From mangroves shielding a storm-prone coast to peatlands locking up megatons of carbon and landscapes coated in life-giving soil: Earth’s ecosystems have massive value. But that value is hard to measure and often gets ignored – with alarming consequences for the environment.
UNEP’s report Becoming #Generation Restoration found that every dollar invested in restoration creates up to 30 dollars in economic benefits.
Now, new tools are available to gauge the worth of nature and its many benefits to people, enabling governments and other decision-makers to consider Earth’s “natural capital” alongside its human and manufactured counterparts and step up efforts to restore it.
“Climate change, biodiversity loss and pollution prove that a narrow focus on conventional economic growth cannot deliver the quality of life that we want for ourselves and future generations,” said Pushpam Kumar, Chief Environmental Economist at UNEP. “We must take all of Earth’s gifts into account as we shift towards sustainability.”
Economic development has long been measured primarily using a country’s gross domestic product (GDP). Calculated annually, GDP sums the market value of the output of goods and services in a given country.
But experts say this metric’s lack of focus on environmental degradation has steered economic policy and investment in harmful directions, including a reliance on fossil fuels and growing inequality, and away from the fair and sustainable use of the planet’s finite resources.
“The critical decisions that we are faced with now, for instance on transforming our energy systems and saving biodiversity, need to be informed by much better measures than GDP,” Kumar said.
Climate change, biodiversity loss and pollution prove that a narrow focus on conventional economic growth cannot deliver the quality of life that we want for ourselves and future generations.
The shortcomings of GDP
GDP captures some of the most tangible ways that nature contributes to the economy, such as supplying markets for timber and fish. But it largely omits nature’s “non-market” benefits, including its spiritual, aesthetic, or recreational value. Also overlooked are fundamental functions such as the generation of fertile soil, the provision of clean air and water, and natural barriers to disease.
Moreover, Kumar notes that market mechanisms typically fail to reflect the alarming erosion of the natural capital from which these vital benefits flow, such as the loss of forests and wetlands or the pollution of the atmosphere.
“This conceals how the foundations of human well-being are weakening even as financial incomes may have risen for most people,” he said.
In response, economists are developing new ways to measure wealth and well-being that better reflect the health of the planet as well as of people and economic systems. More governments have begun to use these metrics to guide their development strategies and economic policies.
New yardsticks for sustainability
For example, UNEP has developed the Inclusive Wealth Index (IWI). Rather than focus on flows of goods and services, the index sums the social value of economic, human, produced and natural assets to indicate whether countries are developing sustainably.
Now calculated for about 140 countries, the index indicates that inclusive wealth expanded by an average of 1.8 per cent for the 1990-2014 period, far below the 3.4 per cent expansion rate of GDP, largely because of declines in natural capital.
“The index doesn’t just show that we are not as wealthy as we think we are,” adds Kumar. “It shows how protecting or restoring the environment is as relevant as developing industries, expanding education and improving public health for our long-term prosperity.”
Natural capital accounting
Countries are also going beyond GDP by adding environmental statistics to their national accounts. Under the UN-supported System of Environmental Economic Accounting (SEEA), countries can track environmental assets such as energy and water resources, their use in the economy, and return flows of waste and emissions.
An assessment in 2020 showed that 89 countries have already implemented the SEEA and another 27 plan to join them.
To further strengthen natural capital accounting, the SEEA has expanded to include “ecosystem accounts” that measure the diversity, extent, condition and the value of ecosystems and the services they generate. Once fully developed, the accounts can reveal how ecosystems as a whole support an economy and whether they are being depleted. “This is a historic step forward towards transforming how we view and value nature,” UN Secretary-General António Guterres said at the 2021 launch. “We will no longer be heedlessly allowing environmental destruction and degradation to be considered economic progress.”
Dozens of countries are already compiling ecosystem accounts on an experimental basis. In South Africa, for example, a study using ecosystem accounts has shown that the economic benefits of restoring grasslands degraded by erosion and bush encroachment clearly outweigh the costs.
Researchers are working on biophysical modelling and artificial intelligence tools to generate ecosystem accounts automatically – a boon for countries with limited data and resources for the task.
This new way of taking nature into account is also starting to affect businesses. The new ‘Task Force on Nature-related Financial Disclosures’ will provide the metrics for the private sector to calculate and manage their ecological footprint.
Monitoring restoration
Ecosystem accounts could also guide growing efforts to halt and reverse environmental degradation.
Coordinators of the UN Decade on Ecosystem Restoration, which began in 2021, are exploring how ecosystem accounts can help identify degradation hotspots and monitor the long-term impacts of projects to restore them. The SEEA could also be used to measure countries’ progress – or lack of it –toward the Sustainable Development Goals and new post-2030 global biodiversity targets to be set later this year. Countries have already committed to restoring nearly 1 billion hectares of degraded ecosystems.
A new report from UNEP and partners has found that global investment in nature needs to increase four-fold by 2050, equating to an annual investment of over USD 536 billion a year, to address the climate, biodiversity and land degradation crises. Countries have already committed to restoring nearly 1 billion hectares of degraded ecosystems. Currently, USD 130 billion per year flows into Nature-based Solutions, with public funds making up 86 per cent and private finance 14 per cent.
“New environmental measures and indicators are revealing with ever more precision not only what we are losing, but also what we will gain from bringing people and planet into balance,” said Tim Christophersen, Coordinator of the UN Decade on Ecosystem Restoration. “The case for investing in nature is only getting clearer.”
Nature for Human and Ecosystem Health is one of the key thematic areas of the resumed session of the UN Environment Assembly (UNEA5.2) to be held from 28 February to 2 March 2022. UNEA is the world’s highest environmental decision-making body. Through its resolutions and calls to action, the Assembly provides leadership and catalyzes intergovernmental action on the environment.
