The Economics of Ecosystems and Biodiversity (TEEB) study is an international initiative to draw attention to the global economic benefits of biodiversity. Its objective is to highlight the growing cost of biodiversity loss and ecosystem degradation and to draw together expertise from the fields of science, economics and policy to enable practical actions. TEEB aims to assess, communicate and mainstream the urgency of actions through its five deliverables; D0: science and economic foundations, policy costs and costs of inaction, D1: policy opportunities for national and international policy-makers, D2: decision support for local administrators, D3: business risks, opportunities and metrics and D4: citizen and consumer ownership.
One motive for the study was to establish an objective global standard basis for natural capital accounting. Various estimates establish the cost of biodiversity and ecosystem damage expected to cost 18% of global economic output by 2050 [1] and currently at over US$2T (for the largest 3000 companies according to Trucost) [2], with some estimates as high as US$6T/year [3]. The World Bank in particular has led recent efforts to include the cost of biodiversity and climate harm in national accounts [4].
Its sponsors declare TEEB to be a "major international initiative to draw attention to the global economic benefits of biodiversity, to highlight the growing costs of biodiversity loss and ecosystem degradation, and to draw together expertise from the fields of science, economics and policy to enable practical actions moving forward." [5] In October 2010 it released its report "Mainstreaming the Economics of Nature: a synthesis of the approach, conclusions and recommendations of TEEB" [6] and launched the Bank of Natural Capital [7] to communicate its findings to the general public.
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The TEEB study was launched by Germany and the European Commission in response to a proposal by the G8+5 Environment Ministers in Potsdam, Germany in 2007, to develop a global study on the economics of biodiversity loss. The second phase of the TEEB study is hosted by the United Nations Environment Programme (UNEP) with support from a number of organizations, including the European Commission, German Federal Ministry for Environment, Nature Conservation and Nuclear Safety and the UK Department for Environment, Food and Rural Affairs.
The study is led by Pavan Sukhdev, a senior banker from Deutsche Bank, and founder-Director of the green accounting project GIST (Green Indian States Trust[8]) in India. The TEEB Advisory Board includes experts from the fields of science and economics.
The TEEB Interim Report was released in May 2008 under Phase I. The report provided evidence for significant global and local economic losses and human welfare impacts due to the ongoing losses of biodiversity and degradation of ecosystems. It focused largely on forests and looked at the extent of losses of natural capital taking place as a result of deforestation and degradation. TEEB estimates that this is US$2â4.5 trillion per year, every year.
Phase II of the study set out to expand on the work begun in Phase I. It was completed in 2010 and presented in Nagoya, Japan, at the 10th Conference of the Parties of the Convention on Biological Diversity (CBD) in October 2010. The final volumes of TEEB are being published by Earthscan. The first volume published in October 2010; The Economics of Ecosystems and Biodiversity: Ecological and Economic Foundations. The second, third and fourth volumes will be published over the course of 2011.
Pavan Sukhdev, a senior banker at Deutsche Bank, is currently on secondment to the United Nations Environmental Programme to lead the agencyâs Green Economy Initiative. This initiative includes The Economics of Ecosystems and Biodiversity study, the Green Economy Report and the Green Jobs report.
As a career banker, he continues to be Chairman of Deutsche Bankâs Global Markets Centre Mumbai (GMC Mumbai). Pavan was instrumental in the evolution of Indiaâs currency and interest rate and in the introduction into India of the overnight indexed swap, which is today Indiaâs most liquid traded interest rate swap instrument.
The world has already lost much of its biodiversity.[1][2] TEEB indicates that pressure on commodity and food prices shows the consequences of this loss to society. TEEB recommends that urgent remedial action is essential because species loss and ecosystem degradation are inextricably linked to human well-being. Economic growth and the conversion of natural ecosystems to agricultural production are forecasted to continue, but TEEB feels that it is essential to ensure that such development takes proper account of the real value of natural ecosystems. This is central to both economic and environmental management.
The findings of TEEB (Interim Report) were largely in three areas - the economic size and welfare impact of losses of ecosystems and biodiversity, the strong links between biodiversity conservation and ecosystem health on the one hand and poverty elimination and the achievement of Millenium Development Goals on the other, and the ethical choices involved in selecting a social discount rate for discounting the benefits of ecosystems and biodiversity.
Main findings
TEEB finds that sound ecosystem and biodiversity management, and the inclusion of natural capital in governmental and business accounting can start to redress inaction and reduce the cost of future losses.
TEEB Phase II, currently underway, takes an economic approach that is spatially specific and builds on knowledge of how ecosystems function and deliver services. It examines how ecosystems and their associated services are likely to respond to particular policy actions. A fundamental focus of TEEB is on developing an economic yardstick that is more effective than GDP for assessing the performance of an economy. TEEB recommends that national accounting systems need to be more inclusive in order to measure the significant human welfare benefits that ecosystems and biodiversity provide. Such systems can help policy makers adopt the right measures and design appropriate financing mechanisms for conservation.
In Phase II TEEB aims to:
TEEB's Climate Update stated that an agreement on funding for forests was a key priority for governments attending the 2009 United Nations Climate Change Conference in Copenhagen.
An estimated 5 gigatonnes or 15 percent of worldwide carbon dioxide emissions are absorbed or âsequestratedâ by forests every year, making them the âmitigation engineâ of the natural world.
TEEB finds that investing in ecosystem-based measures such as financing Reducing Emissions from Deforestation and Forest Degradation (REDD) can thus not only assist in combating climate change but can also be a key anti-poverty and adaptation measure.
The Update also underlines a âCoral Reef Emergencyâ that is already here as a result of the current build-up of greenhouse gases. Scientists contributing to the TEEB process indicate that irreversible damage to coral reefs can occur at atmospheric CO2 concentrations of over 350 parts per million (ppm). This is linked with rising temperatures but also ocean acidification. Concentrations are already above this threshold and rising. It raises concerns that stabilizing CO2 levels at 450 ppm, or some 16 percent above the current levels, may condemn this critical, multi-billion dollar ecosystem to extinction and take with it the livelihoods of 500 million people within a matter of decades.
UNEPâs Green Economy Initiative is a project designed to communicate that the greening of economies is not a burden on growth but rather a new engine for growth, employment, and the reduction of persistent global poverty.
The Green Economy Report, published in February 2011, will use economic analysis and modelling approaches to provide an in-depth assessment of identified economic sectors where "greening" can lead to prosperity and job creation. It will cover sectors such as: agriculture, buildings, cities, fishery, forests, industry, renewable energy, transport, tourism, waste management, and water as well as the enabling conditions in finance, domestic and international policy architecture needed to bring about the transformation to a green economy.