The Color of Eco-Money: Ecosystem Services and the Value of Being Green

Calculating the dollar value of a healthy environment is necessary for rational policy-making

In his 1949 book A Sand County Almanac: And Sketches Here and There, American ecologist Aldo Leopold asserted, "We abuse land because we regard it as a commodity belonging to us."

But perhaps he was wrong. It could very well be that we abuse land precisely because we don't regard it is as a commodity. That's the premise behind the valuation of "ecosystem services," an idea that has been gaining traction.

In a paper published this week in the journal Environmental Health Perspectives, science writer David Holzman makes the case for placing an actual numerical economic value on healthy ecosystems that "provide us with fertile soil, clean water, timber, and food." But that's not all the value they provide. "They reduce the spread of diseases," Holzman notes. "They protect against flooding. Worldwide, they regulate atmospheric concentrations of oxygen and carbon dioxide. They moderate climate. Without these and other 'ecosystem services,' we'd all perish."

MOVING TARGET: FROM INCALCULABLE COSTS TO CALCULABLE BENEFITS

In his Special Message to the Congress Proposing Measures To Preserve America's Natural Heritage, delivered on February 23, 1966, President Lyndon B. Johnson said, "Economists estimate that this generation has already suffered losses from pollution that run into billions of dollars each year. But the ultimate cost of pollution is incalculable."

To be sure, conservation and environmental protection were essential elements of Johnson's dream of a "Great Society." But while he focused on the incalculable costs of the bad things we do to the environment, today's ecologists are increasingly thinking like economists and changing the debate from costs to benefits, i.e., the financial value of maintaining a healthy and naturally functioning environment.

Holzman, for example, noted a big number put forth by Dolf de Groot, head of the Research Program on Integrated Ecosystem Assessment and Management at Wageningen University in the Netherlands, who said, "Every year we lose three to five trillion dollars' worth of natural capital, roughly equivalent to the amount of money we lost in the financial crisis of 2008–2009."

In 1997, DeGroot co-authored an international study published in the journal Nature that sought to make a global "eco-economic" assessment:

"The services of ecological systems and the natural capital stocks that produce them are critical to the functioning of the Earth’s life-support system. They contribute to human welfare, both directly and indirectly, and therefore represent part of the total economic value of the planet. We have estimated the current economic value of 17 ecosystem services for 16 biomes, based on published studies and a few original calculations. For the entire biosphere, the value (most of which is outside the market) is estimated to be in the range of US$16–54 trillion (1012) per year, with an average of US$33 trillion per year. Because of the nature of the uncertainties, this must be considered a minimum estimate. Global gross national product total is around US$18 trillion per year."

WELL, WHEN YOU PUT IT THAT WAY

Mention the financial crisis and most members of the 99% will sigh a deep recognition of the powerful negative effect it caused on saving accounts, IRAs and balance sheets. But mention de Groot's multi-trillion-dollar figures to those same people, and most will just glaze over, perhaps mildly concerned, but not enough to significanltly change any of their behaviors that may contribute to all that environmental destruction. Because the former was and is felt on a personal level. The latter is more abstract, part of a shared self-destruction that is, like the national debt, a problem for some future generation.

Perhaps finding a more direct one-to-one ratio will help. Holzman says that one way to valuate an ecosystem service is to estimate the replacement cost of the least expensive technological "fix" that would be required to replace the lost service.

"New York City recently paid landowners in its watershed more than $1 billion to change their farm management practices to prevent animal waste and fertilizer from washing into the waterways," he notes. "In doing so, the city avoided spending $6–8 billion on a new water filtration plant and $300–500 million annually to run it—the replacement cost of the natural filtration provided by waterways."

TWO WOLVES, SEVEN BILLION BATTEGROUNDS

In his special message to Congress, President Johnson said, "To sustain an environment suitable for man, we must fight on a thousand battlegrounds. Despite all of our wealth and knowledge, we cannot create a redwood forest, a wild river, or a gleaming seashore. But we can keep those we have." What Johnson didn't realize is that the fight for sustainability must actually be fought on billions of battlegrounds—the individual battlegrounds that exist within each and every human being.

The Cherokee proverb of the "two wolves" explains this fundamental internal battle:

An old Cherokee is teaching his grandson about life. "A fight is going on inside me," he said to the boy.

"It is a terrible fight and it is between two wolves. One is evil—he is anger, envy, sorrow, regret, greed, arrogance, self-pity, guilt, resentment, inferiority, lies, false pride, superiority, and ego." He continued, "The other is good—he is joy, peace, love, hope, serenity, humility, kindness, benevolence, empathy, generosity, truth, compassion, and faith. The same fight is going on inside you—and inside every other person, too."

The grandson thought about it for a minute and then asked his grandfather, "Which wolf will win?"

The old Cherokee simply replied, "The one you feed."

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NOTES

Leopold, Aldo. A Sand County Almanac: And Sketches Here and There. New York: Oxford University Press, 1949. p. xviii.
Holzman, David C. Accounting for Nature's Benefits: The Dollar Value of Ecosystem Services. Environmental Health Perspectives. 120:a152-a157. April 1, 2012. Accessed April 4, 2012.
Johnson, Lyndon B. Special Message to the Congress Proposing Measures To Preserve America's Natural Heritage. American Presidency Project. February 23, 1966. Accessed April 4, 2012.
Ibid., 2.
Costanza, Robert, et. al. The value of the world’s ecosystem services and natural capital. Nature. Vol. 387. May 1997. Accessed April 7, 2012.
Ibid., 2
Ibid., 3.
First People - The Legends. Cherokee Legend of Two Wolves. November 16, 2004. Accessed April 5, 2012.

image: In Rob Carter's solo exhibition Faith in A Seed, miniature replicas of three 19th Century estates—Charles Darwin's Down House, Henry David Thoreau's cabin at Walden, and Sir John Bennet Lawes' Rothamsted Manor—will slowly disappear, overtaken by the gardens in which they reside. The transformation will occur over the course of the five-week exhibition at Art in General from April 13 through June 23, 2012.