As communities, governments and corporations acknowledge the unavoidable reality that our planet is facing devastating ecosystem loss, a debate is emerging about the best way to value and incentivise the protection of nature.
One argument put forward by governments, corporations and even some environmentalists, is that “We need to put a price on nature to appreciate its value.” The thinking is that once nature is monetised, market forces will ensure that if it valuable enough, it will be protected.
The movement towards “Payments for Ecosystem Services” or PES follows this logic. But when extended into the marketplace, international commodity and financial traders in London, New York and Tokyo come to view these new “asset classes” as tradeable goods like any other. These ecosystem “services” are to be bought, sold, valued and manipulated according to the most profit they can make – no matter what the impact on the communities and ecosystems that they are connected to. The “herding” behaviour of commodity traders, where they often join stampedes to buy into or abandon products means that prices can go up and down in extremes – and this instability is a disaster for the environmental security that they claim to serve.
Now the concept of “biodiversity offsets” means that companies that destroy one ecosystem can claim to clear their consciences by “buying” cheap ecosystem services elsewhere to compensate. This mathematical approach fails to acknowledge the inherent value of the communities and ecosystems that have been destroyed. Instead of saving the planet’s biodiversity, this presents a path to halving it.
In his article below, George Monbiot argues that putting a price on the nature that provides us with the very air we breathe, water we drink, and soil on which we stand, is the most dangerous privatisation of all. There is simply no way that the many many intrinsic benefits of nature can be accurately valued, and no way that the international marketplace can be trusted to ensure its protection. It is the most extreme threat to the Earth’s commons that we all have a right to share.
But disappointingly, Tony Juniper responds that putting a price on nature is the only way to save it, as it is the only way to bring those who don’t appreciate its value to an ecological way of thinking.
This is a debate that is only going to grow. The financialisation of nature is likely to become yet another path to “development” that African governments may be encouraged to take up. We would be wise to be wary of its false promise.
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1. Putting a price on the rivers and rain diminishes us all
George Monbiot in The Guardian
Date: Monday 6 August 2012
http://www.guardian.co.uk/commentisfree/2012/aug/06/price-rivers-rain-greatest-privatisation
2. We must put a price on nature if we are going to save it
Tony Juniper in The Guardian.
Date: Friday 10 August 2012
http://www.guardian.co.uk/environment/2012/aug/10/nature-economic-value-campaign
3. The Financialisation of Nature: linking food, land grabs, climate & mining
Teresa Anderson for the Gaia Foundation blog.
Date: 10 November 2012
http://www.gaiafoundation.org/blog/the-financialisation-of-nature-linking-food-land-grabs-climate-mining
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1. Putting a price the rivers and rains diminishes us all
George Monbiot in The Guardian
Date: 6 August 2012
http://www.guardian.co.uk/commentisfree/2012/aug/06/price-rivers-rain-greatest-privatisation
Payments for “ecosystem services” look like the prelude to the greatest privatisation since enclosure…
The first man who, having enclosed a piece of ground, bethought himself of saying ‘This is mine’, and found people simple enough to believe him, was the real founder of civil society. From how many crimes, wars and murders, from how many horrors and misfortunes might not anyone have saved mankind, by pulling up the stakes, or filling up the ditch, and crying to his fellows, ‘Beware of listening to this impostor; you are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody’.”
Jean Jacques Rousseau would recognise this moment. Now it is not the land his impostors are enclosing, but the rest of the natural world. In many countries, especially the United Kingdom, nature is being valued and commodified so that it can be exchanged for cash.
The effort began in earnest under the last government. At a cost of £100,000, it commissioned a research company to produce a total annual price for England’s ecosystems. After taking the money, the company reported – with a certain understatement – that this exercise was “theoretically challenging to complete, and considered by some not to be a theoretically sound endeavour”. Some of the services provided by England’s ecosystems, it pointed out, “may in fact be infinite in value”.
This rare flash of common sense did nothing to discourage the current government from seeking first to put a price on nature, then to create a market in its disposal. The UK now has a natural capital committee, anEcosystem Markets Task Force and an inspiring new lexicon. We don’t call it nature any more: now the proper term is “natural capital”. Natural processes have become “ecosystem services”, as they exist only to serve us. Hills, forests and river catchments are now “green infrastructure”, while biodiversity and habitats are “asset classes” within an “ecosystem market”. All of them will be assigned a price, all of them will become exchangeable.
The argument in favour of this approach is coherent and plausible. Business currently treats the natural world as if it is worth nothing. Pricing nature and incorporating that price into the cost of goods and services creates an economic incentive for its protection. It certainly appeals to both business and the self-hating state. The Ecosystem Markets Task Force speaks of “substantial potential growth in nature-related markets – in the order of billions of pounds globally”.
Commodification, economic growth, financial abstractions, corporate power: aren’t these the processes driving the world’s environmental crisis? Now we are told that to save the biosphere we need more of them.
Payments for ecosystem services look to me like the prelude to the greatest privatisation since Rousseau’s encloser first made an exclusive claim to the land. The government has already begun describing land owners as the “providers” of ecosystem services, as if they had created the rain and the hills and the rivers and the wildlife that inhabits them. They are to be paid for these services, either by the government or by “users”. It sounds like the plan for the NHS.
Land ownership since the time of the first impostor has involved the gradual accumulation of exclusive rights, which were seized from commoners. Payments for ecosystem services extend this encroachment by appointing the landlord as the owner and instigator of the wildlife, the water flow, the carbon cycle, the natural processes that were previously deemed to belong to everyone and no one.
But it doesn’t end there. Once a resource has been commodified, speculators and traders step in. The Ecosystem Markets Task Force now talks of “harnessing City financial expertise to assess the ways that these blended revenue streams and securitisations enhance the ROI [return on investment] of an environmental bond”. This gives you an idea of how far this process has gone – and of the gobbledegook it has begun to generate.
Already the government is developing the market for trading wildlife, by experimenting with what it calls biodiversity offsets. If a quarry company wants to destroy a rare meadow, for example, it can buy absolution by paying someone to create another somewhere else. The government warns that these offsets should be used only to compensate for “genuinely unavoidable damage” and “must not become a licence to destroy”. But once the principle is established and the market is functioning, for how long do you reckon that line will hold? Nature, under this system, will become as fungible as everything else.
Like other aspects of neoliberalism, the commodification of nature forestalls democratic choice. No longer will we be able to argue that an ecosystem or a landscape should be protected because it affords us wonder and delight; we’ll be told that its intrinsic value has already been calculated and, doubtless, that it turns out to be worth less than the other uses to which the land could be put. The market has spoken: end of debate.
All those messy, subjective matters, the motivating forces of democracy, will be resolved in a column of figures. Governments won’t need to regulate; the market will make the decisions that politicians have ducked. But trade is a fickle master, and unresponsive to anyone except those with the money. The costing and sale of nature represents another transfer of power to corporations and the very rich.
It diminishes us, it diminishes nature. By turning the natural world into a subsidiary of the corporate economy, it reasserts the biblical doctrine of dominion. It slices the biosphere into component commodities: already the government’s task force is talking of “unbundling” ecosystem services, a term borrowed from previous privatisations. This might make financial sense; it makes no ecological sense. The more we learn about the natural world, the more we discover that its functions cannot be safely disaggregated.
Rarely will the money to be made by protecting nature match the money to be made by destroying it. Nature offers low rates of return by comparison to other investments. If we allow the discussion to shift from values to value – from love to greed – we cede the natural world to the forces wrecking it. Pull up the stakes, fill in the ditch, we’re being conned again.
Twitter: @GeorgeMonbiot
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2. We must put a price on nature if we are going to save it
Tony Juniper in The Guardian. Date: Friday 10 August 2012
http://www.guardian.co.uk/environment/2012/aug/10/nature-economic-value-campaign
Campaigning against economic valuations could inadvertently strengthen the hand of those who believe nature has little or no worth…
Recent calculations of the economic value of nature and ecosystem services have caused many environmentalists to react negatively. They point to the risk of a progressive “privatisation” and “commodification” of nature, and argue that society should appreciate the intrinsic values of nature – nature for its own sake. Putting a ‘price on nature’ will create more enclosures whereby the public benefits derived from ecosystems will be seized by corporations and other private interests.
The new discourse about “natural capital” is seen by some as another step towards the degradation of the biosphere. George Monbiot wrote is such terms this week. He argued:
Rarely will the money to be made by protecting nature match the money to be made by destroying it. Nature offers low rates of return by comparison to other investments. If we allow the discussion to shift from values to value – from love to greed – we cede the natural world to the forces wrecking it.
But to paint such a one-sided picture is a dangerous game. For decades campaigners have fought for the protection of nature for its own sake, and while there has been notable progress (seen for example in the rapid increase in protected areas worldwide, which will hopefully continue irrespective of purely economic evaluations), the overall trends have not been encouraging.
The destruction of unprotected forests, loss of soils, depletion of aquifers, extinction of animals and plants and plunder of the oceans has continued apace. It seems that the moral argument has gained insufficient traction, and that in the absence of new frames continuing population and economic growth will cause more damage.
One source of hope comes from the growing realisation that nature is essential for economic development. The message is clear: without nature the economy is nothing. That penny is beginning to drop in various important places, and could soon lead to a new era of policy-making. One in which ecology and economics go hand in hand, but only if we have the tools to build bridges between these worlds that are so alien to each other. And that is where the economic valuation of nature can come in.
By appreciating that nature is vital for economics, and has measurable tangible financial values, it is possible to get the attention of people who have at best hitherto regarded nature a supplier of resources, or worse still an economically costly distraction that gets in the way of economic ‘growth’. Making the moral case in the face of such beliefs won’t work. If, on the other hand, such scepticism can be met with economically compelling logic, then we might get a bit further.
There are of course ecological values (like beauty and the very fact that things exist) that sometimes cannot be assigned financial values, and should be protected by the law, policy and public backing rather than through markets.
There are certainly dangers that come with financial values being attached to natural systems. These might be seen in how countries choose to reflect the value of ecosystems (like forests) that indigenous people rely on and have ancestral rights over (or should do). Those dangers need to be managed with regulations and other safeguards when, for example, those same forests are deemed as financially valuable in supplying a distant city with water, and when managing that water affect the rights of the people in the forest. There are risks but just outcomes can be secured.
While I am alarmed at how some environmentalists reject the economic valuation of nature, I am more alarmed still at how such a position can appear similar to those with deeply sceptical views about whether we should protect the environment in the first place. Nigel Lawson, the arch climate change denier, is like many environmentalists dead against putting financial values on nature. He knows well that if this happens then economics would have to change in fundamental ways requiring new government policies, changes to how capital is invested and shifts in consumption patterns. By campaigning against the valuation of ecosystem services, some campaigners could inadvertently strengthen the hand of those who believe nature has little or no value, moral, economic or otherwise.
And it seems to me there is not a choice here. I have spent the past 25 years campaigning for nature for its own sake, because it is beautiful, because it should exist for its own reasons and because we have no right to destroy it. I have found that not everyone agrees with that though, and while I am trying to convince them, more forests are cleared, oceans polluted and greenhouse gases released.
We could carry on like this, with ideological purity preserved (on all sides), or we could open a new discourse, one that requires the sceptics to meaningfully engage, and on the field where future environmental battles will be won and lost – the field of economics. After all, it is not most environmentalists who have misunderstood the realities that come with ‘growth’ a finite Earth, but most economists.
• Tony Juniper’s book on the value of ecosystems for economies, What has Nature ever done for us? will be published in January
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3. The Financialisation of Nature: linking food, land grabs, climate & mining
Teresa Anderson for the Gaia Foundation blog.
Date: 10 November 2012
Rising food prices, land grabbing, biofuels, carbon offsets, mining… In recent years, many of us in the Gaia and African Biodiversity Network (ABN) family have felt as if the threats to communities and ecosystems are not only intensifying, but multiplying. Sometimes it feels like we are constantly racing to keep up, to analyse and challenge endless new threats, which seem to come from every direction.
Is it our imagination, we have asked ourselves, or have things got crazier than ever in the last few years? And could there be a link or common cause between all these disparate issues?
I recently went to a meeting that seemed to answer these questions and more. The Paris conference on “The Financialisation of Natural Resources”, hosted by an alliance of European civil society groups, was a fascinating opportunity to make the connections between our many areas of work.
Essentially, the 2008 collapse of financial markets has meant that investors who profit from buying and selling commodities have made huge losses. Their need to recoup their losses has led them to create new markets, accelerating a drive to create new products and spread their risk.
This has led them to view nature: ecosystems, water, minerals, food, land and even the very air we breathe, as potential new products. And they don’t just sell or privatise the products themselves, but go beyond this to create “financialised” assets, or “derivatives”. This might include betting on futures markets, hedging against inflation, speculating on contracts, or even betting on weather in relation to future crop production. Often the value of these financialised assets seem far removed from the value of the original product, but this nonetheless drives the hunger for control over nature and to turn her into a financial resource.
This “financial enclosure of the commons” means that financial speculators based in European and US banks, often investing for pension funds and hedge funds, are treating food as a commodity to bet on, leading to disastrous price volatility and global food crises. They speculate on agricultural land ownership, even if they don’t intend to develop it, and this is driving African land grabs. The global carbon offsets market is seen as having huge potential for creating financial products which are pretty much based on abstract air (carbon offsets are literally a bet on avoiding projected carbon emissions against a disputable, or unknowable, baseline.) The drive to create financialised products based on oil, coal and minerals is driving mining into new territories more aggressively than ever. Water, as one of our most precious resources, is regarded as having huge potential for privatisation, tradeable rights and financialised products. And now there are new efforts to create offsets based on habitats and ecosystems, which would essentially allow companies to destroy one ecosystem, as long as they pay for the preservation of another ecosystem elsewhere.
For me, seeing these links has been a revelation, an insight into the murky world that has been pulling the invisible strings in our lives and work. So how can understanding this “assetisation” of nature help civil society groups to stop the food crises, the land grabs, the destruction of our climate and ecosystems?
African governments are currently all too willing to fall for the narrative told by Western governments, that these “investments” will bring benefits to Africa. Perhaps they might see things differently if they realised that what is driving these mining, land grabbing and carbon offsetting “investments”, is simply a need for pension fund managers and hedge fund millionaires to spread their risk after the 2008 crash.
Those of us in the countries where these investors are based, must recognise that pension funds are one of the key drivers of this destruction. This financialisation of nature therefore needs urgent regulation. Millions of normal, good, ethical people invest in pensions – how would they feel if they knew about the social and environmental devastation that their pensions are having on their brothers and sisters in the South?
These are all potential strategies for civil society groups to think about, as we try to address the root cause of the multiplying threats to Africa’s communities and ecosystems.
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