldwide. Country specific applications of its methods are emerging to estimate the economic value of the natural capital countries own. Benefit of such an application is that big numbers are talked about in the media and the overall process engages all sorts of different stakeholders who can see ‘what’s in it for them’ more clearly.

On a clearer link to holidaying in Mexico…I think there is a lot of room to increase the entry fees to the attractions like the Mayan ruins at Tulum (less than US$5 per person) and Sian Ka’an Biosphere Reserve (US$2.5 per person). There will of course be the predictable protests from local and international businesses but really compared to the benefits provided by such places and the funding need for their maintenance, such entry fees are terribly low. We hope our friends at INE will receive the support they deserve if and when they pursue arguments for a better benefit capture from such sites.

As you can easily find millions of attractive photos of Mexico on the internet, I thought I end with a photo much harder to find…a case of ‘appropriate technology’ in perfect use at a restaurant toilet inside the Sian Ka’an Biosphere Reserve (snorkelling at the reef there was interesting too!) .

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Loss of biodiversity = Economic loss

Amid the election headlines we spotted this article from the BBC on Monday highlighting the conclusions from the UN’s third Global Biodiversity Outlook (GBO-3), and it doesn’t look good.

In 2002 the world set the target of significantly curbing the global rate of biodiversity loss by this year, 2010. The report finds that none of the 21 subsidiary targets which were set at that time have been met on a global basis. This has led to an increasing number of species being listed by the International Union for the Conservation of Nature (IUCN) as ‘threatened’… i.e. they are very close to extinction.

Bill Jackson, the deputy director general of IUCN is quoted as saying “If the world made equivalent losses in share prices, there would be a rapid response and widespread panic”. This is a very valid point, and the article goes on to talk about a project called TEEB (The Economics of Ecosystems and Biodiversity)* which is attempting to value the various services provided to humans by nature – not because it wants to put a dollar sign on the environment, but because it wants to show how even a partial estimate of this value compares to financial figures. It also aims to show that not only do ecosystem services generate economic value but also that once these (at the moment free) services start disappearing, society will have to start spending money to replace them (for those that are possible to replace that is).  Significantly, the BBC article states “TEEB has already calculated the annual loss of forests at $2-5 trillion, dwarfing costs of the banking crisis”.

The message is clear: While, to some people, biodiversity loss might seem less of a threat to society than other seemingly more imminent problems, biodiversity loss is a real and significant threat that needs to be tackled now before the damages become even more significant than they currently are.

* Disclosure: Some of the cows in the pasture are involved in the TEEB project.

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