Biodiversity & the economy

We know that ecosystems provide countless benefits – from food, clean water and climate regulation to habitats for species and protection against natural disasters. The terms ‘natural capital’ and ‘environmental services’ were first coined in the 1970s. However, putting a value on these services is difficult. Can we really put a price tag on nature? If we do, will it help us protect ecosystems? And what about the cultural aspects – the sense of belonging and beauty we derive from the natural world? Ward Hagemeijer from Wetlands International and researcher Dr. Kelvin Peh, who specializes in ecosystem services, discuss the possibilities and pitfalls of putting an economic value on natural resources.


Dr. Kelvin Peh,

Southampton University (United Kingdom)


Ward Hagemeijer,

Head of Business and Ecosystems, Wetlands International

Dr. Kelvin Peh

There are two types of tools to assess ecosystem services: one is written – basically, a step-by-step guide and very site-specific, the other is based on computer models and used for much larger areas – regional or national. A computer-based model will require specialist skills. The idea behind TESSA25, the tool I have been involved in developing, is that it provides a very simple cost-benefit analysis: it compares the ecosystem with alternative ‘states’, such as the building of a hotel. TESSA is designed for non-experts and local communities are involved throughout the process. Their involvement is crucial and, often, they are the ones producing the data.

Ward Hagemeijer

Development decisions are made along economic lines and it is hard to be heard without using economic terms. We may want to look for a measure that is not so biased towards economic value but that does not exist at the moment, and putting a fair value on these ecosystems is very complex. My research concerns the conservation and restoration of wetlands. People and nature depend on wetlands for their survival – they underpin so many of the UN Sustainable Development Goals and store a lot of water and carbon. However, there have been very significant losses, with some estimates going up to as much as 75% of wetlands lost or degraded. A wetland itself has value, but it only exists because it is connected to the world around it – it is part of the water infrastructure and it may be on migratory routes for birds. Its value may also be cultural, intrinsic. It is difficult to put a value on the survival of a species for instance, but it makes perfect sense to factor in such a measure.

Dr. K.P.

We have been developing TESSA with that goal in mind since 2010. For our second version, we have developed a specific module dedicated to cultural services provided by ecosystems representing sense of place, heritage and other intangibles that require a different methodology. These should be valued qualitatively, rather than quantitatively. In terms of data for water and carbon, current tools are reasonably appropriate but with other services, such as pollination, there are still issues, and collecting data on pollination is very hard work. It is sometimes easier to convey the economic argument to governments. This can fight the idea that there is a choice somehow between economic prosperity and environmental protection. With TESSA, the objective is to provide evidence and, instead of relying on ethical or legal considerations, to be able to speak to governments or local communities and say it is in your economic interest to protect this biodiversity or this environment.


Attitudes have changed. There is more recognition of the value wetlands bring – draining is no longer the automatic response and a lot of work has been done in this respect through the Ramsar Convention26. In many places though, there is still no overall vision on how to deal with landscapes that have multiple functions. In most countries, governments’ over-riding vision is economic development: they are open to conserving nature and to recognizing ecosystem services as a basis for development, but that is not their starting point. It is often about compensating for damage rather than taking a more strategic approach. Ecosystems can be quite resilient, but if you change a landscape to such an extent that the ecosystems are no longer able to perform their functions, then you will lose many services that the ecosystem was providing. If you look at tar sands mining in Canada, entire square kilometers of the surface were dug up to a depth of several hundred meters, changing the landscape dramatically with no way for the wetlands to be restored. What is frustrating is that the mining could have been done in a different way. If river courses were left in place, for example, or the gradient in the soil systems, then restoration would have been possible. At this point, we are able to provide a green landscape after mining, but that landscape does not provide the same services, functions or biodiversity.

Dr. K.P.

Valuing biodiversity is useful to business as they often depend on ecosystems or have an impact on them. Putting a value on nature could help business identify risk, target their management more effectively, and understand the conflict between different environmental issues. For the insurance industry, once value has been established, it is easier to assess risk and to create a product that will mitigate that risk. These assessments on their own are not enough, of course, and it is important to still bring in the more traditional, intangible arguments. We can identify the costs and benefits but, in protecting biodiversity, an ecosystem services assessment is just one tool, not a magic bullet.


Assessments happen in a broader context. There is the idea of ‘net gain’ – a commitment to return the landscape to a better state of repair, in terms of value for nature and people, once a project is finished. There is a responsibility for both regulators and companies. Ideally, regulators are well enough informed to protect ecosystems and allow for effective planning – that is not always the case. Sometimes, within governments, two essential ministries, oil and environment for instance, do not speak to each other. It is the companies’ responsibility to use the knowledge they have – or develop that knowledge, if they do not have it – and not just take advantage of low standards. This is also where lenders can make a difference by applying conditions on lending money.


Between 1970 and 2015, 35% of wetlands were lost; wetlands are disappearing three times faster than forests.

Source: Global Wetland Outlook (Ramsar Convention on Wetlands) (2018)


Coastal wetlands can reduce damage from flooding by up to 29%.

Source: TNC (2019)


An estimated 30% of the world’s soil carbon is stored in peatlands, making peatlands a key part of the fight against climate change.

Source: Centre for International Forestry Research (CIFOR) (2018)


Biodiversity & the economy

Our economies depend on natural resources. However, biodiversity has yet to be rigorously and systematically integrated into decision-making. We spoke to three scientists to help shed light on the connection between biodiversity and well-functioning economies, through the example of the proliferation of invasive species and their impact on economic sectors, the benefits of nature on people’s health and well-being, and the role of mountain ecosystems in providing fresh water to local communities.


Pr. Franck Courchamp,

University of Paris Sud (France)

Invasive species have been cited as one of the main causes of biodiversity loss – how big a problem is this?

Pr. Franck Courchamp

This problem affects every region in the world, and, in addition to the impact on biodiversity and ecosystems, it causes damage to human health and to the economy. Every day, hundreds of species are introduced into areas where they are not native. Of course, not all are invasive. Generally, we reckon about 10% will become established in the new environment. Of those, about 10% will become problematic. These invasive species are being introduced mainly through trade or tourism. Given the scale of the phenomenon, the total effect is enough to represent a true issue. We are now working to find out what traits make species potentially invasive, and what makes certain ecosystems more resistant, so we can intervene earlier, before a species becomes problematic.

You mention health and the economy – do we have any idea how much invasive species cost us every year?

Pr. F.C.

There are various effects. We published a study three years ago on the economic costs of invasive insects and we came to an estimate of $70 billion a year. That represents a small part of the real cost. There are many costs that are not accounted for – species that have not been evaluated, and many countries with no data.


Plants make up half of the invasive species reported as impacting biodiversity for food and agriculture. Insects account for another 16%.

Source: FAO (2019)

How immediate is the impact of these invasive species?

Pr. F.C.

The introduction of cats or rats on an island will very quickly kill the native vertebrates, such as birds and lizards, because these species have never been in contact with that particular predator and have not evolved to protect themselves. There are also less immediate effects, for instance invasive plant species that modify the soil composition, or the amount of available water or light. Studies show that, on average, there are fifty years between the establishment of a species and the appearance of impacts from that species. With climate change, species are gradually shifting towards the poles. The tiger mosquito is a good example: each year it is venturing further north due to warmer winters. The tiger mosquito carries possibly thirty different viruses – some of them lethal for humans. The impact may be rapid, but the process of invasion itself is relatively slow.

How can we tackle this problem? You mentioned it was about acting before a species becomes invasive?

Pr. F.C.

Generally, it is much cheaper and more efficient to prevent invasions – or at least to react quickly once they happen – than it is to manage already established invasive species. The Asian hornet, which invaded France in 2004, preys on honeybees. It is now all over France and in neighboring countries, and it seems unstoppable. This invasion appears to have stemmed from just one female hornet hidden on a container ship. Once a species is established, as is the case for the Asian hornet, it is almost impossible to remove. One solution is better biosecurity. In Europe, we have just started using a blacklist of about 50 species, compared with the 14,000 exotic species and hundreds of problematic invasive species we have there. New Zealand has developed a ‘white list’, which requires proof that a species is not potentially invasive before allowing it into the country. There is a switch in the burden of proof, and that is much more effective. A timber company, for example, should survey the insects present in the wood it trades and make sure the insects are not invasive or are removed before importation. It should not be scientists and NGOs trying to prove that species are problematic or not. Of course, there is resistance because it is costly to have these biosecurity measures and because companies would have to bear the cost. Currently, the cost is on society – on taxpayers. And the cost is much higher because of the damage involved.


Dr. Adeline Loyau,

EcoLab – University of Toulouse (France)

Research shows biodiversity improves our sense of well-being. How is that?

Dr. Adeline Loyau

Protecting biodiversity is not just about food or clean water, it is also about our well-being, both psychological and physical. This is something that is often overlooked. We already know about the link between stress and our physical health. If we feel good, we are better able to resist viruses. Biodiversity and time spent surrounded by nature have been shown to decrease risk of illnesses like heart disease, obesity, diabetes, asthma – it can even reduce the amount of time you spend in hospital when you are ill.

What is behind this finding? Is this purely psychological?

Dr. A.L.

It is not easy to distinguish between the psychological and the physiological. This is quite a new field, so there are many things we cannot yet explain. It may simply be linked to stress reduction. A forest, for example, is quieter, our senses are not under attack, there are fewer electric screens. We can put some distance between ourselves and our problems – it is a kind of meditation almost. It could also be better air quality in green areas or the physical exercise, if you are walking. There have been studies comparing people walking in the woods and those walking in a city. They show different results: walking in woods reduces stress and improves health more than in the city. Wilson’s theory of biophilia suggests that humans are drawn to nature, from an evolutionary viewpoint, because nature provides all our needs27. There is also a theory developed in Japan that we breathe in molecules called phytoncides28 produced by plants and trees, which enter our bloodstream and our brains and influence our sense of well-being and health. For the moment, it is just a working theory, but we have detected phytoncides and know they exist.

What about the impact nature has on recovery rates after illness and subsequent health costs?

Dr. A.L.

This is difficult to measure in any objective way. There was a study in the 1980s, which really triggered this whole area of research. It looked at two groups of patients at the same hospital with the same nursing staff – they had undergone the same surgery. One group had access to a window, which looked out onto greenery, the other had a window but they looked out at a brick wall. The study showed that the first group recovered more quickly, left the hospital sooner, had to take fewer painkillers, and were less difficult for the nursing staff. The results were not quantified in money terms but this is the kind of thing that can be calculated – for example, we know exactly how much spending a day in hospital costs

To what extent would you say that the link between well-being and nature is a first world issue?

Dr. A.L.

There is no reason to suppose that what happens in rich countries does not also apply to poorer countries, but yes, to put it bluntly, it can be seen as a rich world problem. In developing countries, it is clear that the perception of well-being is not necessarily a top priority. In richer societies, it is only once material well-being is satisfied – enough to eat and decent housing – that people start to realize that the loss of nature may be affecting their health and well-being.

What type of investment are you referring to? More green spaces?

Dr. A.L.

It is an idea that is gaining ground, but that is probably to do with the heatwaves we are seeing in Europe. I used to live in Leipzig which is a very green city – the parks are planted with local trees with lots of life in them – squirrels and birds. As a result, you do not feel so caged in. In terms of planning, you see the consequences of decisions taken thirty or fifty years ago. For future planning, this is something to take into account. More people around the world are living in cities than in the country and cities are continuing to expand. This poses the question of the effect on our health. Currently, our politicians and urban planners think about these issues in terms of heat, not in terms of people needing these green spaces psychologically


Pr. Dirk S. Schmeller,

Institut National Polytechnique, Toulouse (France)

We are seeing very significant changes in mountain ecosystems. What are these changes, and what can we expect to see in the years ahead?

Pr. Dirk S. Schmeller

A number of current models underestimate the problem of mountain ecosystem change. It is happening much faster than we thought and we can already see a lot of change in the mountains: much higher variability of temperature and changes in precipitation. Some years, the water level is a meter down, others, it is a meter up; some years, there is snow late in the season and in others there is not much snow at all, and, as the snow melts, there is less water coming down into the lakes.

And that has an impact on freshwater as a lot of our freshwater comes from the mountain…

Pr. D.S.

Yes – there is an impact in terms of volume with high variability, which makes it difficult to manage if there are no reservoirs with sufficient capacity. In spring, you may have too much water, in summer, if there is a drought, fields will still dry out. This is a problem of extremes. There is also an issue of quality: if an ecosystem is not working, it is not filtering and cleaning the water as efficiently, and with a system that is out of balance there may be more parasites and pathogens, often from cattle and other livestock. There has been a considerable increase in pressure from livestock. Legacy mining is also an issue in the Pyrenees. In the Taiwanese mountains, the main problem is plastics pollution from the growth in tourism and agriculture. The increase in the world’s population has been an important factor. Water consumption in the 18th century was 15-20 liters a person. In 1975, it was 106 liters, and it has now grown to around 140-150 liters. If we want to continue using this volume of water, given the increase in population, it is likely to be very expensive due to the costs of transport, cleaning and storage.

How resilient are these mountain ecosystems?

Pr. D.S.

The issue with mountain ecosystems is that they are less complex than lowlands, with fewer species and they are therefore much more susceptible to the impacts of climate change, with the change itself being more profound. One can also expect species loss due to increasing temperature: species can still move to higher altitudes, but there is a limit. Smaller lakes produce variations in temperature with water heating up much faster and then heavier rainfall cooling it down again that adds stress to the system.

Do you see much adaptation among local communities?

Pr. D.S.

Not for the moment or, if any, it is very slow. Around the Toulouse area where I work, there is not much discussion on the need to change water management. Farmers in the foothills had real issues with drought last year, and people may realize it is getting hotter, but they do not realize to what extent this may impact their livelihoods.

What is the role of public decision makers in your opinion?

Pr. D.S

By and large, politicians do not understand that climate change and biodiversity loss are economic issues, with a true opportunity to develop a green economy. They are potentially risking the livelihoods of future generations by not acting to stop climate change and biodiversity loss. Because of the reaction time of ecosystems, what we are experiencing now is the result of what we have been doing over the past 30-40 years, while most politicians work in four or five-year cycles.


A third of London is set aside for parks and gardens. The figure is much lower in other cities, however. In New York, it is 27%, Paris 9.5%, Tokyo 7.5% and Istanbul just 2.2%.

Source: World Cities Centre Forum (2019)


Mountains provide freshwater for more than half of humanity.

Source: Convention on Biological Diversity (2019)

26 The Convention on Wetlands, called the Ramsar Convention, is the intergovernmental treaty that provides the framework for the conservation and wise use of wetlands and their resources. It was agreed in 1971 in Ramsar, Iran, and came into force in 1975. Nearly 90% of UN member states have signed up to the Convention.

27 The concept of biophilia was first coined in the 1980s by the American biologist and author Edward Wilson. Biophilia refers to an innate tendency among humans to seek connections with nature and other forms of life.

28 Phytoncides refer to anti-microbial compounds derived naturally from plants and trees; phytoncides prevent rotting and help plants stave off attacks from insects and animals.


Research Fund

Share this page