Balancing development against the price of paradise lost: Stanford researchers spearhead growing push for dollars and cents assessment of benefits of nature

At a time when the world is sweating under the threat of global warming, rocked by food riots, skyrocketing oil prices and raging wildfires, with increasing numbers of fisheries nearing or beyond collapse and increasing numbers of humans clamoring for more energy as natural habitats around the globe continue to shrink under pressure from the growing human hordes at their gates, talk of a renaissance may sound a bit incongruous.

But in a special issue of the Proceedings of the National Academy of Sciences scheduled to be published online this week, co-editors Gretchen Daily and Pamela Matson argue that within the conservation community, there is a flowering of innovation and optimism, as new approaches to assessing the economic value of ecosystems and incorporating that value into finance and policy mechanisms, as well as governmental and corporate decision making, are beginning to bear fruit.

Ecosystem services, or natural capital, is the conceptual driving force behind this conservation renaissance. The central thesis of the approach holds that there is intrinsic economic value to undeveloped land.

"Our big thrust is to try and align economic forces with conservation," said Daily, a professor of biology at Stanford and senior fellow at Stanford's Woods Institute for the Environment. The special issue she and Matson edited is titled "Ecosystem services: from theory to implementation." Matson is dean of the School of Earth Sciences at Stanford.

"The conservation community is really gearing up to advance some new approaches and that is what this special issue is about," Daily said. "We're beginning to characterize in rigorous terms what the stream of benefits is that comes from good investment and management of natural capital. And we're finding tremendous demand for this work, from governments, businesses and private landowners."

One manifestation of that growing demand is the selection of Mark Tercek as the new CEO of The Nature Conservancy, the world's largest conservation agency. Tercek built his career at Goldman Sachs, a global financial services company, where he founded and headed up the firm's Center for Environmental Markets, a new institution promoting the approaches laid out in the special issue.

For centuries, if not millennia, the value of undeveloped land has been deemed to lie in what can be extracted from it or built on it, not in what it offers in an untouched state. It seemed only tree huggers and would-be Thoreaus found pristine wilderness to be of value for its own sake. But there is a middle ground, according to advocates of natural capital. They argue that undeveloped land has an economic value that should be factored into any calculations about the costs and benefits of development, and it is not just about reducing your psychiatry bills by laying down in flowered meadows and watching butterflies flit.

To understand that undeveloped land does in fact have intrinsic economic value, consider the devastating effects of the recent flooding along the Mississippi River in Iowa, Missouri and Illinois. Though the rains that triggered the flooding were exceptionally heavy, the floodplains that once would have buffered the effects of high water could not play that role because so much of the floodplain has been covered with houses and farms. Had the floodplain been left undeveloped, the estimated billions of dollars in damage would have been substantially reduced.

Daily said that undeveloped lands "supply a stream of benefits that range from climate stabilization to flood control to purification of water to pollination of many of our key crops." But those benefits are being steadily reduced, she said, just when human demand for them is at an all-time high and intensifying.

"We're liquidating this type of capital, and it's making us, as a global society, much more vulnerable to exceeding nature's limits," Daily said. "The value of natural capital is usually appreciated only after its sudden loss, such as after Hurricane Mitch, the Asian Tsunami or Hurricane Katrina, disasters made much worse by loss of forests, wetlands and barrier islands. We're working to establish rational, long-term investments in conservation."

Some of the papers in the special issue apply the natural capital approach to assessing how best to link conservation and human development. Heather Tallis, lead scientist with the Natural Capital Project, which is headquartered at the Woods Institute for the Environment, is first author of a paper examining the success rate of World Bank projects intended to simultaneously reduce poverty and protect biodiversity, the animals and plants that make up natural capital.

Erik Nelson, an economics postdoctoral scholar also with the Woods Institute, is first author of another paper presenting results from a model he and his colleagues developed to predict private land-use decisions in response to policy incentives aimed at increasing carbon sequestration and species preservation. Other papers present case histories from implementing natural capital approaches to the Great Barrier Reef in Australia and in China, where the government has committed to spending $100 billion on ecosystem service payments.

"What we're trying to do is learn from these experiences and share experience so we can scale up," Daily said. "The big challenge is to scale up and replicate these successes in aligning economic incentives with conservation."

As an example, she posed the question, "How do we go in and change systems of national accounting, for instance, so that the GDP or GNP actually reflect the depreciation or investment in natural capital?"

Part of the answer may lie in a software program being developed by Daily and her colleagues at the Natural Capital Project, Peter Kareiva and Taylor Ricketts, heads of science at The Nature Conservancy and World Wildlife Fund, respectively. The software is called InVEST, which stands for Integrated Valuation of Ecosystem Services and Tradeoffs, and is the subject of a paper in the special issue.

The program allows users to input basic data about an area such as soil, vegetation, rainfall and topography and calculate the value of the land for provision of various benefits such as water for human consumption, carbon storage, recreational value, flood control, pollination of crops, and forage production for livestock.

"We're leaving a lot of choices up to the user, so you can specify which services are of interest and important and what kind of scenarios of change make sense," Daily said.

"The areas where we might get into controversy are more on the cultural sides, but there we again let the user describe what is important," she said. "This is just a way of organizing information, so we don't put our own sort of values into it, the user does. It's more just a way of having users look at what they care about and what the implications of different future scenarios would be."

Daily said that the goal is to go beyond nature reserves, because setting land aside to maintain biodiversity will only save a tiny fraction, an estimated 5 percent, of Earth's animals and plants.

"We need to go beyond biodiversity, because most people don't even know what it is or relate at all to it," she said. "We need to link to people, human well-being." Her hope is that by developing methods to assess the value of natural lands and let people see how they benefit from maintaining land in a natural state instead of developing it, they will begin to enjoy a higher quality of life in a landscape that contributes to sustaining all life.

"That's kind of the motivation behind all of this," Daily said. "To make conservation mainstream."

Editor Note:

Gretchen Daily will be traveling for several days after Monday, July 14, but will be checking her e-mail.

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