Romy Chevalier
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It is widely acknowledged that well-functioning ecosystems provide reliable and clean flows of fresh water and air, productive soils and many other services that contribute to the well-being of humans. It is also well-documented, however, that economic activities are compromising the resilience of these ecosystems and eroding their natural capacity to deliver vital resources.

The reality is that conventional approaches to natural resource management have failed and unsustainable economic growth has often taken place at the expense of the natural environment.

In the developing world, countries face the challenge of simultaneously developing their economies while ensuring the productivity and viability of underlying ecosystems are maintained over time. Most nations in the Global South are also dealing with development challenges and are constrained financially, finding it difficult to allocate resources for conservation-related initiatives.

As resource depletion and ecosystem degradation are not typically included in national accounting measures, they have been undervalued capital assets when compared with resource exploitation, which reflects positively on GDP indicators. These measures of economic well-being do not register the corresponding decline in assets that is a more appropriate measure of future economic prosperity. Many ecosystem services are available freely (such as fresh water in aquifers and the use of the atmosphere as a sink for pollutants) and so their degradation is not reflected in standard economic measures.

When economic losses associated with resource depletion are factored into measurements of a nation’s wealth, the balance sheet for countries dependent on those resources changes significantly.

Incentive schemes that promote the conservation of ecosystem services
The use of market-based mechanisms and economic instruments to conserve and pay for ecosystem services is a growing global trend that is gaining a foothold not just in carbon markets, but also with biodiversity and water.

The total economic value associated with managing ecosystems more sustainably is often higher than the value associated with the conversion of the ecosystem through farming, logging, or other intensive uses.

Payment for Ecosystem Services (PES) schemes are structured around the premise that ecosystems provide valuable services that can help conservation pay for itself and generate income for those willing to participate. The idea is that these measures will encourage behavioural change by using economic incentives such as additional employment benefits and supplementary income to encourage sustainable resource use and conservation.

PES schemes are no longer solely of interest to conservationists but have gained recognition among local communities, government regulators, private businesses, and international financiers. These have encompassed private deals, both voluntary and obligatory; financing schemes; government programs and a mixture of public-private partnerships.

Although market-based mechanisms are by no means a complete management solution, PES schemes may encourage African decision makers to incorporate nature’s ‘services’ or non-market benefits into development choices to better quantify their value – so as to entice investment back into conservation and not necessarily into alternative use. The total economic value associated with managing ecosystems more sustainably is often higher than the value associated with the conversion of the ecosystem through farming, logging, or other intensive uses.

These decisions are particularly pertinent in Africa where countries are poised to receive an influx of new wealth from oil, coal and gas deposits, with potentially devastating consequences for the physical environment. Through a process of economic valuation, PES mechanisms help decision-makers to visualise the true impacts of their decisions and identify tradeoffs between environmental, economic, and social benefits. PES schemes also encourage policy makers to recognise that ecosystem services are contributing to the well-being of their constituents and overall economic development.

Degraded ecosystems are dangerous for African livelihoods

The UN-initiated Millennium Ecosystem Assessment (MA), conducted in 2005, found that 60 percent of global environmental services assessed are being degraded faster than they recover or used in an unsustainable manner.

Africa is central to this debate as it is home to an abundance of the world’s natural resources. The Southern and Eastern African regions host seven of the world’s biodiversity hotspots. From Ethiopia to the Cape, the region contains several centres of endemism where species of birds, mammals and plants reside nowhere else in the world.

Healthy ecosystems are particularly important in Africa where many rely on ecosystem services for their primary income. Even where natural resources are scarce, most do not have alternative livelihood options. What's more, the harmful effects of ecosystem service degradation are borne disproportionately by the poor and contribute to economic inequality. In Sub-Saharan Africa the condition and management of ecosystem services is a dominant factor influencing prospects for reducing poverty.

Policy discussion and implications

Although the MA made strides in raising awareness about ecosystem services, translating these findings into policy recommendations and changes requires longer-term engagement strategies and the development of new tools that are applicable and easily understood. This is important so that policymakers can base their decisions on evidence; identify and prioritise interventions; track progress towards goals; and inform corrective action in a timely fashion.

Strategies will be needed to communicate the value and condition of ecosystem services to policy-makers and help them integrate this information into their countries’ social and economic indicators. This evidence will demonstrate the harmful effects of the degradation of ecosystem services on livelihoods, health, and local and national economies.

Policymakers also need to take contextual realities into account. PES schemes do not operate in legal, social or political vacuums. A range of laws, policies, institutions and stakeholders affect them. Research can highlight what tools are needed support financial, regulatory and legislative frameworks. Ecosystem service considerations need to be integrated into mainstream economic planning and development policy.

African countries and their regional organizations have yet to take advantage of the opportunities offered by ecosystem markets. There are a number of reasons for this, including a lack of awareness, technical knowledge and market mechanisms. Regional organizations should be at the forefront of these debates – calling member countries to position themselves appropriately to take advantage of such opportunities.

African countries and appropriate stakeholders need to take stock of ecosystems markets and payment schemes, and work to develop equitable sharing models that benefit their communities that are most vulnerable and dependent on ecosystems.

Romy Chevallier is a senior researcher for the Governance of Africa’s Resources Programme at the South African Institute of International Affairs