Deforestation around the world this year will cost the world more than the current financial crisis, economists claim. The study puts the cost of clearing the world’s forests at $2 trillion to $5 trillion every year, compared to the one-off cost of the global credit crunch so far estimated at $1 trillion to $1.5 trillion.
A research by a team led by now-former Deutsche Bank economist Pavan Sukhdev released a report “The Economics of Ecosystems & Biodiversity” back in May that estimated the costs of the loss of forest area in environmental terms. It found that reductions in biodiversity, clean water supply, flood protection and atmospheric carbon absorption from forest decline cost an equivalent of 7 per cent of world GDP.
The report has returned to centre stage after its authors presented a stark cost comparison to the current financial meltdown at the recent World Conservation Congress in Barcelona. “Whereas Wall Street by various calculations has to date lost within the financial sector $1-$1.5 trillion, the reality is that at today's rate we are losing natural capital at least between $2-$5 trillion every year," Sukhdev told the BBC.
"Though our well being is totally dependent upon these 'ecosystem services' they are predominantly public goods with no markets and no prices, so they often are not detected by our current economic compass," his report states.
Sukhdev’s research team is funded by the European Union and Germany and continues its work in calculating the costs of environmental degradation beyond forests.
The study has led to a new project, the Green Economy Initiative, backed by the UN Environment Programme and due to be launched in London next week. The plan will push world leaders to chart a course out of the current financial breakdown to a new sustainable footing for the world economy. Its proponents say will create millions of jobs, cut poverty and revive economic growth.
The essence of the initiative will be a call for a “green new deal” to redirect investment away from speculative activity that caused the current global crisis toward a new job-creating environment protection programmes. It maintains that repairing and protecting the environment will spur economic growth, rather than retard it.
Der Speigel, BBC 10/10/08, The Independent 12/10/08
More info and download:
The Economics of Ecosystems & Biodiversity (TEEB)