Friday, October 10, 2008

Economic Value of Nature, Forests

A recent study by Deutsche Bank economist(s) [study leader: Pavan Sukdev] places an economic value on forests based on the benefits they provide like providing clean water and carbon dioxide (CO2) absorption. The EU-commissioned study puts the annual cost of forest loss at between $2 trillion and $5 trillion.
An interesting point of trivia here is that, "Pavan" in hindi/sanskrit refers to the "Wind God".
The study, headed by the Deutsche Bank economist, parallels the Stern Review into the economics of climate change.

The study echoes the understanding among some proponents of sustainability that being in harmony with nature is paramount to the survival of species. What this study has done is that it has put an economic value, which provides at least provides a floor to the (much higher) intrinsic value of nature. This is my personal opinion that the intrinsic value of nature is higher than the quoted numbers. If a part of nature were irreparably damaged, then the human economy has to provide them instead, either by carbon dioxide sequestration/conversion, or agricultural production of food and products that were previously naturally produced by forests. A excerpt from the study on the numbers involved compares it to the (smaller) scale of the current economic crisis:
"So whereas Wall Street by various calculations has to date lost, within the financial sector, $1-$1.5 trillion, the reality is that at today's rate we are losing natural capital at least between $2-$5 trillion every year."
While you are reading about "natural capital", let me add a note about a book on my wish list: natural capitalism.
The source material for this blog post is the BBC.
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