Ecosystem Services:Perspectives on the Bottom Line

for Business and Industry

Marcus Lee, Millennium Ecosystem AssessmentFIDIC 2005, 6 September, Beijing

Largest assessment of the health of Earth’s ecosystems

Experts and Review Process Prepared by 1360 experts from 95 countries 80-person independent board of review editors Review comments from 850 experts and governments Includes information from 33 sub-global assessments

Governance Called for by UN Secretary General in 2000 Authorized by governments through 4 conventions Partnership of UN agencies, conventions, business,

non-governmental organizations with a multi-stakeholder board of directors

Focus: Ecosystem Services The benefits people obtain from ecosystems

1. Ecosystem Changes in Last 50 Years

2. Gains and Losses from Ecosystem ChangeThree major problems may decrease long-term benefits

Degradation of Ecosystem Services Increased Likelihood of Nonlinear Changes Exacerbation of Poverty for Some People

3. Ecosystem Prospects for Next 50 Years

4. Reversing Ecosystem Degradation

MA Findings - Outline

Why ecosystems and their services matter to business and industry

Businesses interact with ecosystems and ecosystem services, directly or indirectly, by

Using ecosystem services Contributing to ecosystem change

If current trends continue, ecosystem services will become more costly or cease to be available

Operating environments are also likely to change in the face of ecosystem-related challenges

Customer preferences Regulatory and policy regimes New markets Competitor strategies Investor demands

Important ecosystem changes with negative impacts on business

Water scarcity Governments will allocate supplies / water rights Market mechanisms for allocation and efficient use

Climate change

Habitat change and land conversion

Biodiversity loss and invasive species

Overexploitation of the oceans

Nutrient overloading

Biodiversity: current estimates of species loss

Overfishing: example from collapse of Newfoundland cod

What we can expect in future (I)

Growing demand for food Without further harming the environment In particular, capture fisheries vs. aquaculture

Growing fresh water needs for agriculture, industry and consumption

Given globally uneven distribution of supply

Growing demand for energy While minimizing impacts on climate and air

quality

Balancing biodiversity conservation with economic development

What we can expect in future (II)

Unexpected and abrupt changes in ecosystems Cannot assume that there will be ample

warning Businesses may well be caught by surprise

Substitutes can be developed for some, but not all, ecosystem services

Where substitutes are available, their cost is generally high

Insurance industry taking account of growing risks from degradation of ecosystem services

Independent, third-party verification of performance / certification

Challenges for business and industryIncreased regulatory constraints as governments seek to protect degraded ecosystems

Risk to reputation and brand image for businesses directly tied to threatened ecosystems and services

Increases in costs of important inputs

Vulnerability of assets and operations to natural disasters

Conflict and instability in areas affected by scarcity of ecosystem services

Opportunities for business and industryNew markets and products to address degradation in ecosystems and scarcity of ecosystem services

Enhanced image and reputation, political capital, and brand value from genuine proactive management of ecosystem issues

First-mover/competitive cost and operational advantages from early recognition and action with regard to ecosystems

What does this actually mean?Example: Water scarcity

Businesses will have to compete - including with other businesses - for water

Cost of water may cause substantial increase in overall business costs

Decisions about locating operations must take account of long-term water supply

Increasingly, new ways to recycle supplies need to be found

New technologies to reduce water intensity and address water quality will be valuable

Marketing and supplying water is already a business opportunity pursued in some places

Restating the Business Case

Business can be a positive force in addressing ecosystem-related challenges by

Pursuing new opportunities and markets Reducing operational footprints Developing and deploying new technologies Demonstrating leadership in support of poverty

reduction, sustainable development and environmental protection

Businesses which successfully address ecosystem-related challenges will

Gain first-mover / competitive advantage Help ensure stable and secure societies, continued

access to critical resources, and open markets

What businesses can do

Identify and understand ecosystem services used or affected by business operations, as part of strategy

Including those important to suppliers, customers

Manage ecosystem services through the supply chain and/or product life-cycle in an integrated way

Increase efficiency in use and supply of ecosystem services Develop, deploy and market new technologies which

improve operations, reduce impacts, and meet increasing demand

Pursue partnerships with government and civil society Accelerate learning, leverage resources and expertise,

build trust with stakeholders

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