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Ecosystem services are the new metric

The economic, social and cultural benefits of a healthy environment are one of the things that GDP doesn’t measure. However, in 2007 the World Bank conservatively estimated (see reference (1) below)  the cost of China’s pollution at 5.8% of its GDP.

Recent reports (2) show that business is beginning to notice the cost of such environmental harm: 27% of global CEOs surveyed by PwC in 2009 expressed concern about the impacts of biodiversity loss on their business growth prospects.

For example, direct and indirect costs to business, communities and governments from biodiversity loss from logging natural (as opposed to plantation) forests include flood damage, property loss, transport interruptions, soil erosion, reservoir infilling, loss of productive land and reduced timber output, soil fertility, rainfall and water runoff.

Nature does a lot of things for us for free, including purifying water, soil and air and pollinating food crops. Such “ecosystem services” offer new and wider opportunities for every business sector. Astute businesses will be positioning themselves to get a hold of some of the billion dollar opportunities offered by rapidly emerging biodiversity and ecosystem services assessment, certification and trading systems.

That’s why one of the results will be that cities will be the new countryside.

As our Victorian era infrastructure decays and people all over the world flock to the cities, the pressure is on them to meet their own needs for water and food in ways that also meet their inhabitants’ needs for healthy and restorative environments. Businesses in the urban design, transport, building, energy and engineering sectors are realizing they need to work with a host of other professionals and with urban communities to bring nature and its processes and services back into the city – and make the most of the associated business opportunities. Multi-disciplinary businesses will be taking on people with social, ecological and design skills and forging new and fruitful alliances with firms that have complementary skills in order to progressively transform our cities into vibrant and beautiful places that restore both nature and people.

The content of this blog is adapted from some thoughts I put together for the wonderful Ann Andrews of The Corporate Toolbox for her free ebook, “What’s next? 29 Entrepreneurs share Predictions for 2011/12”. Many thanks to Ann for allowing me to reproduce some of that material here.

(1) Jonathan Watts, 2010. When a billion Chinese jump. Faber/Allen and Unwin.
(2) TEEB – The Economics of Ecosystems and Biodiversity Report for Business – Executive Summary 2010. Downloadable from here.