Rio+20 and Ecosystem services – background paper Norway

• Rio+20 should recognise the vital function of ecosystem services. Sustainable management of ecosystem services is essential for sustainable development and human well-being. We can only achieve development goals if we look after nature’s ecosystems.  
• The value of natural capital needs to be taken into account in decision-making, national accounting and economic transactions.  
• Initiatives such as REDD+ have demonstrated ways of valuing natural capital.

 

Background

It is a shortcoming of most economies that they do not take sufficient account of the value of natural capital in decision-making processes, national accounting and economic transactions.

Environmental degradation and the loss of biodiversity can hinder development in poor countries, for example income may be lost or people’s health may deteriorate because fewer food sources are available or crops fail. Global climate regulation may fail if forests are destroyed.  There is a growing understanding of the fact that ecosystem services we take for granted may be of crucial importance for our prosperity. Sustainable management of biodiversity and ecosystems is therefore a joint task for all countries, and cooperation is needed to find solutions for the common good.

Putting a price on nature
Many natural resources and ecosystem services, such as food, seeds, fuel, medicines and building materials, are key elements of the global economy. But many ecosystem services are less visible in economic terms because they have no market price, and they tend to be overlooked in a market-based economic system. If there is no clear ownership of resources and no price is put on the use of common resources, the risk of short-sighted overexploitation increases.

In recent years, awareness of the economic value of ecosystems has been growing. We have been improving our ability to describe and measure biodiversity and ecosystems and document their value. By integrating such values into decision-making and national accounts and statistics, we can improve long-term management of the natural environment and the basis for human livelihoods, both now and in the future

Developing countries are looking to the international community for funding so that they can continue to safeguard biodiversity. This is in line with the principle that rich and poor countries have common but differentiated responsibilities for protecting the environment. Norway will continue to fund projects for the conservation and sustainable use of biodiversity as part of its development cooperation, but it will be necessary to consider other forms of finance than traditional aid funding. Innovative financial mechanisms must be developed, and the private sector must be involved. Sources of income that can be linked directly to ecosystem services are of particular interest. Norway’s aim is a system where the people who are in the best position to safeguard ecological goods and services receive payment from those who enjoy the benefits of these goods and services.

Valuing ecosystem services: the case of forests
International efforts to reduce emissions from deforestation and forest degradation in developing countries (REDD+) provide one example of how natural capital can be valued. Through the creation of financial incentive structures for REDD+, maintaining forests can become an economically attractive alternative to activities which result in deforestation.

Forests play a crucial role in several ways. They provide livelihoods for millions of people, especially for the world’s poorest and for indigenous peoples, they are a large carbon sink and they support a rich diversity of plants and animals. The value of forests goes far beyond climate-related issues, and they provide many other ecosystem services in addition to carbon storage. Although the main objective of the Climate and Forest Initiative is to bring about global cuts in greenhouse gas emissions, it also contributes to the Millennium Development Goals of eradicating extreme poverty and hunger and ensuring environmental sustainability.

The future of the world’s forests is closely interwoven with that of millions of the world’s poorest people. The World Bank estimates that about 90 % of people who live on less than one and a half dollars a day are entirely or partly dependent on forests for their survival. Forests are a safety net – a source of food, income and employment. Indigenous peoples often live directly off the land and are therefore particularly vulnerable to the impacts of deforestation.

Women who live in or near forests often use them to harvest fuel, food and medicines for themselves and their families. This traditional responsibility means that they are particularly vulnerable to changes in forest cover and in local forest management regimes. It also means that in many cases they have built up unique, valuable knowledge of forest resources and their management. It is therefore essential to ensure that women are actively involved in decisions concerning the management of natural resources.

Initial lessons learnt from results-based financing under the REDD+ initiative – with payments for verified ecosystem services as an ultimate aim – show that this approach has the potential to help spur broad-based national policy changes. Such transformational changes are necessary to alter the economic logic of development policies that result in the continued destruction of forests. The use of similar types of incentive structures could be considered in other sectors where broad-based national policy changes are necessary in order to maintain valuable ecosystems and their services.

In addition to reducing greenhouse gas emissions, reducing deforestation and forest degradation also results in the conservation of biodiversity, and may also contribute to sustainable development and the fight against poverty. The Government has therefore chosen to make forests a priority in its initiatives for the maintenance of ecosystem services.