Economic reasons for conserving wild nature
Balmford et al. Science 2002
SCIENCE’S COMPASS REVIEW
●
REVIEW: ECOLOGY
Economic Reasons for Conserving
Wild Nature
Andrew Balmford,1* Aaron Bruner,2 Philip Cooper,3 Robert Costanza,4† Stephen Farber,5 Rhys E. Green,1,6 Martin Jenkins,7
Paul Jefferiss,6 Valma Jessamy,3 Joah Madden,1 Kat Munro,1 Norman Myers,8 Shahid Naeem,9 Jouni Paavola,3
Matthew Rayment,6 Sergio Rosendo,3 Joan Roughgarden,10 Kate Trumper,1 R. Kerry Turner3
matched estimates of the marginal values of
On the eve of the World Summit on Sustainable Development, it is timely to assess goods and services delivered by a biome
progress over the 10 years since its predecessor in Rio de Janeiro. Loss and degradation when relatively intact, and when converted
of remaining natural habitats has continued largely unabated. However, evidence has to typical forms of human use. To ensure
been accumulating that such systems generate marked economic benefits, which the we did not neglect private benefits of con-
available data suggest exceed those obtained from continued habitat conversion. We version, studies were only included if they
estimate that the overall benefit:cost ratio of an effective global program for the covered the most important marketed
conservation of remaining wild nature is at least 100 :1. goods, as well as one or more nonmarketed
services delivering local social or global
benefits. We cross-validated figures for in-
H
umans benefit from wild nature (1) in per hectare for each of 17 services across 16 dividual goods and services with other es-
very many ways: aesthetically and cul- biomes and then extrapolating to the globe by timates from similar places. Finally, we
turally; via the provision of ecological multiplying by each biome’s area, the Costanza checked that the comparisons across differ-
services such as climate regulation, soil forma- team estimated the aggregated annual value of ent states of a biome used the same valua-
tion, and nutrient cycling; and from the direct nature’s services (updated to 2000 US$) to lie tion techniques for particular goods and
in the range of $18 trillion to $61 trillion (1012 ),
harvest of wild species for food, fuel, fibers, services. Our survey uncovered only five
and pharmaceuticals (2). In the face of increas- around a rough average of $38 trillion. These examples that met all these criteria. Here,
ing human pressures on the environment, these figures are of similar size to global gross na- we summarize their findings, with all fig-
benefits should act as powerful incentives to tional product (GNP), but have been criticized ures expressed as net present values (NPVs,
in 2000 US$ ha 1), and using the discount
conserve nature, yet evaluating them has by some in the economic community (5–9).
proved difficult because they are mostly not One problem is that such macroeconomic rates considered by the authors [see Fig. 1
captured by conventional, market-based eco- extrapolations are inconsistent with microeco- and supplemental online material (10) for
nomic activity and analysis. nomic theory: extrapolation from the margin to further details].
In 1997, Costanza et al. published a synthe- a global total should incorporate knowledge Two studies quantified net marginal ben-
sis (3) of more than 100 attempts to value about the shape of the demand curve (3, 5–8). In efits of different human uses of tropical forest
ecosystem goods and services using a range of practice, it is very likely that per-unit demand areas. Kumari compared the values obtained
techniques including hedonic pricing, contin- for nonsubstitutable services escalates rapidly as from timber plus a suite of nontimber forest
gent valuation, and replacement cost methods supply diminishes, so that simple grossing-up of products (NTFPs), as well as the values of
(4). Using case studies to derive average values marginal values (as is also done in calculating water supply and regulation, recreation, and
GNP from prices) will probably underestimate the maintenance of carbon stocks and endan-
true total values. On the other hand, high local gered species, for forests under a range of
Conservation Biology Group, Department of Zoology,
1
values of services such as tourism may not be management regimes in Selangor, Malaysia
University of Cambridge, Cambridge CB2 3EJ, UK. 2Cen-
maintained if extrapolated worldwide. In addi- (11). Compared with two methods of re-
ter for Applied Biodiversity Science at Conservation In-
tion, while some policy decisions are made us- duced-impact logging, high-intensity, unsus-
ternational, 1919 M Street, NW, Suite 600, Washington,
DC 20036, USA. 3Centre for Social and Economic Re- ing macroeconomic indicators, many others are tainable logging was associated with greater
search on the Global Environment (CSERGE), School of made at the margin, and so are more appropri- private benefits through timber harvesting (at
Environmental Sciences, University of East Anglia, Nor-
ately informed by marginal rather than total least at high discount rates and over one
wich NR4 7TJ, UK. 4Center for Environmental Science,
valuations (9). harvesting cycle), but reduced social and
Biology Department and Institute for Ecological Eco-
nomics, University of Maryland, Box 38, Solomons, MD Another problem with the original estimate global benefits (through loss of NTFPs, flood
20688, USA. 5Graduate School of Public and Internation- is that landscapes can yield substantial (albeit protection, carbon stocks, and endangered
al Affairs, University of Pittsburgh, Pittsburgh, PA 15260, rather different) flows of goods and services species). Summed together, the total econom-
USA. 6The Royal Society for the Protection of Birds, The
after, as well as before, conversion by humans ic value (TEV) of forest was some 14%
Lodge, Sandy, Bedfordshire SG19 2DL, UK. 7UN Environ-
(which is of course why people convert them). greater when placed under more sustainable
ment Programme–World Conservation Monitoring Cen-
tre (UNEP-WCMC), 219 Huntingdon Road, Cambridge A clearer picture of the value of retaining habitat management (at $13,000 compared with
CB3 ODL, UK. 8Green College, Woodstock Road, Oxford $11,200 ha 1).
in relatively undisturbed condition might there-
OX2 6HG, UK; and Upper Meadow, Old Road, Heading-
fore be obtained by estimating not the gross A study from Mount Cameroon, Cam-
ton, Oxford OX3 8SZ, UK. 9Department of Zoology,
values of the benefits provided by natural bi- eroon, comparing low-impact logging with
University of Washington, 24 Kincaid Hall, Box 351800,
Seattle, WA 98195–1800, USA.10Department of Biolog- omes, but rather the difference in benefit flows more extreme land-use change again found
ical Sciences, Stanford University, Stanford, CA 94305, between relatively intact and converted versions that private benefits favor conversion, this
USA.
of those biomes. time to small-scale agriculture (12). Howev-
*To whom correspondence should be addressed. E- er, a second alternative to retaining the forest,
mail: a.balmford@zoo.cam.ac.uk Net Marginal Benefits conversion to oil palm and rubber planta-
†Address after Sept. 2002: Gund Institute of Ecolog-
To address these concerns, we reviewed tions, in fact yielded negative private benefits
ical Economics, The University of Vermont, Burling-
ton, VT 05405, USA. more than 300 case studies, searching for once the effect of market distortions was
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SCIENCE’S COMPASS
removed. Social benefits from NTFPs, sedi- did sustainable fishing (15). The social ben- vices outweighs the marketed marginal ben-
mentation control, and flood prevention efits of sustainable exploitation, arising from efits of conversion, often by a considerable
were highest under sustainable forestry, as coastal protection and tourism, were also lost amount. Across the four biomes studied,
were global benefits from carbon storage upon dynamiting reefs. As a consequence, mean losses in TEV due to conversion run
and a range of option, bequest, and exis- the TEV of retaining an essentially intact at roughly one-half of the TEV of relatively
tence values. Overall, the TEV of sustain- reef was almost 75% higher than that of intact systems (mean 54.9%; SE
able forestry was 18% greater than that of destructive fishing (at $3300 compared 13.4%; n 4). This is certainly not to say
with $870 ha 1).
small-scale farming ( $2570 compared that conversion has never been economical-
with $2110 ha 1), whereas plantations had One clear message from our survey is ly beneficial; in most instances, past clear-
a negative TEV. the paucity of empirical data on the central ance of forests and wetlands for prime
Three other biomes yielded single studies question of the changes in delivery of agricultural land and other forms of devel-
meeting our criteria. Analysis of a mangrove goods and services arising from the conver- opment probably benefited society as a
system in Thailand revealed that conversion sion of natural habitats for human use. For whole. But unless the present case studies
for aquaculture made or the range of ser-
sense in terms of vices and biomes
short-term private examined in the lit-
benefits, but not once erature are extreme-
external costs were ly unrepresentative
factored in (13). The (and we know of no
global benefits of reason why this
carbon sequestration should be the case),
were considered to be our synthesis indi-
similar in intact and cates that at present,
degraded systems. conversion of re-
However, the sub- maining habitat for
stantial social bene- agriculture, aquac-
fits associated with ulture, or forestry
the original man- often does not make
grove cover—from sense from the per-
timber, charcoal, spective of global
NTFPs, offshore sustainability.
fisheries, and storm
Continuing Losses
protection—fell to
almost zero follow- These results there-
ing conversion. Sum- fore provide a clear
ming all measured and compelling eco-
goods and services, nomic case, alongside
the TEV of intact sociocultural and
mangroves exceeded moral arguments (16–
that of shrimp farm- 18), for us to strength-
ing by around 70% en attempts to con-
( $60,400 com- serve what remains of
pared with $16,700 natural ecosystems.
ha 1). Yet, when we sum-
van Vuuren and marized available es-
Roy (14) reported that timates of recent
draining freshwater Fig. 1. The marginal benefits of retaining and converting natural habitats, expressed as NPV (in trends in the global
2000 US$ ha 1) calculated using the discount rates ( ) and time horizons presented. Values of
marshes in one of measured goods and services delivered when habitats are relatively intact and when converted status of natural habi-
Canada’s most pro- are plotted as green and black columns, respectively. [From (11–15); see (10) for further tats and free-ranging
ductive agricultural details.] vertebrate popula-
areas yielded net pri- tions, we found that
vate benefits (in large part because of substan- 10 of the largely natural biomes (including although key data are again disturbingly scarce,
tial drainage subsidies). However, social bene- rangelands, temperate forests, rivers and they show that rates of conversion are high
fits of retaining wetlands, arising from sustain- lakes, and most marine systems) in across most biomes (10).
able hunting, angling, and trapping, greatly ex- Costanza et al. (3), we found no studies that We included in our survey any estimate of
ceeded agricultural gains. Consequently, for all met all of our criteria. For the four biomes global trend in habitat cover based on a series
three marsh types considered, TEVs were high- which were analyzed, only a handful of which began in 1970 or later and included a
er when the wetlands remained intact, exceed- well-established ecosystem services were period of at least 5 years after the 1992
ing figures for conversion by a mean of around considered, and some particularly valuable United Nations Conference on Environment
60% ( $8800 compared with $3700 ha 1). services, such as nutrient cycling, waste and Development in Rio de Janeiro. We sup-
Finally, a synthesis of economic studies treatment, and the provision of cultural val- plemented this with biome-specific indices
examining Philippine reef exploitation dem- ues, were not examined at all. based on time-series data on populations of
onstrated that despite high initial benefits, Despite the limited data, our review also wild vertebrates, derived from the World
destructive techniques such as blast fishing suggests a second broad finding: in every Wildlife Fund (WWF) 2000 Living Planet
had a far lower NPV of private benefits than case examined, the loss of nonmarketed ser- Index (LPI) and UN Food and Agricultural
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SCIENCE’S COMPASS
Organization (FAO) fisheries data (19, 20). standing to gain immediate private benefits should in due course result in public and
For three biomes, we found two estimates from land-use change. Hence, conserving rel- private decision-makers acting to reduce con-
derived by different methods and from either atively intact habitats will often require com- version of remaining habitats worldwide.
largely or wholly independent data. In each pensatory mechanisms to mitigate the impact More immediately, given concerns about the
case, the two estimates were remarkably sim- of private, local benefits foregone, especially practicalities of exploiting natural resources
ilar (10), and so were averaged to yield single in developing countries. We see the develop- sustainably, one of the most important strat-
estimates of rates of change. Data such as ment of market instruments that capture at a egies to safeguard relatively intact ecosys-
these, quantifying trends in areal coverage private level the social and global values of tems is the maintenance of remaining habitats
and in populations, in some ways provide a relatively undisturbed ecosystems—for in- in protected areas. This costs money, and
more tractable measure of the scale of the stance, through carbon or biodiversity credits predictably, our current undervaluation of na-
ongoing crisis facing nature than do estimates or through premium pricing for sustainably ture is reflected in marked underinvestment
of extinction rates, which are harder to doc- harvested wild-caught fish or timber (22, in reserves. To the best of our knowledge, the
ument and more difficult to link to monetary 23)—as a crucial step toward sustainability. world spends (in 2000 US$) $6.5 billion
values. Third, the private benefits of conversion each year on the existing reserve network
Overall, we found that five of the six biomes are often exaggerated by intervention fail- (28). Yet, half of this is spent in the United
measured have experienced net losses since the ures. In the Cameroon study, for example, States alone. Globally, despite increased ex-
Rio summit, with the mean rate of change forests were cleared for plantations because penditure since the Rio Summit by both
across all measured biomes running at –1.2% of private benefits arising from government international institutions and private founda-
per year, or –11.4% over the decade (Fig. 2) tax incentives and subsidies (12). The same is tions, available resources for existing re-
(10). Hence, the capacity of natural systems to true for the Canadian wetland example (14), serves fall far short of those needed to meet
deliver goods and services upon which we de- as well as for many other wetlands across the basic management objectives (29). Moreover,
pend is decreasing markedly. Costing the over- United States and Europe (24). While over terrestrial and marine reserves currently cov-
all value of these losses is fraught with the the short term these programs may be rational er only around 7.9% and 0.5% of Earth’s land
problems of extrapolation and data availability with respect to public or private policy ob- and sea area, respectively (30, 31), well be-
already discussed. Nevertheless, it is sobering jectives, over the longer term many result in low the minimum safe standard considered
to calculate that if the aggregate figures of necessary for the task of maintaining wild
Costanza et al. (3) and our estimate of the nature into the future (32–34).
proportion of TEV lost through habitat change To estimate the resources needed to meet
are roughly representative, a single year’s hab- this shortfall on land, we reworked recent
itat conversion costs the human enterprise, in calculations (28, 35) of the costs of properly
net terms, of the order of $250 billion that year, managing existing terrestrial protected areas
and every year into the future (10). Why then is and expanding the network to cover around
widespread habitat loss still happening, and 15% of land area in each region. We found
what can we do about it? that a globally effective network would re-
quire an approximate annual outlay of be-
Reasons for Continued Conversion tween $20 billion and $28 billion [includ-
In economic terms, our case studies illustrate ing payments to meet private opportunity
three broad, interrelated reasons why the costs imposed by existing and new reserves,
planet is continuing to lose natural ecosys- spread out over 10 and 30 years, respectively
tems despite their overall benefits to society (10)]. New work derived from the costs of
(21). First, there are often failures of infor- existing marine reserves suggests that an
Fig. 2. Recent global estimates of the annual
mation. For many services, there is a lack of equivalent initiative for the world’s seas, this
rate of change in area or the abundance of
valuations of their provision by natural sys- time covering 30% of total area (34, 36),
associated vertebrate populations for six bi-
tems, and particularly of changes in this pro- would cost at most $23 billion/year in re-
omes. Note that the biomes that have declined
vision as human impacts increase. Although current costs, plus $6 billion/year (over 30
deliver valuable ecosystem services (3). *Values
this is an understandable reflection of sub- years) in start-up costs (10). The estimated
plotted are the mean of habitat and popula-
stantial technical difficulties, we believe that mean total cost of an effective, global reserve
tion-based estimates; †Little confidence can be
attached to this value (10).
future work needs to compare delivery of program on land and at sea is some $45
multiple services across a range of competing billion/year. This sum dwarfs the current $6.5
land uses if it is to better inform policy both economic inefficiency and the erosion of billion annual reserve budget, yet could be
decisions. Our examples show that even natural services. Globally, the subset of sub- readily met by redirecting less than 5% of
when only a few ecosystem services are con- sidies which are both economically and eco- existing perverse subsidies (25, 26). The cru-
sidered, their loss upon conversion typically logically perverse totals between $950 billion cial question is whether this is a price worth
outweighs any gains in marketed benefits. and $1950 billion each year [depending on paying.
Second, these findings highlight the fun- whether the hidden subsidies of external costs Although limited data make the answer
damental role of market failures in driving are also factored in (25, 26)]. Identifying and imprecise, they indicate that conservation in
habitat loss. In most of the cases we studied, then working to remove these distortions reserves represents a strikingly good bargain.
the major benefits associated with retaining would simultaneously reduce rates of habitat We assumed that the mean proportional loss
systems more or less intact are nonmarketed loss, free up public funds for investing in of value upon conversion recorded in our
externalities, accruing to society at local and sustainable resource use, and save money case studies is representative of all biomes
global scales. Conversion generally makes (25–27). and services, and that previous gross per-
narrow economic sense, because such exter- hectare values of those services are roughly
Costing Conservation
nal benefits [or related external costs, as in correct (3). If these assumptions are valid,
the case of the damage caused by shrimp Tackling these underlying economic prob- then our hypothetical global reserve network
farming (13)] have very little impact on those lems requires action on many levels, but would ensure the delivery of goods and ser-
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SCIENCE’S COMPASS
20. UN Food and Agricultural Organization, The State of
vices with an annual value (net of benefits case: our relentless conversion and degra-
the World Fisheries and Aquaculture (UN FAO, Rome,
from conversion) of between $4400 billion dation of remaining natural habitats is erod-
2000).
and $5200 billion, depending on the level of ing overall human welfare for short-term 21. R. K. Turner et al., Ecol. Econ. 35, 7 (2000).
resource use permitted within protected ar- private gain. In these circumstances, retain- 22. J. Hardner, R. Rice, Sci. Am. 286 (no. 5), 71 (2002).
eas, and with the lower number coming from ing as much as possible of what remains of 23. S. Scherr, A. White, D. Kaimowitz, Policy Brief: Making
Markets For Forest Communities (Forest Trends,
a network entirely composed of strictly pro- wild nature through a judicious combina-
Washington, DC, and Center for International Forest-
tected reserves [for working, see (10)]. The tion of sustainable use, conservation, and,
ry Research, Bogor, Indonesia, 2002).
benefit:cost ratio of a reserve system meeting where necessary, compensation for result- 24. R. Turner, T. Jones, Eds., Wetlands: Market and Inter-
minimum safe standards is therefore around ing opportunity costs [as called for at the vention Failures (Four Case Studies) (Earthscan, Lon-
100 :1. Rio Summit (40)] makes overwhelming don, 1991).
25. C. P. van Beers, A. P. G. de Moor, Addicted to Subsi-
Put another way, the case studies, the economic as well as moral sense.
dies: How Governments Use Your Money to Destroy
service values of Costanza et al. (3), or our
the Earth and Pamper the Rich (Institute for Research
References and Notes
reserve costs would have to be off by a on Public Expenditure, The Hague, Netherlands,
1. By “wild nature” we mean habitat in which biodiver-
factor of 100 for the reserve program en- 1999).
sity, nonbiotic components, and ecosystem function-
26. N. Myers, J. Kent, Perverse Subsidies (Island Press,
visaged to not make economic sense. We ing are sufficiently intact that the majority of eco-
Washington, DC, 2001).
consider errors of this size to be highly system services typically derived from such a habitat
27. S. L. Pimm et al., Science 293, 2207 (2001).
are still being sustainably and reliably supplied. Our
unlikely, because most of our assumptions
28. A. James, K. J. Gaston, A. Balmford, BioScience 51, 43
usage differs from other usages, such as those adopt-
are conservative [for other sensitivity anal- (2001).
ed in cultural or anthropological studies. Because our
yses, see (10)]. For example, in terms of the focus is on wild nature, we excluded the cropland and 29. A. N. James, M. J. B. Green, J. R. Paine, Global Review
urban biomes when using data from table 2 of (3). of Protected Area Budgets and Staff ( WCMC, Cam-
values of services, we assume that unit
2. G. C. Daily, Ed., Nature’s Services (Island Press, Wash- bridge, 1999)
values will not increase as supply dimin- ington, DC, 1997). 30. International Union for Conservation of Nature and
ishes, that nature reserves do not increase 3. R. Costanza et al., Nature 387, 253 (1997). Natural Resources (IUCN), 1997 United Nations List
4. The hedonic price method values environmental ser-
the flow of services beyond their bound- of Protected Areas ( WCMC and IUCN, Cambridge,
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aries [whereas some clearly can (34, 37 )], UK, and Gland, Switzerland, 1998).
housing) across situations which differ in the provi-
31. G. Kelleher, C. Bleakley, S. Wells, A Global Represen-
and that all of a biome’s services not in- sion of those services. Contingent valuation involves
tative System of Marine Protected Areas ( The World
asking respondents how much they would be pre-
cluded in the Costanza et al. survey (3) are
Bank, Washington, DC, 1995).
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worthless. On the reserve costs side, we 32. IUCN, Parks for Life: Report of the IVth World Con-
(such as ensuring the survival of a species or habitat)
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or how much compensation they would demand for
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33. M. E. Soule, M. A. Sanjayan, Science 279, 2060
´
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5. M. Toman, Ecol. Econ. 25, 57 (1998).
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10. For further details, see supporting online material.
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imprecise. To enable readers to follow our working,
we generally present numbers used in calculations to 37. C. M. Roberts, J. A. Bohnsack, F. Gell, J. P. Hawkins, R.
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Thailand (unpublished report, Economy and Environ- 41. This review is the result of a workshop convened by
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15. A. T. White, H. P. Vogt, T. Arin, Mar. Pollut. Bull. 40,
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598 (2000). We thank N. Hockley, P. Gravestock, J. Scharlemann,
that they should: income disparity world- 16. P. W. Taylor, Environ. Ethics 3, 197 (1981). and C. Tiley for help with research, and M. Avery, R.
wide is increasing and most countries are 17. D. Ehrenfeld, in Biodiversity, E. O. Wilson, Ed. (Nation- Cowling, G. Daily, A. Gammell, D. Gibbons, J. Mc-
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Wildlife Fund, Gland, Switzerland, 2000). SOM Text
show one compelling reason why this is the
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www.sciencemag.org SCIENCE VOL 297 9 AUGUST 2002
●
REVIEW: ECOLOGY
Economic Reasons for Conserving
Wild Nature
Andrew Balmford,1* Aaron Bruner,2 Philip Cooper,3 Robert Costanza,4† Stephen Farber,5 Rhys E. Green,1,6 Martin Jenkins,7
Paul Jefferiss,6 Valma Jessamy,3 Joah Madden,1 Kat Munro,1 Norman Myers,8 Shahid Naeem,9 Jouni Paavola,3
Matthew Rayment,6 Sergio Rosendo,3 Joan Roughgarden,10 Kate Trumper,1 R. Kerry Turner3
matched estimates of the marginal values of
On the eve of the World Summit on Sustainable Development, it is timely to assess goods and services delivered by a biome
progress over the 10 years since its predecessor in Rio de Janeiro. Loss and degradation when relatively intact, and when converted
of remaining natural habitats has continued largely unabated. However, evidence has to typical forms of human use. To ensure
been accumulating that such systems generate marked economic benefits, which the we did not neglect private benefits of con-
available data suggest exceed those obtained from continued habitat conversion. We version, studies were only included if they
estimate that the overall benefit:cost ratio of an effective global program for the covered the most important marketed
conservation of remaining wild nature is at least 100 :1. goods, as well as one or more nonmarketed
services delivering local social or global
benefits. We cross-validated figures for in-
H
umans benefit from wild nature (1) in per hectare for each of 17 services across 16 dividual goods and services with other es-
very many ways: aesthetically and cul- biomes and then extrapolating to the globe by timates from similar places. Finally, we
turally; via the provision of ecological multiplying by each biome’s area, the Costanza checked that the comparisons across differ-
services such as climate regulation, soil forma- team estimated the aggregated annual value of ent states of a biome used the same valua-
tion, and nutrient cycling; and from the direct nature’s services (updated to 2000 US$) to lie tion techniques for particular goods and
in the range of $18 trillion to $61 trillion (1012 ),
harvest of wild species for food, fuel, fibers, services. Our survey uncovered only five
and pharmaceuticals (2). In the face of increas- around a rough average of $38 trillion. These examples that met all these criteria. Here,
ing human pressures on the environment, these figures are of similar size to global gross na- we summarize their findings, with all fig-
benefits should act as powerful incentives to tional product (GNP), but have been criticized ures expressed as net present values (NPVs,
in 2000 US$ ha 1), and using the discount
conserve nature, yet evaluating them has by some in the economic community (5–9).
proved difficult because they are mostly not One problem is that such macroeconomic rates considered by the authors [see Fig. 1
captured by conventional, market-based eco- extrapolations are inconsistent with microeco- and supplemental online material (10) for
nomic activity and analysis. nomic theory: extrapolation from the margin to further details].
In 1997, Costanza et al. published a synthe- a global total should incorporate knowledge Two studies quantified net marginal ben-
sis (3) of more than 100 attempts to value about the shape of the demand curve (3, 5–8). In efits of different human uses of tropical forest
ecosystem goods and services using a range of practice, it is very likely that per-unit demand areas. Kumari compared the values obtained
techniques including hedonic pricing, contin- for nonsubstitutable services escalates rapidly as from timber plus a suite of nontimber forest
gent valuation, and replacement cost methods supply diminishes, so that simple grossing-up of products (NTFPs), as well as the values of
(4). Using case studies to derive average values marginal values (as is also done in calculating water supply and regulation, recreation, and
GNP from prices) will probably underestimate the maintenance of carbon stocks and endan-
true total values. On the other hand, high local gered species, for forests under a range of
Conservation Biology Group, Department of Zoology,
1
values of services such as tourism may not be management regimes in Selangor, Malaysia
University of Cambridge, Cambridge CB2 3EJ, UK. 2Cen-
maintained if extrapolated worldwide. In addi- (11). Compared with two methods of re-
ter for Applied Biodiversity Science at Conservation In-
tion, while some policy decisions are made us- duced-impact logging, high-intensity, unsus-
ternational, 1919 M Street, NW, Suite 600, Washington,
DC 20036, USA. 3Centre for Social and Economic Re- ing macroeconomic indicators, many others are tainable logging was associated with greater
search on the Global Environment (CSERGE), School of made at the margin, and so are more appropri- private benefits through timber harvesting (at
Environmental Sciences, University of East Anglia, Nor-
ately informed by marginal rather than total least at high discount rates and over one
wich NR4 7TJ, UK. 4Center for Environmental Science,
valuations (9). harvesting cycle), but reduced social and
Biology Department and Institute for Ecological Eco-
nomics, University of Maryland, Box 38, Solomons, MD Another problem with the original estimate global benefits (through loss of NTFPs, flood
20688, USA. 5Graduate School of Public and Internation- is that landscapes can yield substantial (albeit protection, carbon stocks, and endangered
al Affairs, University of Pittsburgh, Pittsburgh, PA 15260, rather different) flows of goods and services species). Summed together, the total econom-
USA. 6The Royal Society for the Protection of Birds, The
after, as well as before, conversion by humans ic value (TEV) of forest was some 14%
Lodge, Sandy, Bedfordshire SG19 2DL, UK. 7UN Environ-
(which is of course why people convert them). greater when placed under more sustainable
ment Programme–World Conservation Monitoring Cen-
tre (UNEP-WCMC), 219 Huntingdon Road, Cambridge A clearer picture of the value of retaining habitat management (at $13,000 compared with
CB3 ODL, UK. 8Green College, Woodstock Road, Oxford $11,200 ha 1).
in relatively undisturbed condition might there-
OX2 6HG, UK; and Upper Meadow, Old Road, Heading-
fore be obtained by estimating not the gross A study from Mount Cameroon, Cam-
ton, Oxford OX3 8SZ, UK. 9Department of Zoology,
values of the benefits provided by natural bi- eroon, comparing low-impact logging with
University of Washington, 24 Kincaid Hall, Box 351800,
Seattle, WA 98195–1800, USA.10Department of Biolog- omes, but rather the difference in benefit flows more extreme land-use change again found
ical Sciences, Stanford University, Stanford, CA 94305, between relatively intact and converted versions that private benefits favor conversion, this
USA.
of those biomes. time to small-scale agriculture (12). Howev-
*To whom correspondence should be addressed. E- er, a second alternative to retaining the forest,
mail: a.balmford@zoo.cam.ac.uk Net Marginal Benefits conversion to oil palm and rubber planta-
†Address after Sept. 2002: Gund Institute of Ecolog-
To address these concerns, we reviewed tions, in fact yielded negative private benefits
ical Economics, The University of Vermont, Burling-
ton, VT 05405, USA. more than 300 case studies, searching for once the effect of market distortions was
950 9 AUGUST 2002 VOL 297 SCIENCE www.sciencemag.org
SCIENCE’S COMPASS
removed. Social benefits from NTFPs, sedi- did sustainable fishing (15). The social ben- vices outweighs the marketed marginal ben-
mentation control, and flood prevention efits of sustainable exploitation, arising from efits of conversion, often by a considerable
were highest under sustainable forestry, as coastal protection and tourism, were also lost amount. Across the four biomes studied,
were global benefits from carbon storage upon dynamiting reefs. As a consequence, mean losses in TEV due to conversion run
and a range of option, bequest, and exis- the TEV of retaining an essentially intact at roughly one-half of the TEV of relatively
tence values. Overall, the TEV of sustain- reef was almost 75% higher than that of intact systems (mean 54.9%; SE
able forestry was 18% greater than that of destructive fishing (at $3300 compared 13.4%; n 4). This is certainly not to say
with $870 ha 1).
small-scale farming ( $2570 compared that conversion has never been economical-
with $2110 ha 1), whereas plantations had One clear message from our survey is ly beneficial; in most instances, past clear-
a negative TEV. the paucity of empirical data on the central ance of forests and wetlands for prime
Three other biomes yielded single studies question of the changes in delivery of agricultural land and other forms of devel-
meeting our criteria. Analysis of a mangrove goods and services arising from the conver- opment probably benefited society as a
system in Thailand revealed that conversion sion of natural habitats for human use. For whole. But unless the present case studies
for aquaculture made or the range of ser-
sense in terms of vices and biomes
short-term private examined in the lit-
benefits, but not once erature are extreme-
external costs were ly unrepresentative
factored in (13). The (and we know of no
global benefits of reason why this
carbon sequestration should be the case),
were considered to be our synthesis indi-
similar in intact and cates that at present,
degraded systems. conversion of re-
However, the sub- maining habitat for
stantial social bene- agriculture, aquac-
fits associated with ulture, or forestry
the original man- often does not make
grove cover—from sense from the per-
timber, charcoal, spective of global
NTFPs, offshore sustainability.
fisheries, and storm
Continuing Losses
protection—fell to
almost zero follow- These results there-
ing conversion. Sum- fore provide a clear
ming all measured and compelling eco-
goods and services, nomic case, alongside
the TEV of intact sociocultural and
mangroves exceeded moral arguments (16–
that of shrimp farm- 18), for us to strength-
ing by around 70% en attempts to con-
( $60,400 com- serve what remains of
pared with $16,700 natural ecosystems.
ha 1). Yet, when we sum-
van Vuuren and marized available es-
Roy (14) reported that timates of recent
draining freshwater Fig. 1. The marginal benefits of retaining and converting natural habitats, expressed as NPV (in trends in the global
2000 US$ ha 1) calculated using the discount rates ( ) and time horizons presented. Values of
marshes in one of measured goods and services delivered when habitats are relatively intact and when converted status of natural habi-
Canada’s most pro- are plotted as green and black columns, respectively. [From (11–15); see (10) for further tats and free-ranging
ductive agricultural details.] vertebrate popula-
areas yielded net pri- tions, we found that
vate benefits (in large part because of substan- 10 of the largely natural biomes (including although key data are again disturbingly scarce,
tial drainage subsidies). However, social bene- rangelands, temperate forests, rivers and they show that rates of conversion are high
fits of retaining wetlands, arising from sustain- lakes, and most marine systems) in across most biomes (10).
able hunting, angling, and trapping, greatly ex- Costanza et al. (3), we found no studies that We included in our survey any estimate of
ceeded agricultural gains. Consequently, for all met all of our criteria. For the four biomes global trend in habitat cover based on a series
three marsh types considered, TEVs were high- which were analyzed, only a handful of which began in 1970 or later and included a
er when the wetlands remained intact, exceed- well-established ecosystem services were period of at least 5 years after the 1992
ing figures for conversion by a mean of around considered, and some particularly valuable United Nations Conference on Environment
60% ( $8800 compared with $3700 ha 1). services, such as nutrient cycling, waste and Development in Rio de Janeiro. We sup-
Finally, a synthesis of economic studies treatment, and the provision of cultural val- plemented this with biome-specific indices
examining Philippine reef exploitation dem- ues, were not examined at all. based on time-series data on populations of
onstrated that despite high initial benefits, Despite the limited data, our review also wild vertebrates, derived from the World
destructive techniques such as blast fishing suggests a second broad finding: in every Wildlife Fund (WWF) 2000 Living Planet
had a far lower NPV of private benefits than case examined, the loss of nonmarketed ser- Index (LPI) and UN Food and Agricultural
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SCIENCE’S COMPASS
Organization (FAO) fisheries data (19, 20). standing to gain immediate private benefits should in due course result in public and
For three biomes, we found two estimates from land-use change. Hence, conserving rel- private decision-makers acting to reduce con-
derived by different methods and from either atively intact habitats will often require com- version of remaining habitats worldwide.
largely or wholly independent data. In each pensatory mechanisms to mitigate the impact More immediately, given concerns about the
case, the two estimates were remarkably sim- of private, local benefits foregone, especially practicalities of exploiting natural resources
ilar (10), and so were averaged to yield single in developing countries. We see the develop- sustainably, one of the most important strat-
estimates of rates of change. Data such as ment of market instruments that capture at a egies to safeguard relatively intact ecosys-
these, quantifying trends in areal coverage private level the social and global values of tems is the maintenance of remaining habitats
and in populations, in some ways provide a relatively undisturbed ecosystems—for in- in protected areas. This costs money, and
more tractable measure of the scale of the stance, through carbon or biodiversity credits predictably, our current undervaluation of na-
ongoing crisis facing nature than do estimates or through premium pricing for sustainably ture is reflected in marked underinvestment
of extinction rates, which are harder to doc- harvested wild-caught fish or timber (22, in reserves. To the best of our knowledge, the
ument and more difficult to link to monetary 23)—as a crucial step toward sustainability. world spends (in 2000 US$) $6.5 billion
values. Third, the private benefits of conversion each year on the existing reserve network
Overall, we found that five of the six biomes are often exaggerated by intervention fail- (28). Yet, half of this is spent in the United
measured have experienced net losses since the ures. In the Cameroon study, for example, States alone. Globally, despite increased ex-
Rio summit, with the mean rate of change forests were cleared for plantations because penditure since the Rio Summit by both
across all measured biomes running at –1.2% of private benefits arising from government international institutions and private founda-
per year, or –11.4% over the decade (Fig. 2) tax incentives and subsidies (12). The same is tions, available resources for existing re-
(10). Hence, the capacity of natural systems to true for the Canadian wetland example (14), serves fall far short of those needed to meet
deliver goods and services upon which we de- as well as for many other wetlands across the basic management objectives (29). Moreover,
pend is decreasing markedly. Costing the over- United States and Europe (24). While over terrestrial and marine reserves currently cov-
all value of these losses is fraught with the the short term these programs may be rational er only around 7.9% and 0.5% of Earth’s land
problems of extrapolation and data availability with respect to public or private policy ob- and sea area, respectively (30, 31), well be-
already discussed. Nevertheless, it is sobering jectives, over the longer term many result in low the minimum safe standard considered
to calculate that if the aggregate figures of necessary for the task of maintaining wild
Costanza et al. (3) and our estimate of the nature into the future (32–34).
proportion of TEV lost through habitat change To estimate the resources needed to meet
are roughly representative, a single year’s hab- this shortfall on land, we reworked recent
itat conversion costs the human enterprise, in calculations (28, 35) of the costs of properly
net terms, of the order of $250 billion that year, managing existing terrestrial protected areas
and every year into the future (10). Why then is and expanding the network to cover around
widespread habitat loss still happening, and 15% of land area in each region. We found
what can we do about it? that a globally effective network would re-
quire an approximate annual outlay of be-
Reasons for Continued Conversion tween $20 billion and $28 billion [includ-
In economic terms, our case studies illustrate ing payments to meet private opportunity
three broad, interrelated reasons why the costs imposed by existing and new reserves,
planet is continuing to lose natural ecosys- spread out over 10 and 30 years, respectively
tems despite their overall benefits to society (10)]. New work derived from the costs of
(21). First, there are often failures of infor- existing marine reserves suggests that an
Fig. 2. Recent global estimates of the annual
mation. For many services, there is a lack of equivalent initiative for the world’s seas, this
rate of change in area or the abundance of
valuations of their provision by natural sys- time covering 30% of total area (34, 36),
associated vertebrate populations for six bi-
tems, and particularly of changes in this pro- would cost at most $23 billion/year in re-
omes. Note that the biomes that have declined
vision as human impacts increase. Although current costs, plus $6 billion/year (over 30
deliver valuable ecosystem services (3). *Values
this is an understandable reflection of sub- years) in start-up costs (10). The estimated
plotted are the mean of habitat and popula-
stantial technical difficulties, we believe that mean total cost of an effective, global reserve
tion-based estimates; †Little confidence can be
attached to this value (10).
future work needs to compare delivery of program on land and at sea is some $45
multiple services across a range of competing billion/year. This sum dwarfs the current $6.5
land uses if it is to better inform policy both economic inefficiency and the erosion of billion annual reserve budget, yet could be
decisions. Our examples show that even natural services. Globally, the subset of sub- readily met by redirecting less than 5% of
when only a few ecosystem services are con- sidies which are both economically and eco- existing perverse subsidies (25, 26). The cru-
sidered, their loss upon conversion typically logically perverse totals between $950 billion cial question is whether this is a price worth
outweighs any gains in marketed benefits. and $1950 billion each year [depending on paying.
Second, these findings highlight the fun- whether the hidden subsidies of external costs Although limited data make the answer
damental role of market failures in driving are also factored in (25, 26)]. Identifying and imprecise, they indicate that conservation in
habitat loss. In most of the cases we studied, then working to remove these distortions reserves represents a strikingly good bargain.
the major benefits associated with retaining would simultaneously reduce rates of habitat We assumed that the mean proportional loss
systems more or less intact are nonmarketed loss, free up public funds for investing in of value upon conversion recorded in our
externalities, accruing to society at local and sustainable resource use, and save money case studies is representative of all biomes
global scales. Conversion generally makes (25–27). and services, and that previous gross per-
narrow economic sense, because such exter- hectare values of those services are roughly
Costing Conservation
nal benefits [or related external costs, as in correct (3). If these assumptions are valid,
the case of the damage caused by shrimp Tackling these underlying economic prob- then our hypothetical global reserve network
farming (13)] have very little impact on those lems requires action on many levels, but would ensure the delivery of goods and ser-
952 9 AUGUST 2002 VOL 297 SCIENCE www.sciencemag.org
SCIENCE’S COMPASS
20. UN Food and Agricultural Organization, The State of
vices with an annual value (net of benefits case: our relentless conversion and degra-
the World Fisheries and Aquaculture (UN FAO, Rome,
from conversion) of between $4400 billion dation of remaining natural habitats is erod-
2000).
and $5200 billion, depending on the level of ing overall human welfare for short-term 21. R. K. Turner et al., Ecol. Econ. 35, 7 (2000).
resource use permitted within protected ar- private gain. In these circumstances, retain- 22. J. Hardner, R. Rice, Sci. Am. 286 (no. 5), 71 (2002).
eas, and with the lower number coming from ing as much as possible of what remains of 23. S. Scherr, A. White, D. Kaimowitz, Policy Brief: Making
Markets For Forest Communities (Forest Trends,
a network entirely composed of strictly pro- wild nature through a judicious combina-
Washington, DC, and Center for International Forest-
tected reserves [for working, see (10)]. The tion of sustainable use, conservation, and,
ry Research, Bogor, Indonesia, 2002).
benefit:cost ratio of a reserve system meeting where necessary, compensation for result- 24. R. Turner, T. Jones, Eds., Wetlands: Market and Inter-
minimum safe standards is therefore around ing opportunity costs [as called for at the vention Failures (Four Case Studies) (Earthscan, Lon-
100 :1. Rio Summit (40)] makes overwhelming don, 1991).
25. C. P. van Beers, A. P. G. de Moor, Addicted to Subsi-
Put another way, the case studies, the economic as well as moral sense.
dies: How Governments Use Your Money to Destroy
service values of Costanza et al. (3), or our
the Earth and Pamper the Rich (Institute for Research
References and Notes
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26. N. Myers, J. Kent, Perverse Subsidies (Island Press,
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