“Putting a price on a natural bounty long taken for granted as free may sound impossible, even ridiculous. But after three decades on the fringes of serious policymaking, the idea is gaining traction, from the vividly clear waters of the Maldives to the sober, suited reaches of the World Bank,” writes Katy Daigle for Businessweek.
“As traditional measures of economic progress like GDP are criticized for ignoring downsides including pollution or diminishment of resources such as fresh water or fossil fuels, there has been an increased urgency to arguments for a more balanced and accurate reckoning of costs.
That is particularly so as fast-developing nations such as India and China jostle with rich nations for access to those resources and insist on their own right to pollute on a path toward growth.
Proponents of so-called “green accounting” — who will gather in Rio de Janeiro this week for the Rio Earth Summit — hope that putting dollar values on resources will slam the brakes on unfettered development. A mentality of growth at any cost is already blamed for disasters like the chronic floods that hit deforested Haiti or the raging sand storms that have swept regions of China, worsening desertification.
Environmental economists argue that redefining nature in stark monetary terms would offer better information for making economic and development decisions.
That, they say, would make governments and corporations less likely to jeopardize future stocks of natural assets or environmental systems that mostly unseen make the planet habitable, from forests filtering water to the frogs keeping swarming insects in check.
If the value of an asset like a machine is reduced as it wears out, proponents say, the same accounting principle should apply to a dwindling natural resource.
‘Environmental arguments come from the heart. But in today’s world based on economics it’s hard for arguments of the heart to win,’ said Pavan Sukhdev, a former banker now leading an ongoing project that was proposed by the Group of Eight industrialized nations to study monetary values for the environment.
That study, started in 2007, has estimated the world economy suffers roughly $2.5 trillion to $4 trillion in losses every year due to environmental degradation. That’s up to 7 percent of global GDP.
‘We need to understand what we’re losing in order to save it,’ Sukhdev said. ‘You cannot manage what you do not measure.’
Using the same accounting principles, some countries are already changing policy.
The Maldives recently banned fishing gray reef sharks after working out that each was worth $3,300 a year in tourism revenue, versus $32 paid per catch. Ugandans spared a Kampala wetland from agricultural development after calculating it would cost $2 million a year to run a sewage treatment facility — the same job the swamp does for free.
But environmental accounting still faces many detractors and obstacles. Among them is resistance from governments who might lack the resources and expertise to publish a “greened” set of national accounts alongside those measuring economic growth.