The Economic Benefits of Healthy Ecosystems and Their Services

Okay, yes everyone knows that healthy ecosystems are beautiful ecosystems, and that healthy ecosystems are essential for the future of life on earth. But what people don’t realize is that healthy ecosystems can also have massive economic benefits to a country.

When it comes down to it, most of humanity’s non-mineral resources are derived from (or at least begin with) different species processes at a basic level.

In fact, according to some scientists and other people who understand ecosystem processes, “One hundred percent of economic activity is dependent on the services and benefits provided by nature” [1].

If this is true, then of course healthy ecosystems benefit the economy.

Here are just a few examples of how:

The main economic benefits of ecosystem services

#1 Carbon sequestration

Usually (not in every case, but in most), healthy ecosystems have a higher biomass and a greater carbon absorbing ability. With this in mind, it is obviously extremely important to do whatever we can to improve ecosystem function, as this will help mitigate the effects of global warming and climate change.

According to a study commissioned by the government of the UK in 2008, halving deforestation (and therefore stopping ecosystem degradation) could have economic benefits amounting to around $3.7 trillion. Yes, trillion [2]!

Most of these benefits would come from the reduced cost of climate change due to it causing less damage and progressing much slower than it otherwise would. In this case, the $3.7 trillion wouldn’t be seen as money in anyone’s bank account, but it would instead be the reduced amount of spending needed to mitigate the effects of climate change [2].

#2 Pest and disease control

Healthy ecosystems also have huge functions in preventing agricultural pests and diseases.

If the trophic levels of natural systems are honored in farms or plantations, then economic benefits come from two places: firstly, the need for chemicals is reduced, saving money (and potentially also reducing the need for healthcare due to illness caused by these chemicals), secondly, the crop yield is higher than it otherwise would have been [1].

A good example of this is birds controlling insects in coffee, apple, and timber plantations. Apple yields in the Netherlands have increased by an estimated 50 percent thanks to birds removing pest caterpillars [3].

Birds in the eastern Cascades are saving about $46,000 per square kilometer per year by consuming timber eating insects, thus protecting the timber [4]. Insectivorous birds in coffee plantations save the owner an estimated $310 per hectare per year [5].

#3 Pollination

Healthy ecosystems mean that there is a lot of bees (and other insects) available to pollinate crops and other plants. According to the results of various studies over the past decades, the economic benefit of pollination amounts to around 153 billion euros every single year.

In Europe alone, pollination is worth around 22 billion euros a year [6].

#4 Genetic diversity and medicinal research

Genetic diversity and the unique genetic makeup of a number of relatively unknown species has contributed an immense amount of knowledge to various medical studies.

In fact, it has been estimated that around of half of the various medicines and other treatments available today have been developed through the study of various animals or other organisms – which we may not have or have had without healthy ecosystems [7].

How does economic growth affect the environment? Does it always equal environmental degradation?

Economic growth is considered a good thing for our society: it helps increase wages, it reduces unemployment and overall it provides us with a better standard of living. This is why one of the key metrics to identify whether a country is performing well is its Gross Domestic Product, commonly known as GDP. The higher the GDP, the more affluent the country is considered.

But is economic growth alone a panacea?

Well, not really. And there are many reasons for this. Economic growth is at first instance a good thing, but we need to qualify this with additional factors. For example, how is this growth and its benefits distributed? It is contributing to closing the wage gap between sexes? To help the less well-off people of our society reach a decent standard of living? Or is it accentuating existing inequalities?

The same argument holds for our environment: is economic growth contributing to environmental degradation?

Looking at our economic growth since the industrial revolution, it would be understandable to think that economic growth is tantamount to environmental degradation. Today, we extract and use around 50 percent more natural resources than only 30 years ago, this is about 60 billion tons of raw materials a year [8].

In other words, economic growth measured as a performance of GDP is just not good enough of a metric. Yes, GDP measures how active or busy our economy is – but it tells us absolutely nothing about the kind of economic activities we are pursuing. And we would all agree that growing because there is an increase in the renewables market is very different to growing because of fossil fuels and other polluting industries.

Can economic growth be environmentally sustainable?

To deliver on this, our pursuit of economic growth needs to bear in mind that our planet’s resources are finite. In this respect, the impacts of growth on our planet were most eloquently captured by the Club of Rome which back in the 1970’s coined the concept of “limits to growth.”

This was based on a realization that if we kept on consuming our planet’s resources at the same pace, we would not be able to grow our economics for much longer as we would have depleted all our natural resources.

So knowing that our planet’s resources are limited and that they should be used carefully as inputs for economic growth, economists are realizing that we need to learn to grow within the carrying capacity of our planet. In other words, to grow in a way that our planet can afford.

This line of thinking has led to the birth of different “alternative” models for economic growth which in recent years have become more and more popular.

A very popular one is that of the circular economy which is based on maximizing the reuse of resource inputs and delivering a “zero waste economy.” This should achieve a real cut in our resource use while at the same time generating “green jobs” and sustainable growth.

But others have ventured beyond that, questioning the reason we pursue growth and whether growth is an end in itself or a means to something?

The premise here is that people want to lead happy and content lives. So is growing our economies in perpetuity at a great environmental and often social cost, going to make us happy?

Does economic growth increase happiness?

Happiness normally requires a minimum good standard of living, but beyond that people are realizing that there are other things to life except economic affluence. So there is a space at which our economics can operate which delivers on the required level of growth while enhancing other aspects of our daily life that we hold dear.

It is in this spirit that organizations such as Oxfam have developed tools such as the Humankind Index. Originally developed to support policymaking in Scotland, the Humankind Index proposes a number of indicators such as good homes, satisfying work, access to green space and physical and mental health as criteria against which our policies need to deliver [3].

This discussion is very similar to that initiated at EU level on “Beyond GDP” [4], an initiative which is about developing indicators that are more inclusive of environmental and social aspects of progress.

The picture here is not black and white. Not all growth is bad but pursuing only growth can be highly damaging to our society as a whole, not just the environment. And in the end, a growth-oriented society is not what will make us happiest. A useful experiment bringing this message home is cross-checking GDP figure with ratings of the happiest countries; you may be surprised at how countries compare!