High-Level Panel hits biodiversity loss with cost-benefit analysis

The all-important High-Level Panel report on the costs of delivering the Aichi Targets on Biodiversity should have ended on page 44. It does a great job of analysing resource needs but should have resisted the temptation to stray beyond its mandate into a cost-benefit analysis.

The Conference of the Parties (COP11) to the UN Convention on Biological Diversity which ends in Hyderabad on Friday needs a much sharper jolt to its financial stupor.

As a former investment banker, the Chair of the Panel, Pavan Sukhdev, should be aware that cost-benefit analysis doesn’t work when systems are in collapse, whether financial or ecological.

The welcome virtue of this report – A First Assessment of the Resources Required for implementing the Strategic Plan for Biodiversity 2011-2020 – is its honesty in interpreting the 20 Aichi Targets within an agenda of global sustainable development that goes far beyond the authority of this Convention.

Ministers are not being told that the demand for $150-$440 billion per annum relates to their obligations that go under the neat heading of biodiversity. Too often we’re brow-beaten with sectoral estimates to eliminate hunger, adapt to climate change, provide safe drinking water – as though such vital needs exist in isolation.

The Sukhdev Panel bends over backwards to stress that “these resource requirements neither should nor could be met by biodiversity finance alone.” Indeed, the report offers biodiversity decision-makers in Hyderabad several juicy get-out-of-jail cards such as “climate change adaptation funds will be a key target for enhancing coral reef resilience.”

It goes on to observe that the targets “are essential for biodiversity conservation but deliver much wider benefits to society as a whole (e.g. sustainable agriculture, fisheries and pollution control).”

These and many other cautionary notes about the cost estimates are repeated at intervals throughout the report, together with reference to the need for “further research.”

Such caveats may provide ministers from the richer countries with a licence for inaction. I fear that Friday may bring finance for research rather than finance to deliver the Targets.

This risk seems fair enough because it’s grounded in logic and reality. It’s the final section on “Benefits of meeting the Aichi Biodiversity Targets” which introduces the language of “investment in natural capital” and “value of ecosystem services.” We are led inexorably to the resounding conclusion that “benefits are likely significantly to outweigh costs.”

Many of the benefit numbers are sourced from recent work of The Economics of Ecosystems and Biodiversity (TEEB), a series of economic research reports founded by Mr Sukhdev. TEEB has produced some immensely valuable ideas for introducing die-hard economists to the natural world on which we all depend. But it’s an incomplete science whose failings impinge on this vital UN process.

If economics and biodiversity are to be bedfellows, let’s do it properly. The analogy that drives TEEB is that ecosystems behave like a bank, a store of capital from which we derive a valuable return.

But TEEB fails to complete the loop of its analogy. If bank capital degrades below a critical threshold, the failure of the business topples other banks, such is their interdependence. Degraded ecosystems have the same characteristic.

And we should keep in mind that landmark 2009 analysis of nine planetary boundaries by the Stockholm Resilience Centre. The rate of loss of biodiversity is so far beyond its boundary that it won’t fit into the graphic.

The costs of delivering the Aichi Targets should not therefore be presented as though COP11 is meeting to assess a proposal to build a new airport. They are the biodiversity equivalent of recapitalising the banks when they collapsed in 2008.

Remember that well-worn phrase from the bail-out crisis G20 meeting in London: “we will do whatever is necessary.” It’s the same with our ecosystems now in intensive care. The cost of restoration is academic – although it is much less than the cost of rescuing the banks.

I fear that the architects of this High-level Panel report may suffer the same judgment of history now cast on those responsible for global economic management circa 2008. Masterful in their grasp of everything except the one piece that really matters.

That’s the problem with the TEEB approach. It’s selective in its application of monetary economics to biodiversity. Until it corrects the blind-spot on the significance of boundaries, it will have few takers.

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Resourcing the Aichi Biodiversity Targets – Report of the High-level Panel

Background briefings on Biodiversity

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