Friday, October 31, 2008

A new study: The destruction of forests costs much more than the financial crisis in Wall Street

Would you believe that annual loss from the disappearance of forests is greater than the current losses of Wall Street?

According to an EU commissioned study, the destruction of forests cost global economy $2-$5 trillion every year, whereas Wall Street by various calculations has to date lost, within the financial sector, $1-$1.5 trillion.

The BBC News reported (thanks to GreenLine Paper for the tip!) about this study, entitled "The Economics of Ecosystems and Biodiversity" (Teeb) and headed by Pavan Sukhdev, an economist of Deutsche Bank. According to the article, the first phase of the study concluded in May when the team released its finding that forest decline could be costing about 7% of global GDP.

So what is exactly this economic loss that results out of the destruction of forests? well, the principle is quite simple - as forests decline, nature stops providing services which it used to provide us essentially for free, such as providing clean water and absorbing carbon dioxide. Then, the report explains, the human economy has to provide them instead, perhaps through building reservoirs, building facilities to sequester carbon dioxide, and so on, or we have to do without them. Either way, there is a financial cost.

If you ask yourself how come the Wall Street crisis gets so much attention and of course an immediate remedy, whereas the forests are left behind, think of relevance to your daily life. I think that's the main issue here. Of course we need more regulation and economic steps to be taken to support conservation and make sure living trees will have greater value than trees that are cut down, but in the bottom line it's mainly about relevance.

People were persuaded that the Wall Street crisis is relevant for each and every one of them due to its overall influence on the economy. But most people don't find the forests' crisis relevant to their daily life, and therefore it doesn't really matter what the price tag attached to this crisis is. And if it won't matter to people, governments and businesses (but especially governments) will find it much more difficult to act in the right direction.

How you make the forests' desctruction more personally relevant for people? I wish I had the right answer. My belief is that it is a combination of more education, more political awareness, more business action and more media attention. As you see there's a lot to be done but we need to stay optimistic and believe in our ability to achieve this goal even in time of financial difficulties.

At least Mr. Sukhdev, the study leader succeed to see the full half of the glass. "governments and businesses" he says, "are getting the point." And he further expalins: "times have changed. Almost three years ago, even two years ago, their eyes would glaze over. Today, when I say this, they listen. In fact I get questions asked - so how do you calculate this, how can we monetize it, what can we do about it, why don't you speak with so and so politician or such and such business."

Raz @ Eco-Libris

More posts relevant to this issue:

Al Gore and Wangari Maathai calls the U.N. General Assemby to support protection of forests

Will the new international fund save the Amazon?

Green Options 2: The Nature Conservancy: 320,000 Acres of Forest Protected in Landmark Deal

Merrill Lynch is investing in forest protection

* Picture Courtesy of Sustainable Harvest international