Georgia takes lead in assessing natural capital…

Georgia is one of the pilot countries that have volunteered to assess its natural capital with the ultimate objective of valuing the services provided by the country’s ecosystems. “Bringing the wealth of the natural world to the attention of decision-makers will pave the way to better informed choices and policies,” said Pavan Sukhdev, chair of the TEEB Advisory Board at the launch of The Economics of Ecosystems and Biodiversity Scoping Study in Tbilisi.

The TEEB Scoping Study for Georgia--a joint effort of the Ministry of Environment, UN Environment Program, and WWF Caucasus--is an important step in valuing ecosystems and biodiversity. Identifying five core sectors of Georgian economy--energy, tourism, agriculture, mining, and forestry--the study highlights their dependence on natural capital and related services.

“Considering the rapid development of Georgia’s economy, the TEEB initiative is an effective instrument to help conserve ecosystems while promoting sustainable growth,” said environment minister Khatuna Gogaladze at the launch event on Oct. 1.

Georgia’s agriculture sector employs 53 percent of the workforce and is a main vehicle for rural development. The sector’s long-term sustainability, however, faces challenges associated with reduction of genetic diversity, land degradation due to salinization, and soil erosion. Crop yields are at risk if incentives are not provided to promote, for example, limited pesticide and chemical fertilizer use, soil conservation, and crop rotation.

This first scoping exercise recommends the development of TEEB for Agriculture, a sectoral examination that addresses policies to ensure food security, improve agricultural biodiversity, reduce the extent of land degradation, and maintain agriculture as a strong economic sector, according to a news release from UNEP.

“Nature plays a vital role in sustaining Georgia’s important economic sectors and policy priorities. For example, with its abundance of rivers and varying terrain, the hydropower sector has immense potential. The sector depends, however, on both quality and quantity of freshwater, guaranteed by forests upstream. This is another call for protected ecosystems that would benefit us all,” said Yolanda Kakabadse, president of WWF International.

There have been steps taken toward ecosystem service valuation in neighboring Armenia, with pilot programs initiated by UNEP and REC Caucasus. Some of the areas targeted for Georgia were the subject of my capstone research which focused on the link between natural capital and the tourism, beverage, and hydropower sectors of Armenia’s economy. The main concepts were outlined in my 2011 talk at TEDx Yerevan on Redefining Our Economic Systems.

Prospects for a green economy...

Orakarg (Agenda) business newspaper conducted this interview about prospects for a Green Economy in Armenia after my talk at TEDx Yerevan on Redefining our economic systems: Could a forest be worth more than a gold mine? The article was titled, Finding wealth in the soil: Green economy can replace mining.

Պրն Սոհիգյան, ի՞նչ է կանաչ տնտեսությունը:

Կանաչ տնտեսությունը հասկացություն է, որն առաջին անգամ օգտագործվել է ՄԱԿ-ի շրջակա միջավայրի պահպանության ծրագրում՝ նկարագրելու տնտեսության այնպիսի մոդել, որը կարող է նպաստել մարդկանց բարեկեցությանը և սոցիալական հավասարությանը՝ միաժամանակ նվազեցնելով ռիսկերը շրջակա միջավայրի համար: Այս թեման քննարկումների լայն ալիք է ստեղծել համաշխարհային հարթակներում, քանի որ այսօր մենք կանգնած ենք բնական ռեսուրսների ոչնչացման եզրին: Այս թեմային է նվիրված նաև «Կայուն զարգացում» խորագրով «Ռիո 20» համաժողով:

Կանաչ տնտեսության կարևորությունն այն է, որ գոյություն ունի կապ, ասենք, անտառների և ջրային ռեսուրսների միջև, ինչի պատճառով բիզնեսը կախված է շրջակա միջավայրից: Անտառները թույլ են տալիս պաշտպանվել ջրհեղեղներից և ապահովում են հողատարածքների վերականգնումը: Հետևաբար, շրջակա միջավայրի ռազմավարությունը կարող է պաշտպանել կարևոր ջրբաժանները անտառների պահպանության միջոցով: Այսինքն՝ բնության մեջ ամեն ինչ փոխկապակցված է, ինչը կարելի է օգտագործել տնտեսական նկատառումներով:

Հայաստանի համար որքանո՞վ է կարևոր կանաչ տնտեսությունը, եթե հաշվի առնենք, որ, օրինակ, տնտեսությունը ծայրահեղորեն կախված է հանքարդյունաբերությունից:

2011թ. սեպտեմբերին երևանյան TEDx-ին իմ ելույթում ես նշեցի, որ Հայաստանի տնտեսության համար ռազմավարական նշանակություն ունեցող առնվազն երեք ոլորտներ կախված են շրջակա միջավայրից: Դա ըմպելիքների արտադրության, տուրիզմի և հիդրոէներգետիկայի ոլորտներն են, որոնցից յուրաքանչյուրը Հայաստանի տնտեսության կարևոր մասն է:

The rest of the interview is available here. Stay tuned for a follow up article on this topic in English in the coming weeks.

Pavan Sukhdev discusses the economic invisibility of nature at TED Global...

In this talk from TEDGlobal, Pavan Sukhdev explains the economic invisibility of nature and why we need to correct this market failure. He outlines the value of natural capital and explains why it is characterized as an externality because it is not priced by markets. This becomes a challenge because it often leads to the overexploitation and subsequent scarcity of resources that may be irreplaceable. Pavan points out that we are losing natural capital at an extraordinary rate, with implications that may be more severe than the global financial crisis.

Pavan is the CEO of GIST Advisory, an environmental consulting firm which helps governments and corporations manage their impacts on natural capital. He founded the Global Markets Centre in Mumbai and took a sabbatical from Deutsche Bank to lead UNEP’s Green Economy Initiative and the G8+5 commissioned project on The Economics of Ecosystems and Biodiversity (TEEB). Pavan was a speaker at the World Economic Forum in 2010 and 2011 and he serves on the boards of Conservation International and the Stockholm Resilience Centre.

The research done by The Economics of Ecosystems and Biodiversity initiative was cited in my talk on Redefining Our Economic Systems at TEDx Yerevan. Pavan's talk is well worth watching.

Redefining our economic systems @TEDx Yerevan…

Just when I thought this day couldn’t get any better, coverage of my talk at TEDx Yerevan, "Redefining Our Economic Systems: Could a Forest Be Worth More Than a Gold Mine?" hit National Geographic Online. The premise was that forests are a form of green infrastructure that have a range of values worth more than firewood or building material and that these could be worth more than a gold mine. The issue is significant because the region is one of the planet’s most endangered “hotspots for biodiversity” and the country’s economy is dependent on mining.

In addition, resources like forests and water are becoming scarce as a result of unsustainable management and climate change while several strategic industries are heavily reliant on the “natural capital” provided by forests. National Geographic’s coverage by Kara Marston of the event at the Tumo Center for Creative Technologies is available here. The video of the talk was posted by TEDx here:



The talk is based on my master's thesis on “How Payments for Environmental Services Can Deliver Co-Benefits for Business and Sustainable Development: A Conservation Finance Strategy to Protect Armenia’s Natural Heritage,” and I cited data from UNEP's program on The Economics of Ecosystems and Biodiversity. The research was presented earlier this year at the 17th International Sustainable Development Research Conference hosted by the Earth Institute at Columbia University and the United Nations Division of Sustainable Development.

The concepts of forest valuation and understanding our dependence on ecosystem services are becoming more mainstream, especially among large corporations and in conversations about creating a Green Economy. The following sites provide further information: Bank of Natural Capital, Corporate Ecosystem Services Review, Guide to Corporate Ecosystem Valuation. Stay tuned...

The Economics of Ecosystems & Biodiversity discussed at London School of Economics…

In this video from the London School of Economics, Pavan Sukhdev provides an engaging discussion on the findings of The Economics of Ecosystems and Biodiversity study. The TEEB initiative was launched by the G8+5 in 2007 to create an economic, scientific, and policy analysis for ecosystems and biodiversity that would be comparable to the Stern Review on the Economics of Climate Change.

In addition to his role as TEEB study leader, Pavan Sukhdev is head of the United Nations Environment Programme’s Green Economy Initiative. Prior to his work for TEEB and UNEP, he was head of Deutsche Bank’s Global Markets Business in India and a founding member of the Green Indian States Trust. His March 21 talk at LSE was titled, “Ending the Economic Invisibility of Nature.”

How Payments for Environmental Services can deliver co-benefits for business & sustainable development…

This site was created to review issues related to my career and graduate coursework, so this is a good time for a status update. In December, I completed a capstone on Payments for Environmental Services, which was the last requirement for my master’s from the Sustainability and Environmental Management Program at Harvard.

The abstract for my capstone, “How Payments for Environmental Services Can Deliver Co-Benefits for Business and Sustainable Development: A Conservation Finance Strategy to Protect Armenia’s Natural Heritage,” was recently accepted for the 17th International Sustainable Development Research Conference. The conference is hosted by the Earth Institute at Columbia University and the United Nations Division of Sustainable Development.

The peer review committee invited me to present the research in the session on “Redefining Economic Systems for Sustainable Development.” The following is a condensed version of the research abstract:

“The Caucasus region has been identified by international conservation organizations as a ‘global hotspot’ for biodiversity. Among the nations of the South Caucasus, the environment of the Republic of Armenia faces widespread degradation driven by factors including unsustainable management, lack of alternative energy supplies, and a shortage of sustainable financing for conservation. In order to address similar challenges, some countries have implemented Payment for Environmental Services (PES) programs to compensate upstream landowners or land managers for environmental conservation that benefits downstream users. This research presented three examples of PES programs. The programs in Costa Rica and in upstate New York demonstrated that PES can deliver significant levels of conservation finance and can achieve favorable sustainable development results. The ongoing example in the Danube Basin shows that PES can be implemented as a pilot program to demonstrate the applicability of the concept and transfer lessons learned to neighboring regions.”

“Based on these results, this paper argues that PES may be an effective conservation finance strategy to apply in the Republic of Armenia. This is especially compelling since there are several sectors that have been identified as strategically important for the country’s economic development that rely heavily on environmental services as a core part of their business. These include hydropower, the beverage industry, and the tourist industry. This paper has shown that these sectors have a direct interest in environmental conservation and that investing in natural capital would ensure their long-term viability and profitability. In addition to addressing business risk in these strategic industries in a proactive manner that lowers costs, a PES program can deliver sustainable development co-benefits and enhance a Corporate Social Responsibility program.”

This research was motivated by the work of a number of organizations including the following, each of which provided support or resources cited in this study:

• Armenia Tree Project
• Caucasus Nature Fund
• Conservation Finance Forum
• The Economics of Ecosystems and Biodiversity
• The Katoomba Group
• World Resources Institute
• WWF Caucasus Programme

One of the next steps is to advance the business case for a PES program using WRI’s Corporate Ecosystem Services Review. This tool enables corporate managers to develop proactive strategies to manage business risks and opportunities arising from environmental impacts and dependence on environmental services. I hope readers will stay tuned as this research advances to the next stage toward implementation.

PFA issues new report on state of Armenia’s environment…

Policy Forum Armenia has issued its first annual report on The State of Armenia’s Environment. According to its website, PFA has a “hybrid mission,” operating as a think tank and an advocacy group. With an international network of members, PFA’s stated objective is to offer professional analysis with innovative and practical recommendations for public policy design.

The 32-page study provides an overview of environmental challenges facing Armenia in areas including water resources, air pollution, the adequacy of nature reserves, deforestation, and energy. The report argues that improving environmental governance requires increased transparency and public participation in policy decisions as well as the enforcement of existing environmental laws.

A major section of the report is a case study of the open pit copper mine in northern Armenia, where the Teghut Forest has been cleared to create a tailing dump. “[Teghut] is an example of one facility where both urgent policy changes and adequate enforcement of existing policies are needed,” notes PFA.

The authors state that Armenia is a country of rich biodiversity with more than 3,500 plant species and 17,500 invertebrate and vertebrate species including the endangered Caucasian Leopard. However, mismanagement and the rapid growth of some sectors of the economy during the last decade created serious environmental challenges. The report concludes that “environmental protection should constitute a key element of Armenia’s developmental strategy.”

“Despite the fact that the prevailing developmental policy thinking is heavily skewed toward extractive industries, decisions about whether or not to undertake new large-scale projects with potentially sizable environmental impact in Armenia must be considered with the country’s long-term benefits and objectives in mind,” notes the PFA study.

It is especially interesting that PFA’s second “state of the nation” report has addressed environmental issues, particularly since this integral aspect of sustainable development has not been widely considered in Armenia. For example, a 2006 conference hosted by the Armenian International Policy Research Group titled, Armenia: Challenges of Sustainable Development, did not give environmental issues any consideration on the agenda.

The focus of sustainable development in Armenia has been on economic and social issues, while attention to environmental conservation has not been widely understood as a current strategic priority. Hopefully this annual report will contribute to a broader understanding of sustainable development and raise the level of dialogue to a new level.

Will TEEB end the economy vs. environment debate?

How valuable are forests and wetlands? Economics largely takes nature, biodiversity, and environmental services for granted and does not put a value on them. These services include water and air quality regulation, nutrient cycling and decomposition, plant pollination, and flood control. As a result, governments, businesses, and people tend to overexploit the resources on which our livelihoods and prosperity depend.

It is against this background that The Economics of Ecosystems and Biodiversity (TEEB) project was set up in 2007 to provide an assessment of the economic aspects of these issues. A groundbreaking new book, The Economics of Ecosystems and Biodiversity: Ecological and Economic Foundations, outlines all of the scientific and economic principles of measuring and valuing environmental services and biodiversity.

The effort furthers the work of the Millennium Ecosystem Assessment which issued a major scientific review in 2005 of the status and trends in the world’s ecosystems and the services they provide, as well as recommendations for action to manage them more sustainably. The head of the TEEB project is Pavan Sukhdev, a Deutsche Bank economist who also leads UNEP’s Green Economy Initiative.

The book was launched at the COP10 Nagoya Biodiversity Summit in Japan and is recommended for a detailed review of the latest research in environmental economics and the valuation of natural resources. The TEEB project has also launched a website, Bank of Natural Capital, to make its findings more accessible to the public.

The hope is that the thorough scientific and economic analysis behind the TEEB studies will put and end to the popular debate about the economy versus the environment, and correct the market failures that lead to the unsustainable use of natural capital.

Pavan Sukhdev discusses the invisible natural economy...

This Corporate Knights news magazine interview with Pavan Sukhdev was filmed earlier this year during a series of talks in Canada organized by Sustainable Prosperity. Mr. Sukhdev is head of UNEP's Green Economy Initiative, a program intended to demonstrate that the greening of economies is not a burden on growth but rather a new engine for growth and poverty reduction.

The Deutsche Bank economist is leading the G8+5 commissioned report on The Economics of Ecosystems and Biodiversity, which has shown the economic significance of the loss of nature's services. In this interview, Mr. Sukhdev explains the problems of a global economy that ignores the economic value of nature and its services.

Why do governments and corporations value some things and not others? Mr. Sukhdev discusses the impact of externalities and market failures on the valuation of natural assets and makes a case for assessing the real value of our environment.