Andy Kerr - Nature Most Powerful Economic Engine

By Andy Kerr

Column #23 - Go to next column

Length: 744 words

Published: 5 June 1997, Wallowa County Chieftain

"If you don't cut it, dig it, pick it or pump it, it's not real wealth," an old logger once growled at me. His thesis was that all wealth comes from the Earth.

He conveniently ignored wealth that comes from the goods and services provided by human knowledge.

There is real economic value to you from the doctor who makes you well. Or from the musician who entertains you. Or the robots who make your car.

I wonder what would that old logger think of a new study published in the journal Nature (May 15) which noted that "(t)he biggest business in the world by far is nature." Expert scientists and economists looked at the value of "ecosystem services": the goods and services that nature provides us.

The scientists calculated the value to all humans provided from the soil, forest, marshes, oceans and species at $33 trillion (000,000,000,000). According to the World Bank, the total world output of goods and services last year was about $28 trillion.

They considered such factors as the recycling of nutrients by oceans, the pollination services of birds and insects, and the "air conditioning" provided by wild plants (air that is oxygen-rich, cool and clean).

The scientists tallied up all these goods and services and estimated what it would cost humans to replace what nature provides without charge.

Over-the counter medicines with plant extracts are estimated to be worth $84 billion annually. They estimated that yet-to-be discovered medicinal plants from tropical forests is valued at $147 billion.

Remember taxol, one of the most promising cancer-fighting compounds to come along in years? It was originally discovered in the Pacific Yew tree, heretofore considered a weed tree of no value by foresters.

The scientist who identified taxol in the laboratory said, "This molecule is so complex, only a tree could have thought of it." Once humans isolated taxol, modern technology allowed humans to synthesize the taxol molecule from other more common substances with great efficiency.

We suffer from what Garret Hardin called the Tragedy of the Commons. Ecosystem services are common goods, which benefit everyone. Problems arise when the benefits to an individual of abusing the commons for short-term personal gain is greater than the cost that individual will pay for such abuse in the long-term. Although the long-term cost far is greater in total, it is borne by, and therefore spread to, all.

Hardin used the example of a common grazing area, where the short-term marginal benefit of grazing more stock than the pasture could withstand was greater to each individual grazer, even thought the long-term cost of overgrazing would be paid by all.

While nature provides us with all these critically important ecosystem services, a market economy doesn't well recognize them. For example, it is difficult for an individual forest landowner to capture the economic benefit to the common good of watershed protection provided by not logging. A greater economic return to the owner is to cut down the trees, even though it might end up costing society more to replace or mitigate the ecosystem services lost by logging.

While nature provides these services without charge, she does charge us when we abuse her.

The taxpayers are funding the mitigation of stream-killing acid drainage from mines that haven't produced an ounce of gold for a hundred years.

Global warming of the atmosphere is causing higher ocean levels, worse hurricanes, more severe (including colder winters and hotter summers) weather.

Roading and logging so much of the forest is increasing both the frequency and the severity of floods. In the case of the federal forests, the taxpayers are paying at least twice: first to subsidize its logging; now in an attempt to repair watershed damage.

Society needs to come up with better reward systems to private landowners who provide ecosystem services for the common good.

In the Sierras, an attempt is being made to compensate private forestland owners for not logging their lands. A prime group of beneficiaries are water consumers downstream. It's worth it for water users to pay a little more in their bill each month to compensate upstream landowners than to much more for water treatment.

The same is happening in the Sterling Forest on the New York-New Jersey border. Urban beneficiaries of forest conservation are paying rural forestland owners for doing it.

It should also happen in the Pacific Northwest.

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