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Ecosystem Investments Could Yield Trillions of Dollars in Benefits, Study Finds

Countries that invest in the management and restoration of ecosystems are likely to see far higher rates of return and stronger economic growth in the 21st century, according to a study by 100 experts from science, economics and policy from across the globe.

“Some countries have already made the link to a limited extent and are glimpsing benefits in terms of jobs, livelihoods and economic returns that outstrip those wedded to older economic models of the previous century,” says a statement accompanying the release today of a report prepared by The Economics of Ecosystems and Biodiversity (TEEB).


Silhouetted mangrove trees and roots at sunset, Gabon. Mangroves can save millions of dollars on dyke maintenance. Removing them to make shrimp farms may be a bad investment.

NGS stock photo by Michael Nichols

TEEB was launched by Germany and the European Commission in response to a proposal by the G8+5 Environment Ministers (Potsdam, Germany 2007) to develop a global study on the economics of biodiversity loss. It is an independent study, hosted by the United Nations Environment Programme with financial support from European countries.

In its report released today, TEEB gave these examples of countries already reaping benefits from ecosystem projects:

  • In Venezuela, investment in the national protected area system is preventing sedimentation that otherwise could reduce farm earnings by around U.S.$3.5 million a year.
  • Planting and protecting nearly 12,000 hectares of mangroves in Vietnam costs just over $1 million but saved annual expenditures on dyke maintenance of well over $7 million.
  • One in 40 jobs in Europe is now linked with the environment and ecosystem services ranging from clean tech “eco-industries” to organic agriculture, sustainable forestry and eco-tourism.
  • Investment in the protection of Guatemala’s Maya Biosphere Reserve is generating an annual of income of close to $50 million a year, createed 7,000 jobs, and boosted local family incomes.

“Accelerate, scale-up and embed investments in the management and restoration of ecosystems.”

The TEEB report, The Economics of Ecosystems and Biodiversity, calls on policy-makers to “accelerate, scale-up and embed investments in the management and restoration of ecosystems.”

It also calls for more sophisticated cost-benefit analysis before policy decisions are made.

The report cites a study on mangroves in south Thailand on the conversion of mangroves into shrimp farms, an example of cost-benefit analysis that was perhaps not very well thought-through.

“Subsidized commercial shrimp farms can generate returns of around $1,220 per hectare by clearing mangrove forests. But this does not take into account the losses to local communities totaling over $12,000 a hectare linked with wood and non-wood forest products, fisheries and coastal protection services,” TEEB said.

“Nor does the profit to the commercial operators take into account the costs of rehabilitating the abandoned sites after five years of exploitation—estimated at over $9,000 a hectare.”

Ecosystem-savvy economy


TEEB’s report outlines a plan to catalyze a transition to more ecosystem-savvy economies able to meet the multiple challenges and deliver the multiple opportunities on a planet of six billion people, rising to nine billion by 2050.

Said Pavan Sukhdev, TEEB’s study leader, “Nature’s multiple and complex values have direct economic impacts on human wellbeing and public and private spending. Recognizing and rewarding the value delivered to society by the natural environment must become a policy priority.

“The economic invisibility of ecosystems and biodiversity is increased by our dominant economic model, which is consumption-led, production-driven, and GDP-measured. This model is in need of significant reform. The multiple crises we are experiencing–fuel, food, finance, and the economy–serve as reminders of the need for change.

“It is now up to governments to provide fiscal or other incentives to move us from short-term opportunism to long-term stewardship. The right policies can help us move toward a resource efficient economy.”

The report comes in advance of the United Nations climate convention meeting in Copenhagen where governments are expected to give the green light to funding developing countries to maintain forests, the statement says.

“Close to 20 per cent of current global greenhouse gas emissions are linked with deforestation. Reduced Emissions from Deforestation and Forest Degradation (REDD) aims to counter this while also generating financial flows from North to South.

“REDD and REDD-Plus, which includes not only maintaining forests but planting and recovering forest systems, secured the backing of close 15 presidents and prime ministers at a special meeting hosted last month by UN Secretary-General Ban Ki-moon.” (Read about this on Stuart Pimm’s blog Better REDD than dead when it comes to climate change.)


Kinabatangan River and forest, East Malaysia. Paying countries to not only maintain forests but also plant and recover forest systems would recognize the enormous economic value these ecosystems provide.

NGS stock photo by James P. Blair

Achim Steiner, UN Under-Secretary General and UNEP Executive Director, said: “Paying developing countries under REDD marks a fundamental step forward in terms of bringing the huge financial importance of ecosystems and biodiversity into the centre of economic activity.”

“It could open the door to more creative and forward looking funds and mechanisms covering other nature-based infrastructure such as peatlands and wetlands en route to support for the services generated by coastal and marine ecosystems such as coral reefs to mangroves,” he said.

Read on for the key recommendations of The Economics of Ecosystems and Biovidersity:

Key recommendations

  • Invest in ecological infrastructure: This can provide cost-effective opportunities to increase resilience to climate change, reduce risk from natural hazards, improve food and water security, and contribute to poverty alleviation.

Up-front investments in maintenance and conservation are almost always cheaper than trying to restore damaged ecosystems, and the social benefits that flow from restoration can be several times higher than the costs.

Preliminary TEEB estimates suggest that the potential rates of return can reach 40 percent for mangrove and woodlands/shrublands, 50 percent for tropical forests and 79 percent for grasslands when the multiple ecosystems services are taken into account.

  • Reward benefits through payments and markets: Payments for ecosystem services (PES schemes) from local (e.g. water provisioning) to global (the REDD-Plus proposal for Reduced Emissions from Deforestation and Degradation, as well as from afforestation, reforestation, and effective conservation).
  • Reform environmentally harmful subsidies: reforming subsidies that are inefficient, outdated or harmful makes double sense during a time of economic and ecological crisis.
  • Address losses through regulation and pricing: The cost of losses of biodiversity and ecosystem services should be tackled through regulatory frameworks that establish environmental standards and liability regimes. Designing a robust instrumental and market framework to confront resource users with these costs is a key priority for policy makers.
  • Recognize that protected areas are a cornerstone of conservation policies and provide multiple benefits: The global protected area network covers around 13.9 percent of the Earth’s land surface, 5.9 percent of territorial seas, and only 0.5 percent of the high seas: nearly a sixth of the world’s population depends on protected areas for a significant percentage of their livelihoods.

“Investing $45 billion in protected areas could secure vital nature-based services worth some $5 trillion a year.”

Investing $45 billion in protected areas could secure vital nature-based services worth some $5 trillion a year, including the sequestration of carbon, the protection and enhancement of water resources and protection against flooding.

There are also employment incentives for example, in Bolivia protected-area tourism generates over 20,000 jobs, indirectly supporting over 100,000 people.

Urgent strategic priorities


The TEEB report points to urgent strategic priorities. One is to save and restore global fisheries and related jobs, currently an underperforming asset in danger of collapse and generating U.S.$50 billion less per year than it could.

Photo by André Künzelmann/UFZ

The study shows that benefits of reform are multiple. It also reinforces the growing evidence that there are a number of urgent strategic ecosystem priorities that require policy shifts to address them:

  • Halt deforestation and forest degradation: This should be an integral part of climate change mitigation and adaptation focused on “green carbon.” It has the added benefit of preserving the huge range of services and goods forests provide to local people and the wider community;
  • Protect tropical coral reefs–and the associated livelihoods of half a billion people–through major efforts to avoid global temperature rise;
  • Save and restore global fisheries, which are currently under threat of collapse from over fishing;
  • Recognize the deep link between ecosystem degradation and the persistence of rural poverty and align policies across sectors with key Millennium Development Goals.
  • Agree a forest carbon deal at Copenhagen