Recognising the economic benefits of nature in 2011

Efforts to halt deforestation across the world will be stepped up this year

The world is waking up to the fact it can no longer sit back while the planet's natural resources, and the species that depend upon them, are systematically destroyed.

The economic and human costs of inaction are simply too great.

Much of the groundwork has been laid, not least research that, for the first time in history, has begun to quantify just how expensive the degradation of nature really is.

A recent United Nations study entitled the Economics of Ecosystems and Biodiversity (TEEB) put the damage done to the natural world by human activity in 2008 at between $2tn (£1.3tn) and $4.5tn - at the lower end, roughly equivalent to the entire annual economic output of the UK.

And in October last year in Nagoya, Japan, almost 200 countries negotiated 20 specific targets with the express aim of "taking effective and urgent action to halt the loss of biodiversity".

Among these included massively increasing areas of protected oceans, halving the rate of loss of natural habitats and preventing the extinction of threatened species.

Binding commitments are not due to be signed until February next year, but over the next 12 months momentum will really begin to build upon many of the targets set out in Nagoya.

Forest credits

One of the most important areas will be the development of the reduced emissions from deforestation and forest degradation programme, or REDD, under which forest owners are effectively paid not to cut down trees.

This is seen as one of the key ways in which the essential carbon storage capacity of the world's forests can be preserved.

Governments have committed billions of dollars to preserving rainforests

Much in the same way as with carbon credits, countries will be issued with credits depending on how successful they are in reducing deforestation. They can then sell these credits on to other countries or companies, which can use them to help meet their own emissions targets.

To date, countries have pledged more than $4.5bn to the REDD scheme.

Using its vast North Sea oil riches, Norway alone has pledged $1bn to both Brazil and Indonesia to help them preserve pristine forests.

With cash on the table, "it's amazing how much can be done, and both Brazil and Indonesia are taking [REDD] very seriously and are really moving forward this year," says Pavan Sukdhev, team leader of TEEB.

Many other countries are also embracing the REDD programme to ensure that the current rate of global deforestation, at which an area equivalent in size to the UK is cut down every two years, is drastically reduced.

Sharing benefits

Another major breakthrough at Nagoya was an agreement on what is called Access and Benefit Sharing (ABS), whereby companies share the benefits of discoveries made in developing nations.

For example, a bioprospecting firm that finds a new plant that is then used in pharmaceuticals will have to negotiate with the country in which it made the discovery to share the commercial benefits from the drug.

"This may take the form of a cash payment, or an undertaking to create employment, for example in research and development, in that country," explains Chris Knight, assistant director of forestry and ecosystems at PricewaterhouseCoopers.

The precise details of how ABS will work in practice will be negotiated this year.

Not only will this agreement have a major impact on pharmaceuticals companies, but it will help ensure the continued discovery of vital drugs in developing countries that will be more open to foreign companies using their natural resources.

Marine protection

A great deal of work will also begin this year on identifying areas for marine conservation in order to protect fish stocks that in many areas of the world have fallen by more than 90% since the onset of commercial fishing.

In many areas of the world certain fish stocks are close to collapse

At Nagoya, an agreement was negotiated to increase dramatically marine protected zones from 0.5% to 10% of the world's oceans in the next 10 years.

Fishing quotas and restrictions on time at sea have already had a huge impact on fishing communities, not least on the west coast of Scotland, so identifying new protected zones is a highly sensitive issue that will require many months of careful negotiations.

However, research has shown that protected zones are highly effective in re-establishing fish stocks that in many areas are near total collapse.

Natural accounting

This year will also see real momentum gathering for the value of nature to be reflected in national accounts.

With trillions of dollars being lost to the global economy each year through the destruction of the Earth's natural resources, the World Bank and individual national accounting bodies are working to find the best way in which this money can be accounted for.

Only then will the true value of the services that nature provides - for example vital pollination for crops by bees and storm protection from mangrove swamps - be identified. Only then can proper mechanisms be put in place to protect these so-called ecosystem services.

India has already announced its intention to incorporate natural capital into its national accounts by 2015, and "others will hopefully agree by the end of the year to a framework [to follow suit]", says Mr Sukhdhev.

Indeed a World Bank-led project hopes to sign up 10 to 12 developing and developed nations this year to pilot the programme.

Much work has been done on the impact of water shortages on cotton farmers

But there is a huge amount of work to be done before the widespread adoption of accounting for nature, as the actual economic benefits of natural resources the world over need to be calculated.

TEEB has so far completed two case studies focusing on the impact of deforestation on the Chinese construction industry and of the drying up of the Aral Sea on the local cotton industry.

Mr Sukdhev says between 500 and 1000 such case studies are needed before natural capital can begin to be widely incorporated into national accounts.

And there are no short cuts - hard graft by researchers on the ground is the only way to secure this essential information.

"It takes a hell of a lot of effort, and therefore money," explains Mr Sukdhev.

And here is where much effort will be expended over the next 12 months - TEEB hopes to have in place by the end of this year a foundation to raise money to support this research, with the Institute of Chartered Accountants taking a lead.

This laborious and in many cases largely unrecognised work is absolutely vital in helping the world understand the economic value of nature.

And this year is the one in which the foundations for much of this research will be laid, research that will help to hammer home just what a vital role nature plays in the global economy.