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«The Economic and Social Aspects of Biodiversity Benefits and Costs of Biodiversity in Ireland REPORT PREPARED BY: CRAIG BULLOCK, OPTIMIZE CONSULTANTS ...»

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The ocean, as well as rivers and lakes, provides a provisioning ecosystem service in terms of a fish catch. Fish are harvested directly, but this catch itself depends on a functioning ecosystem that supplies nutrients, prey species, habitats and a desirable water quality. Over-fishing, pollution, destruction of habitat and alien species are amongst the many threats to marine biodiversity.

The present quayside value of the fish catch is 180 million per year, but could be worth twice this amount if fish populations were to be managed sustainably. Aquaculture and the seaweed industry are worth over 50 million and also depend heavily on ecosystem services. The value of assimilation of waste emptied by our rivers or sewerage outflows cannot be estimated, but is certainly substantial. Bizarrely, despite the obvious benefits of marine biodiversity, we are still unable to shake off a policy of subsidising the over-exploitation of fisheries. Although we spent a pittance on the protection of marine biodiversity, lack of political realism and willpower remain the principal constraints.

Wa t e r

Within the aquatic environment, biodiversity performs a significant service both in terms of recycling nutrients and ensuring desirable water quality for agricultural use, fisheries and human consumption. Likewise, this same biodiversity assimilates human or animal waste and industrial pollutants. Many aquatic habitats are important for these services, for flood mitigation, recreation or amenity. Our dependence on water quality means that any degradation through excessive pollution is amongst the first adverse human environmental impacts of which we are likely to become aware.

A distinction must be drawn between the huge external cost of water pollution and the value of the ecosystem service. The latter is of value for assimilating excess nutrients from diffuse pollution, but can be overwhelmed. Without full consideration of this service, the value of biodiversity is estimated at up to 385 million per year. The true value would diminish if we managed agricultural and residential pollution better, but rise if fish populations recover or water-based recreational expenditure were to increase.

H u m a n w e l f a re

A very important contribution is made by biodiversity to human welfare. This occurs directly through our appreciation of nature, be this through nature watching or eco-tourism, or simply through the complementary association between environments that are attractive and rich in biodiversity. Biodiversity also has an obvious role in angling and water sports.

Nobody has yet brought together the marginal utility value of all ecosystem services as they contribute to natural environments in Ireland that are used for passive enjoyment or for recreation.

Irish inland waters and the coast represent particular omissions. However, from those studies that have been conducted, the utility value (including environmentally-sensitive agriculture as noted above, but excluding health) can be estimated as being at least 330 million per year. Recent work by the Heritage Council suggests an incremental value for policies to enhance the natural environment of 65 million per year.


The connection between biodiversity and health is only beginning to be understood. Clearly, a functioning ecosystem contributes to a supply of nutritious food and water of a quality essential to human health. In addition, it ensures that many diseases, and their vectors, do not get out of hand.

Although this may be best understood through reference to many tropical diseases, the importance of these regulatory services in temperate climates is beginning to be understood through instances where natural systems have been disrupted by human interference, bird flu being a probable example. Biodiversity has also been important to the isolation of many important drugs.

Good health has a utility benefit that probably exceeds that of any other sector. The potential health expenditure savings due to high environmental quality are equally sizeable. Although the routes through which biodiversity contributes positively to health are too indirect or multidimensional to quantify in this report, they are certainly huge and deserving of more attention.

P olicy costs

Policy costs are estimated in the region of 370 million per year. However, only a proportion of these are truly incurred on protecting biodiversity despite the Convention on Biological Diversity to which Ireland is a signatory. Even within the Parks and Wildlife Service only a proportion of spending, i.e. around 35 million per year, is spent directly on biodiversity or habitat protection.

A significant amount of spending is also undertaken by the Environmental Protection Agency (EPA), but while this indirectly benefits biodiversity, its principal aim is to reduce pollution toxicity and to protect environmental quality in conformance with EU Directives.

The Rural Environmental Protection Scheme (REPS) could be identified as a policy that directly benefits biodiversity by protecting species and habitats found on agricultural land. The policy cost is around 280 million per year, although only a portion of this is relevant to biodiversity as REPS supplies other objectives, including aesthetic benefits, food quality and animal welfare. A significant benefit of REPS is as a social transfer to more marginal farmers that coincides with rural development objectives.

Other policies are difficult to identify. Expenditure is incurred by the National Roads Authority (NRA) on measures to protect biodiversity along new roads, but this expenditure has not been estimated by the agency. A new Forest Environmental Protection Scheme (FEPS) has recently been launched by the Forest Service, but initial expectations of expenditure are modest. Although the cost of biodiversity requirements for new plantings are borne by private forestry companies in terms of lost timber production, these costs are recouped in the form of forestry grants.

Net benefits

We are increasingly conscious of the damage that human activities are doing to the environment.

Environmental policy is typically evaluated in terms of its success in reducing these adverse impacts.

However, we are less accustomed to thinking of what the environment does for us. Even though only a few examples of biodiversity benefits have been estimated - and then only very approximately given the scope of this report and our limited understanding of ecosystem services - it is clear that the benefits far exceed the costs of policies to protect biodiversity.

Amongst the most urgent of the threats we face is that of a total collapse of fish stocks. Hitherto, we have responded to declining fish stocks by attempting to place quotas on those species at risk.

Everybody now agrees that, for a variety of reasons, these policies have not been very successful. It is only recently that the relationship between commercial fish stocks and the underlying ecosystem has been demonstrated.

In other areas, there have been recent positive trends in environmental policy. Some formerly polluted rivers are becoming cleaner, natural forests are no longer being felled, agricultural policy is no longer paying farmers to drain wetlands or rip up hedgerows, and previously native species, such as the golden eagle, have been reintroduced. The damage that is continuing to affect natural systems is now more subtle and elusive, for example the accumulation of toxins, nutrification of watercourses and soils, or the gradual attrition of natural habitat. Subtle or not, future generations will face a huge bill in terms of public health, water purity and, ultimately for environmental rehabilitation, if we continue to abuse biodiversity.

The report finds that there are substantial net social and economic benefits from biodiversity when compared with the policy costs. Nevertheless, direct expenditure on the protection of biodiversity is not always necessary. Environmental impact assessment and integrated land use planning can do much to minimise threats to biodiversity. Awareness and political decisiveness are critical too. By designing policies that do not reward people for damaging the environment, and by enforcing these with environmental standards, biodiversity protection need not cost the earth.

I n t roductions

1. B I O D I V E R S I T Y: ECON O M I C A N D S O C I A L A S P E C T S

1.1 T H E I M P O RTA N C E O F B I O D I V E R S I T Y

Biodiversity is a fundamental characteristic of life on Earth and encompasses the “whole range of variation in living organisms” (Wilson, 1993). It can be defined in terms of genetic variation, species variation or ecosystem variation. Throughout the EU much biodiversity has been lost in recent decades. For many years in Ireland, biodiversity remained relatively protected by the low economic growth. However, as the economy has raced ahead in the past ten years, so biodiversity is being threatened by built development and changes in land use management. Like all countries, there is also the pervasive risk that climate change will further multiply the problems associated with loss of biodiversity.

Reviewing the state of biodiversity in the EU, Kettunen and ten Brink (2006) identify habitat change and destruction as being the most direct reasons for biodiversity loss. Other significant factors include over-exploitation of resources, pollution and changes in ecosystem composition due to colonisation by non-native plant and animal species.

Biodiversity is not of value for purely esoteric reasons. It is of value to all of us for the ecosystem services that a healthy biodiversity provides. Kettunen and ten Brink categorise these as the provisioning, regulating, supporting and cultural services that underpin our supplies of food, clean water and renewable resources, and which maintain hydrological cycles and, ultimately, our climate.

An early reaction to the loss of biodiversity was the recognition that this was eroding our quality of life, an observation that was articulated so well by Rachel Carson in 1962, in her famous book, Silent Spring. However, as the continued loss of biodiversity is threatening to undermine the ecosystem services on which we depend, so the direct economic consequences of this loss are becoming increasingly apparent.

Science has revealed much of the importance of biodiversity, but an economic and social assessment is needed to communicate the fact that biodiversity loss also has an economic and social impact.

Considerable costs will be faced in the protection or replacement of ecosystem services, so policy decisions are required if these costs are to be avoided. These decisions need to be guided by both an understanding of the value of biodiversity to current economic and social systems, and an appreciation of what the costs of inaction could be.

Such a valuation does not imply that nature is all good. From a human perspective, many species have a negative impact on our utility, namely agricultural pests or bacterial disease. Taking a wider perspective, however, these pests and diseases are kept in check by a functioning ecosystem.

Indeed, many species which may be better known as pests also play a critical positive part in this functioning of the ecosystem through interdependencies and evolutionary adaptation.

Neither does it necessarily follow that high levels of biodiversity are better than low levels. The presence of particular key species or functionality (what we call a “healthy” ecosystem) may be more important than the absolute numbers of species. Generally, though, it is the case that a high level of biodiversity is likely to coincide with overall stability. The more species there are in an ecosystem, the more likely it is that species will be ecologically similar or able to provide the same functions as others in the event of exogenous change to the ecosystem (van Rensburg & Mill, 2006, Vitousek & Hooper, 1993). This stability provides an insurance against sudden change. This concept of insurance is little different from people’s own reliance on various income earning skills or their possession of a broad portfolio of investments (Tilman et al., 1995).

1.2 T H E NAT U R E O F B I O D I V E R S I T Y Biodiversity is a public good. That is, it is unpriced by normal market processes. As such, it is subject to ‘market failure’ in that there are no prices through which to indicate its scarcity. This, in turn, presents issues in relation to the neglect or misuse of natural systems.

To understand the value of biodiversity, it is first necessary to examine and categorise the multiple

benefits it provides. Many of these can be quantified in economic terms. They include:

• The underpinning of the provision of ecosystem services, ensuring the productivity of agriculture, forestry, fisheries, water purification and climate moderation;

• Contributing to quality of life by providing utility to people directly through their appreciation of nature or landscapes and through their enjoyment of a type of recreation that depends on a functioning ecosystem, e.g. angling, water sports, hunting.

• Providing economic returns directly in relation to recreation and tourism, including nature tourism.

• Contributing to human health through the recycling of nutrients and decomposition of pollutants (including those that could find their way into potable water supplies), or through benefits to health due to the physical exercise of recreation undertaken in open spaces.

–  –  –

P rov i s i o n i n g Food and fibre Fuel (e.g. wood, bio-oils) Biochemicals and pharmaceuticals Fresh water Regulating Air quality Climate regulation Water regulation (flood prevention, waste assimilation, evapotranspiration) Erosion control (ground protection) Water purification and waste management Regulation of human diseases Pest control Pollination

–  –  –

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