Ecosystems functions and genetic diversity: TEEB raises challenges for the economics discipline

Abstract

The prime product of the international TEEB (The Economics of Ecosystems and Biodiversity) project is the book, The Economics of Ecosystems and Biodiversity: Ecological and Economic Foundations. This article critically assesses the content of this book. Both global warming and biodiversity loss raise comparable economic issues because both threaten the sustainability of economic growth and human well-being. Therefore, it is not surprising that the TEEB project was motivated by the Stern Review of Climate Change. After outlining the genesis of the TEEB project and its objectives, this article examines its analysis of the economics of ecosystems. The project shows that the total economic value of some natural ecosystems is very high in some places (higher than the uniformed might imagine), but this only creates awareness of their potential absolute value. It does not indicate circumstances in which hominid transformation of these systems to alternative systems would increase or reduce economic benefits. The TEEB report considers ecosystems and biodiversity to be natural capital. This is too narrow a view because some human produced ecosystems and genetic material are valuable forms of capital, and the economics of changes and trade-offs in the composition of the genetic stock needs to be analysed. This is not considered in the TEEB findings. A conceptual model of genetic resources is provided in this article which might enable the economic analysis of genetic diversity to be extended. In order to rectify economic failures, the TEEB report seems to favour payments for ecosystem services (PES) but does not give enough attention to their drawbacks and alternatives. Political and institutional constraints on implementing economic policies also deserve more attention than given in TEEB. In general, economists need to give greater attention to interdisciplinary perspectives in formulating theories and in giving policy advice. However, academia currently provides little incentive for such an approach.