Biodiversity

Debate between Barry Gardiner and Helen Goodman

Thursday 16th September 2010 Westminster Hall

[Barry Gardiner (Brent North) (Lab)]

I, too, am pleased to speak in this debate under your chairmanship, Mr Crausby. Last year, the UN climate change convention met in Copenhagen. It attracted the most incredible media frenzy, and something of a political frenzy as well, as Prime Ministers, Ministers and politicians from all over the globe made sure that they had a suitable photo opportunity.

In a month’s time, its sister convention on biological diversity will meet in Nagoya, Japan, to discuss why whole species are moving into extinction at a rate that, barring the loss of the dinosaurs, is unprecedented in the entirety of the fossil record of life on this planet. So far, the convention has met with total silence from the world’s press—why? How do the world’s most eminent scientists propose that we tackle the problem of extinctions?

One of the first things I was told in the Department that the Minister now occupies was the wonderful target that had been set to halve the rate of decline in species loss by 2010. That was the UK’s national target. I said that that was wonderful and asked the civil servant what was the rate of loss that we were going to halve. He said that the rate of loss was not known, and I asked how we would halve the rate if we did not know what it was. He replied that we would use indicators. We started without a sufficient baseline. The European Union tried to bail us out, of course, and said that it would substantially reduce the rate of loss. That European target was a bit woollier. With such an assessment at the beginning of the project, it is not very surprising that we reached 2010 to find that even those indicators have not enabled us to say that we have had any real success.

Where will we go in Nagoya? Top of the agenda will be natural capital. I welcome the Minister’s comments on the subject, and all that he said about the TEEB report and Pavan Sukhdev’s astonishing work. We must take on board the fact that one of the great advances in the past 100 years in classical economics was acknowledgment that there is such a thing as human, social and intellectual capital. We have come to realise that a well functioning judicial system and an excellent education system are as much a part of the wealth of a nation as its roads, ports and factories. The irony is that economists and economies have not caught up with the most important capital—natural capital.

Natural capital may be defined as the benefits that accrue to human society from the different species of life that inhabit the natural world—the biodiversity that is the subject of our debate. Classical economics values things such as forests by adding the sale price of the timber that can be harvested, and the alternative use to which the land may be put. A pine forest in the mountains will be worth a lot less per hectare than a forest of oak and ash close to good arable land and a river. Soft wood pine sells for pulp or low-grade timber, but oak and ash sell for designer kitchens. The mountain land has few alternative uses, but river land may raise prime beef. So that is how forests are valued. Wrong.

The true value of forests lies in far more than that. They stop soil erosion, prevent flooding by absorbing moisture, and control climate, often regulating local as well as global weather patterns. They are a source of medicines and food, and they have recreational and aesthetic value. All that is before carbon sequestration has been mentioned. In the Millennium Ecosystem Assessment, 1,360 of the world’s top scientists showed that classical economics captured only one third of the actual value of the services that forests provide. The same is true for rivers, reefs, salt marshes, mangroves and all other natural ecosystems. We fail to factor in their actual economic value to our policies and decision making, but because most of the other services that they provide are not bought or sold in markets, they are normally not taken into account, so the forests, reefs and rivers are lost or degraded.

Another important consideration is that those wider benefits, although immensely valuable, do not accrue to an individual property owner. The benefits are experienced by a community at large. They are regarded as free goods by the wider economy and the wider community, which would no more think of paying for flood protection provided by the local forest than of paying for the air they breathe, which is also provided in part by the local forest. In classical economics, such free goods are called externalities, but because they are not directly captured by the landowner they do not feature in their decisions on how or whether to dispose of them.

[Helen Goodman (Bishop Auckland) (Lab)]

My hon. Friend is making an interesting point. During the last Parliament, we updated the legislation on commons. The previous update had been during the 14th century, so it was in some need of reform. One of the most interesting issues that arose was that there are more SSSIs on common land than on private land because on common land people were under communal pressure to farm sustainably and that such pressure did not exist on private land. There is real-life evidence to back up what my hon. Friend is saying.

[Barry Gardiner]

As always, I was delighted to sit down when my hon. Friend stood up. She made an excellent intervention and highlighted the importance of seeing land, and land use, and land use change, in a fundamentally economic way, and looking at property ownership and tenure is absolutely part of that. All hon. Members in the Chamber and those who care deeply about the subject will know of the issues relating to indigenous people. There are different forms of communal property ownership in tropical forests throughout the world. That applies not just in this country, as my hon. Friend rightly pointed out, and it is essential to bear in mind the conflict that can arise from land tenure and the different forms of property ownership when considering the future of our tropical rain forests throughout the world.

A country may experience economic growth while becoming poorer, and an example may be helpful. A Government may sell a large timber concession to a logging company. They will achieve for that land only the classical measure of value for the logs or fuel wood, plus any alternative land use. The logging company, perhaps being afraid of political instability somewhere in Africa, may not even cut the logs into timber in the country itself. Instead, it may export them to a neighbouring state where it has a production factory that cuts the logs and produces furniture for export to European markets.

It is important to note that no one in this example has done anything wrong or corrupt. The Government have increased their export sales by the value of the logs and have seen a corresponding rise in GDP. The logging company has paid the market price for its logging concession and made a rational business decision about the management of the company’s political risk. The neighbouring country happily welcomed the jobs and economic growth that come from the re-export of those logs as much more valuable furniture, but the original country is poorer. The value of the ecosystem services that it has lost is far greater than the value of economic GDP growth that it has achieved.

In 2000, Kofi Annan commissioned an assessment of the state of global ecosystems that aimed to describe and evaluate the full range of services that we as human beings derive from nature. In the Millennium Ecosystem Assessment, 1,360 scientific experts reported on the 24 key services on which human life depends. Of those, only four services were found to be increasing, 15 were assessed as being in decline and five were said to be stable although under strain in certain regions.

On the positive side of the balance sheet, agricultural production is increasing the amount of crops and livestock available to feed an expanding world population. On the negative side, marine fish stocks are dangerously depleted, fresh water is declining in quality and availability, and services such as pollination, pest control, soil stabilisation, climate regulation and air and water purification are all in marked decline.

Recognising that those essential services provide 50% of the GDP of the poorest people on our planet, the report pointed out:

“The loss of services derived from ecosystems is a significant barrier to the achievement of the Millennium Development Goals to reduce poverty, hunger and disease.”

It concluded that

“human activities have taken the planet to the edge of a massive wave of species extinctions, further threatening our own well-being.”

Just as the Millennium Ecosystem Assessment was being published in 2005, Hurricane Katrina hit the coast of Louisiana, killing 1,800 people, displacing 1 million more and causing damage assessed at up to $125 billion. The US army engineering corps is spending $16 billion on building a 350-mile long system of levees to replace those that failed in 2005. That failure was not due to a natural disaster; it was the result of 100 years of policy decisions supposedly to “improve” the navigation and economic efficiency of the lower Mississippi basin, and the consequent loss of wetlands that followed from that.

Today, the sewerage and water board of New Orleans plans to pipe thousands of tons of semi-treated sewage into a bayou to help to regrow a cypress-tupelo wetland and protect the lower ninth ward from flooding. Recently, the US army engineering corps made an astonishing admission: during Katrina, every levee that had wetland protection remained intact but every levee that had no wetland protection was breached.

It has been estimated that since the 1930s, 120,000 square miles of wetland habitat has been lost on the lower Mississippi basin. Currently, one acre—the size of a football pitch—is lost every 48 minutes. The wetlands are of various types, but a freshwater or intermediate marsh wetland is estimated to reduce surge swells during a hurricane by as much as 1 foot for every mile width of wetland. A cypress swamp wetland is estimated to reduce storm surges by an incredible 6 feet for every mile width of wetland. The ring of concrete and steel that is being constructed around the city at such enormous cost—$16 billion—sets in context the true value of the natural capital that makes up Louisiana’s lost wetlands.

In 1956, the US Congress gave approval for the construction of the Mississippi river-gulf outlet—MRGO, as it is known locally. The economic case seemed overwhelming. The man-made navigational channel would connect the gulf of Mexico to the city of New Orleans, bisecting the marshes of lower St Bernard parish and the shallow waters of the Chandeleur sound. That would reduce the passage by 40 miles and straighten the route, making it a safer and more efficient passage for shipping than the Mississippi river below New Orleans with its winding channels.

The habitats that the MRGO was cut through are shallow estuarine waters and sub-delta marshes. Much wetland was lost by the original excavation, but more importantly, the soil erosion and rise in salinity have led to the destruction of the cypress swamp. Ironically, the MRGO has not been the economic success that Congress supposed it would be. Today, it carries a mere 3% of the region’s waterborne freight, with fewer than five passages a day. The US army engineering corps estimates dredging costs to be $22.1 million per year. That means that every vessel that passes through will cost $12,657 per vessel per day.

As early as 1958 the US Department of the Interior warned that

“the excavation of the (MRGO) could result in major ecological change with widespread and severe ecological consequences.”

Ecological consequences—the process was not seen as a contribution to the economic debate surrounding the case for the MRGO, but rather as an unimportant, if factual, environmental comment. In those days, the concepts of natural capital and ecosystem services were simply not understood by legislators, but today we have no excuse.

What would a Government who incorporated the valuation of natural capital and ecosystem services into their framework of national accounting look like? What would they do differently? Principally, they would make explicit and visible the estimated value of nature’s multiple and complex benefits. By incorporating that value into their procedures of decision making and cost-benefit analysis, the Government would provide a more complete evidence base through which to improve outcomes. Factors previously regarded as externalities would become essential elements of increased efficiency in policy design.

It is important to understand that the values of natural capital do not exist objectively and independently of a community of potential beneficiaries. Therefore, they cannot simply be imported into a set of national accounts as a constant given. However, that is equally true of other forms of capital and it should not be allowed as an argument against a proper valuation of ecosystem services. The kickback given by Finance Departments and Treasuries is always, “It is very difficult to estimate the value of a river or a forest.” Well, it is difficult to estimate the value of a bridge. Nobody would try to measure a bridge by its height or length, but instead by the economic savings in time and fuel multiplied by the number of people who might use it as opposed to the alternative easiest route. One must estimate. It is the same with forests, wetlands, swamps and peat bogs, but the Treasury will always kick back and say, “No, it is too difficult.” That is the area we have to look at.

In the same way, the value of a coral reef will vary, not only in accordance with the quantity of marine life that it spawns, but with the level of dependence that a community may have on it for food. It may also fluctuate in value in accordance with its suitability for use as a tourist destination generating recreational dollars. Thus, the value of natural capital in one part of the globe cannot easily be translated across borders. Economic values are not a property of ecosystems; they are a measure of those ecosystems’ utility to human communities in a given geographical and socio-economic context. For that reason, Governments who take natural capital seriously would do well to estimate the value not of the ecosystem as such, but of the economic effects that a proposed or envisaged change might have were a particular policy to be pursued.

The successful integration of the value of natural capital into UK Government accounts could see the elimination of perverse subsidies in fishing and agriculture and in the use of nitrates and fossil fuels. It could create financial incentives to encourage proper environmental management that preserves ecosystem services and a rigid application of the “polluter pays” principle throughout industry. To achieve that, a number of undertakings would be required from the Government, and, in that respect, I thank the Minister for the positive and constructive meeting that we had with GLOBE the other day. As he knows, I do not lay these issues simply at the door of his Department; the key point is that these undertakings must be given by Governments, rather than Environment Departments. Environment Departments know and understand them very well; the difficulty is getting them appropriated by Government colleagues more widely.

First, inventories should be required of all Departments. They should identify as far as possible all the natural capital assets for which a Department is responsible or whose value may be affected, whether adversely or positively, by departmental activity. Secondly, in adopting the latest methodology set out in SEEA—the “Handbook of National Accounting: Integrated Environmental and Economic Accounting”—Departments should be obliged to co-ordinate with the Treasury and agree a valuation for all the natural capital assets in their inventory.

Thirdly, all policy proposals and recommendations should be obliged to incorporate a costed explanation of how they will enhance natural capital or transform it into other forms of capital so that overall national wealth is increased. Fourthly, where a policy proposal or recommendation is estimated to deplete natural capital or result in declining ecosystem services, that depletion must be clearly costed and agreed by the Treasury.

Fifthly, an equivalent post to that of the Chief Secretary to the Treasury must be established with the aim of regulating the Government’s use of natural resources and signing off all allocations of natural capital. Sixthly, that post should have the further challenge function of questioning why Departments are pursuing a technological solution to a problem that might be more efficiently dealt with through an imaginative use of ecosystem services. For example, why build a chemical-based sewage filtration plant when the lugworms on one hectare of mud flats can provide a remediation service for 100,000 people’s effluent?

Seventhly, the Treasury should prepare a set of green accounts for natural capital and ecosystem services, which should be published initially for three years in parallel with the Red Book. Eighthly, after the initial trial period, those green accounts should be fully integrated and incorporated into the Budget and the Red Book.

Ninthly, the National Audit Office should be requested to monitor and report on the effective application of the incorporation of natural capital into the national accounting framework. Tenthly, Parliament’s Environmental Audit Committee should be requested to hold the Treasury and all Departments across the Government to account for their use of natural capital and ecosystem services. Eleventhly, the Treasury should be tasked with preparing and publishing an annual report on the status of the country’s natural capital and ecosystems.

Are there better ways to achieve this objective? Are there better uses for these resources? The Government have an obligation to their citizens to ensure that no policy, programme or project is adopted without Ministers first having the answer to those questions, and it is not possible to answer them unless the Government unequivocally embrace a transparent system for the valuation of natural capital.

In October 2010, I will chair the GLOBE legislators session at the United Nations convention on biodiversity in Nagoya—the conference of the parties. One hundred legislators will press to have natural capital incorporated into national accounts. They will establish legislators’ role as that of providing a vital monitor and audit function, overseeing their respective Executives. Many scientists regard success at the Nagoya convention as even more important than success at the convention on climate change. After all, what would a change in climate matter if species could keep pace with the rate of change? The fact that they cannot, and the demise of the ecosystem services that are lost with them, is the greatest threat to human well-being on this planet.

A decade ago, the United Nations set the world the target of reducing the rate of species loss by 2010—the international year of biodiversity. Well, here we are. The UN willed the objective but not the means. The integration of the valuation of natural capital into Government accounting frameworks is that means.