Paying for Nature

In the past many of the ways in which we benefit from the natural world have been overlooked. The law has traditionally taken into account only those benefits based on physical possession of land or on tangible produce which has a commercial value, such as timber. Other concerns, such as fresh air, clear water and the state of biodiversity, have therefore fallen outside the law’s regard. Colin Reid explores the issue.

More recently, however, considerable work has been done to recognise and value the many ways in which we rely on and benefit from the world around us and which are not reflected in commercial values. In particular the various ecosystem services provided to us are being identified. These include:

• Provisioning services in the form of products such as food, fresh water, and fibres
• Regulating services such as climate regulation, water purification and pollination
• Cultural services in the form of spiritual, aesthetic and educational benefits and recreation
• Supporting services which are necessary for the production of all other ecosystem services, including soil formation and nutrient cycling.

This work allows us to appreciate that land which is not producing commercially valuable resources or crops, and which therefore in conventional terms may be seen as “unproductive”, is in fact supplying something of immense value. By recognising the ways in which human activities are affecting the ecosystem and the services it provides, a basis exists for developing new means of reflecting and influencing our impact on biodiversity, predominantly by applying various forms of economic instrument. The effect of our activities can be positive or negative, and interventions designed to regulate our impacts on ecosystem services can be based on penalising or rewarding activities as appropriate.

The “polluter pays” principle

One set of measures is based on the well-known “polluter pays” principle. This endeavours to make sure that those who cause losses to biodiversity are required to compensate for this in some way, and by internalising the costs of the ecological damage felt by the wider community, to prompt those whose actions will harm biodiversity to reduce or avoid such negative impacts. Examples include biodiversity offsetting schemes, where those whose activities will cause loss in one place are allowed to proceed only if they provide equivalent gains elsewhere, and various forms of impact fees where the compensatory action takes the form of financial contributions to support conservation projects

The “beneficiary pays” principle

The alternative is based on the “beneficiary pays” principle, where it is recognised that when land management is producing a positive impact, the provider of this should be rewarded by the beneficiaries. This is reflected in Payment for Ecosystem Services schemes, with the state often making payment on behalf of the wider community, given the difficulty of identifying more specific beneficiaries. Examples include agri-environment schemes giving additional financial support to farmers adopting environmentally-friendly methods and management agreements under which landowners are paid for maintaining and enhancing the features which have led to sites being designated and nature reserves etc.

There are technical challenges with both approaches, as well as concerns that they inappropriately treat biodiversity as a commodity.

Quite apart from disputes over the methodology for the valuation of ecosystem services (even in terms of judging equivalence, without resort to monetary values) the attribution between individual suppliers and beneficiaries is difficult.

The services are often overlapping and hard to disentangle; maintaining a healthy peat bog provides benefits for both biodiversity and carbon storage, whilst contributing with many other elements in the wider catchment to the quality and quantity of water resources. Moreover the services are likely to be provided by areas defined by their ecological functions, such as stream catchments, not by discrete plots defined by the legal boundaries of ownership which are often on a completely different scale. There are also challenges in providing the secure long-term and co-ordinated arrangements needed to ensure the health of the ecosystems which lie at the root of service provision. So long as the limitations are recognised, however, the absence of perfection may not be a fatal problem if the alternative is the status quo which allows the loss of biodiversity to continue by failing to recognise and reward the provision of ecosystem services.

There can, nevertheless, be strong objections to any exercise along these lines. It can be argued that it is fundamentally wrong to view nature only in terms of the services it can offer to humankind. From this viewpoint, putting a value on biodiversity denies the intrinsic worth of the organisms with which we share the planet and amounts to an unacceptable commodification of nature. The goal of “no net loss to biodiversity” when development takes place not only fails to recognise the degradation that has already taken place at human hands but also suggests that the elements of nature are freely interchangeable, whereas a desert is not the same as a marsh, a deer not the same as a dolphin.

The conventional approach to conserving biodiversity is to rely on “command and control” techniques. These prohibit activities which are harmful to the particular species and habitats designated as being of particular value, restricting the landowners’ rights to use their land as they wish and penalising the killing and taking of protected plants and animals and connected activities. Such an approach will always have a major part to play in conserving biodiversity, but it is not simply the future of particular sites and species but the health of the ecosystem as a whole that must be ensured to stop and reverse the devastating and accelerating loss of biodiversity that we have seen in past centuries. Thinking about who should be paying for nature may offer more flexible, more effective and more inclusive way of supporting the biodiversity we need to survive.

Colin T. Reid is Professor of Environmental Law at the University of Dundee

The Privatisation of Biodiversity? New Approaches to Conservation Law by Colin T. Reid and Walters Nsoh is out now. Chapter one is available to read for free on Elgaronline.