What’s Wrong with Putting a Price on Nature?

The concept of pricing ecosystem services and allowing them to be bought and sold has gained wide acceptance among conservationists in recent years. But does this approach merely obscure nature’s true value and put the natural world at even greater risk?

Ecosystem services is not exactly a phrase to stir the human imagination. But over the past few years, it has managed to dazzle both diehard conservationists and bottom-line business types as the best answer to global environmental decline.

For proponents, the logic is straightforward: Old-style protection of nature for its own sake has badly failed to stop the destruction of habitats and the dwindling of species. It has failed largely because philosophical and scientific arguments rarely trump profits and the promise of jobs. And conservationists can’t usually put enough money on the table to meet commercial interests on their own terms. Pointing out the marketplace value of ecosystem services was initially just a way to remind people what was being lost in the process — benefits like flood control, water filtration, carbon sequestration, and species habitat. Then it dawned on someone that, by making it possible for people to buy and sell these services, we could save the world and turn a profit at the same time.

But the rising tide of enthusiasm for PES (or payment for ecosystem services) is now also eliciting alarm and criticism. The rhetoric is at times heated, particularly in Britain, where a government plan to sell off national forests had to be abandoned in the face of fierce public opposition. (The

Skeptics say they’re making constructive criticisms of what they see as blind faith in new financial markets.
government’s own expert panel also found that it had “greatly undervalued” what it was proposing to sell.) Writing recently in The Guardian, columnist and land rights activist George Monbiot denounced PES schemes as “another transfer of power to corporations and the very rich.” Also writing in The Guardian, Tony Juniper, a conservationist and corporate consultant, replied in effect that Monbiot and other critics should shut up, on the grounds that campaigning against payment for ecosystem services “could inadvertently strengthen the hand of those who believe nature has little or no value, moral, economic or otherwise.”

Not all critics reject the PES idea outright. Some say they’re merely making constructive criticisms of what they see as blind faith in new financial markets, and in global initiatives like the United Nations’ REDD mechanism (for Reducing Emissions from Deforestation and Forest Degradation in Developing Countries).

The first mistake, says Kent H. Redford, an environmental consultant, is to assume that old-style conservation methods have failed. “They’ve worked in certain circumstances, in certain ways, for certain things.” They’re the reason, for instance, that state-sponsored protected areas now cover 25 percent of the land in Costa Rica, 27 percent in the United States (at the federal level alone), 30 percent in Tanzania and Guatemala, and 50 percent in Belize.

Writing in Conservation Biology, Redford and co-author William M. Adams catalogued some of the ways PES transactions can go wrong, beginning with the whole question of price. Traditional conservationists sought to protect forests and other landscapes primarily for their intrinsic value, says Redford. But those values are likely to carry less weight when even conservationists think first in economic terms. Many ecosystem services are also likely to be hard to price — for instance, the arguably beneficial effects on climate and agriculture (minus the deleterious impacts on health) when atmospheric dust from the African Sahel drifts across the Atlantic. And even if you can put a price on an ecosystem service, Redford and Adams argue, figuring out who has a legitimate right to sell it means picking winners and losers. In developing countries, indigenous communities may lack the documentation or the political clout to assert their ownership.

Payment schemes also risk creating perverse incentives, Redford and Adams warn. If the system pays landowners to bank carbon, they may plant non-native species, or genetically “improved” trees, to bank carbon faster. Or they may discourage natural phenomena that happen to be good for biodiversity, but bad for people, including such ecosystem disservices as
Making the economic case for ecosystem services often ‘has more resonance’ with decision makers, one researcher says.
fire, drought, disease, or flood. Finally, Redford and Adams point out, the effects of climate change, “always the joker in the pack,” could toss carefully constructed economic schemes — and natural habitats — into disarray.

Stuart H. M. Butchart, a researcher at BirdLife International, replies that embracing the ecosystem services idea doesn’t necessarily mean abandoning the argument that species and habitats have intrinsic value. But making the economic case often “has more resonance” for decision-makers.

A study published last week in Science, co-authored by Butchart, also suggests why the PES idea now seems so urgent. To determine what it would cost to meet current targets set for the year 2020 under the international Convention on Biological Diversity, the study looked at the cost of protecting and down-listing threatened bird species. Then it extrapolated that preventing further loss of species across all plant and animal groups would cost $78 billion a year. That’s an order of magnitude above current conservation spending — but the study noted that it was only between 1 and 4 percent of the value of the ecosystem services being lost through habitat destruction every year.

PES proponents can also point to early success stories: Vittel-Nestlé Waters recognized a few years ago that its aquifer in northern France was being polluted by nitrate fertilizers and pesticides from nearby farms. It devised a scheme to pay farmers to change their methods and deliver the ecosystem service of unpolluted water. Beijing undertook a similar scheme in the catchment around one of its reservoirs, ahead of the 2008 Olympics. (It had previously tried anti-growth regulations and resettlements.)

But there isn’t always a wealthy corporation or a big city nearby willing to pick up the tab (for Vittel, $31.4 million over the first seven years), and other transactions are more complex. Norway, for instance, pledged $1 billion each to Brazil and Indonesia for forest preservation efforts under the REDD mechanism, partly to compensate for failing to meet its own greenhouse gas emissions targets. But the Norwegian government recently felt compelled to issue a public warning to both countries against backsliding on their forest preservation commitments.

Monbiot adds that making nature fungible, so one asset can be substituted for another, guarantees that they will be: “If a quarry company wants to destroy a rare meadow, for example, it can buy absolution by paying
Critics are uncomfortable with viewing nature ‘as a service provider fit to be incorporated into the global capital markets.’
someone to create another somewhere else.” When governments and PES proponents talk about employing marketplace solutions instead of traditional regulatory approaches, he says, “what they are really talking about is shrinking democracy, shrinking public involvement in decision making, shrinking transparency and accountability. By handing it over to the market you are in effect handing it over to corporations and the very rich,” and to “a very plutocratic” decision-making process.

Pavan Sukhdev, a former international banker who has pioneered efforts to highlight the economic importance of biodiversity, says none of these criticisms is especially new. He has raised many of them himself and says the marketplace is working to address them. “It’s useful to hear criticisms, but the critics must remember one basic fact. It wasn’t Christopher Columbus who discovered America, it was the Native Indians who lived there. So critics should not think that they have invented knowledge. They should be a little more humble in their attitude. And understand that the people on the ground are professionals who have been working on this and thinking about this for quite some time.”

But no amount of financial tweaking or social engineering is likely to allay the deeper discomfort voiced by many PES critics with the whole idea of nature, in the words of one recent paper, “as a service provider fit to be incorporated into the global capital markets.” Or the notion, expressed by Jean-Christophe Vié, of the International Union for Conservation of Nature, that nature is “the largest company on Earth.” When you view nature in economic terms, as a provider in a sort of “master-servant” relationship, they suggest, you make a fundamental change not just in the world around us, but in ourselves.


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Sian Sullivan, a University of London anthropologist, warns that past revolutions in capital investment, like the enclosure of common lands in eighteenth-century Britain, and the industrial revolution of the nineteenth century, resulted in “the shattering of peoples’ relationships with landscapes” and the conversion of rural folk into factory workers and service-providers for capital. In the ecosystem services movement, Sullivan warns, we are seeing “a major new wave of capture and enclosure of Nature by capital.” And it will come, she says, at the cost of profound cultural and psychological upheaval.

It may be, as some argue, that we have no better way to save the world. But the danger in the process is that we may lose our souls.