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Investing in the Environment Gives “Big Bang for Your Buck”

Poverty and Environment Partnership Says Natural Capital Central to Development Goals

New York/Nairobi, 14 September 2005 - Targeted investments in the environment will generate substantial economic returns especially among the more than one billion people who live on less than a dollar a day a new report shows.

Every dollar invested in fighting land degradation and desertification may conservatively generate over three dollars in economic benefits helping to fight poverty among the millions living on fragile lands.

Money could be spent on such traditional and soil conserving features like terracing.

Meanwhile every dollar spent on delivering clean water and sanitation is likely to give impressive rates of return of up to $14. It indicates that in some cases the income of the very poor could be boosted fourteen fold.

Here the economic benefits arise from areas including reduced health care costs, increased productivity because of workers spending less time searching for water and improved school attendance.

Conservation of habitats and ecosystems are also cost effective when compared with the short term profits from environmentally damaging activities such as dynamite fishing, mining and sedimentation as a result of deforestation in the interior.

A study of coral reefs in the Caribbean indicates that sustainable harvesting of coral fish for food and industries such as the pet and aquaria trade may be worth $300 million a year, coral-based tourism just over $2 billion annually and shoreline protection from reefs up to $2.2 billion a year.

However, these economic benefits are threatened by damage and degradation amounting to between $350 million and $870 million a year. Overall for every dollar invested in coral reef conservation economic returns will total up to $5.

Meanwhile the carbon storage or “sequestration” potential of forests ranges between $360 and $2,200 per hectare which makes them worth far more than if they are converted to grazing or cropland.

Indeed the study claims that once carbon reaches over $30 a ton it becomes far more cost effective to conserve forests than to clear them.

Natural capital also serves as back up against calamities such as droughts or crop failures. Studies from Brazil show that farmers in the Amazon’s Tapajos National Park turn to forests products such as nuts and berries when crop yields tumble.

In other words, the forest acts as a kind of nature-based insurance policy for those denied access to formal insurance and financial markets.

These are among some of the findings from “Investing in Environmental Wealth for Poverty Reduction” prepared on behalf of the Poverty-Environment Partnership (PEP) for the 2005 World Summit taking place this week at the headquarters of the United Nations in New York.

One of the summit’s aims is to review the status of the Millennium Development Goals (MDGs) covering poverty eradication and the provision of safe and sufficient supplies of drinking water up to the reversal of the spread of diseases and the empowerment of women.

Launched in 2000, these internationally agreed goals are set to be met by 2015.

The partnership, which includes the United Nations Development Programme, United Nations Environment Programme (UNEP), organizations such as IUCN-the World Conservation Union and government agencies, today meets to plan how the environment can be mainstreamed in national poverty reduction strategies in order to better achieve the Goals.

Klaus Toepfer, UNEP Executive Director, said:” It is clear from this report, and from a series of other studies published throughout the year, that the environment is something like the red ribbon running through the Millennium Development Goals. It is not a luxury good, only affordable when all other problems have been solved. It is the oxygen that breathes life into all our aspirations for a healthier, fairer and more stable world. I would call on world leaders to recognize this in the outcome of this important summit”.

“We also need to pursue more imaginative and clever methods for paying the poor for the regional and global assets they hold. It has been calculated that the carbon absorption value of tropical forests alone is worth tens of billions of dollars a year. But these ecosystem services, which largely remove the pollution of the rich countries from the atmosphere, are provided gratis and the people paid nothing for these assets,” he said.

“Increased investment alone is not enough,” notes Kemal Dervis, Administrator of UNDP. “To be effective, investments must be implemented and driven at the grassroots level by communities, local governments and the private sector. The poor must have secure rights and access to natural resources and a greater voice in decisions over the management of the land, water and biological resources that support their livelihoods.”

The PEP report, whose lead author was the renowned environmental economist Professor David Pearce who tragically died last week, outlines the challenges of bringing the value of the environment into center stage.

The report estimates that, to reach poverty reduction targets, an annual global investment in environmental assets of $60 billion to $90 billion will be needed over the next ten to 15 years.

At least $80 billion per annum more is needed to tackle global climate change in order to stabilize greenhouse gases at 550 parts per million over the next 50 years. 550 parts per million is double the concentrations of these gases from pre-industrial days.

Among the issues that need to be resolved is the creation of markets, reflecting the value of natural capital. These need to be fostered by governments, the United Nations, non-governmental organizations and the private sector in areas such as carbon trading, eco tourism and the use of genetic resources.

Payments for nature may also offer a way forward such as those being pioneered by hydropower companies who pay for forest conservation on rivers upstream.

Local people must also be part of the equation so that the ‘environmental assets’ are managed in people and poverty-friendly ways.

A pre-requisite is a stable, corruption-free government that respects the rule of law and fosters efficient and accountable public services and streamlined regulations.

Poor-friendly property rights must also be urgently addressed and case studies examined on what does and does not work. Extending financial credit during times of trouble may also help ensure that, out of desperation, poor people are not forced to over use and run down their ‘natural capital’.

Another important issue is that of the more than $1 trillion trade subsidies and trade barriers in rich countries.

The report argues that subsidies on traded goods from developed economies perpetuate poverty which in turn can triggers environmental degradation in the developing world.

Meanwhile subsidies or poor pricing policies in poorer countries tend to lead to environmental degradation. For example irrigation subsidies often lead to inefficient use of supplies that in turn triggers effects like water logging and salt contamination of soils.

Notes to Editors

The report, Investing in Environmental Wealth for Poverty Reduction, and an accompanying report called Assessing Environment’s Contribution to Poverty Reduction, can be found at www.povertyenvironment.net/pep

More information on the 2005 World Summit can be found at www.unep.org

For More Information Please Contact Nick Nuttall, UNEP Spokesperson, Office of the Executive Director, on Tel: 254 20 623084, Mobile: 41 79 596 5737, e-mail: nick.nuttall@unep.org.

If there is no prompt response, contact Elisabeth Waechter, UNEP Associate Media Officer, on Tel: 254 20 623088, Mobile: 254 720 173968, e-mail: elisabeth.waechter@unep.org

UNEP News Release 2005/45




Further Resources

The PEP Reports
Assessing Environment's Contribution to Poverty Reduction

Investing in Environmental Wealth for Poverty Reduction

Unprecedented Environmental Investments and Commitments Made Today to Reduce Poverty
Environment for the MDGs Press release (14 September 2005)

UNDP/UNEP Poverty and Environment Initiative (PEI)

UNEP Poverty & the Environment website

Nature's Capital at Centre of Poverty Eradication
Editorial by Klaus Toepfer, UNEP Executive Director

Key PEP Poverty & Environment Reports Launched at World Summit

2005 World Summit

The Green Room
The Green Room is a World Summit collaborative effort by UN partners, NGOs and beyond, to communicate the central role of environmental sustainability in development planning.


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