Promoting Development, Protecting Environment

The World Bank and other Multilateral Development Banks (MDBs) are revising their environmental strategies for development planning. As they do so, they can and should integrate nature's ecosystem services into their planning and decisions, says a new WRI report.

Janet Ranganathan, Vice President of Science and Research at the World Resources Institute and lead author of Banking on Natures Assets explains how economic development and a healthy environment can co-exist.

Q: What are ecosystem services?

Ecosystem services are the benefits that nature provides to people. Food, freshwater, timber and cotton for clothes are some of the most familiar services. But there are other types of services that we often take for granted, for example the ability of forests to sequester carbon and mitigate climate change and the way in which wetlands filter and purify water.

The current mindset of society is to put economic development and nature in separate boxes, separate government agencies and separate academic disciplines.

We all depend on ecosystem services for our well-being, and nature’s health increasingly depends on humanity. Every development or investment decision made around the world both depends on and has an impact on nature somewhere, or somehow. Over the past century, our relationship with nature has been increasingly destructive — degrading two thirds of ecosystem services worldwide. Our report, Banking on Nature’s Assets, explains that it doesn’t have to be that way.

Q: How can focusing on ecosystem services strengthen development?

Development and ecosystem services are intertwined. We can’t really deal with one without dealing with the other. However, the current mindset of society is to put economic development and nature in separate boxes, separate government agencies and separate academic disciplines. We think that protecting the environment is an impediment to development. We think it’s a cost. But when we consider the environment in terms of ecosystem services, that mindset can change. We can instead see and value the environment as a series of assets or benefits that development in fact depends upon.

By treating ecosystems as assets that generate benefits, development agencies can help developing countries grow economically while sustaining the environment and the livelihoods of those people who depend on ecosystems.

Q: How do development agencies currently treat ecosystem services?

Traditionally, development agencies and development planners focus on single ecosystem services, particularly those that can be marketed, such as freshwater, timber, crops and fish. They overlook ecosystem services that regulate important natural processes such as climate, disease, erosion, water flows, and pollination, as well as protection from natural hazards.

For example, in the 1980’s the World Bank saw aquaculture as a great opportunity for economic development in Latin American and Southeast Asia. With the Bank’s support, Thailand’s government cleared the mangroves surrounding fishing communities and replaced them with shrimp aquaculture farms. By 2007, Thailand was exporting seven times more frozen shrimp than 20 years before. While it was a very beneficial strategy for a select group of shrimp farmers, no one considered the less obvious services previously provided by the mangroves—coastal protection during high tides, storms and hurricanes, and spawning grounds for fish that supported the livelihoods of local communities. As a result, the development of aquaculture farms left local communities vulnerable to increased storm damage, depleted offshore fisheries, water pollution and mosquito infestations.

Q: Don’t MDBs already consider ecosystems services through safeguards?

In the past, cost benefit analysis and safeguards such as impact assessment have not usually incorporated the full range of ecosystem services and how changes to ecosystem services in turn affect those people dependent on those services. The shrimp aquaculture example also illustrates how a development strategy can inadvertently create distributional effects when important ecosystem services are overlooked. The shrimp farm benefits primarily accrued to the few shrimp farmers and to those in export markets such as the U.S. and Europe who enjoyed “cheap” shrimp. In contrast, poor coastal communities who depended on the former mangroves for spawning grounds and for storm protection lost out. By systematically looking at the full range of ecosystem services that their strategies depend upon and impact, development planners can minimize and better manage ecosystem services trade-offs and increase the chances of development outcomes that are both sustainable and equitable.

Q: How can Banking on Nature’s Assets help MDB’s?

Banking on Nature’s Assets identifies entry points for mainstreaming ecosystem services into MDB’s core operations. These range from country assistance strategies and environmental analysis to sector work and development policy loans. The report also presents a range of tools and policy options that MDBs can use to help country partners sustain their precious capital. It concludes with recommendations for scaling up the use of an ecosystem service approach in MDB’s core operations.

Q: What tools can development planners use to make trade-offs among multiple ecosystem services?

These tools and policies are becoming available. For example, a comprehensive list of ecosystem services is the most basic tool in moving from an approach that focuses on a single service to one that focuses on the trade-offs among multiple services. The Millennium Ecosystem Assessment used a list and a refined version is available on WRI’s website. Other tools provide frameworks to prioritize services for attention and to assess the condition and trends of those selected for attention. Mapping and valuing ecosystem services are also important tools. WRI has worked with Uganda to produce maps that overlay geo-referenced information on population and household expenses with spatial data on ecosystem services. It can now flag areas to introduce strategies that benefit both wetlands and the people depending on the services these wetlands provide. Uganda has used valuation in helping make decisions. For example, a study of the Nakivubo wetland showed that conversion of wetlands was driving up the costs of providing fresh water to 2 million residents in Kampala, Uganda. As a result, decision makers decided not to drain it for housing and industry but to make it part of the city’s greenbelt.

Q: What about policies that sustain ecosystem services?

Banking on Nature’s Assets explains how to determine the most critical ecosystem services in a particular location and then select the most effective policies for sustaining them depending on a country’s capacity and existing laws and policies. MDBs are already playing an important role in introducing some policies such as payments of ecosystems services. In the future, they can help countries develop policies that transform the ways in which landowners manage their land. Instead of income only from a single service like providing timber, for example, policies can encourage landowners to earn income from ecotourism, producing Forest Stewardship Council-certified timber, sequestering carbon to protect the climate, or maintaining a wetland’s filtration and flood prevention capacity.