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Thursday, July 15, 2010

What is the World Worth? An Economist values Nature

With thanks to Miss Eagle for alerting me to this forthcoming Lecture Tour.
When she emailed me today, about this I immediately asked:
  • Its about time someone started asking the right questions.
Her reply owes much to Adam Smith, of course:
  • Denis, one little economic rule of thumb is scarcity+demand = value.
  • If you keep promoting the little blue friend on your blog with continued reference to its scarcity then the scarcity and demand components might be in sufficient quantity to give the little thing a quantifiable value.
***** ***** *****
I can but live in hope.
Meanwhile, if you can make it to one of these Lectures
I am sure it would be worthwhile.
***** ***** *****

Hosted by the Centre for Policy Development

What is the World Worth?

Pavan Sukhdev

Sydney 3 August | Canberra 4 August | Melbourne 5 August

The BP oil spill, which is dumping around 60,000 barrels of crude into the Gulf of Mexico every day, is a tragic example of the environmental destruction business activity can cause.

Cleaning up the coast and compensating for lost income will be expensive, yet these costs are small compared to the impact of this disaster on ecosystems.

Pavan Sukhdev, pioneering economist and head of the UN Green Economy Initiative, is an expert on the natural capital that gets left off corporate balance sheets: the services that nature provides for “free”, like clean air, fresh water, healthy oceans, fertile soil and stable ecosystems. This week he warned that as long as we allow corporations to avoid paying the costs of environmental damage, CEOs will continue to take natural capital for granted - with dangerous results.

A senior business leader himself, working at UNEP on secondment from Deutsche Bank, Pavan recognises that the way we do business needs to change:
"We have created a soulless corporation that does not have any innate reason to be ethical about anything...So it's up to society and its leaders and thinkers to design the checks and balances that are needed to ensure that the corporation does not simply become cancerous."

So Pavan has been putting a price on nature, measuring the economic value of the world’s ecosystems - and the costs of losing them.

The numbers he has crunched so far are alarming. Global destruction of forests alone is costing the world's economies between US$2 & US$5 trillion a year. More can be found in The Economics of Ecosystems and Biodiversity Report for Business, released this week.

If the US Government had required what Pavan calls a "holistic economic assessment" before BP started offshore drilling, the estimates of ecosystem damage might have led to more stringent safety measures. As things stand, Pavan says "we only think about them after there is a problem, and then scurry about and chase our tails for a bit."

The BP oil spill is a powerful lesson in how NOT to protect nature's precious assets – and a reminder that neither business nor government can afford to bailout bankrupt ecosystems.

Book or register now to hear how we can avoid an environmental credit crunch that could see vital ecosystems collapse. We cannot afford to ignore Pavan’s ideas for the next generation of economics and environmentalism.

6:30pm Tuesday 3 August 2010
Sydney Opera House, Playhouse Theatre
Don't miss out. Tickets $25.
Call t: 02 9250 7777 or book online.

5pm Wednesday 4 August
Australian National University

Molongolo Theatre,
J G Crawford Building
132 Lennox Crossing 0200
This event is FREE.

5:30pm Thursday 5 August
Melbourne University
Law Building (GM15 Theatre), 185 Pelham St Carlton
This event is FREE. Register here

More ideas from CPD & Pavan Sukhdev


mick said...

An interesting idea but what a commentary on modern society. Must we really be able to put a price on something for it to be valued?

Denis Wilson said...

Aaah, yes, Mick.
That's economists for you.
Unless it has a price, it does not exist.
That's why fresh air and pure water are at risk.

Flabmeister said...


I will try to keep this brief, and hopefully only offend those who need offending!

While working in the UN system I attended a few talks by senior UN people. They tended to resemble travelogues: the speaker said where they had been, who they had met and what they did there. They thanked everyone in their filofax and sat down. Intellectual content: 0. This was OK when I just had to walk across 1st Avenue but I don't think I will make an 80km round trip and pay $25 for the privilege.

Not all economists require that everything is costed to demonstrate its value. Quite often a balance between marketed costs and benefits can be shown together with a list of unmarketable costs and benefits where it is clear that net market benefit of 'x' is to be balanced against a net non-market cost of 'y'. It spells things out for the decision maker but doesn't put a monetary value on (eg) an orchid.

What really gets my goat is when people claiming to be naturalists start raving about "conservation values". By using such crummy language they are joining those who believe the market is all that matters!

Here endeth the rant!


Denis Wilson said...

Hi Martin.
Plenty of room on my Blog for controversial opinions.
You have obviously been to too many International Conferences. You may be right about this one, but I hope you are a bit off the mark.
I shall not be attending, anyway - for reasons of keeping my carbon footprint down.
That's my excuse, anyway.
Re "Conservation Values", I sympathise with the conservationists who feel they need to speak in the language of the "dominant paradigm" - namely Economics. For that's what Politicians have been taught is the only way to measure the "value" of anything.
Mick's comment above, was spot on.
I personally blame John Stone (who you may or may not remember). Former Treasury Secretary, and a XYZ C. of monumentally bad influence on Fiscal Policy.
Personally I can look at my beloved Sun Orchid and "believe" in its intrinsic value, and its right to exist.
But will that persuade the Sydney Catchment Authority to not drain its last two known swamp habitats?
I doubt it.
That's the dilemma.
Now, if I took the South American Marxist view, I could surround the Swamp with "weapons that shoot in a sustained manner", but I would be carted away oh so quickly!
That's the first time I have had to re-word something to avoid the Security Services word scanners. Damn!
So, what it to be?
The language of Economics or chaotic, anarchistic defence of an endangered species?
I am too middle class to take to the Swamps in Khaki and a Beret to defend these little Beauties (even though I already have the Beard!)
For the Scrutineers of the Internet, despite what you might mistakenly think, I am a pacifist.

Denis Wilson said...

Hi Martin
I wrote an elaborate response. But the Internet Server blocked it, which is probably just as well.
My point is, ever since the likes of John Stone (former Treasury Secretary) asserted such dominance over Treasury, and Politics in general, the language of Economics has become the Dominant Paradigm.
So what can we environmentalists do?
Speak in their language, or take to the Swamps with "mechanised equipment for rapidly expelling small, hard projectiles"?
(That's my tribute to the Scanning devices apparently employed by the Internet Security people.)
I am too middle class and too unfit to take to the Swamps to defend my Sun Orchid beauties, a la a Latin American resistance Group.
I can stare at one of these Beauties, and believe it has intrinsic value and an inherent right to exist. But will that stop the Catchment Authority from draining the last two remaining known swampy habitats for this Orchid?
I doubt it.

Denis Wilson said...

Well, the first one re-appeared, after all.
So you can read what I really think.

Snail said...

I am never surprised but am consistently appalled that we need to impose ethical behaviour on corporations. That may simply reflect a lack of imagination on my part.

Martin, that's a really interesting point you make about buying into the notion of the supremacy of the market. But how do we redirect the focus back to intrinsic rather than monetary value? Have we gone too far along the track to turn back? (Sorry about the cliche!) I would hope that it is possible to redefine 'worth' but amd not sure how any more.

Sigh. At least we known that the oil companies in the Gulf of Mexico have a plan for the walruses.

Denis Wilson said...

Hi Snail
Your "sigh" is very evocative.
Re the Walrus plan, I had also heard that comment on that at least they have a rescue strategy for Walruses. Amazingly inappropriate, and ignorant. But somehow its nice to know they care!

Flabmeister said...

G'day Snail

In my more pragmatic moments I think we are a bit too far down the track to reverse. So I do from time to time try to work for change within the system - perhaps with the odd win.

Deep down however I wish that the views of Edward Abbey (eg those expressed soberly in Desert Solitaire or more flamboyantly in The Monkey Wrench Gang) had become society's driving force!


Anonymous said...

I can put on the khakis for you and guard the swamp lol I think the Sun Orchid has immense value, in fact more value than some poeple I know.

Denis Wilson said...

Thanks Captain Vine of the Khaki!
Stand by, in November 2010.