Banker Seeks to Put a Price on Nature

Summary
Pavan Sukhdev is banker collaborating with the UN to create a cost-benefit analysis for nature, by estimating the cost and economic gain from biodiversity, ecosystem services, and other natural resources. He believes that this is the only way to show the importance of protecting the environment so that steps can be taken to resolve global climate change. As other economists have agreed, it is more cost-effective to fight global warming now than it is to deal with later consequences. This applies to protecting biodiversity loss as well; prevention is always easier and cheaper than fixing the problem later on. The study hopes to achieve a “cap-and-trade”-like system for water rights, biodiversity credits, and forest credits.

Response
The economic implications of this article are huge – it involves quantifying the value of our environment in order to “trade” for biodiversity credits, forest credits, etc. If implemented, this system would greatly impact the world economy as more emphasis would be placed on sustainability rather than growth. This would lead to an even greater ecological impact because it would be financially prudent for industry and individuals to protect the environment, ultimately leading to more protection of the natural world and biodiversity.
As with any issue, there are two sides – one in support, and one in opposition. Support for this plan may come from a more economic-focused audience. If the value of the environment was placed, it may show people the true value of protecting the natural world, leading to more support to combat global climate change and species extinction. Estimating the value of the Earth would make people and businesses realize that these resources need to be recognized for their irreplaceable value. In class today we watched The Eleventh Hour, where it was estimated that the cost to completely replace the environment and all of its ecological services would be $35 trillion. This article is particularly relevant to class because it brings up the issue of the importance of protecting the environment, and whether or not one can put a number on all that the world does for us. Others may argue that cost-benefit analysis is ineffective because it is only an estimate of the true value of the ecosystems, and can never be verified to be completely accurate. Still, more people may object to the idea of simply placing a value on the environment because it can be subjective and because you can never truly place a value on all of the aesthetic and ethical values of preserving nature.
I believe that although it is difficult to measure the value of the environment truly accurately, in our capitalist society, finance has a voice. This should be recognized, and taken advantage of in order to stop global warming before it is too late. Showing the astronomical value of ecosystem services gives evidence in support of saving the environment to people opposed to environmental policy due to potential economic harm. This study will be effective in proving the necessity of biodiversity and ecosystem protection, leading to something nearly everyone supports – a healthy biosphere teeming with beauty and biodiversity.
What do you think about putting a price on nature? Do you have any other possible solutions for raising support for environmental policy?

Kanter, James. "Banker Seeks to Put a Price on Nature." Green Inc. New York Times, 13 Nov. 2009.
Web. 11 Dec. 2009. banker-seeks-to-put-a-price-on-nature/?scp=6&sq=biodiversity&st=cse>.


http://greeninc.blogs.nytimes.com/2009/11/13/banker-seeks-to-put-a-price-on-nature/?scp=6&sq=biodiversity&st=cse