Biodiversity

As always, I was delighted to sit down when my hon. Friend stood up. She made an excellent intervention and highlighted the importance of seeing land, and land use, and land use change, in a fundamentally economic way, and looking at property ownership and tenure is absolutely part of that. All hon. Members in the Chamber and those who care deeply about the subject will know of the issues relating to indigenous people. There are different forms of communal property ownership in forests throughout the world. That applies not just in this country, as my right hon. Friend rightly pointed out, and it is essential to bear in mind the conflict that can arise from land tenure and the different forms of property ownership when considering the future of our tropical rain forests throughout the world. A country may experience economic growth while becoming poorer, and an example may be helpful. A Government may sell a large timber concession to a logging company. They will achieve for that land only the classical measure of value for the logs or fuel wood, plus any alternative land use. The logging company, perhaps being afraid of political instability somewhere in Africa, may not even cut the logs into timber in the country itself. Instead, it may export them to a neighbouring state where it has a production factory that cuts the logs and produces furniture for export to European markets. It is important to note that no one in this example has done anything wrong or corrupt. The Government have increased their export sales by the value of the logs and have seen a corresponding rise in GDP. The logging company has paid the market price for its logging concession and made a rational business decision about the management of the company's political risk. The neighbouring country happily welcomed the jobs and economic growth that comes from the re-export of those logs as much more valuable furniture, but the original country is poorer. The value of the ecosystem services that it has lost is far greater than the value of economic GDP growth that it has achieved. In 2000, Kofi Annan commissioned an assessment of the state of global ecosystems that aimed to describe and evaluate the full range of services that we as human beings derive from nature. In the Millennium Ecosystem Assessment, 1,360 scientific experts reported on the 24 key services on which human life depends. Of those, only four services were found to be increasing, 15 were assessed as being in decline and five were said to be stable although under strain in certain regions. On the positive side of the balance sheet, agricultural production is increasing the amount of crops and livestock that is available to feed an expanding world population. On the negative side, marine fish stocks are dangerously depleted, fresh water is declining in quality and availability, and services such as pollination, pest control, soil stabilisation, climate regulation and air and water purification are all in marked decline. Recognising that those essential services provide 50% of the GDP of the poorest people on our planet, the report pointed out:"““The loss of services derived from ecosystems is a significant barrier to the achievement of the Millennium Development Goals to reduce poverty, hunger and disease.””" It concluded that,"““human activities have taken the planet to the edge of a massive wave of species extinctions, further threatening our own well-being.””" Just as the Millennium Ecosystem Assessment was being published in 2005, Hurricane Katrina hit the coast of Louisiana, killing 1,800 people, displacing 1 million more and causing damage assessed at up to $125 billion. The US army engineering corps is currently spending $16 billion on building a 350-mile long system of levees to replace those that failed in 2005. That failure was not due to a natural disaster; it was the result of 100 years of policy decisions to supposedly ““improve”” the navigation and economic efficiency of the lower Mississippi basin, and the consequent loss of wetlands that followed from that. Today, the sewerage and water board of New Orleans plans to pipe thousands of tons of semi-treated sewage into a bayou to help regrow a cypress-tupelo wetland and protect the lower ninth ward from flooding. Recently, the US army engineering corps made an astonishing admission: during Katrina, every levee that had wetland protection remained intact but every levee that had no wetland protection was breached. It has been estimated that since the 1930s, 120,000 square miles of wetland habitat have been lost on the lower Mississippi basin. Currently, one acre—the size of a football pitch—is lost every 48 minutes. The wetlands are of various types, but a freshwater or intermediate marsh wetland is estimated to reduce surge swells during a hurricane by as much as 1 foot for every mile width of wetland. A cypress swamp wetland is estimated to reduce storm surges by an incredible 6 feet for every mile width of wetland. The ring of concrete and steel that is currently being constructed around the city at such enormous cost—$16 billion—sets in context the true value of the natural capital that makes up Louisiana's lost wetlands. In 1956, the US Congress gave approval for the construction of the Mississippi river-gulf outlet—MRGO, as it is known locally. The economic case seemed overwhelming. The man-made navigational channel would connect the gulf of Mexico to the city of New Orleans, bisecting the marshes of lower St Bernard parish and the shallow waters of the Chandeleur sound. That would reduce the passage by 40 miles and straighten the route, making it a safer and more efficient passage for shipping than the Mississippi river below New Orleans with its winding channels. The habitats that the MRGO was cut through are shallow estuarine waters and sub-delta marshes. Much wetland was lost by the original excavation, but more importantly, the soil erosion and rise in salinity has led to the destruction of the cypress swamp. Ironically, the MRGO has not been the economic success that Congress supposed it would be. Today, it carries a mere 3% of the region's waterborne freight, with fewer than five passages a day. The US army engineering corps estimates dredging costs to be $22.1 million per year. That means that every vessel that passes through will cost $12,657 per vessel per day. As early as 1958 the US Department of the Interior warned that,"““the excavation of the (MRGO) could result in major ecological change with widespread and severe ecological consequences.””" Ecological consequences—the process was not seen as a contribution to the economic debate surrounding the case for the MRGO, but rather as an unimportant, if factual, environmental comment. In those days, the concepts of natural capital and ecosystem services were simply not understood by legislators, but today we have no excuse. What would a Government who incorporated the valuation of natural capital and ecosystem services into their framework of national accounting look like? What would they do differently? Principally, they would make explicit and visible the estimated value of nature's multiple and complex benefits. By incorporating that value into their procedures of decision making and cost-benefit analysis, the Government would provide a more complete evidence base through which to improve outcomes. Factors previously regarded as externalities would become essential elements of increased efficiency in policy design. It is important to understand that the values of natural capital do not exist objectively and independently of a community of potential beneficiaries. Therefore, they cannot simply be imported into a set of national accounts as a constant given. However, that is equally true of other forms of capital and it should not be allowed as an argument against a proper valuation of ecosystem services. The kickback given by finance departments and treasuries is always, ““It is very difficult to estimate the value of a river or a forest.”” Well, it is difficult to estimate the value of a bridge. Nobody would try to measure a bridge by its height or length, but instead by the economic savings in time and fuel multiplied by the number of people who might use it as opposed to the alternative easiest route. One must estimate. It is the same with forests, wetlands, swamps and peat bogs, but the Treasury will always kick back and say, ““No, it is too difficult.”” That is the area we have to look at. In the same way, the value of a coral reef will vary, not only in accordance with the quantity of marine life that it spawns, but with the level of dependence that a community may have on it for food. It may also fluctuate in value in accordance with its suitability for use as a tourist destination generating recreational dollars. Thus, the value of natural capital in one part of the globe cannot easily be translated across borders. Economic values are not a property of ecosystems; they are a measure of those ecosystems' utility to human communities in a given geographical and socio-economic context. For that reason, Governments who take natural capital seriously would do well to estimate the value not of the ecosystem as such, but of the economic effects that a proposed or envisaged change might have were a particular policy to be pursued. The successful integration of the value of natural capital into UK Government accounts could see the elimination of perverse subsidies in fishing and agriculture and in the use of nitrates and fossil fuels. It could create financial incentives to encourage proper environmental management that preserves ecosystem services and a rigid application of the ““polluter pays”” principle throughout industry. To achieve that, a number of undertakings would be required from the Government, and, in that respect I thank the Minister for the positive and constructive meeting that we had with GLOBE the other day. As he knows, I do not lay these issues simply at the door of his Department; the key point is that these undertakings must be given by Governments, rather than environment departments. Environment departments know and understand them very well; the difficulty is getting them appropriated by Government colleagues more widely. First, inventories should be required of all Departments. They should identify as far as possible all the natural capital assets for which a Department is responsible or whose value may be affected, whether adversely or positively, by departmental activity. Secondly, in adopting the latest methodology set out in SEEA—the ““Handbook of National Accounting: Integrated Environmental and Economic Accounting””—Departments should be obliged to co-ordinate with the Treasury and agree a valuation for all the natural capital assets in their inventory. Thirdly, all policy proposals and recommendations should be obliged to incorporate a costed explanation of how they will enhance natural capital or transform it into other forms of capital so that overall national wealth is increased. Fourthly, where a policy proposal or recommendation is estimated to deplete natural capital or result in declining ecosystem services, that depletion must be clearly costed and agreed by the Treasury. Fifthly, an equivalent position to that of the Chief Secretary to the Treasury must be established with the aim of regulating the Government's use of natural resources and signing off all allocations of natural capital. Sixthly, that position should have the further challenge function of questioning why Departments are pursuing a technological solution to a problem that might be more efficiently dealt with through an imaginative use of ecosystem services. For example, why build a chemical-based sewage filtration plant when the lugworms on one hectare of mud flats can provide a remediation service for 100,000 people's effluent? Seventhly, the Treasury should prepare a set of green accounts for natural capital and ecosystem services, which should be published initially for three years in parallel with the Red Book. Eighthly, after the initial trial period, those green accounts should be fully integrated and incorporated into the Budget and the Red Book. Ninthly, the National Audit Office should be requested to monitor and report on the effective application of the incorporation of natural capital into the national accounting framework. Tenthly, Parliament's Environmental Audit Committee should be requested to hold the Treasury and all Departments across the Government to account for their use of natural capital and ecosystem services. Eleventhly, the Treasury should be tasked with preparing and publishing an annual report on the status of the country's natural capital and ecosystems. Are there better ways to achieve this objective? Are there better uses for these resources? The Government have an obligation to their citizens to ensure that no policy, programme or project is adopted without Ministers first having the answer to those questions, and it is not possible to answer them unless the Government unequivocally embrace a transparent system for the valuation of natural capital. In October 2010, I will chair the GLOBE legislators session at the United Nations convention on biodiversity in Nagoya—the conference of the parties. One hundred legislators will press to have natural capital incorporated into national accounts. They will establish legislators' role as that of providing a vital monitor and audit function, overseeing their respective Executives. Many scientists regard success at the Nagoya convention as even more important than success at the convention on climate change. After all, what would a change in climate matter if species could keep pace with the rate of change? The fact that they cannot, and the demise of the ecosystem services that are lost with them, is the greatest threat to human well-being on this planet. A decade ago, the United Nations set the world the target of reducing the rate of species loss by 2010—the international year of biodiversity. Well, here we are. The UN willed the objective but not the means. The integration of the valuation of natural capital into Government accounting frameworks is that means.