Press Release October 2005 - "Natural Accounting" = Essential for Poverty Reduction

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"Natural = Accounting"=20 Essential for Poverty Reduction

Poverty to=20 Rise Unless Economies Factor =91Nature=92s = Capital=92 into=20 National Accounts

Economists and Environmentalists Gather = in=20 London to Bring Environment into Centre of = Wealth=20 Creation

London, 10 October 2005 - Poverty will only = be made=20 history when nature=92s capital is factored into = national=20 profit and loss books, one of the world=92s = leading=20 economists will assert today.=20

Key to this is creating markets that give = real and=20 long lasting value to the goods and services = nature=20 provides.=20

Traditional measures such as gross domestic = product=20 (GDP) are short changing current and future = generations,=20 says Professor Sir Partha Dasgupta of Cambridge=20 University.=20

This is because they fail to value the goods = and=20 services generated by the natural world and = instead=20 treat them as free to use and limitless in their = abundance and ability withstand damage and = decay.=20

Such services include the carbon soaking = power of=20 forests, the fisheries and coastal defense = activities of=20 coral reefs, the pollution filtering-potential = of=20 wetlands and the nutrient recycling processes of = the=20 earth=92s soils.=20

Currently countries that fell their forests = for=20 timber exports, dynamite reefs for fish, pollute = their=20 land for intensive agriculture and contaminate = their=20 waterways with farm and factory run off can = appear to be=20 getting richer in the short term.=20

In reality, they are likely to be sliding = into=20 poverty or, at the very best, treading water, = because=20 they are plundering their natural capital=97a = key pillar=20 of medium and long term wealth.=20

=93Take the Indian sub-continent as an = example. On the=20 basis of traditional measures, like GDP, the = region has=20 been getting richer since the 1970s but in = reality=20 wealth per capita has actually declined. This is = because, relative to population growth, = investments in=20 manufactured capital, knowledge, skills and = health, and=20 improvements in institutions were not sufficient = to=20 compensate for the depreciation of natural = capital,=94=20 said Professor Das Gupta.=20

This has alarming consequences for not only = this but=20 the next generation who stand to inherit a = planet with=20 insufficient clean and functioning = =91ecosystems=92 to=20 sustain their basic needs let lone their hopes = and=20 aspirations.=20

=93Poverty will only be made history when = nature enters=20 economic calculations in the same way as do = buildings,=20 machines, roads and for example software. It is = a=20 particular catastrophe for the very poor,=94 = said=20 Professor Das Gupta.=20

=93As countries mine their natural wealth to = fuel=20 economic activity, the poorest of the poor lose = their=20 very life support systems. If fish disappears = from a=20 rich country=92s supermarket shelves shoppers = can=20 substitute this loss of protein by buying = another form=20 for example pork, beef or soya. Poor people, = depending=20 on the natural resources around them, do not = have this=20 luxury, do not have this kind of choice,=94 said = Professor=20 Das Gupta.=20

Klaus Toepfer, Executive Director of the = United=20 Nations Environment Programme (UNEP) which is = running a=20 two day brainstorming at the London School of = Economics=20 on how to mainstream environment in pro poor = development=20 strategies, said: =93In the end we are all = facing poverty=20 if we fail to address environmental decline, if = we fail=20 to reinvest in nature=92s capital. You cannot = continue to=20 drive a car if all you do is put petrol in the = tank. It=20 needs servicing, parts require replacing and we = must pay=20 for the roads and infrastructure on which it = runs=94.=20

=93In reality, nature is even more = complicated. By=20 continually depleting and damaging it and = without=20 investment in the running, maintenance and = management=20 costs, the Earth=92s life support can suddenly = and=20 abruptly fade or switch to become less = productive and=20 unpredictable. I believe we are slowly winning = this=20 political and economic argument but not fast = enough. So=20 we must hurry up otherwise all six billion of us = will=20 eventually be scratching around trying to = survive,=94 he=20 added.=20

Mr Toepfer said this was given fresh urgency = by the=20 Millennium Ecosystem Assessment, the work of = over 1,300=20 experts.=20
According to the assessment, some 60 per cent = of the=20 planet's ecosystem services are currently being = degraded=20 by human activities.=20
This week=92s two day brainstorming, running = from 10 to=20 12 October, has brought together some of the = finest=20 minds in environmental economics as well as = senior=20 figures from the environmental and = intergovernmental=20 fields.=20

It is hoped to engage the so called = Multilateral=20 Environmental Agreements, covering areas like = biological=20 diversity, migratory species and climate.=20

These treaties could go a long way towards = helping=20 refine ecosystem valuations and to improve cost = benefit=20 analysis of targeted investments in degraded = ecosystems=20 to boost political and financial support for = this=20 nature-based approach.=20

One of the primary aims is to see how = pro-poor=20 markets can be created that generate income for = those in=20 desperate need while conserving the life support = systems=20 upon which they and the rest of the world = depend.=20

Currently, most of the good and services = provided by=20 ecosystems have little or no market value = despite their=20 importance in the economic lives of communities, = nations=20 and the globe.=20

It has been calculated that tropical forests = are=20 worth some $60 billion a year as a result of = their=20 carbon removal activities alone which are = helping in the=20 fight against global warming.=20

But these forests, found in countries like = the=20 Democratic Republic of Congo or Indonesia, are = only=20 valued as timber resources rather than for their = even=20 more valuable carbon sequestration services.=20

Thus governments and local people have less = incentive=20 to conserve them and more incentive to cut them = down.=20

Mr Toepfer said the Millennium Ecosystem = Assessment=20 and other reports released during the year have = made=20 compelling economic cases for conserving = ecosystems and=20 for carrying out targeted investments in = restoring=20 degraded ones.=20
Valuing Natural Capital and Ecosystems=20
New figures show that an intact wetland in = Canada is=20 worth $6,000 a hectare versus $2,000 a hectare = for one=20 cleared for intensive agriculture.=20
Intact tropical mangroves, coastal ecosystems = that=20 are nurseries for fish, natural pollution = filters and=20 coastal defenses, are worth around $1,000 a = hectare.=20 Cleared for shrimp farms, the value falls to = around $200=20 a hectare.=20
The Assessment also puts a value on peat bogs = and=20 marshlands. It estimates that the Muthurajawela = Marsh, a=20 more than 3,000 hectare coastal bog in Sri = Lanka, is=20 worth an estimated $5 million a year as a result = of=20 services such as local flood control.=20
Losses as a result of damage by alien = invasive=20 species in the Cape Floral region of South = Africa is=20 calculated at around $2,000 a hectare.=20
The annual recreational value of coral reefs = in the=20 six Marine Management Areas of the Hawaiian = islands=20 ranges from $300,000 to tens of millions of = dollars a=20 year.=20
Studies from Algeria, Italy, Portugal, Syria = and=20 Tunisia also point to the value of intact = forests.=20
These estimate that the value of the timber = and=20 fuel-wood from a forest is worth less than a = third when=20 compared with the value of their services such = as=20 water-shed protection and recreation to the = absorption=20 of pollutants like greenhouse gases.=20
The burning of 10 million hectares of = Indonesia's=20 forests in the late 1990s cost an estimated $9 = billion=20 as a result of factors including increased = health care=20 and tourism losses.=20
There are also new findings on the link = between the=20 spread of disease and environmental destruction. = The=20 provision of treated bed nets, the better = availability=20 of low cost anti-malarial drugs and the = development of=20 vaccines are crucial but so are healthy = ecosystems.=20
Studies in the Amazon by researchers at Johns = Hopkins=20 University in the United States have concluded = that for=20 every one per cent increase in deforestation, = there is=20 an eight per cent increase in the number of=20 malaria-carrying mosquitoes.=20
This has implications for human health but = also to=20 economic development. It is calculated that = Africa's=20 Gross National Product (GNP) in 2000 could have = been 25=20 per cent or $100 billion higher if malaria had = been=20 eradicated 35 years ago.=20
Investing in Ecosystems to Meet the = Millennium=20 Development Goals on Poverty, Health, Women and = Water=20
Research indicates that investing in nature = can=20 provide an excellent rate of return and help = meet the=20 internationally agreed development goals.=20
Every dollar invested in fighting land = degradation=20 and desertification may conservatively generate = over=20 three dollars in economic benefits helping to = fight=20 poverty among the millions living on fragile = lands.=20
Money could be spent on such traditional and = soil=20 conserving features like terracing.=20
Meanwhile every dollar spent on delivering = clean=20 water and sanitation is likely to give = impressive rates=20 of return of up to $14. It indicates that in = some cases=20 the income of the very poor could be boosted = fourteen=20 fold.=20
Here the economic benefits arise from areas = including=20 reduced health care costs, increased = productivity=20 because of workers spending less time searching = for=20 water and improved school attendance.=20
Conservation of habitats and ecosystems are = also cost=20 effective when compared with the short term = profits from=20 environmentally damaging activities such as = dynamite=20 fishing, mining and sedimentation as a result of = deforestation in the interior.=20
A study of coral reefs in the Caribbean = indicates=20 that sustainable harvesting of coral fish for = food and=20 industries such as the pet and aquaria trade may = be=20 worth $300 million a year, coral-based tourism = just over=20 $2 billion annually and shoreline protection = from reefs=20 up to $2.2 billion a year.=20
However, these economic benefits are = threatened by=20 damage and degradation amounting to between $350 = million=20 and $870 million a year. Overall for every = dollar=20 invested in coral reef conservation economic = returns=20 will total up to $5.=20
Meanwhile the carbon storage or = =93sequestration=94=20 potential of forests ranges between $360 and = $2,200 per=20 hectare which makes them worth far more than if = they are=20 converted to grazing or cropland.=20
Indeed once carbon reaches over $30 a ton it = becomes=20 far more cost effective to conserve forests than = to=20 clear them.=20
Natural capital also serves as back up = against=20 calamities such as droughts or crop failures. = Studies=20 from Brazil show that farmers in the Amazon=92s = Tapajos=20 National Park turn to forests products such as = nuts and=20 berries when crop yields tumble.=20
In other words, the forest acts as a kind of=20 nature-based insurance policy for those denied = access to=20 formal insurance and financial markets.=20
Notes to Editors=20
Creating Pro-Poor Markets for Ecosystem = Services=20

A High-Level Brainstorming Workshop 10 =96 12 = October=20 2005, London School of Economics, United Kingdom =

Organized by UNEP through its Division of=20 Environmental Conventions and Division of Policy = Development and Law, UNEP in conjunction with = the LSE.=20
=
http://www.unep.org/dec/support/mdg_meeting_lon.htm=20

For More Information Please Contact=20

Nick Nuttall, UNEP Spokesperson, on Tel: 41 = 79 596=20 5737 or E-mail: nick.nuttall@unep.org=20

UNEP News Release=20

Further Resources

High-Level=20 Brainstorming Workshop 10 =96 12 October = 2005=20 London , United Kingdom
Web site = for=20 more information.

=93In= vesting=20 in Development: A Practical Plan to = Achieve the=20 Millennium Development Goals=94 =
Report of=20 the UN Millennium Project [PDF file = 3370KB]=20

Workshop=20 for MEAs on Mainstreaming Environment = Beyond MDG=20 7 ,July 2005, Nairobi, Kenya=20

Millennium=20 Ecosystem Assessment (MA) =
Ecosystems and=20 Human Well-being: Opportunities and = Challenges=20 for Business and Industry

UNDP/UNEP=20 Poverty and Environment Initiative (PEI) =

World=20 Resources 2005 -- The Wealth of the = Poor:=20 Managing ecosystems to fight poverty=20

UNEP=20 Poverty and Environment Unit=20

Nature=92s=20 Capital at Centre of Poverty Eradication =
Editorial by Klaus Toepfer, UNEP = Executive Director 2005 World Summit = Must be Red=20 Ribbon Day for Environment =

=93Natural=20 Capital=94 Investment or Higher Costs = and Lower=20 Profits
New Millennium Ecosystem = Assessment Report Urges Corporations to = Face=20 Environmental Challenges and Maximize = Green=20 Opportunities (UNEP Press Release, July = 2005 )=20

Green Room=20
A collaborative effort by a = range of=20 partners from the UN family, the NGO = community,=20 and beyond, to communicate the central = role of=20 environmental sustainability in = development=20 planning=20 =

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