Millions for Billions!

In an article in the Los Angeles Times, Robert H Frank argues that Charles Darwin should be given the same honor that Adam Smith enjoys. The simple reason is Darwin’s theory of competition, struggle for survival makes more economic sense. Certainly, a dimension that needs a bit more of critical thought and analyses.

I am not keen to either understand the basis of competitive theory or survival of the fittest here. My take on this is how we need to differentially understand ‘economics of nature’ and move the discussions on realizing the potential of nature and natural resource, its goods and services, to the national and local economy from lecture theaters and seminar halls to markets and living rooms.

For the purposes of this article, I am focusing on biological resources (biodiversity) as the most important component of natural resources. Biodiversity or biological diversity is the variety of life on Earth. How many of us know that in spite of centuries of research and study on biodiversity, we know only as little as less than 10 percent of this variety? How many of us realize that every action of a human being is dependent on this variety which is un-recognized, under-valued and often misused. Just to sum-up in the words of Martin Luther King we are dependent on more than half of the world and its biological diversity even to have a simple breakfast every day!

Biological diversity contributes to billions of dollars to national economy for all countries around the world. This is real and not potential. According to the Secretariat of Convention on Biological Diversity (SCBD), the estimated economic potential of biodiversity in pharmaceutical sector is about USD 640 billion of which 25-50 percent are derived directly from biological resources, globally. Herbal supplements, personal care products and food products collectively have a market size of USD 65 billion representing the largest ‘nature’ based market.  The economic potential of coral reefs, on an average, at any given site include the following –  estimated USD 189,000/hectare/year in reducing natural disasters, tourism up to USD 1 million/hectare/year, genetic material and prospecting up to USD 57,000/hectare/year, fisheries up to USD 3,818/hectare/year. Collectively we are looking at an economic potential of USD 1, 250 Million/hectare/year from coral reefs. These are researched figures by economists. Consider that we realize a mere 10 percent of this potential for the local people. We are talking about USD 125,000 per year/hectare. It translates to Indian Rs. 61,25,000/hectare/year. If India has on an average 2,330 hectares of coral reefs, we are talking of Rs. 14,27,12,50,000 of revenue per year from this simple but critical ecosystem as of now. The contributory figures can go up many folds if we invest in the proper maintenance of this ecosystem. I have discussed a few of these issues in my article on nature-based GDP.

But what are we doing today? From politician to a common man, we value biodiversity better dead than alive. Global development debates and actions clearly indicate that we are investing billions (worth of ecosystem goods and services) to make millions! In recent years, there has been a renewed push to promote the concept of a ‘green economy’, an idea that is gradually gaining momentum thanks to a series of studies and assessments that looked at the value of biodiversity and ecosystems to economic development.

If we are to secure the future of the Planet, we need to ensure that biodiversity survives in nature and not just on paper and in policies. If bio-economy is the future, then we need to change our actions so that we stop destroying biodiversity and degrading ecosystems.

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