Posts Tagged ‘Commodification’

Sharing nature’s bounty or managing the services provided by natural capital?

Tuesday, August 7th, 2012

In an article in the Guardian, a UK newspaper, George Monbiot, takes a hit on ecosystem services and natural capital.

He finds the current shift in vocabulary very worrying:

  • Nature has become natural capital
  • Natural processes have become ecosystem services, as they exist only to serve us.
  • Ecosystems (hills, forests, river catchments, etc.) are now green infrastructure
  • Biodiversity and habitats are now asset classes within an ecosystem market
  • He basically argues that all the hype around these new terms and concepts carries with it the privatization of nature. He uses private ownership of land, exemplified by the enclosure of the commons, as an illustration of that privatization process.

    Enclosure Act for Shifnal, 1793

    Land ownership (…) 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.

    His message is clearly stated, but it is not new. In fact, this has been a constant worry of all those involved in the growing incorporation of biodiversity, ecosystems, and ecosystem services into decisions affecting our environment. This includes both public bodies such as local governments involved in land planning, and private entities such as NGOs looking for extra funding or businesses trying to manage their dependency or impacts on natural resources and ecological processes.

    His critique focuses on the idea that only by giving a monetary value to the ecosystem services provided by natural capital can we internalize them into our decisions. This is one way forward, but because it assumes that natural capital is thus interchangeable with human or financial capital, it carries the risks outlined by the article. Another approach is to identify which bits of our natural capital are not exchangeable (fungible), and adopt a no net loss approach to their management.

    Managing our natural capital: No Net Loss vs. Monetization

    No net loss of natural capital has been one of the guiding principles of environmental legislation and is generally translated into regulations – such as the European Habitats Directive – than impose a sequence of steps aimed at avoiding, reducing, and offsetting impacts on natural capital.

    Concerning offsets, George Monbiot clearly does not trust environmental authorities to give priority to avoiding over reduction and offsetting of impacts.

    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.

    He is probably right. Would impacts have been avoided if offsets had not been possible through this pilot scheme? Probably. Is that a good enough reason to give in? Maybe.

    George Monbiot takes the creation of the UK’s Natural Capital Commitee as a symbol of the worrying trend towards a gradual monetization, and thus privatization, of nature and natural processes. Let’s hope we can get a bit of no net loss principles in there…

    Non-market environmental commodities – what else?

    Friday, October 2nd, 2009

    The debate continues on finding appropriate units of biodiversity and ecosystem services to which value can be assigned.

    The value can be monetary but not necessarily. In fact, many policy instruments that aim to incorporate ecosystem services or biodiversity into cost-benefit analyses do not require that landscapes, ecosystems or species be assigned a price tag. The recent EU directive on environmental liability (2004/35/EC) or the US Oil Pollution Act are example where impacts on ecosystems are compensated for by restoring equivalent resources (biodiversity) and services rather than “paying what they are worth”. Nevertheless, monetary valuation techniques such as contingent valuation are still very much in use.

    In the context of contingent valuation, as well as in the case of like-for-like compensation required under directive 2004/35/EC, finding appropriate “non-market environmental commodities” that can be valued, substituted or replaced is all the hype.

    James Boyd and Alan Krupnick of Resources for the Future recently published a discussion paper on the subject:

    A virtue of market commodities (if you’re an analyst) is that markets not only yield prices, they define units of consumption. A grocery store is full of cans, boxes, loaves, and bunches. The number of these units bought yields a set of quantity measures to which prices can be attached.

    A key challenge faced by nonmarket economists is clarification of the nonmarket commodities that yield utility. Nature presents us with many possible units to choose from.

    Should we use the units governments monitor? Should we use units used in economic studies? The ones used by ecologists? Should we use what laypeople tell us matters most to them?

    In the paper, Boyd and Krupnick explore the non-market environmental commodities to which monetary values are attached and offer a set of principles to guide the selection of such commodities. Their analysis is based on the “ecological production theory” that was introduced by Boyd and Banzhaf in 2006 (pdf). What else?

    Can ecosystems be decomposed into commodities? Should they?

    Can ecosystems be decomposed into commodities? Should they?