Deforestation costs much worse than credit crunch

According to the BBC’s Richard Black, Environment Correspondent, ”the global economy is losing more money from the disappearance of forests than through the current banking crisis, according to an EU-commissioned study. It puts the annual cost of forest loss at between $2 trillion and $5 trillion. The figure comes from adding the value of the various services that forests perform, such as providing clean water and absorbing carbon dioxide.”

The study, headed by a Deutsche Bank economist, parallels the Stern Review into the economics of climate change. It has been discussed during many sessions at the World Conservation Congress.

“Some conservationists see it as a new way of persuading policymakers to fund nature protection rather than allowing the decline in ecosystems and species, highlighted in the release on Monday of the Red List of Threatened Species, to continue.

Speaking to BBC News on the fringes of the congress, study leader Pavan Sukhdev emphasised that the cost of natural decline dwarfs losses on the financial markets. “It’s not only greater but it’s also continuous, it’s been happening every year, year after year,” he told BBC News. “So 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.”

The review that Sukhdev leads is The Economics of Ecosystems and Biodiversity (Teeb). The first phase concluded in May when the team released its finding that forest decline could be costing about 7% of global GDP. The second phase will expand the scope to other natural systems.